USF&G CORP, S-3/A, 1994-01-25

USF&G CORP
S-3/A, 1994-01-25
FIRE, MARINE & CASUALTY INSURANCE

Previous: GALLAGHER ARTHUR J & CO, SC 13G/A, 1994-01-25

Next: PRUDENTIAL GOVERNMENT SECURITIES TRUST, 24F-2NT, 1994-01-25

As filed with the Securities and Exchange Commission on January 25, 1994
Registration No. 33-51859

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 1 TO
FORM S-3

REGISTRATION STATEMENT

Under

The Securities Act of 1933

USF&G CORPORATION
(Exact name of registrant as specified in its charter)

Maryland 52-1220567
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
100 Light Street
Baltimore, Maryland 21202
(410) 547-3000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

John A. MacColl, Esq.
Senior Vice President - General Counsel
USF&G Corporation
100 Light Street
Baltimore, Maryland 21202
(410) 547-3000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

Robert W. Smith, Jr., Esq. Keith L. Kearney, Esq.
Piper & Marbury Davis Polk & Wardwell
36 South Charles Street 450 Lexington Avenue
Baltimore, Maryland 21201 New York, New York 10017

Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this
Registration Statement as determined in light
of market conditions and other factors

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /xx/

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine. Pursuant to Rule 429 under the Securities Act of 1933, as
amended, the Prospectus included in this Registration Statement also relates to
unsold securities in the amount of $400,000,000 registered under Registration
Statement No. 33-33271.

SUBJECT TO COMPLETION, DATED JANUARY 25, 1994

$600,000,000

USF&G CORPORATION

DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK AND WARRANTS

USF&G Corporation (the "Corporation") may from time to
time offer, together or separately, its (i) debt securities (the
"Debt Securities") which may be either senior debt securities (the
"Senior Debt Securities") or subordinated debt securities (the
"Subordinated Debt Securities"), (ii) shares of its preferred
stock, $50.00 par value per share (the "Preferred Stock"), which
may be issued in the form of Depositary Shares evidenced by
Depositary Receipts, (iii) shares of its common stock, $2.50 par
value per share (the "Common Stock"), and (iv) warrants to
purchase securities of the Corporation as shall be designated by
the Corporation at the time of the offering (the "Warrants"), in
amounts, at prices and on terms to be determined at the time of
offering. The Debt Securities, Preferred Stock, Common Stock and
Warrants are collectively called the "Securities."

The Securities offered pursuant to this Prospectus may be
issued in one or more series or issuances and will be limited to
$600,000,000 aggregate public offering price (or its equivalent
(based on the applicable exchange rate at the time of sale) in one
or more foreign currencies, currency units or composite currencies
as shall be designated by the Corporation). Certain specific terms
of the particular Securities in respect of which this Prospectus
is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement"), including, where
applicable, in the case of Debt Securities, the specific title,
aggregate principal amount, the denomination, whether such Debt
Securities are secured or unsecured obligations, maturity,
premium, if any, the interest rate (which may be fixed, floating
or adjustable), the time and method of calculating payment of
interest, if any, the place or places where principal of (and
premium, if any) and interest, if any, on such Debt Securities
will be payable, the currency in which principal of (and premium,
if any) and interest, if any, on such Debt Securities will be
payable, any terms of redemption at the option of the Corporation
or the holder, any sinking fund provisions, terms for any
conversion or exchange into other Securities, the initial public
offering price and other special terms, in the case of Preferred
Stock, the specific title,
the aggregate number of shares offered, any dividend including the
method of calculating payment of dividends), liquidation,
redemption, voting and other rights, any terms for any conversion
or exchange into other Securities, the initial public offering
price and other terms, and, in the case of Warrants, the duration,
purchase price, exercise price and detachability of such Warrants
and a description of the securities for which each Warrant is
exercisable. If so specified in the applicable Prospectus
Supplement, Debt Securities of a series may be issued in whole or
in part in the form of one or more temporary or permanent global
securities ("Global Securities").

The Corporation's Common Stock is listed on the New York
Stock Exchange under the trading symbol "FG." Any Common Stock
sold pursuant to a Prospectus Supplement will be listed on such
exchange, subject to official notice of issuance. The
Corporation's Common Stock is also listed on the Pacific Stock
Exchange, the London Stock Exchange and the Swiss Exchanges in
Basle, Geneva and Zurich, Switzerland.

Unless otherwise specified in a Prospectus Supplement,
the Senior Debt Securities, when issued, will be unsecured and
will rank equally with all other unsecured and unsubordinated
indebtedness of the Corporation. The Subordinated Debt Securities,
when issued, will be subordinated in right of payment to all
Senior Debt (as defined herein) of the Corporation.

The Prospectus Supplement will contain information
concerning certain U.S. federal income tax considerations, if
applicable to the Securities offered.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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

The Securities will be sold directly, through agents,
underwriters or dealers as designated from time to time, or
through a combination of such methods. If agents of the
Corporation or any dealers or underwriters are involved in the
sale of the Securities in respect of which this Prospectus is
being delivered, the names of such agents, dealers or underwriters
and any applicable commissions or discounts are set forth in or may
be calculated from the Prospectus Supplement with respect to such Securities.

The date of this Prospectus is , 1994.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR
TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

AVAILABLE INFORMATION

The Corporation is subject to the informational
requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and, in accordance therewith, files reports, proxy or
information statements and other information with the Securities
and Exchange Commission (the "Commission"). This Prospectus
contains information concerning the Corporation but does not
contain all of the information set forth in the Registration
Statement and exhibits thereto which the Corporation has filed
with the Commission under the Securities Act of 1933 (the
"Securities Act"). Such reports, proxy or information statements,
Registration Statement and exhibits and other information filed by
the Corporation with the Commission can be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth St., N.W., Washington, D.C. 20549, and at the
Regional Offices of the Commission at 7 World Trade Center, New
York, New York 10048; and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. Such reports, proxy or information
statements, Registration Statement and exhibits and other
information concerning the Corporation can also be inspected at
the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005, and the Pacific Stock Exchange, Inc.,
301 Pine Street, San Francisco, California 94104 and 233 South
Beaudry Avenue, Los Angeles, California 90012.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Corporation hereby incorporates by reference in this
Prospectus its (1) Annual Report on Form 10-K for the year ended
December 31, 1992, as amended on July 13, 1993, under File
No. 1-8233, (2) Quarterly Report on Form 10-Q for the three months
ended March 31, 1993, under File No. 1-8233, (3) Quarterly Report
on Form 10-Q for the six months ended June 30, 1993, under File
No. 1-8233, (4) Quarterly Report on Form 10-Q for the nine months
ended September 30, 1993, under File No. 1-8233, and (5) the description
of the Corporation's
Common Stock and Shareholder Rights Plan contained in its
Registration Statements filed pursuant to Section 12 of the
Exchange Act and any amendment or report filed for the purpose of
updating those descriptions.

All documents filed by the Corporation pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the
offering of the Securities shall be deemed to be incorporated by
reference in this Prospectus and made a part hereof from the date
of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in
any other document subsequently filed with the Commission which
also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

The Corporation will provide without charge to each person to
whom this Prospectus is delivered, upon the written or oral request
of such person, a copy of any or all of the documents incorporated
by reference herein (not including the exhibits to such documents,
unless such exhibits are specifically incorporated by reference in
such documents). Requests for such copies should be directed to:
USF&G Corporation, 100 Light Street, Baltimore, Maryland 21202,
Attention: John F. Hoffen, Jr., Secretary, telephone (410)
547-3000.

THE CORPORATION

USF&G Corporation (the "Corporation") is a holding company
whose principal subsidiaries are engaged in writing
property/casualty insurance and life insurance/annuities.
Property/casualty insurance is written primarily by United States
Fidelity and Guaranty Company, founded in 1896, and is sold through
independent agents supported by the Company's underwriting,
marketing, administrative and claim services offices located
throughout the United States. Life insurance and annuities are
written primarily by Fidelity and Guaranty Life Insurance Company,
founded in 1959, and are sold throughout the United States through
independent agents. The Corporation is incorporated in Maryland,
and its principal executive office is located at 100 Light Street,
Baltimore, Maryland 21202, telephone (410) 547-3000.

RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES AND RATIO
OF CONSOLIDATED EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS

On a consolidated basis, the ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred stock
dividends include the earnings and fixed charges of the Corporation
and its subsidiaries.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years ended December 31
1993 1992 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings
to Fixed Charges... 2.3 1.3 1.4 (A) (B) 2.9 5.1

Ratio of Earnings
to Combined Fixed
Charges and
Preferred Stock
Dividends.......... 1.3 .8 .8 (A) (B) 2.4 4.0

<FN>

(A) The Corporation had a net loss for the year ended December
31, 1991, and earnings were inadequate to cover fixed charges
and combined fixed charges and preferred stock dividends by
$149 million and $186 million, respectively, for the year
ended December 31, 1991.

(B) The Corporation had a net loss for the year ended
December 31, 1990, and earnings were inadequate to cover
fixed charges and combined fixed charges and preferred stock
dividends by $435 million and $452 million, respectively, for
the year ended December 31, 1990.
</TABLE>
The ratios were determined by dividing consolidated earnings
by total fixed charges and total fixed charges and preferred stock
dividends, respectively. Earnings consist of income from
continuing operations before considering income taxes, the
cumulative effect of accounting changes, and fixed charges. Fixed
charges consist of interest, that portion of rentals which is
deemed to be an appropriate interest factor and preferred stock
dividend requirements.

USE OF PROCEEDS

Except as otherwise stated in a Prospectus Supplement,
the net proceeds from the sale of the Securities will be added to
the general funds of the Corporation and will be available for
general corporate purposes, including the repayment of
indebtedness.

DESCRIPTION OF DEBT SECURITIES

The following description sets forth certain general
terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if
any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus
Supplement relating to such Debt Securities.

The Senior Debt Securities are to be issued under an
Indenture to be dated as of January 28, 1994 (the "Senior
Indenture"), between the Corporation and Signet Trust Company, as
trustee. The Subordinated Debt Securities are to be issued under
a separate Indenture to be dated as of January 28, 1994 (the
"Subordinated Indenture"), between the Corporation and Chemical
Bank, as trustee. The Senior Indenture and the Subordinated
Indenture are sometimes referred to collectively as the
"Indentures." Copies of the Senior Indenture and the Subordinated
Indenture have been filed as exhibits to the Registration
Statement. Each of Signet Trust Company and Chemical Bank is
hereinafter referred to as a "Trustee" and collectively, as the
"Trustees." The following summaries of certain provisions of the
Senior Debt Securities, the Subordinated Debt Securities and the
Indentures do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all the provisions
of the Indentures applicable to a particular series of Debt Securities,
including the definitions therein of certain terms. Wherever particular
Sections, Articles or defined terms of the Indentures are referred
to, it is intended that such Sections, Articles or defined terms
shall be incorporated herein by reference. Article and Section
references used herein are references to the applicable Indenture.
Capitalized terms not otherwise defined herein shall have the
meaning given in the Indentures.

General

The Indentures do not limit the aggregate principal
amount of Debt Securities which may be issued thereunder and each
Indenture provides that Debt Securities may be issued thereunder
from time to time in one or more series and may be denominated and
payable in foreign currencies or units based on or relating to
foreign currencies. Unless otherwise specified in the Prospectus
Supplement, the Senior Debt Securities when issued will be
unsecured and unsubordinated obligations of the Corporation and
will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of the Corporation. The Subordinated
Debt Securities when issued will be subordinated in right of
payment to the prior payment in full of all Senior Debt (as
defined below) of the Corporation, as described under
"Subordination of Subordinated Debt Securities" and in the
Prospectus Supplement applicable to an offering of Subordinated
Debt Securities.

Reference is made to the Prospectus Supplement relating
to the particular Debt Securities offered thereby (the "Offered
Debt Securities") which shall set forth whether the Offered Debt
Securities shall be Senior Debt Securities or Subordinated Debt
Securities, and shall further set forth the following terms of the
Offered Debt Securities: (l) the title of the Offered Debt
Securities; (2) any limit on the aggregate principal amount of the
Offered Debt Securities; (3) the Person to whom any interest on
the Offered Debt Securities will be payable, if other than the
Person in whose name such Offered Debt Securities are registered
on any Regular Record Date; (4) the date or dates on which the
principal of the Offered Debt Securities will be payable; (5) the
rate or rates per annum (which may be fixed, floating or
adjustable) at which the Offered Debt Securities will bear
interest, if any, or the formula pursuant to which such rate or
rates shall be determined, the date or dates from which such
interest will accrue and the dates on which such interest, if any,
will be payable and the Regular Record Dates for such interest
payment dates; (6) whether the Offered Debt Securities will be
secured; (7) the place or places where principal of (and premium,
if any) and interest, if any, on Offered Debt Securities will be
payable; (8) if applicable, the price at which, the periods within
which and the terms and conditions upon which the Offered Debt
Securities may he redeemed at the option of the Corporation
pursuant to a sinking fund or otherwise; (9) if applicable, any
obligation of the Corporation to redeem or purchase Offered Debt
Securities pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof, and the period or periods
within which, the price or prices at which and the terms and
conditions upon which the Offered Debt Securities will be redeemed
or purchased, in whole or in part; (10) if applicable, the terms
of any right to convert or exchange the Offered Debt Securities
into other securities or property of the Corporation; (ll) if
other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the Offered Debt Securities
will be issuable; (12) the currency or currencies, including
composite currencies or currency units, in which payment of the
principal of (or premium, if any) or interest, if any, on any of
the Offered Debt Securities will be payable if other than the
currency of the United States of America; (13) if the amount of
payments of principal of (or premium, if any) or interest, if any,
on the Offered Debt Securities may be determined with reference to
one or more indices, the manner in which such amounts will be
determined; (14) if the principal of (or premium, if any) or
interest, if any, on any of the Offered Debt Securities of the
series is to be payable, at the election of the Corporation or a
Holder thereof, in one or more currencies, including composite
currencies, or currency units other than that or those in which
the Securities are stated to be payable, the currency, currencies,
including composite currencies, or currency units in which payment
of the principal of (or premium, if any) or interest, if any, on
Securities of such series as to which such election is made will
be payable, and the periods within which and the terms and
conditions upon which such election is to be made; (15) the
portion of the principal amount of the Offered Debt Securities, if
other than the principal amount thereof, payable upon acceleration
of maturity thereof; (16) whether all or any part of the Offered
Debt Securities will be issued in the form of a Global Security or
Securities and, if so, the depositary for, and other terms
relating to, such Global Security or Securities; (17) any event or
events of default applicable with respect to the Offered Debt
Securities in addition to those provided in the Indentures; (18)
any other covenant or warranty included for the benefit of the
Offered Debt Securities in addition to (and not inconsistent with)
those included in the Indentures for the benefit of Debt
Securities of all series, or any other covenant or warranty
included for the benefit of the Offered Debt Securities in lieu of
any covenant or warranty included in the Indentures for the benefit
of Debt Securities of all series, or
any provision that any covenant or warranty included in the
Indentures for the benefit of Debt Securities of all series shall
not be for the benefit of the Offered Debt Securities, or any
combination of such covenants, warranties or provisions; (19) any
restriction or condition on the transferability of the Offered
Debt Securities; (20) any authenticating or paying agents,
registrars, conversion agents or any other agents with respect to
the Offered Debt Securities; and (21) any other terms of the
Offered Debt Securities. (Indentures, Section 301) Debt
Securities may also be issued under the Indentures upon the
exercise of Warrants. See "Description of Warrants."

Unless otherwise indicated in the Prospectus Supplement
relating thereto, the Offered Debt Securities are to be issued as
registered securities without coupons in denominations of $1,000 or
any integral multiple of $1,000. (Indentures, Section 302) No
service charge will be made for any transfer or exchange of such
Offered Debt Securities, but the Corporation or the Trustee may
require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Indentures,
Section 305)

Debt Securities may be issued under the Indentures as Original
Issue Discount Securities to be sold at a substantial discount
below their stated principal amount. Federal income tax
consequences and other considerations applicable thereto will be
described in the Prospectus Supplement relating hereto.

Since the Corporation is a holding company, the rights of the
Corporation, and hence the right of creditors of the Corporation
(including the Holders of Debt Securities), to participate in any
distribution of the assets of any subsidiary upon its liquidation
or reorganization or otherwise is necessarily subject to the prior
claims of creditors of the subsidiary, except to the extent that
claims of the Corporation itself as a creditor of the subsidiary
may be recognized.

The Indentures do not contain any provisions that limit the
ability of the Corporation or any subsidiary to incur indebtedness
or that afford Holders of the Debt Securities protection in the
event of a highly leveraged or similar transaction involving the
Corporation or any subsidiary.

Events of Default and Notice Thereof

Unless otherwise specified in the Prospectus Supplement, the
following events are defined in the Indentures as "Events of
Default" with respect to Debt Securities of any series: (a) failure
to pay principal (including any sinking fund payment) of, or premium
(if any) on, any Debt Security of that
series when due (in the case of the Subordinated Indenture, whether
or not payment is prohibited by the subordination provisions); (b)
failure to pay interest, if any, on any Debt Security of that
series when due and such failure continues for a period of 30 days;
(c) failure by the Corporation to perform in any material respect
any other covenant in the Indentures (other than a covenant
included in the Indentures solely for the benefit of a series of
Debt Securities other than that series) which continues for a
period of 90 days after written notice to the Corporation; (d) due
acceleration (which acceleration shall not have been rescinded
within 30 days after written notice to the Corporation) of any
indebtedness for borrowed money in a principal amount in excess of
$50,000,000 for which the Corporation or any Principal Insurance
Subsidiary is liable, including Debt Securities of another series,
or a default by the Corporation or any Principal Insurance
Subsidiary in the payment at final maturity of outstanding indebtedness for
borrowed money in a principal amount in excess of $50,000,000
unless such acceleration or default at maturity shall be remedied
or cured by the Corporation or any Principal Insurance
Subsidiary or rescinded, annulled or waived by the
holders of such indebtedness, in which case such acceleration or
default at maturity shall not constitute an Event of Default under
this provision and any acceleration relating thereto shall be
rescinded; and (e) certain events of insolvency, reorganization,
receivership or liquidation of the Corporation or any Principal Insurance
Subsidiary. (Indentures, Section 501)

No Event of Default with respect to Debt Securities of a
particular series shall necessarily constitute an Event of Default
with respect to Debt Securities of any other series. If an Event of
Default with respect to Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or
the Holders of at least 25% in principal amount of the Outstanding
Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all Debt Securities of
that series to be due and payable immediately; provided, however,
that under certain circumstances the Holders of a majority in
aggregate principal amount of Outstanding Debt Securities of that
series may rescind or annul such declaration and its consequences.
(Indentures, Section 502)

Reference is made to the Prospectus Supplement relating to any
series of Offered Debt Securities which are Original Issue Discount
Securities for the particular provisions relating to the principal
amount of such Original Issue Discount Securities due on
acceleration upon the occurrence of an Event of Default and the
continuation thereof.

The Indentures provide that the applicable Trustee may
withhold notice to the Holders of the Debt Securities of any
default (except in payment of principal (or premium, if any) or
interest, if any) if it considers it in the interest of the Holders
of the Debt Securities to do so. (Indentures, Section 602)

The Corporation will be required to furnish to the applicable
Trustee annually a statement by certain officers of the Corporation
as to the compliance with all conditions and covenants of the
Indentures. (Indentures, Section 1004)

The Holders of a majority in principal amount of the
Outstanding Debt Securities of any series affected will have the
right, subject to certain limitations, to direct the time, method
and place of conducting any proceeding for any remedy available to
the applicable Trustee or exercising any trust or power conferred
on such applicable Trustee with respect to the Debt Securities of
such series, and to waive certain defaults. (Indentures, Sections
512 and 513)

The Indentures provide that, in case an Event of Default shall
occur and be continuing, the applicable Trustee shall exercise such
of its rights and powers under the Indentures, and use the same
degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own
affairs. (Indentures, Section 601) Subject to such provisions, the
applicable Trustee will be under no obligation to exercise any of
its rights or powers under the Indentures at the request of any of
the Holders of Debt Securities unless they shall have offered to
such Trustee security or indemnity in form and substance reasonably
satisfactory to such Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request. (Indentures, Section 603)

No Holder of a Debt Security of any series will have any right
to institute any proceeding with respect to the Indentures or for
any remedy thereunder, unless such Holder shall have previously
given to the applicable Trustee written notice of a continuing
Event of Default and unless also the Holders of at least 25% in
aggregate principal amount of the Outstanding Debt Securities of
the same series shall have made written request, and offered
security or indemnity to such Trustee in form and substance
reasonably satisfactory to such Trustee, to institute such
proceeding as trustee, and such Trustee shall not have received
from the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of the same series a direction
inconsistent with such request and shall have failed
to institute such proceeding within 60 days. (Indentures, Section
507) However, such limitations do not apply to a suit instituted by
a Holder of a Debt Security for enforcement of payment of the
principal of (or premium, if any) or interest, if any, on such Debt
Security on or after the respective due dates expressed in such
Debt Security, or of the right to convert such Debt Security in
accordance with the Indentures (if applicable). (Indentures,
Section 508)

Modification and Waiver

Modifications and amendments of the Indentures may be made by
the Corporation and the applicable Trustee, with the consent of the
Holders of not less than a majority of aggregate principal amount
of each series of the Outstanding Debt Securities issued under the
Indentures which is affected by the modification or amendment;
PROVIDED, HOWEVER, that no such modification or amendment may,
without the consent of each Holder of such Debt Security affected
thereby: (1) change the Stated Maturity of the principal of (or
premium, if any) or any installment of principal or interest, if
any, on any such Debt Security; (2) reduce the principal amount of
(or premium, if any) or the interest rate, if any, on any such Debt
Security or the principal amount due upon acceleration of an
Original Issue Discount Security; (3) change the place or currency
of payment of principal of (or premium, if any) or the interest, if
any, on any such Debt Security; (4) impair the right to institute
suit for the enforcement of any such payment on or with respect to
any such Debt Security; (5) adversely change the right to convert
or exchange, including decreasing the conversion rate or increasing
the conversion price of, such Debt Security (if applicable); (6)
reduce the percentage of Holders of Debt Securities necessary to
modify or amend the Indentures; (7) in the case of the Subordinated
Indenture, modify the subordination provisions in a manner adverse
to the holders of the Subordinated Debt Securities; or (8) modify
the foregoing requirements or reduce the percentage of outstanding
Debt Securities necessary to waive compliance with certain
provisions of the Indentures or for waiver of certain defaults.
(Indentures, Section 902)

The holders of at least a majority of the aggregate principal
amount of the Outstanding Debt Securities of any series may, on
behalf of all Holders of that series, waive compliance by the
Corporation with certain restrictive provisions of the Indentures
and waive any past default under the Indentures, except a default
in the payment of principal, premium or interest or in the
performance of certain covenants. (Indentures, Sections 907 and
513)

Defeasance and Covenant Defeasance

The Indentures provide that the Corporation may elect either
(A) to defease and be discharged from any and all obligations with
respect to such Debt Securities (including, in the case of
Subordinated Debt Securities, the provisions described under
"Subordination of Subordinated Debt Securities" herein and except
for the obligations to exchange or register the transfer of such
Debt Securities, to replace temporary or mutilated, destroyed, lost
or stolen Debt Securities, to maintain an office or agency in
respect of the Debt Securities, and to hold monies for payments in
trust) ("defeasance"), or (B) to be released from its obligations
with respect to such Debt Securities concerning the restrictions
described under "Consolidation, Merger and Sale of Assets" and any
other covenants applicable to such Debt Securities (including, in
the case of Subordinated Debt Securities, the provisions described
under "Subordination of Subordinated Debt Securities" herein),
which are subject to covenant defeasance ("covenant defeasance"),
and the occurrence of an event described and notice thereof in
clauses (c) and (d) under "Events of Default and Notice Thereof"
(with respect to covenants subject to covenant defeasance) shall no
longer be an Event of Default, in each case, upon the irrevocable
deposit with the applicable Trustee (or other qualifying trustee),
in trust for such purpose, of money, and/or U.S. Government
Obligations (as defined) (or Foreign Government Obligations (as
defined) in the case of Debt Securities denominated in foreign
currencies) which through the payment of principal and interest in
accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) and
interest, if any, on such Debt Securities, and any mandatory
sinking fund or analogous payments thereon, on the scheduled due
dates therefor. Such a trust may only be established if, among
other things, (i) the Corporation has delivered to the applicable
Trustee an opinion of counsel (as specified in the Indentures) to
the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for Federal income tax purposes as
a result of such defeasance or covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, (ii) no Event
of Default or event which with the giving of notice or lapse of
time, or both, would become an Event of Default under the Indenture
shall have occurred and be continuing on the date of such deposit
and (iii) in the case of Subordinated Debt Securities, (x) no
default in the payment of principal of (or premium, if any) or
interest, if any, on any Senior Debt beyond any applicable grace
period shall have occurred and be continuing, and (y) no other
default with respect to any Senior Debt shall have occurred
and be continuing and shall have resulted in the acceleration of such
Senior Debt. (Indentures, Article Thirteen)

The Corporation may exercise its defeasance option with
respect to such Debt Securities notwithstanding its prior exercise
of its covenant defeasance option. If the Corporation exercises its
defeasance option, payment of such Debt Securities may not be
accelerated because of an Event of Default. If the Corporation
exercises its covenant defeasance option, payment of such Debt
Securities may not be accelerated by reference to the covenants
noted under clause (B) above. In the event the Corporation omits to
comply with its remaining obligations with respect to such Debt
Securities under the Indentures after exercising its covenant
defeasance option and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations (or Foreign
Government Obligations in the case of Debt Securities denominated
in foreign currencies) on deposit with the applicable Trustee may
be insufficient to pay amounts due on the Debt Securities of such
series at the time of the acceleration resulting from such Event of
Default. However, the Corporation will remain liable in respect of
such payments. (Indentures, Article Thirteen)

Limitation on Liens

As long as any of the Debt Securities remains outstanding, the
Corporation will not, and will not permit any Principal Insurance
Subsidiary to, issue, assume, incur or guarantee any indebtedness
for borrowed money secured by a mortgage, pledge, lien or other
encumbrance, directly or indirectly, on any of the Common Stock of
a Principal Insurance Subsidiary, which Common Stock is owned by
the Corporation or by any Principal Insurance Subsidiary, unless
the Debt Securities and, if the Corporation so elects, any other
indebtedness of the Corporation ranking on a parity with the Debt
Securities, shall be secured equally and ratably with, or prior to,
such secured indebtedness for borrowed money so long as it is
outstanding. (Indentures, Section 1005)

"Principal Insurance Subsidiary" means each of United States
Fidelity and Guaranty Company and Fidelity and Guaranty Life
Insurance Company, so long as it remains a Subsidiary, or any other
Subsidiary of the Corporation which shall hereafter succeed by
merger or otherwise to a major part of the business of one or more
of the Principal Insurance Subsidiaries. The decision as to
whether a subsidiary shall have succeeded to a major part of the
business of one or more of the Principal Insurance Subsidiaries
shall be made in good faith by the board of directors of the Corporation
or a committee thereof by the adoption of a resolution so stating, and the
Corporation shall within 30 days of the date of the adoption of such
resolution deliver to the applicable Trustee a copy thereof, certified by the
Corporate Secretary or an Assistant Corporate Secretary of the
Corporation. (Indentures, Section 101)

"Common Stock" means, with respect to any Principal Insurance
Subsidiary, stock of any class, however designated, except stock
which is non-participating beyond fixed dividend and liquidation
preferences and the holders of which have either no voting rights
or limited voting rights entitling them, only in the case of
certain contingencies, to elect less than a majority of the
directors (or persons performing similar functions) of such
Principal Insurance Subsidiary, and shall include securities of any
class, however designated, which are convertible into such Common
Stock. (Indentures, Section 101)

Consolidation, Merger and Sale of Assets

The Corporation may not consolidate with or merge into any
other Person or sell its property and assets as, or substantially
as, an entirety to any Person and may not permit any Person to
merge into or consolidate with the Corporation unless (i) either
the Corporation will be the resulting or surviving entity or any
successor or purchaser is a corporation, partnership or trust
organized under the laws of the United States of America, any State
or the District of Columbia, and any such successor or purchaser
expressly assumes the Corporation's obligations on the Debt
Securities under a supplemental Indenture, (ii) immediately after
giving effect to the transaction no Event of Default shall have
occurred and be continuing, and (iii) certain other conditions are
met. (Indentures, Section 801)

Conversion Rights

The terms on which Debt Securities of any series may be
convertible or exchangeable into Common Stock or other securities
of the Corporation or exchangeable into securities of another
corporation will be set forth in the Prospectus Supplement relating
thereto. Such terms shall include provisions as to whether
conversion or exchange is mandatory, at the option of the holder or
at the option of the Corporation, and may include provisions
pursuant to which the number of shares of Common Stock or other
securities of the Corporation or the securities of another
corporation, as the case may be, to be received by the holders of
Debt Securities would be calculated according to the market price
of Common Stock or other securities of the Corporation as of a time
stated in the Prospectus Supplement. (Indentures, Article Twelve)

Subordination of Subordinated Debt Securities

Unless otherwise indicated in the Prospectus Supplement, the
following provisions will apply to the Subordinated Debt
Securities.

The Subordinated Debt Securities will, to the extent set forth
in the Subordinated Indenture, be subordinate in right of payment
to the prior payment in full of all Senior Debt, including the
Senior Debt Securities. Upon any payment or distribution of assets
to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors,
marshalling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of the Corporation, the holders
of Senior Debt will first be entitled to receive payment in full of
principal of (and premium, if any) and interest, if any, on such
Senior Debt before the holders of the Subordinated Debt Securities
will be entitled to receive or retain any payment in respect of the
principal of (and premium, if any) or interest, if any, on the
Subordinated Debt Securities. (Subordinated Indenture, Section
1502)

By reason of such subordination, in the event of liquidation
or insolvency, creditors of the Corporation who are not holders of
Senior Debt or Subordinated Debt Securities may recover less,
ratably, than holders of Senior Debt and may recover more, ratably,
than the holders of the Subordinated Debt Securities.

In the event of the acceleration of the maturity of any
Subordinated Debt Securities, the holders of all Senior Debt
outstanding at the time of such acceleration will first be entitled
to receive payment in full of all amounts due thereon (including
any amounts due upon acceleration) before the Holders of the
Subordinated Debt Securities will be entitled to receive any
payment upon the principal of (or premium, if any) or interest, if
any, on the Subordinated Debt Securities. (Subordinated Indenture,
Section 1503)

No payments on account of principal (or premium, if any) or
interest, if any, in respect of the Subordinated Debt Securities
may be made if there shall have occurred and be continuing a
default in any payment with respect to Senior Debt, or an event of
default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default. (Subordinated
Indenture, Section 1504) For purposes of the subordination
provisions, the payment, issuance and delivery of cash, property
or securities (other than stock and certain
subordinated securities of the Corporation) upon conversion of a
Subordinated Debt Security will be deemed to constitute payment on
account of the principal of such Subordinated Debt Security.

"Debt" means (without duplication and without regard to any
portion of principal amount that has not accrued and to any
interest component thereof (whether accrued or imputed) that is not
due and payable) with respect to any Person, whether recourse is to
all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of
property, assets or businesses; (iii) every reimbursement
obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account
of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in
the ordinary course of business); (v) every capital lease
obligation of such Person; (vi) every Hedging Obligation, (vii)
every obligation of others secured by a lien on any asset of such Person,
whether or not such obligation is assumed by such Person, (viii) every
obligation of the type referred to in clauses (i) through (vii) of
another Person and all dividends of another Person the payment of
which, in either case, such Person has guaranteed or is responsible
or liable, directly or indirectly, as obligor or otherwise, and
(ix) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications or supplements to any liability of the
kind described in any of the preceding clauses (i) through (viii).

"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating
to the Corporation to the extent that such claim for post-petition
interest is allowed in such proceeding) payable on, and fees, expenses,
reimbursement obligations, indemnity obligations and other amounts due on
or in connection with, any Debt incurred, assumed or guaranteed by the
Corporation, whether on or prior to the date of the Subordinated Indenture or
thereafter incurred, assumed or guaranteed, unless, in the instrument creating
or evidencing the same or pursuant to which the same is outstanding,
it is provided that such obligations are not superior in right of
payment to the Subordinated Debt Securities or to other Debt which is pari passu
with, or subordinated to the Subordinated Debt Securities; provided, however,
that Senior Debt shall not be deemed to include the Subordinated Debt
Securities.

The Subordinated Indenture does not limit or prohibit the
incurrence of additional Senior Debt, which may include
indebtedness that is senior to the Subordinated Debt Securities,
but subordinate to other obligations of the Corporation. The Senior
Debt Securities, when issued, will constitute Senior Debt.

The Prospectus Supplement may further describe the provisions,
if any, applicable to the subordination of the Subordinated Debt
Securities of a particular series.

Global Securities

The Debt Securities of a series may be issued in the form of
one or more Global Securities that will be deposited with a
Depositary or its nominee. In such a case, one or more Global
Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal
amount of Outstanding Debt Securities of the series to be
represented by such Global Security or Securities. Unless and until
it is exchanged in whole or in part for Debt Securities in
definitive registered form, a Global Security may not be registered
for transfer or exchange except as a whole by the Depositary for
such Global Security to a nominee for such Depositary and except in
the circumstances described in the applicable Prospectus
Supplement. (Indentures, Sections 204 and 305)

The specific terms of the depositary arrangement with respect
to any portion of a series of Debt Securities to be represented by
a Global Security and a description of the Depositary will be
contained in the applicable Prospectus Supplement.

The Trustee

The Indentures contain limitations on the right of the
applicable Trustee, as a creditor of the Corporation, to obtain
payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or
otherwise. In addition, the applicable Trustee may be deemed to
have a conflicting interest and may be required to resign as
Trustee if at the time of a default under the Indentures it is a
creditor of the Corporation.

The applicable Trustee or its affiliates may act as depositary
for funds of, make loans to and perform other services for, or may
be a customer of, the Corporation in the ordinary course of
business.

Governing Law

The Indentures are governed by and shall be construed in
accordance with the laws of the State of New York, but without
regard to principles of conflicts of laws.

DESCRIPTION OF CAPITAL STOCK

General

The authorized capital stock of the Corporation consists
of 240,000,000 shares of common stock, $2.50 par value per share
(the "Common Stock") and 12,000,000 shares of preferred stock,
$50.00 par value per share, of which 4,000,000 shares are
classified as $4.10 Series A Convertible Exchangeable Preferred
Stock (the "Series A Preferred Stock"), 1,300,000 shares are
classified as Series B Cumulative Convertible Preferred Stock (the
"Series B Preferred Stock"), 3,800,000 shares are classified as
$5.00 Series C Cumulative Convertible Preferred Stock (the "Series
C Preferred Stock") and 1,200,000 are classified as Junior
Participating Preferred Stock (the "Junior Preferred Stock"). As
of December 31, 1993, there were issued and outstanding 85,009,482
shares of Common Stock, 4,000,000 shares of Series A Preferred
Stock, 1,300,000 shares of Series B Preferred Stock and 3,800,000
shares of Series C Preferred Stock. The shares of Junior
Preferred Stock have been reserved for issuance in connection with
the Corporation's Shareholder Rights Plan and no shares of the
Junior Preferred Stock currently are outstanding.

The following summary of the terms of the Corporation's
capital stock does not purport to be complete and is qualified in
its entirety by reference to the applicable provisions of Maryland
law and the Corporation's Articles of Incorporation, as amended
(the "Charter").

The Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock rank on a parity with each other and
rank senior to the Junior Preferred Stock and the Common Stock as
to dividends and upon liquidation.

The Transfer Agent and Registrar for the Corporation's
Common Stock, Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Junior Preferred Stock is First
Chicago Trust Company, New York, New York ("First Chicago Trust").

Common Stock

Each holder of Common Stock is entitled to one vote for
each share of Common Stock held. Cumulative voting for the
election of directors is not provided for in the Charter or the
by-laws. Subject to the prior rights of the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock
and the Junior Preferred Stock and any other preferred stock
which may be classified and issued, the holders of the
Common Stock of the Corporation are entitled to receive, pro-rata,
such dividends as may be declared by the Board of Directors out of
funds legally available therefor, and are also entitled to share,
pro-rata, in any other distribution to stockholders. There are no
redemption or sinking fund provisions and no direct limitations in
any indenture or agreement on the payment of dividends. Payment
of dividends by the Corporation is not subject to restrictions
under the Maryland Insurance Code. However, payment of dividends
to the Corporation by its insurance subsidiaries is subject to
certain restrictions under Maryland and other state insurance
laws. Such restrictions as well as other contractual restrictions
may limit the amount of dividends that may be paid by the
Corporation. All shares of Common Stock sold hereunder will be
fully paid and non-assessable.

Preferred Stock

The following description of the terms of the Preferred
Stock sets forth certain general terms and provisions of the
Preferred Stock (the "Preferred Stock") to which any Prospectus
Supplement may relate. Certain terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be
described in the Prospectus Supplement relating to such series of
the Preferred Stock. If so indicated in the Prospectus Supplement,
the terms of any such series, including any Depositary Shares (as
defined below) issued in respect thereof, may differ from the
terms set forth below. The description of certain provisions of
the Preferred Stock set forth below and in any Prospectus
Supplement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Corporation's
Charter which is an exhibit to this Registration Statement and the
articles supplementary to the Corporation's Charter which has been
or will be filed with the Commission in connection with the
offering of such series of Preferred Stock.

General. Under the Corporation's Charter, the Corporation is
authorized to issue 12,000,000 shares of preferred stock, $50.00
par value per share, in one or more series. The Board of
Directors is authorized to fix and determine the terms,
limitations and relative rights and preferences of any of the
series of the Preferred Stock including, without limitation, any
voting rights thereof, to divide and issue any Preferred Stock in
series, and to fix and determine the variations among series to
the extent permitted by law. The Corporation may amend from time
to time its Charter to increase the number of authorized shares of
Preferred Stock. Any such amendment would require the approval of
the holders of a majority of the outstanding shares of Common Stock,
and the approval of the holders of a majority of the outstanding
shares of the Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock (together with any other shares of
Preferred Stock which may be then outstanding and have similar rights)
voting together as a single class and the holders of two-thirds of the
outstanding shares of the Series B Preferred Stock voting separately as a
class.

The Preferred Stock shall have the dividend, liquidation,
redemption and voting rights set forth below, unless otherwise
provided in the Prospectus Supplement relating to a particular
series of the Preferred Stock. Reference is made to the
Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i)
the title of such Preferred Stock and the number of shares
offered; (ii) the amount of liquidation preference per share;
(iii) the price at which such Preferred Stock will be issued; (iv)
the dividend rate (or method of calculation), the dates on which
dividends shall be payable, whether such dividends shall be
cumulative or noncumulative and, if cumulative, the dates from
which dividends shall commence to cumulate; (v) any redemption or
sinking fund provisions of such Preferred Stock; (vi) the terms of
any right to convert or exchange the Preferred Stock into other
securities or property of the Corporation; (vii) whether the
Corporation has elected to offer Depositary Shares (as defined
below); and (viii) any additional voting, dividend, liquidation,
redemption, sinking fund and other rights, preferences,
privileges, limitations and restrictions of such Preferred Stock.

The Preferred Stock will, when issued, be fully paid and
non-assessable and have no preemptive rights. Unless otherwise
specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock
will rank on a parity as to dividends and liquidation rights in
all respects with each other series of the Preferred Stock.

Dividend Rights. Holders of the Preferred Stock of each series
will be entitled to receive, when, as and if declared by the Board
of Directors of the Corporation, out of assets of the Corporation
legally available therefor, cash dividends at such rates and on
such dates as are set forth in the Prospectus Supplement relating
to such series of the Preferred Stock. Such rate may be fixed or
variable or both. Each such dividend will be payable to the
holders of record as they appear on the stock record books of the
Corporation (or, if applicable, the records of the Depositary
referred to below under "Depositary Shares") on such record dates
as will be fixed by the Board of Directors of
the Corporation or a duly authorized committee thereof. Dividends
on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the Prospectus Supplement relating
thereto.

Each series of Preferred Stock will be entitled to
dividends as described in the Prospectus Supplement relating to
such series, which may be based upon one or more methods of
determination. Different series of the Preferred Stock may be
entitled to dividends at different rates or based upon different
methods of determination.

Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
holders of each series of Preferred Stock will be entitled to
receive out of assets of the Corporation available for
distribution to shareholders, before any distribution of assets is
made to holders of Common Stock or any other class of stock
ranking junior to such series of the Preferred Stock upon
liquidation, liquidating distributions in the amount set forth in
the Prospectus Supplement relating to such series of the Preferred
Stock plus an amount equal to accrued and unpaid dividends for the
then-current dividend period and, if such series of the Preferred
Stock is cumulative, for all dividend periods prior thereto, all
as set forth in the Prospectus Supplement with respect to such
shares.

Redemption. A series of the Preferred Stock may be redeemable, in
whole or in part, at the option of the Corporation, and may be
subject to mandatory redemption pursuant to a sinking fund, in each
case upon terms, at the times and at the redemption prices set
forth in the Prospectus Supplement relating to such series. After
the date fixed for redemption, the shares of Preferred Stock so
called for redemption will no longer be deemed to be outstanding
and rights of the holders of such shares will cease, except the
right to receive the moneys payable upon such redemption and any
money or other property to which the holders of such shares were
entitled upon such redemption, upon surrender to the Corporation of
the certificates evidencing such shares.

Conversion and Exchange. The terms, if any, on which shares of any
series of Preferred Stock are convertible into Common Stock or
exchangeable for Debt Securities will be set forth in the
Prospectus Supplement relating thereto. Such terms may include
provisions for conversion, either mandatory, at the option of the
holder, or at the option of the Corporation, in which case the
number of shares of Common Stock or the amount of Debt Securities
to be received by the holders of Preferred Stock would
be calculated as of a time and in the manner stated in the
Prospectus Supplement.

Transfer Agent and Registrar. The transfer agent, registrar and
dividend disbursement agent for a particular series of Preferred
Stock will be named in the Prospectus Supplement relating to such
series of Preferred Stock. The registrar for shares of such series
of Preferred Stock will send notices to shareholders of any
meetings at which holders of such series of the Preferred Stock
have the right to elect directors of the Corporation or to vote on
any other matter.

Voting Rights. Except as indicated in the Prospectus Supplement
relating to a particular series of Preferred Stock, or except as
expressly required by applicable law, the holders of the Preferred
Stock will not be entitled to any voting rights.

Depositary Shares. The Corporation may, at its option, elect to
offer receipts for fractional interests ("Depositary Shares") in
Preferred Stock. In such event, receipts ("Depositary Receipts")
for Depositary Shares, each of which will represent a fraction (to
be set forth in the Prospectus Supplement relating to a particular
series of Preferred Stock) of a share of a particular series of
Preferred Stock, will be issued as described below.

The shares of any series of Preferred Stock represented by
Depositary Shares will be deposited under a Deposit Agreement (the
"Deposit Agreement") between the Corporation and the depositary
named in the Prospectus Supplement relating to such shares (the
"Preferred Stock Depositary"). Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock
represented by such Depositary Share, to all the rights and
preferences of the Preferred Stock represented thereby (including
dividend, voting, redemption, subscription and liquidation rights).
The following summary of certain provisions of the Deposit
Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of
the Deposit Agreement, including the definitions therein of certain
terms. Whenever particular sections of the Deposit Agreement are
referred to, it is intended that such sections shall be
incorporated herein by reference. Copies of the forms of Deposit
Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and the
following summary is qualified in its entirety by reference to such
exhibits.

The Preferred Stock Depositary will distribute all cash
dividends or other cash distributions received in respect of the
Preferred Stock to the record holders of Depositary Shares relating
to such Preferred Stock in proportion to the numbers of such
Depositary Shares owned by such holders. (Deposit Agreement,
Section 4.01)

In the event of a distribution other than in cash, the
Preferred Stock Depositary will distribute property received by it
to the record holders of Depositary Shares in an equitable manner,
unless the Preferred Stock Depositary determines that it is not
feasible to make such distribution, in which case the Preferred
Stock Depositary may sell such property and distribute the net
proceeds from such sale to such holders. (Deposit Agreement,
Section 4.02)

Upon surrender of the Depositary Receipts at the corporate
trust office of the Preferred Stock Depositary and upon payment of
the taxes, charges and fees provided for in the Deposit Agreement
and subject to the terms thereof, the holder of the Depositary
Shares evidenced thereby is entitled to delivery at such office, to
or upon his or her order, of the number of whole shares of the
related series of Preferred Stock and any money or other property,
if any, represented by such Depositary Shares.

If a series of Preferred Stock represented by Depositary
Shares is subject to redemption, the Depositary Shares will be
redeemed from the proceeds received by the Preferred Stock
Depositary resulting from the redemption, in whole or in part, of
such series of Preferred Stock held by the Preferred Stock
Depositary. The redemption price per Depositary Share will be equal
to the applicable fraction of the redemption price per share
payable with respect to such series of the Preferred Stock.
Whenever the Corporation redeems shares of Preferred Stock held by
the Preferred Stock Depositary, the Preferred Stock Depositary will
redeem as of the same redemption date the number of Depositary
Shares representing shares of Preferred Stock so redeemed. If fewer
than all the Depositary Shares are to be redeemed, the Depositary
Shares to be redeemed will be selected by lot, pro rata or by any
other equitable method as may be determined by the Preferred Stock
Depositary. (Deposit Agreement, Section 2.08)

Upon receipt of notice of any meeting at which the holders of
the Preferred Stock are entitled to vote, the Preferred Stock
Depositary will mail the information contained in such notice of
meeting to the record holders of the Depositary Shares relating to
such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date
for the Preferred Stock) will be entitled to instruct the Preferred
Stock Depositary as to the exercise of the
voting rights pertaining to the amount of the Preferred Stock
represented by such holder's Depositary Shares. The Preferred Stock
Depositary will endeavor, insofar as practicable, to vote the
amount of the Preferred Stock represented by such Depositary Shares
in accordance with such instructions, and the Corporation will
agree to take all reasonable action which may be deemed necessary
by the Preferred Stock Depositary in order to enable the Preferred
Stock Depositary to do so. The Preferred Stock Depositary will
abstain from voting shares of the Preferred Stock to the extent it
does not receive specific instructions from the holder of
Depositary Shares representing such Preferred Stock. (Deposit
Agreement, Section 4.05)

The form of Depositary Receipt evidencing the Depositary
Shares and any provision of the Deposit Agreement may at any time
be amended by agreement between the Corporation and the Preferred
Stock Depositary. However, any amendment which materially and
adversely alters the rights of the holders of Depositary Shares
will not be effective unless such amendment has been approved by
the holders of at least a majority of the Depositary Shares then
outstanding. (Deposit Agreement, Section 6.01) The Deposit
Agreement will only terminate if (i) all outstanding Depositary
Shares have been redeemed or (ii) there has been a final
distribution in respect of the Preferred Stock in connection with
any liquidation, dissolution or winding-up of the Corporation and
such distribution has been distributed to the holders of Depositary
Receipts. (Deposit Agreement, Section 6.02)

The Corporation will pay all transfer and other taxes and
governmental charges arising solely from the existence of the
depositary arrangements. The Corporation will pay charges of the
Preferred Stock Depositary in connection with the initial deposit
of the Preferred Stock and issuance of Depositary Receipts, all
withdrawals of shares of Preferred Stock by owners of Depositary
Shares and any redemption of the Preferred Stock. Holders of
Depositary Receipts will pay other transfer and other taxes and
governmental charges and such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
(Deposit Agreement, Section 5.07)

The Preferred Stock Depositary may resign at any time by
delivering to the Corporation notice of its election to do so, and
the Corporation may at any time remove the Preferred Stock
Depositary, any such resignation or removal to take effect upon the
appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock
Depositary must be appointed within 60 days after delivery
of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
(Deposit Agreement, Section 5.04)

The Preferred Stock Depositary will forward all reports and
communications from the Corporation which are delivered to the
Preferred Stock Depositary and which the Corporation is required or
otherwise determines to furnish to the holders of the Preferred
Stock. (Deposit Agreement, Section 4.07)

Neither the Preferred Stock Depositary nor the Corporation
will be liable under the Deposit Agreement to holders of Depositary
Receipts other than for its negligence, willful misconduct or bad
faith. Neither the Corporation nor the Preferred Stock Depositary
will be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Corporation and the
Preferred Stock Depositary may rely upon written advice of counsel
or accountants, or upon information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Receipts or
other persons believed to be competent and on documents believed to
be genuine. (Deposit Agreement, Section 5.03)

Outstanding Preferred Stock

The Corporation currently has outstanding three classes of
Preferred Stock.

Series A Preferred Stock. Subject to the limitations discussed
herein, the holders of the Series A Preferred Stock are entitled to
receive, when and as declared by the Board of Directors out of
funds legally available therefor, cumulative dividends at the
annual rate of $4.10 per share. Dividends are payable quarterly,
in arrears, on January 31, April 30, July 31 and October 31 in each
year. Unless full cumulative dividends on all outstanding Series
A Preferred Stock and any other class of preferred stock ranking on
a parity with the Series A Preferred Stock as to dividends and upon
liquidation ("Parity Stock") have been paid, the Corporation will
not declare or pay any dividend on, or set aside or apply any
amount to the redemption or purchase of, any shares of the Common
Stock or any other class of stock ranking junior to the Series A
Preferred Stock (except for dividends payable only in, or rights to
subscribe for or purchase, shares of junior stock).

Except as indicated below, or except as expressly required by
applicable law, the holders of shares of Series A Preferred Stock
have no voting rights.

During any period in which dividends on the Series A Preferred
Stock or any outstanding Parity Stock are cumulatively in arrears
in the amount of six or more full quarterly dividends, the number
of directors of the Corporation will be increased by two and the
holders of shares of Series A Preferred Stock, voting together as
a class with the holders of any other class or series of Parity
Stock having a similar voting right, will have the right to elect
two additional directors to the Corporation's Board of Directors to
fill such newly created directorships until all such dividends have
been paid in full.

The approval of two-thirds of the outstanding shares of
Series A Preferred Stock and Parity Stock, voting together as a
single class, shall be required in order to amend the Charter of
the Corporation to affect adversely the rights of the holders of
the Series A Preferred Stock or to authorize or create any class of
stock having rights senior or superior with respect to dividends
and upon liquidation to the Series A Preferred Stock. In addition,
the approval of a majority of the outstanding shares of Series A
Preferred Stock and Parity Stock, voting together as a single
class, shall be required in order to increase the number of shares
of preferred stock authorized in the Charter or to create any other
class of stock (but not any other series of preferred stock)
ranking on a parity with the Series A Preferred Stock as to
dividends and upon liquidation.

At the option of the holders of the Series A Preferred Stock,
such shares may be converted into shares of Common Stock of the
Corporation at the then applicable conversion rate. The current
conversion rate is 1.179 shares of Common Stock for each share of
Series A Preferred Stock (equivalent to a conversion price of
$42.40 per share). The conversion rate is subject to adjustment in
certain events, including stock dividends, subdivisions, splits and
combinations, and certain other distributions of rights or warrants
to purchase Common Stock at less than the then current market price
(as defined), and distributions to all holders of Common Stock of
evidences of indebtedness or assets of the Corporation other than
cash out of earned surplus. The conversion rate has been adjusted
under this provision as a result of dividend payments by the
Corporation on its Common Stock notwithstanding the deficit in its
earned surplus account.

The Series A Preferred Stock is exchangeable in whole but not
in part at the option of the Corporation on any dividend payment
date for the Corporation's 8.20% Convertible Subordinated
Debentures due October 31, 2011 (the "Debentures") at a rate of
$50.00 principal amount of the Debentures plus cash in the amount
of accrued but unpaid dividends, if any, for each share of Series
A Preferred Stock.

The Series A Preferred Stock is redeemable at the option of
the Corporation for cash, as a whole or in part, at redemption
prices declining to $50.00 per share on October 31, 1996, plus
accrued and unpaid dividends to the redemption date. The
Corporation may not purchase or redeem less than all the Series A
Preferred Stock and any other series of Parity Stock if, as of
such time, the Corporation has failed to pay all accrued and
unpaid dividends thereon.

In case of the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, holders of any
shares of Series A Preferred Stock are entitled to receive $50.00
per share, plus an amount equal to any dividends accrued and
unpaid to the payment date, before any distribution is made to the
holders of any junior stock.

Series B Preferred Stock. The 1,300,000 shares of the Series B
Preferred Stock were issued in three subseries: 650,000 shares
of the Series B Cumulative Convertible Preferred Stock 1995 (the
"Series B Preferred Stock 1995"); 325,000 shares of the Series B
Cumulative Convertible Preferred Stock 1996 (the "Series B
Preferred Stock 1996"); and 325,000 shares of the Series B
Cumulative Convertible Preferred Stock 1997 (the "Series B
Preferred Stock 1997"). Subject to the limitations discussed
herein, the holders of the Series B Preferred Stock are entitled
to receive, when and as declared by the Board of Directors out of
funds legally available therefor, cumulative dividends at the
annual rate of $10.25 per share. Dividends are payable quarterly,
in arrears, on January 31, April 30, July 31, and October 31 of
each year. Unless full cumulative dividends on all outstanding
Series B Preferred Stock and any other Parity Stock have been
paid, the Corporation will not declare or pay any dividend on, or
set aside or apply any amount to the redemption or purchase of,
any shares of the Common Stock or any other class of stock ranking
junior to the Series B Preferred Stock.

Holders of Series B Preferred Stock have limited voting
rights similar to those of the Series A Preferred Stock except
that under the terms of the Series B Preferred Stock the right to
elect two additional directors accrues when dividends on the
Series B Preferred Stock are cumulatively in arrears in the amount
of two or more full quarterly dividends. A special class vote of
holders of two-thirds of the outstanding Series B Preferred Stock
is necessary in order to authorize the issuance of a new, or to
increase the authorized number of any existing, class of capital
stock senior to the Series B Preferred Stock as to dividends and
upon liquidation or to increase the number of
shares of preferred stock or create any additional Parity Stock
authorized in the Charter.

At the option of the holders of the Series B Preferred Stock,
such shares may be converted into shares of Common Stock at the
then applicable conversion rate. The current conversion rate for
the Series B Preferred Stock is 8.316 shares of Common Stock per
converted share of Series B Preferred Stock (equivalent to a
conversion price of $12.025 per share). The conversion rate is
subject to adjustment in certain events, including stock
dividends, subdivisions, splits and combinations, and certain
distributions of rights or warrants to purchase Common Stock at
less than the then current market price (as defined), and
distributions to all holders of Common Stock of evidences of
indebtedness or assets of the Corporation (other than regular
quarterly Common Stock dividends consistent with the Corporation's
current dividend policy and future dividends payable out of
consolidated earned surplus or current earnings).

The Series B Preferred Stock is redeemable at the option of
the Corporation for cash, as a whole or in part, at any time or
from time to time, as follows: (1) the Series B Preferred Stock
1995, at any time on and after June 1, 1994; (2) the Series B
Preferred Stock 1996, at any time on or after June 1, 1995; and
(3) the Series B Preferred Stock 1997, at any time on or after
June 1, 1996; at a per share redemption price equal to the
liquidation value of $100.00 and accrued and unpaid dividends
plus, beginning after June 1, 1997, a premium which declines to
zero on June 1, 2001. Notwithstanding the foregoing, no
redemption may be effected prior to June 1, 1997, unless the
closing price of the Common Stock exceeds 150% of the then current
Series B Conversion Price on the date notice of redemption is
given and for each of the twenty prior consecutive trading days.

In the event that there shall occur a "change in control" (as
defined below) of the Corporation, then, at the election of each
holder of Series B Preferred Stock, the Corporation will issue and
sell additional nonredeemable equity securities and apply the net
proceeds thereof to redeem the Series B Preferred Stock at the
appropriate redemption price, plus accrued dividends, but only if
and to the extent any such proceeds are raised. The term "change
in control" means any acquisition by any person or group of 50% or
more of the combined voting power of the outstanding voting
securities of the Corporation, a sale of substantially all of the
assets of the Corporation, or a merger of the Corporation with or
into another person which results in the exchange, conversion,
reclassification or cancellation of the Common Stock of the
Corporation.

In case of the voluntary liquidation, dissolution or
winding-up of the Corporation, holders of any shares of Series B
Preferred Stock are entitled to receive $100.00 per share, plus an
amount equal to any dividends accrued and unpaid to the payment
date, before any distribution is made to the holders of any junior
stock.

Series C Preferred Stock. Subject to the limitations discussed
herein, the holders of the Series C Preferred Stock are entitled
to receive, when and as declared by the Board of Directors out of
funds legally available therefor, cumulative dividends at the
annual rate of $5.00 per share. Dividends are payable quarterly,
in arrears, on January 31, April 30, July 31 and October 31 in
each year. Unless full cumulative dividends on all outstanding
Series C Preferred Stock and any other Parity Stock have been
paid, the Corporation will not declare or pay any dividend on or
set aside or apply any amount to the redemption or purchase of,
any shares of the Common Stock or on any other class of stock
ranking junior to the Series C Preferred Stock (except for
dividends payable only in, or rights to subscribe for or purchase,
shares of junior stock).

Holders of Series C Preferred Stock have limited voting
rights similar to those of the Series A Preferred Stock except
that under the terms of the Series C Preferred Stock the right to
elect two additional directors accrues when dividends on the
Series C Preferred Stock are cumulatively in arrears in the amount
of two or more full quarterly dividends.

At the option of the holders of the Series C Preferred Stock,
such shares may be converted into shares of Common Stock of the
Corporation at the then applicable conversion rate. The present
conversion rate is 4.158 shares of Common Stock for each share of
Series C Preferred Stock (equivalent to a conversion price of
$12.025 per share). The conversion rate is subject to adjustment
in certain events, including stock dividends, subdivisions, splits
and combinations, and certain other distributions of rights or
warrants to purchase Common Stock at less than the then current
market price (as defined), and distributions to all holders of
Common Stock of evidences of indebtedness or assets of the
Corporation (other than regular quarterly Common Stock dividends
consistent with the Corporation's current dividend policy and
future dividends payable out of consolidated earned surplus or
current earnings). The conversion rate is also subject to further
adjustment in the event of certain transactions pursuant to a plan
under which all or substantially all the Common Stock is to be
exchanged or converted into the right to receive cash, securities
or other assets.

The Series C Preferred Stock is redeemable, commencing on
June 13, 1994, at the option of the Corporation for cash, as a
whole or in part, at redemption prices declining to $50 per share
on June 13, 2001, plus accrued and unpaid dividends to the
redemption date. The Corporation may not purchase or redeem less
than all the Series C Preferred Stock and any other series of
Parity Stock if, as of such time, the Corporation has failed to
pay all accrued and unpaid dividends thereon.

In case of the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, holders of any
shares of Series C Preferred Stock are entitled to receive $50 per
share, plus an amount equal to any dividends accrued and unpaid to
the payment date, before any distribution is made to the holders
of any junior stock.

Shareholder Rights Plan

The Corporation has a shareholder rights plan (the "Plan") to
deter coercive or unfair takeover tactics and to prevent a
potential purchaser from gaining control of the Corporation
without offering a fair price to all of the Corporation's
stockholders. Under the Plan, each outstanding share of the
Corporation's Common Stock has one preferred share purchase right
(a "Right") expiring in 1997. Each Right entitles the registered
holder to purchase 1/100 of a share of Junior Preferred Stock for
$140. The Rights cannot be exercised unless certain events occur
that might lead to a concentration in ownership of Common Stock.
At that time, the Rights may be exercised for Common Stock having
a value of twice the exercise price. Under certain conditions,
the Rights also become exercisable into shares of Common Stock of
a purchaser having a value of twice the exercise price. The
Corporation will generally be entitled to redeem the Rights, at
$.05 per Right, any time before the tenth day after a 20% position
in the Corporation is acquired. The Form 8-A setting forth a
description of the Plan is an exhibit to the Registration
Statement of which this Prospectus is a part and is incorporated
by reference herein.

Special Statutory Requirements for Certain Transactions

Business Combination Statute. The Maryland General
Corporation Law establishes special requirements with respect to
"business combinations" between Maryland corporations and
"interested stockholders" unless exemptions are applicable. Among
other things, the law prohibits for a period of five years a
merger and other specified or similar transactions between a
company and an interested stockholder and requires a
super-majority vote for such transactions after the end of such
five-year period.

"Interested stockholders" are all persons owning
beneficially, directly or indirectly, more than 10% of the
outstanding voting stock of a Maryland corporation. "Business
combinations" include any merger or similar transaction subject to
a statutory vote and additional transactions involving transfers
of assets or securities in specified amounts to interested
stockholders or their affiliates. Unless an exemption is
available, transactions of these types may not be consummated
between a Maryland corporation and an interested stockholder or
its affiliates for a period of five years after the date on which
the stockholder first became an interested stockholder and
thereafter may not be consummated unless recommended by the board
of directors of the Maryland corporation and approved by the
affirmative vote of at least 80% of the votes entitled to be cast
by all holders of outstanding shares of voting stock and 66-2/3%
of the votes entitled to be cast by all holders of outstanding
shares of voting stock other than the interested stockholder. A
business combination with an interested stockholder which is
approved by the board of directors of a Maryland corporation at
any time before an interested stockholder first becomes an
interested stockholder is not subject to the special voting
requirements. An amendment to a Maryland corporation's charter
electing not to be subject to the foregoing requirements must be
approved by the affirmative vote of at least 80% of the votes
entitled to be cast by all holders of outstanding shares of voting
stock and 66-2/3% of the votes entitled to be cast by holders of
outstanding shares of voting stock who are not interested
stockholders. Any such amendment is not effective until 18 months
after the vote of stockholders and does not apply to any business
combination of a corporation with a stockholder who was an
interested stockholder on the date of the stockholder vote. The
Corporation has not adopted any such amendment to its Charter.

Control Share Acquisition Statute. The Maryland law imposes
limitations on the voting rights in a "control share acquisition."
The Maryland statute defines a "control share acquisition" at the
20%, 33-1/3% and 50% acquisition levels, and requires a two-thirds
stockholder vote (excluding shares owned by the acquiring person
and certain members of management) to accord voting rights to
stock acquired in a control share acquisition. The statute also
requires Maryland corporations to hold a special meeting at the
request of an actual or proposed control share acquiror generally
within 50 days after a request is made with the submission of an
"acquiring person statement," but only if the acquiring person
(a) posts a bond for the cost of the meeting and (b) submits a
definitive financing agreement to the extent that financing is not
provided by the acquiring person. In addition, unless the charter
or by-laws provide otherwise, the statute gives the Maryland
corporation, within certain time limitations, various redemption
rights if there is a stockholder vote on the issue and the grant
of voting rights is not approved, or if an "acquiring person
statement" is not delivered to the target within 10 days following
a control share acquisition. Moreover, unless the charter or
by-laws provide otherwise, the statute provides that if, before a
control share acquisition occurs, voting rights are accorded to
control shares which results in the acquiring person having
majority voting power, then minority stockholders have appraisal
rights. An acquisition of shares may be exempted from the control
share statute provided that a charter or by-law provision is
adopted for such purpose prior to the control share acquisition.
There are no such provisions in the charter or by-laws of the
Corporation.

Reference is made to the full text of the foregoing statutes
for their entire terms, and the partial summary contained in this
Prospectus is not intended to be complete.

Insurance Acquisitions Disclosure and Control Act. Under the
Maryland Insurance Code, unless certain filings are made with the
State Insurance Commissioner, no person may acquire any voting
security or security convertible into a voting security of an
insurance holding company, such as the Corporation, which controls
one or more Maryland insurance companies if, as a result of such
acquisition, such person would "control" such insurance holding
company. The acquisition may not proceed unless it has been
approved by the Maryland Insurance Commissioner within 60 days
after such filings have been submitted. "Control" is presumed to
exist if a person, directly or indirectly, owns or controls 10% or
more of the voting securities of another person. This presumption
may be rebutted by establishing by a preponderance of evidence
that control does not exist in fact.

Reference is made to the full text of the statute for its
entire terms, and this partial summary is not intended to be
complete.

DESCRIPTION OF WARRANTS

The Corporation may issue Warrants, including Warrants to
purchase Debt Securities ("Debt Warrants") as well as other types
of Warrants to purchase Securities. Warrants may be issued independently
or together with any Securities and may be
attached to or separate from such Securities. The Warrants are to
be issued under warrant agreements (each a "Warrant Agreement") to
be entered into between the Corporation and a bank or trust
company, as warrant agent (the "Warrant Agent"), all as shall be
set forth in the Prospectus Supplement relating to the Warrants
being offered pursuant thereto.

Debt Warrants

The applicable Prospectus Supplement will describe the terms
of Debt Warrants offered thereby, the Warrant Agreement relating
to such Debt Warrants and the debt warrant certificates
representing such Debt Warrants, including the following: (1) the
title of such Debt Warrants; (2) the aggregate number of such Debt
Warrants; (3) the price or prices at which such Debt Warrants will
be issued; (4) the currency or currencies, including composite
currencies or currency units, in which the price of such Debt
Warrants may be payable; (5) the designation, aggregate principal
amount and terms of the Debt Securities purchasable upon exercise
of such Debt Warrants, and the procedures and conditions relating
to the exercise of such Debt Warrants; (6) the designation and
terms of any related Debt Securities with which such Debt Warrants
are issued, and the number of such Debt Warrants issued with each
such Debt Security; (7) the currency or currencies, including
composite currencies or currency units, in which the principal of
(or premium, if any), or interest, if any, on the Debt Securities
purchasable upon exercise of such Debt Warrants will be payable;
(8) the date, if any, on and after which such Debt Warrants and
the related Debt Securities will be separately transferable; (9)
the principal amount of Debt Securities purchasable upon exercise
of each Debt Warrant, and the price at which and the currency,
including composite currency or currency unit, in which such
principal amount of Debt Securities may be purchased upon such
exercise; (10) the date on which the right to exercise such Debt
Warrants shall commence, and the date on which such right shall
expire; (11) the maximum or minimum number of such Debt Warrants
which may be exercised at any time; (12) a discussion of material
federal income tax considerations, if any; and (13) any other
terms of such Debt Warrants and terms, procedures and limitations
relating to the exercise of such Debt Warrants.

Debt warrant certificates will be exchangeable for new debt
warrant certificates of different denominations, and Debt Warrants
may be exercised at the corporate trust office of the Warrant
Agent or any other office indicated in the Prospectus Supplement.
Prior to the exercise of their Debt Warrants, holders of Debt
Warrants will not have any of the rights of holders of the Debt
Securities purchasable upon such exercise and
will not be entitled to payments of principal of (or premium, if
any) or interest, if any, on the Debt Securities purchasable upon
such exercise.

Other Warrants

The Corporation may issue other Warrants. The applicable
Prospectus Supplement will describe the following terms of any
such other Warrants in respect of which this Prospectus is being
delivered: (l) the title of such Warrants; (2) the Securities
(which may include Preferred Stock or Common Stock) for which such
Warrants are exercisable; (3) the price or prices at which such
Warrants will be issued; (4) the currency or currencies, including
composite currencies or currency units, in which the price of such
Warrants may be payable; (5) if applicable, the designation and
terms of the Preferred Stock or Common Stock with which such
Warrants are issued, and the number of such Warrants issued with
each such share of Preferred Stock or Common Stock; (6) if
applicable, the date on and after which such Warrants and the
related Preferred Stock or Common Stock will be separately
transferable; (7) if applicable, a discussion of material federal
income tax considerations; and (8) any other terms of such
Warrants, including terms, procedures and limitations relating to
the exchange and exercise of such Warrants.

Exercise of Warrants

Each Warrant will entitle the holder of Warrants to purchase
for cash such principal amount of Securities at such exercise price
as shall in each case be set forth in, or be determinable as set
forth in, the Prospectus Supplement relating to the Warrants
offered thereby. Warrants may be exercised at any time up to the
close of business on the expiration date set forth in the
Prospectus Supplement relating to the Warrants offered thereby.
After the close of business on the expiration date, unexercised
Warrants will become void.

Warrants may be exercised as set forth in the Prospectus
Supplement relating to the Warrants offered thereby. Upon receipt
of payment and the warrant certificate properly completed and duly
executed at the corporate trust office of the Warrant Agent or any
other office indicated in the Prospectus Supplement, the
Corporation will, as soon as practicable, forward the Securities
purchasable upon such exercise. If less than all of the Warrants
represented by such warrant certificate are exercised, a new
warrant certificate will be issued for the remaining Warrants.

PLAN OF DISTRIBUTION

The Corporation may sell Securities to or through
underwriters, and also may sell Securities directly to other
purchasers or through agents.

The distribution of the Securities may be effected from time
to time in one or more transactions at a fixed price or prices,
which may be changed, or at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at
negotiated prices.

Sales of Common Stock offered hereby may be effected from time
to time in one or more transactions on the New York Stock Exchange
or in negotiated transactions or a combination of such methods of
sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at other negotiated
prices. In connection with distributions of Common Stock or
otherwise, the Corporation may enter into hedging transactions with
broker-dealers in connection with which such broker-dealers may
sell Common Stock registered hereunder in the course of hedging
through short sales the positions they assume with the Corporation.

In connection with the sale of Securities, underwriters or
agents may receive compensation from the Corporation or from
purchasers of Securities for whom they may act as agents in the
form of discounts, concessions or commissions. Underwriters may
sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that
participate in the distribution of Securities may be deemed to be
underwriters, and any discounts or commissions received by them
from the Corporation and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions,
under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Corporation
will be described, in the Prospectus Supplement.

Under agreements which may be entered into by the Corporation,
underwriters and agents who participate in the distribution of
Securities may be entitled to indemnification by the Corporation
against certain liabilities, including liabilities under the
Securities Act.

If so indicated in the Prospectus Supplement, the Corporation
will authorize underwriters or other persons acting as the Corporation's
agents to solicit offers by certain
institutions to purchase Securities from the Corporation pursuant
to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and
others, but in all cases such institutions must be approved by the
Corporation. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the
Securities shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which such purchaser is subject.
The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such
contracts.

Certain of the underwriters or agents and their associates may
be customers of, engage in transactions with and perform services
for the Corporation in the ordinary course of business.

The Securities may or may not be listed on a national
securities exchange or a foreign securities exchange (other than
the Common Stock, which is listed on the New York Stock Exchange,
the Pacific Stock Exchange, the London Stock Exchange and the Swiss
Exchanges in Basle, Geneva and Zurich). Any Common Stock sold
pursuant to a Prospectus Supplement will be listed on the New York
Stock Exchange, subject to official notice of issuance. No
assurances can be given that there will be an active trading market
for the Securities.

VALIDITY OF SECURITIES

The legal validity of the Securities offered hereby will be
passed upon for the Corporation by Piper & Marbury, Baltimore,
Maryland and for any underwriters or agents by Davis Polk &
Wardwell, New York, New York. Davis Polk & Wardwell will rely upon
the opinion of Piper & Marbury as to certain matters governed by
Maryland law. L.P. Scriggins, a Director of the Corporation, is a
partner of Piper & Marbury. As of January 1, 1994 lawyers in the
firm of Piper & Marbury beneficially owned in the aggregate
approximately 20,000 shares of Common Stock or Common Stock
equivalents of the Corporation.

EXPERTS

The consolidated financial statements of the Corporation
incorporated in this Prospectus by reference to Form 10-K for the
year ended December 31, 1992 have been audited by Ernst & Young,
independent auditors, as set forth in their report thereon included
therein and incorporated by reference herein. Such
consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

With respect to the unaudited condensed consolidated interim
financial information for the three-month periods ended March 31,
1993 and 1992, and the three- and six-month periods ended June 30,
1993 and 1992, and the three- and nine-month periods ended
September 30, 1993 and 1992, incorporated by reference in this
Registration Statement, the independent auditors have reported that
they have applied limited procedures in accordance with
professional standards for a review of such information. However,
their separate reports included in USF&G's quarterly reports on
Form 10-Q for the quarters ended March 31, 1993, June 30, 1993, and
September 30, 1993, and incorporated by reference herein, state
that they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance
on their reports on such information should be restricted in light
of the limited nature of the review procedures applied. The
independent auditors are not subject to the liability provisions of
Section 11 of the Securities Act of 1933 for their reports on the
unaudited interim financial information because those reports are
not "reports" or a "part" of the Registration Statement prepared or
certified by the auditors within the meaning of Sections 7 and 11
of the Securities Act.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses in
connection with the offering of the Securities other than
underwriting discounts and commissions:

SEC Registration Fee...................................$ 68,966
Blue Sky Fees and Expenses............................. 30,000
Accounting Fees and Expenses........................... 75,000
Rating Agency Fees..................................... 200,000
Legal Fees and Expenses................................ 250,000
Trustees' Fees and Expenses............................ 32,000
Printing and Engraving Fees and Expenses............... 75,000
Miscellaneous.......................................... 50,034
TOTAL.........................................$781,000

Item 15. Indemnification of Directors and Officers.

1. Statutory Provisions.

Section 2-418 of the Maryland General Corporation Law provides
as follows:

(a) Definitions.--In this section the following words
have the meanings indicated.

(1) "Director" means any person who is or was a
director of a corporation and any person who, while a
director of a corporation, is or was serving at the
request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture,
trust, other enterprise, or employee benefit plan.

(2) "Corporation" includes any domestic or foreign
predecessor entity of a corporation in a merger,
consolidation, or other transaction in which the
predecessor's existence ceased upon consummation of the
transaction.

(3) "Expenses" include attorney's fees.

(4) "Official capacity" means the following:

(i) When used with respect to a director, the
office of director in the corporation; and

(ii) When used with respect to a person other
than a director as contemplated in subsection (j),
the elective or appointive office in the
corporation held by the officer, or the employment
or agency relationship undertaken by the employee
or agent in behalf of the corporation.

(iii) "Official capacity" does not include
service for any other foreign or domestic
corporation or any partnership, joint venture,
trust, other enterprise, or employee benefit plan.

(5) "Party" includes a person who was, is, or is
threatened to be made a named defendant or respondent in
a proceeding.

(6) "Proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative.

(b) Permitted indemnification of director.--(1) A
corporation may indemnify any director made a party to any
proceeding by reason of service in that capacity unless it is
established that:

(i) The act or omission of the director was
material to the matter giving rise to the proceeding; and

1. Was committed in bad faith; or

2. Was the result of active and deliberate
dishonesty; or

(ii) The director actually received an improper
personal benefit in money, property, or services; or

(iii) In the case of any criminal proceeding, the
director had reasonable cause to believe that the act or
omission was unlawful.

(2) (i) Indemnification may be against judgments,
penalties, fines, settlements, and reasonable expenses
actually incurred by the director in connection with the
proceeding.

(ii) However, if the proceeding was one by or in
the right of the corporation, indemnification may not be
made in respect of any proceeding in which the director
shall have been adjudged to be liable to the corporation.

(3) (i) The termination of any proceeding by judgment,
order, or settlement does not create a presumption that
the director did not meet the requisite standard of
conduct set forth in this subsection.

(ii) The termination of any proceeding by
conviction, or a plea of nolo contendere or its
equivalent, or an entry of an order of probation prior to
judgment, creates a rebuttable presumption that the
director did not meet that standard of conduct.

(c) No indemnification of director liable for improper
personal benefit.--A director may not be indemnified under
subsection (b) of this section in respect of any proceeding
charging improper personal benefit to the director, whether or not
involving action in the director's official capacity, in which the
director was adjudged to be liable on the basis that personal
benefit was improperly received.

(d) Required indemnification against expenses incurred
in successful defense.--Unless limited by the charter:

(1) A director who has been successful, on the
merits or otherwise, in the defense of any proceeding referred to
in subsection (b) of this section shall be indemnified against
reasonable expenses incurred by the director in connection with
the proceeding.

(2) A court of appropriate jurisdiction, upon
application of a director and such notice as the court shall
require, may order indemnification in the following circumstances:

(i) If it determines a director is entitled to
reimbursement under paragraph (1) of this subsection, the
court shall order indemnification, in which case the
director shall be entitled to recover the expenses of
securing such reimbursement; or

(ii) If it determines that the director is fairly
and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not the director has
met the standards of conduct set forth
in subsection (b) of this section or has been adjudged
liable under the circumstances described in subsection (c)
of this section, the court may order such indemnification as
the court shall deem proper. However, indemnification with
respect to any proceeding by or in the right of the corporation or
in which liability shall have been adjudged in the circumstances
described in subsection (c) shall be limited to expenses.

(3) A court of appropriate jurisdiction may be the
same court in which the proceeding involving the director's
liability took place.

(e) Determination that indemnification is proper.--(1)
Indemnification under subsection (b) of this section may not be
made by the corporation unless authorized for a specific proceeding
after a determination has been made that indemnification of the
director is permissible in the circumstances because the director
has met the standard of conduct set forth in subsection (b) of this
section.

(2) Such determination shall be made:

(i) By the board of directors by a majority vote
of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such a quorum cannot be
obtained, then by a majority vote of a committee of the
board consisting solely of two or more directors not, at
the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the
full board in which the designated directors who are
parties may participate;

(ii) By special legal counsel selected by the
board of directors or a committee of the board by vote as
set forth in subparagraph (i) of this paragraph, or, if
the requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a
majority vote of the full board in which directors who
are parties may participate; or

(iii) By the stockholders.

(3) Authorization of indemnification and
determination as to reasonableness of expenses shall be made in
the same manner as the determination that indemnification is
permissible. However, if the determination that indemnification
is permissible is made by special legal counsel, authorization of
indemnification and determination as to
reasonableness of expenses shall be made in the manner specified
in subparagraph (ii) of paragraph (2) of this subsection for
selection of such counsel.

(4) Shares held by directors who are parties to the
proceeding may not be voted on the subject matter under this
subsection.

(f) Payment of expenses in advance of final disposition
of action.--(1) Reasonable expenses incurred by a director who is
a party to a proceeding may be paid or reimbursed by the
corporation in advance of the final disposition of the proceeding
upon receipt by the corporation of:

(i) A written affirmation by the director of the
director's good faith belief that the standard of conduct
necessary for indemnification by the corporation as
authorized in this section has been met; and

(ii) A written undertaking by or on behalf of the
director to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.

(2) The undertaking required by subparagraph (ii)
of paragraph (1) of this subsection shall be an unlimited general
obligation of the director but need not be secured and may be
accepted without reference to financial ability to make the
repayment.

(3) Payments under this subsection shall be made as
provided by the charter, bylaws, or contract or as specified in
subsection (e) of this section.

(g) Validity of indemnification provision.--The
indemnification and advancement of expenses provided or authorized
by this section may not be deemed exclusive of any other rights,
by indemnification or otherwise, to which a director may be
entitled under the charter, the bylaws, a resolution of
stockholders or directors, an agreement or otherwise, both as to
action in an official capacity and as to action in another
capacity while holding such office.

(h) Reimbursement of director's expenses incurred while
appearing as witness.--This section does not limit the
corporation's power to pay or reimburse expenses incurred by a
director in connection with an appearance as a witness in a proceeding
at a time when the director has not been made a named
defendant or respondent in the proceeding.

(i) Director's service to employee benefit plan.--For
purposes of this section:

(1) The corporation shall be deemed to have
requested a director to serve an employee benefit plan
where the performance of the director's duties to the
corporation also imposes duties on, or otherwise involves
services by, the director to the plan or participants or
beneficiaries of the plan;

(2) Excise taxes assessed on a director with
respect to an employee benefit plan pursuant to
applicable law shall be deemed fines; and

(3) Action taken or omitted by the director with
respect to an employee benefit plan in the performance of
the director's duties for a purpose reasonably believed
by the director to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be for
a purpose which is not opposed to the best interests of
the corporation.

(j) Officer, employee or agent.--Unless limited by the
charter:

(1) An officer of the corporation shall be
indemnified as and to the extent provided in subsection
(d) of this section for a director and shall be entitled,
to the same extent as a director, to seek indemnification
pursuant to the provisions of subsection (d);

(2) A corporation may indemnify and advance
expenses to an officer, employee, or agent of the
corporation to the same extent that it may indemnify
directors under this section; and

(3) A corporation, in addition, may indemnify and
advance expenses to an officer, employee, or agent who is
not a director to such further extent, consistent with
law, as may be provided by its charter, bylaws, general
or specific action of its board of directors, or
contract.

(k) Insurance or similar protection.--(1) A corporation
may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent
of the corporation, or who, while a director, officer, employee,
or agent of the corporation, is or was serving at the request of
the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise, or employee
benefit plan against any liability asserted against and incurred
by such person in any such capacity or arising out of such
person's position, whether or not the corporation would have the
power to indemnify against liability under the provisions of this
section.

(2) A corporation may provide similar protection,
including a trust fund, letter of credit, or surety bond, not
inconsistent with this section.

(3) The insurance or similar protection may be
provided by a subsidiary or an affiliate of the corporation.

(l) Report of indemnification to stockholders.--Any
indemnification of, or advance of expenses to, a director in
accordance with this section, if arising out of a proceeding by or
in the right of the corporation, shall be reported in writing to
the stockholders with the notice of the next stockholders' meeting
or prior to the meeting.

2. Charter Provisions.

The Registrant has provided for indemnification of its
directors and officers by the provisions of Article NINTH, Section
5 of its charter, as follows:

(5) The Corporation shall indemnify (a) its directors to
the full extent provided by the General Laws of the State of
Maryland now or hereafter in force, including the advance of
expenses under the procedures provided by such laws; (b) its
officers to the same extent it shall indemnify its directors; and
(c) its officers who are not directors to such further extent as
shall be authorized by the Board of Directors and be consistent
with such law. The foregoing shall not limit the authority of the
Corporation to indemnify other employees and agents consistent
with law.

3. Contract Provisions.

As permitted under Subsection (K) of Section 2-418 of the Maryland
Code, set forth above, the Registrant has purchased and maintains insurance on
behalf of its directors and officers against any liability asserted against
such directors and officers in their capacities as such whether or not the
Registrant would have the power to indemnify such persons under the provisions
of Maryland law governing indemnification.

Item 16. Exhibits.

Exhibit Number Exhibit

1.1 Proposed form of Underwriting Agreement
relating to Debt Securities and Warrants
to Purchase Debt Securities.
1.2 Proposed form of Underwriting Agreement
relating to Common Stock, Preferred Stock
and Warrants to Purchase Common Stock and
Preferred Stock.
4.1 Charter of USF&G Corporation (incorporated
by reference to Exhibit 3(a), Registration
Statement on Form S-14, No. 2-73339; Exhibit
3(a), Amendment No. 2 on Form 8 to Form 8-B,
filed June 22, 1984; Exhibit 2, Amendment
No. 1 on Form 8 to Form 8-A, filed July 31,
1986; Exhibit A to Exhibit 1 to Form 8-A,
filed September 21, 1987; Exhibit 4.3,
Amendment No. 3 to Registration Statement on
Form S-3, No. 33-40492, filed June 13, 1991;
Exhibit 19, Form 10-Q for the quarter ended
March 31, 1992, filed May 15, 1992; and
Exhibit 4.3 to Registration Statement on
Form S-3, No. 33-50825, filed October 29,
1993).
4.2 Form of Indenture for Senior Debt Securities
between the Corporation and
Signet Trust Company as Trustee.
4.3 Form of Indenture for Subordinated Debt
Securities between the Corporation and
Chemical Bank as Trustee.
4.4 Form of Stock Warrant Agreement.
4.5 Form of Debt Warrant Agreement.
4.6 Form of Deposit Agreement.
4.7 Description of Shareholder Rights Plan
(incorporated by reference to Form 8-A,
filed September 21, 1987)
5 Opinion and Consent of Piper & Marbury
as to Legality.
12 Statement regarding computation of
the Corporation's ratio of consolidated
earnings to fixed charges and ratio of
consolidated earnings to combined fixed
charges and preferred stock dividends
(incorporated by reference to Exhibit 12
to the Corporation's 1992 Annual Report on
Form 10-K, 1991 Annual Report on Form 10-K
and 1990 Annual Report on Form 10-K, and
Quarterly Report on Form 10-Q for the nine
months ended September 30, 1993).
15 Acknowledgement of Ernst & Young re:
unaudited interim financial information.
24.1 Consent of Ernst & Young.
24.2 Consent of Piper & Marbury (included
in Exhibit 5).
25 Power of Attorney of the Board of Directors.@
26.1 Form T-1: Statement of Eligibility and
Qualification under the Trust Indenture
Act of 1939 of Chemical Bank,
Trustee under the Indenture for Subordinated
Debt Securities.
26.2 Form T-1: Statement of Eligibility and
Qualification under the Trust Indenture
Act of 1939 of Signet Trust Company,
Trustee under Indenture for Senior Debt
Securities.
28 Information from reports furnished to state
insurance regulatory authorities
(incorporated by reference to Exhibit 29
to the Corporation's 1992 Annual Report
on Form 10-K).

@ Previously filed.

Item 17. Undertakings.

(a) Rule 415 Offering. The undersigned registrant
hereby undertakes:

(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement;

(i) To include any Prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the Prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and

(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement;

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the Registration Statement is
on Form S-3 or Form S-8, and the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.

(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.

(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.

(b) Incorporation of Subsequent Exchange Act Documents.
The undersigned Registrant undertakes hereby that, for purposes of
determining liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(c) Indemnification. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Baltimore, State of Maryland, on January 21, 1994.

USF&G CORPORATION

By:NORMAN P. BLAKE, JR.
Norman P. Blake, Jr.
Chairman of the Board,
President and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of
1933, this Amendment No. 1 to the Registration Statement has been signed
by the following persons in the capacities and on the dates indicated.

January 21, 1994 NORMAN P. BLAKE, JR.
Norman P. Blake, Jr.
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)

January 21, 1994 DAN L. HALE
Dan L. Hale, Executive Vice
President, Chief Financial
Officer (Principal Financial
Officer and Principal Accounting
Officer)

Board of Directors:

H. Furlong Baldwin, Michael J. Birck, George L. Bunting,
Jr., Robert E. Davis, Rhoda M. Dorsey, Dale F. Frey, Robert E.
Gregory, Jr., Robert J. Hurst, Wilbur G. Lewellen, Henry A.
Rosenberg, Jr., Larry P. Scriggins, Anne Marie Grimes Whittemore
and George S. Wills.

January 21, 1994 NORMAN P. BLAKE, JR.
Norman P. Blake, Jr., (for
himself and as attorney-in-fact)

EXHIBIT INDEX

Exhibit
Number Exhibit Page No.

1.1 Proposed form of Underwriting Agreement
relating to Debt Securities and Warrants
to Purchase Debt Securities.

1.2 Proposed form of Underwriting Agreement
relating to Common Stock, Preferred Stock
and Warrants to Purchase Common Stock and
Preferred Stock.

4.1 Charter of USF&G Corporation (incorporated
by reference to Exhibit 3(a), Registration
Statement on Form S-14, No. 2-73339; Exhibit 3(a),
Amendment No. 2 on Form 8 to Form 8-B, filed June
22, 1984; Exhibit 2, Amendment No. 1 on Form 8 to
Form 8-A, filed July 31, 1986; Exhibit A to
Exhibit 1 to Form 8-A, filed September 21, 1987;
Exhibit 4.3, Amendment No. 3 to Registration
Statement on Form S-3, No. 33-40492, filed June
13, 1991; Exhibit 19, Form 10-Q for the quarter
ended March 31, 1992, filed May 15, 1992; and
Exhibit 4.3 to Registration Statement on Form S-3,
No. 33-50825, filed October 29, 1993).

4.2 Form of Indenture for Senior Debt Securities
between the Corporation and
Signet Trust Company as Trustee.

4.3 Form of Indenture for Subordinated Debt
Securities between the Corporation and
Chemical Bank as Trustee.

4.4 Form of Stock Warrant Agreement.

4.5 Form of Debt Warrant Agreement.

4.6 Form of Deposit Agreement.

4.7 Description of Shareholder Rights Plan
(incorporated by reference to Form 8-A, filed
September 21, 1987).

5 Opinion and Consent of Piper & Marbury
as to Legality.

12 Statement regarding computation of
the Corporation's ratio of consolidated
earnings to fixed charges and ratio of
consolidated earnings to combined fixed
charges and preferred stock dividends
(incorporated by reference to Exhibit 12
to the Corporation's 1992 Annual Report on
Form 10-K, 1991 Annual Report on Form 10-K
and 1990 Annual Report on Form 10-K, and
Quarterly Report on Form 10-Q for the nine
months ended September 30, 1993).

15 Acknowledgement of Ernst & Young re:
unaudited interim financial information.

24.1 Consent of Ernst & Young.

24.2 Consent of Piper & Marbury (included
in Exhibit 5).

25 Power of Attorney of the Board of Directors.@

26.1 Form T-1: Statement of Eligibility and
Qualification under the Trust Indenture
Act of 1939 of Chemical Bank,
Trustee under the Indenture for Subordinated Debt
Securities.

26.2 Form T-1: Statement of Eligibility and
Qualification under the Trust Indenture
Act of 1939 of Signet Trust Company,
Trustee under Indenture for Senior Debt
Securities.

28 Information from reports furnished to state
insurance regulatory authorities
(incorporated by reference to Exhibit 29
to the Corporation's 1992 Annual Report
on Form 10-K).

@ Previously filed.

USF&G Corporation

Debt Securities and Warrants to
Purchase Debt Securities

----------

Underwriting Agreement

_______________, 19__

To the Representatives of the several Underwriters named in
the respective Pricing Agreements hereinafter described.

Dear Sirs:

From time to time USF&G Corporation, a Maryland
corporation (the "Company"), proposes to enter into one or more
Pricing Agreements (each a "Pricing Agreement") in the form of
Annex I hereto, with such additions and deletions as the parties
thereto may determine, and, subject to the terms and conditions
stated herein and therein, to issue and sell to the firms named
in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing
Agreement and the securities specified therein) certain of its
(i) senior debt securities (the "Senior Debt Securities"), (ii)
subordinated debt securities (the "Subordinated Debt
Securities"), (iii) debt securities, which may be either Senior
Debt Securities or Subordinated Debt Securities, convertible
into shares of common stock, par value $2.50 per share
("Stock"), of the Company (the "Convertible Debt Securities"
and, together with the Senior Debt Securities and the
Subordinated Debt Securities, the "Debt Securities") or (iv)
warrants (the "Warrants") to purchase Debt Securities (the
"Warrant Securities") in any such case, as specified in Schedule
II to such Pricing Agreement. The Debt Securities and the
Warrants (and, to the extent appropriate, any Stock or Warrant
Securities) are collectively referred to herein as the
"Securities". With respect to any Pricing Agreement, those
Securities which the Underwriters are committed to purchase are
referred to, as appropriate, as the "Firm Debt Securities" and
the "Firm Warrants," respectively, and collectively, the "Firm
Securities", and, in any case where Firm Securities are covered
by Delayed Delivery Contracts as provided in Section 3 hereof
and as may be specified in Schedule II to such Pricing
Agreement, any Firm Securities to be covered by Delayed Delivery
Contracts are herein sometimes referred to as "Contract
Securities" and the Firm Securities to be purchased by the
Underwriters (after giving effect to the deduction, if any, for
Contract Securities) are herein sometimes referred to as
"Underwriters' Securities". If specified in the Pricing
Agreement, the Company may grant to the Underwriters the right
to purchase at their election an additional principal amount of
Debt Securities or number of Warrants, specified in such Pricing
Agreement as provided in Section 3 hereof (the "Optional Debt
Securities" and the "Optional Warrants", respectively, and
collectively, the "Optional Securities"). The Firm Debt
Securities and the Optional Debt Securities are collectively
referred to as the "Designated Debt Securities". The Firm
Warrants and the Optional Warrants are collectively referred to
as the "Designated Warrants". The Designated Debt Securities
and the Designated Warrants are herein collectively referred to
as the "Designated Securities".

The terms and rights of any particular issuance of
Designated Securities shall be as specified in the Pricing
Agreement relating thereto and in or pursuant to the indenture
(the "Indenture") identified in such Pricing Agreement and, with
respect to Designated Warrants, in or pursuant to the warrant
agreement (the "Warrant Agreement") identified in such Pricing
Agreement.

1. Particular sales of Designated Securities may be
made from time to time to the Underwriters of such Securities,
for whom the firms designated as representatives of the
Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the
"Representatives"). The term "Representatives" also refers to a
single firm acting as sole representative of the Underwriters
and to Underwriters who act without any firm being designated as
their representative. This Underwriting Agreement shall not be
construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to
purchase any of the Securities. The obligation of the Company to
issue and sell any of the Securities and the obligation of any
of the Underwriters to purchase any of the Securities shall be
evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement
shall specify the aggregate principal amount or number of Firm
Securities, the maximum aggregate amount or number of Optional
Securities, if any, the initial public offering price of such
Firm and Optional Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the
Underwriters of such Designated Securities, the names of the
Representatives of such Underwriters, the principal amount or
number of such Designated Securities to be purchased by each
Underwriter and whether any of such Firm Securities shall be
covered by Delayed Delivery Contracts (as defined in Section 3
hereof) and shall set forth the date, time and manner of
delivery of such Firm and Optional Securities, if any, and
payment therefor. The Pricing Agreement shall also specify (to
the extent not set forth in the Indenture or Warrant Agreement
and the registration statement and prospectus with respect
thereto) the terms of such Designated Securities. A Pricing
Agreement shall be in the form of an executed writing (which may
be in counterparts), and may be evidenced by an exchange of
telegraphic communications or any other rapid transmission
device designed to produce a written record of communications
transmitted. The obligations of the Underwriters under this
Agreement and each Pricing Agreement shall be several and not
joint.

2. The Company represents and warrants to, and agrees
with, each of the Underwriters that:

(a) A registration statement in respect of the
Securities, the shares of Stock issuable upon conversion of
any Convertible Debt Securities and the Warrant Securities
issuable upon exercise of any Warrants has been filed with
the Securities and Exchange Commission (the "Commission");
such registration statement and any post-effective amendment
thereto, each in the form heretofore delivered or to be
delivered to the Representatives and, excluding exhibits to
such registration statement, but including all documents
incorporated by reference in the prospectus contained
therein, to the Representatives for each of the other
Underwriters have been declared effective by the Commission
in such form; no other document with respect to such
registration statement or document incorporated by reference
therein has heretofore been filed or transmitted for filing
with the Commission; and no stop order suspending the
effectiveness of such registration statement has been issued
and no proceeding for that purpose has been initiated or, to
the best of the Company's knowledge, threatened by the
Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant
to Rule 424(a) of the rules and regulations of the
Commission under the Securities Act of 1933, as amended (the
"Act"), being hereinafter called a "Preliminary Prospectus";
the various parts of such registration statement, including
all exhibits thereto and the documents incorporated by
reference in the prospectus contained in the registration
statement at the time such part of the registration
statement became effective but excluding Form T-1, each as
amended at the time such part of the registration statement
became effective, being hereinafter called the "Registration
Statement"; the prospectus relating to the Securities, in
the form in which it has most recently been filed, or
transmitted for filing, with the Commission on or prior to
the date of this Agreement, being hereinafter called the
"Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein
pursuant to the applicable form under the Act, as of the
date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to
any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include any documents filed after the date
of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and incorporated by reference
in such Preliminary Prospectus or Prospectus, as the case
may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual
report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in
the Registration Statement; any reference to the Prospectus
as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the
applicable Designated Securities in the form in which it is
filed with the Commission pursuant to Rule 424(b) under the
Act in accordance with Section 5(a) hereof, including any
documents incorporated by reference therein as of the date
of such filing); and any reference to the Preliminary
Prospectus, Prospectus or Registration Statement shall be
deemed to mean such document after excluding any statement
in any such document which does not constitute a part
thereof pursuant to Rule 412 of Regulation C under the Act
and after substituting therefor any statement modifying or
superseding such excluded statement;

(b) The documents incorporated by reference in
the Prospectus, when they became effective or were filed
with the Commission, as the case may be, conformed in all
material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and
any further documents so filed and incorporated by reference
in the Prospectus or any further amendment or supplement
thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to the
Company by an Underwriter of Designated Securities through
the Representatives expressly for use in the Prospectus as
amended or supplemented relating to such Securities;

(c) The Registration Statement and the Prospectus
conform, and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in
all material respects to the requirements of the Act and the
Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the
Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement
and any amendment thereto and as of the applicable filing
date as to the Prospectus and any amendment or supplement
thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein
or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter of
Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented
relating to such Securities;

(d) Neither the Company nor any of its
subsidiaries has sustained since the date of the latest
audited financial statements included or incorporated by
reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated
in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, there has not been (i) any material
addition, or any development involving a prospective
material addition, to either the Company's consolidated
reserve for property/casualty insurance claims and claims
expense or the consolidated reserve for life insurance
policy benefits, (ii) any change in the capital stock,
short- term debt or long-term debt of the Company or any of
its subsidiaries, or (iii) any material adverse change,
or any development involving a prospective material adverse
change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of
operations of the Company and its subsidiaries (, taken as a
whole), otherwise than as set forth or contemplated in the
Prospectus;

(e) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with power
and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus;
each of United States Fidelity and Guaranty Company and
Fidelity and Guaranty Life Insurance Company (each a
"Principal Subsidiary" and, collectively, the "Principal
Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation;

(f) The Company has authorized capital stock as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
the shares of Stock initially issuable upon conversion of
the Convertible Debt Securities, if applicable, have been
duly and validly authorized and reserved for issuance and,
when issued and delivered in accordance with the provisions
of the Convertible Debt Securities and the Indenture, will
be duly and validly issued, fully paid and non-assessable
and will conform to the description of the Stock contained
in the Prospectus as amended or supplemented with respect to
such Designated Securities; and all of the issued shares of
capital stock of each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares)
are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;

(g) The Debt Securities have been duly
authorized, and, when Designated Debt Securities are issued
and delivered pursuant to this Agreement and the Pricing
Agreement with respect to such Designated Debt Securities
and, in the case of any Contract Securities pursuant to
Delayed Delivery Contracts (as defined in Section 3 hereof)
with respect to such Contract Securities, such Designated
Debt Securities will have been duly executed, authenticated,
issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits
provided by the Indenture, which will be substantially in
the form filed as an exhibit to the Registration Statement;
the Indenture has been duly authorized and duly qualified
under the Trust Indenture Act and, at the Time of Delivery
for such Designated Debt Securities (as defined in Section 4
hereof), the Indenture will constitute a valid and legally
binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and
to general equity principles; and the Indenture conforms,
and the Designated Debt Securities will conform in all
material respects, to the descriptions thereof contained in
the Prospectus as amended or supplemented with respect to
such Debt Securities;

(h) In the event that any of the Designated
Securities are Designated Warrants, the Warrants have been
duly authorized and, when Designated Warrants are issued and
delivered pursuant to this Agreement and the Pricing
Agreement with respect to such Designated Warrants and
countersigned by the Warrant Agent as provided in the
Warrant Agreement, such Designated Warrants will have been
duly executed, countersigned, issued and delivered and will
constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Warrant
Agreement under which they are to be issued, which will be
substantially in the form filed as an exhibit to the
Registration Statement; the Warrant Agreement has been duly
authorized and, at the Time of Delivery for such Designated
Warrants, will constitute a valid and legally binding
instrument enforceable in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles; and the Warrant Agreement conforms, and the
Designated Warrants will conform in all material respects to
the descriptions thereof in the Prospectus as amended or
supplemented with respect to such Designated Warrants;

(i) In the event that any of the Designated
Securities are Designated Warrants, the Warrant Securities
initially issuable upon exercise of the Designated Warrants
have been duly authorized, and, when issued and delivered in
accordance with the provisions of the Warrant Agreement,
will be duly executed, authenticated, issued and delivered
and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the
Indenture, and the Warrant Securities will conform in all
material respects to the description thereof contained in
the Prospectus as amended or supplemented with respect to
such Warrant Securities;

(j) The issue and sale of the Securities, the
issue of the shares of Stock upon conversion of the
Convertible Debt Securities, if applicable, and the issue
and sale of any Warrant Securities upon the exercise of
Warrants pursuant to the Warrant Agreement, if applicable,
and the compliance by the Company with all of the provisions
of the Securities, the Indenture, each of the Delayed
Delivery Contracts, if any, this Agreement, any Pricing
Agreement and the Warrant Agreement, if applicable, and the
consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, sale/leaseback agreement, loan agreement, similar
financing agreement or instrument or other agreement or
instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject,
nor will such action result in any violation of the
provisions of the Charter or By- laws of the Company or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and
sale of the Securities or the consummation by the Company of
the transactions contemplated by this Agreement or any
Pricing Agreement, the Indenture, the Warrant Agreement, if
applicable, or any Delayed Delivery Contracts, except such
as have been, or will have been prior to the Time of
Delivery, obtained under the Act and the Trust Indenture Act
and such consents, approvals, authorizations, registrations
or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Designated Securities by the
Underwriters;

(k) Other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely
to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse
effect on the consolidated financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;

(l) In the event any of the Firm Securities are
purchased pursuant to Delayed Delivery Contracts, each of
such Delayed Delivery Contracts has been duly authorized by
the Company and, when executed and delivered by the Company
and the purchaser named therein, will constitute a valid and
legally binding agreement of the Company enforceable in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors'
rights and to general equity principles; and any Delayed
Delivery Contracts conform in all material respects to the
description thereof in the Prospectus as amended or
supplemented;

(m) The Company and its subsidiaries have good
and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus
or such as do not materially affect the value of such
property and do not interfere with the use made and proposed
to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;

(n) Ernst & Young, who have certified certain
financial statements of the Company and its subsidiaries,
are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder;

(o) Each of the Principal Subsidiaries is duly
licensed to conduct an insurance business under the
insurance laws of each jurisdiction in which the conduct of
its business requires such licensing and of each
jurisdiction in which the failure to be so licensed would
have, individually or in the aggregate, a material adverse
effect on the business operations, consolidated financial
position, shareholders' equity or results of operations of
the Company and its subsidiaries (, taken as a whole); each
of the Company and the Principal Subsidiaries has all
consents, approvals, authorizations, orders, registrations
and qualifications of or with, and is in compliance with,
all statutes, orders, rules and regulations of, all courts
and governmental agencies and bodies having jurisdiction
over it and any of its properties, except where the failure
to have any such consent, approval, authorization, order,
registration or qualification, or so to comply, would not,
individually or in the aggregate with all other such
failures, have a material adverse effect on the business
operations, consolidated financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries (, taken as a whole); and there is no pending
or, to the knowledge of the Company, threatened action,
suit, proceeding or investigation that reasonably could lead
to the revocation, termination or suspension of, or
render invalid or otherwise ineffective, any such license,
consent, approval, authorization, order, registration or
qualification, other than any such revocation, termination,
suspension, invalidity or ineffectiveness that would not,
individually or in the aggregate with all other such
revocations, terminations, suspensions, invalidity and
ineffectiveness, have a material adverse effect on the
business operations, consolidated financial position,
shareholders' equity or results of operations of the Company
and its subsidiaries (, taken as a whole);

(p) All property-casualty reinsurance treaties
and arrangements to which any of the Company and the
Principal Subsidiaries is the ceding party are in full force
and effect, with such exceptions as would not individually
or in the aggregate have a material adverse effect on the
consolidated financial position, shareholders' equity or
results of operations of the Company and its subsidiaries,
and neither the Company nor any of the Principal
Subsidiaries is in violation of, or in default in the
performance, observance or fulfillment of, any obligation,
agreement, covenant or condition contained therein, except
to the extent that any such violation or default would not,
individually or in the aggregate with all such other
violations and defaults, have a material adverse effect on
the consolidated financial position, shareholders' equity
or results of operations of the Company and its
subsidiaries; neither the Company nor any of the Principal
Subsidiaries has received any notice from any of the other
parties to such treaties, contracts and arrangements that
such other party intends not to perform in any material
respect such treaty, contract or arrangement, and the
Company and the Principal Subsidiaries have no reason to
believe that any of the other parties to such treaties,
contracts and arrangements will be unable to perform in all
material respects its obligations under such treaties,
contracts and arrangements;

(q) The statutory financial statements of the
Principal Subsidiaries required or permitted to be prepared
in accordance with the insurance laws, rules and regulations
of any jurisdiction to which the Principal Subsidiaries are
subject, and from which certain ratios and other financial
and statistical data contained in the Registration Statement
and the Prospectus have been derived, have, for each
relevant period, been prepared in conformity in all material
respects with the requirements of such insurance laws,
rules and regulations and present fairly the information
purported to be shown;

(r) The reserves carried on the books of the
Principal Subsidiaries for payment of all benefits, losses,
claims and expenses under outstanding insurance policies and
programs are adequate, under presently accepted actuarial
principles applied on a consistent basis, to cover the total
amount of all reasonably anticipated liabilities under all
issued and outstanding insurance policies and programs under
which the Principal Subsidiaries may have any liability; and

(s) The Company has complied with all provisions
of Section 517.075 Florida Statutes (Chapter 92-198, Laws of
Florida).

3. Upon the execution of the Pricing Agreement
applicable to any Designated Securities and authorization by the
Representatives of the release of the Underwriters' Securities,
the several Underwriters propose to offer such Underwriters'
Securities for sale upon the terms and conditions set forth in
the Prospectus as amended or supplemented.

The Company may specify in Schedule II to the Pricing
Agreement applicable to any Designated Securities that the
Underwriters are authorized to solicit offers to purchase
Designated Securities from the Company pursuant to delayed
delivery contracts (herein called "Delayed Delivery Contracts"),
substantially in the form of Annex III attached hereto but with
such changes therein as the Representatives and the Company may
authorize or approve. If so specified, the Underwriters will
endeavor to make such arrangements, and as compensation therefor
the Company will pay to the Representatives, for the accounts of
the Underwriters, at the First Time of Delivery (as defined in
Section 4 hereof), such commission, if any, as may be set forth
in such Pricing Agreement. Delayed Delivery Contracts, if any,
are to be with investors of the types described in the
Prospectus and subject to other conditions therein set forth.
The Underwriters will not have any responsibility with respect
to the validity or performance of any Delayed Delivery Contracts.

The principal amount of Contract Securities to be
deducted from the principal amount of Firm Securities to be
purchased by each Underwriter as set forth in Schedule I to the
Pricing Agreement applicable to such Firm Securities shall be,
in each case, the principal amount of Contract Securities which
the Company has been advised by the Representatives have been
attributed to such Underwriter, provided that, if the Company
has not been so advised, the amount of Contract Securities to be
so deducted shall be, in each case, that proportion of Contract
Securities which the principal amount of Firm Securities to be
purchased by such Underwriter under such Pricing Agreement bears
to the total principal amount of the Firm Securities (rounded as
the Representatives may determine). The total principal amount
of Underwriters' Securities to be purchased by all the
Underwriters pursuant to such Pricing Agreement shall be the
total principal amount of Firm Securities set forth in Schedule
I to such Pricing Agreement less the principal amount of the
Contract Securities. The Company will deliver to the
Representatives not later than 3:30 p.m., New York City time, on
the third business day preceding the First Time of Delivery
specified in the applicable Pricing Agreement (or such other
time and date as the Representatives and the Company may agree
upon in writing) a written notice setting forth the principal
amount of Contract Securities.

The Company may specify in the Pricing Agreement
applicable to any Designated Securities that the Company thereby
grants to the Underwriters the right (an "Overallotment Option")
to purchase at their election up to the aggregate principal
amount or number of Optional Securities set forth in such
Pricing Agreement, on the terms set forth in the first paragraph
of this Section 3, for the sole purpose of covering
over-allotments in the sale of the Firm Securities. Any such
election to purchase Optional Securities may be exercised by
written notice from the Representatives to the Company, given
within a period specified in the Pricing Agreement, setting
forth the aggregate principal amount or number of Optional
Securities to be purchased and the date on which such Optional
Securities are to be delivered, as determined by the
Representatives but in no event earlier than the First Time of
Delivery (as defined in Section 4 hereof) or, unless the
Representatives and the Company otherwise agree in writing,
earlier than or later than the respective number of business
days after the date of such notice set forth in such Pricing
Agreement.

4. Underwriters' Securities and Optional Securities
to be purchased by each Underwriter pursuant to the Pricing
Agreement relating thereto, in definitive form to the extent
practicable, and in such authorized denominations and registered
in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company, shall be
delivered by or on behalf of the Company to the Representatives
for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by
certified or official bank check or checks, payable to the order
of the Company in the funds specified in such Pricing Agreement,
(i) with respect to the Underwriters' Securities, all at the
place and time and date specified in such Pricing Agreement or
at such other place and time and date as the Representatives and
the Company may agree upon in writing, such time and date being
herein called the "First Time of Delivery," and (ii) with
respect to the Optional Securities, if any, on the time and date
specified by the Representatives in the written notice given by
the Representatives of the Underwriters' election to purchase
such Optional Securities, or at such other time and date as the
Representatives and the Company may agree upon in writing, such
time and date, if not the First Time of Delivery, herein called
the "Second Time of Delivery". Each such time and date for
delivery is herein called a "Time of Delivery."

Concurrently with the delivery of and payment for the
Underwriters' Securities, the Company will deliver to the
Representatives for the accounts of the Underwriters a check
payable to the order of the party designated in the Pricing
Agreement relating to such Securities in the amount of any
compensation payable by the Company to the Underwriters in
respect of any Delayed Delivery Contracts as provided in Section
3 hereof and the Pricing Agreement relating to such Securities.

5. The Company agrees with each of the Underwriters
of any Designated Securities:

(a) To prepare the Prospectus as amended and
supplemented in relation to the applicable Designated
Securities in a form approved by the Representatives and to
file such Prospectus pursuant to Rule 424(b) under the Act
not later than the Commission's close of business on the
second business day following the execution and delivery of
the Pricing Agreement relating to the applicable Designated
Securities or, if applicable, such earlier time as may be
required by Rule 424(b); to make no further amendment or any
supplement to the Registration Statement or Prospectus
as amended or supplemented after the date of the Pricing
Agreement relating to such Securities and prior to any Time
of Delivery for such Securities which shall be disapproved
by the Representatives for such Securities promptly after
reasonable notice thereof; to advise the Representatives
promptly of any such amendment or supplement after any Time
of Delivery for such Securities and furnish the
Representatives with copies thereof; to file promptly all
reports and any definitive proxy or information statements
required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is
required in connection with the offering or sale of such
Securities, and during such same period to advise the
Representatives, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed with the
Commission, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of
any prospectus relating to the Securities, of the
suspension of the qualification of such Securities for
offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or
for additional information; and, in the event of the
issuance of any such stop order or of any such order
preventing or suspending the use of any prospectus relating
to the Securities or suspending any such qualification, to
use promptly its best efforts to obtain its withdrawal;

(b) Promptly from time to time to take such
action as the Representatives may reasonably request to
qualify the Securities, the shares of Stock issuable on
conversion of Convertible Debt Securities and the Warrant
Securities issuable upon exercise of Warrants for offering
and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws
so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not
be required to qualify as a foreign corporation or to file a
general consent to service of process in any
jurisdiction;

(c) To furnish the Underwriters with copies of
the Prospectus as amended or supplemented in such quantities
as the Representatives may from time to time reasonably
request, and, if the delivery of a prospectus is required at
any time in connection with the offering or sale of the
Securities and if at such time any event shall have occurred
as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period
to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act, the Exchange Act
or the Trust Indenture Act, to notify the Representatives
and upon their request to file such document and to prepare
and furnish without charge to each Underwriter and to any
dealer in securities as many copies as the Representatives
may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance;

(d) To make generally available to its security-
holders as soon as practicable, but in any event not later
than eighteen months after the effective date of the
Registration Statement (as defined in Rule 158(c)), an
earning statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act
and the rules and regulations of the Commission thereunder
(including at the option of the Company Rule 158);

(e) During the period beginning from the date of
the Pricing Agreement for such Designated Securities and
continuing to and including (__) days after the last Time of
Delivery for such Designated Securities, not to offer, sell,
contract to sell or otherwise dispose of any securities of
the Company which are substantially similar to such
Designated Securities or any securities convertible,
exercisable or exchangeable for securities which are
substantially similar to such Designated Securities, without
the prior written consent of the Representatives;

(f) During a period of five years from the date
of the first Pricing Agreement, to furnish to the
Underwriters (A) copies of all reports or other
communications (financial or other) generally furnished to
stockholders, and deliver to the Underwriters (i) as soon as
they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any
national securities exchange on which the Securities or any
class of securities of the Company is listed and (ii) the
documents specified in Section(s) ___ (and ___) of the
Indenture and Section ___ of the Warrant Agreement, each as
in effect at the Time of Delivery; and (B) such additional
information concerning the business and financial condition
of the Company as the Representatives may from time to time
reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company
and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);

(g) To reserve and keep available at all times,
free of preemptive rights, shares of Stock for the purpose
of enabling the Company to satisfy any obligations to issue
shares of its Stock upon conversion of the Convertible Debt
Securities; and

(h) To use its best efforts to list any shares of
Stock issuable upon conversion of the Convertible Debt
Securities on the New York Stock Exchange.

6. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the
registration of the Securities, the shares of Stock and the
Warrant Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, any Pricing Agreement, any
Indenture, any Delayed Delivery Contracts, any Warrant
Agreement, any Blue Sky and Legal Investment Memoranda and any
other documents in connection with the offering, purchase, sale
and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 5(b) hereof,
including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in
connection with the Blue Sky and legal investment surveys; (iv)
any fees charged by securities rating services for rating the
Securities; (v) any filing fees incident to any required review
by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities; (vi) the cost of preparing
the Securities and the Warrant Securities and certificates for
the Stock; (vii) the fees and expenses of any Trustee and any
agent of any Trustee and the fees and disbursements of counsel
for any Trustee in connection with any Indenture and the
Securities; (viii) the fees and expenses of any Warrant Agent
and any agent of any Warrant Agent and the fees and
disbursements of counsel for any Warrant Agent in connection
with the Warrant Agreement, the Warrants and the Warrant
Securities; and (ix) all other costs and expenses incident to
the performance of its obligations hereunder, under any Delayed
Delivery Contracts and under any Over-allotment Options which
are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this
Section, Section 8 and Section 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Securities
by them, and any advertising expenses connected with any offers
they may make.

7. The obligations of the Underwriters of any
Designated Securities under the Pricing Agreement relating to
such Designated Securities shall be subject, in the discretion
of the Representatives, to the condition that all
representations and warranties and other statements of the
Company in or incorporated by reference in the Pricing Agreement
relating to such Designated Securities are, at and as of each
Time of Delivery for such Designated Securities, true and
correct, the condition that the Company shall have performed all
of its obligations hereunder theretofore to be performed, and
the following additional conditions:

(a) The Prospectus as amended or supplemented in
relation to such Designated Securities shall have been filed
with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with
Section 5(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on
the part of the Commission shall have been complied with to
the Representatives' reasonable satisfaction;

(b) Davis Polk & Wardwell, counsel for the
Underwriters, shall have furnished to the Representatives
such opinion or opinions, dated each Time of Delivery for
such Designated Securities, with respect to the
incorporation of the Company, this Agreement, the Pricing
Agreement, the validity of the Indenture, the Warrant
Agreement, if applicable, the Designated Securities, the
shares of Stock initially issuable upon conversion of the
Convertible Debt Securities, if applicable, the Warrant
Securities issuable upon exercise of the Warrants, if
applicable, the Delayed Delivery Contracts, if any, the
Registration Statement, the Prospectus as amended or
supplemented and other related matters as the
Representatives may reasonably request, and such counsel
shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;

(c) Piper & Marbury, counsel for the Company, or
other counsel satisfactory to the Representatives, shall
have furnished to the Representatives their written opinion,
dated each Time of Delivery for such Designated Securities,
in form and substance satisfactory to the Representatives,
to the effect that:

(i) The Company has been duly
incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of
its incorporation, with power and authority to own its
properties and conduct its business as described in the
Prospectus as amended or supplemented; each of the
Principal Subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing
under the laws of its jurisdiction of
incorporation;

(ii) The Company has authorized capital
stock as set forth in the Prospectus as amended or
supplemented, and all of the issued shares of capital
stock of the Company have been duly and validly
authorized and issued and are fully paid and
non-assessable; the shares of Stock initially issuable
upon conversion of Convertible Debt Securities, if
applicable, have been duly and validly authorized and
reserved for issuance and, when issued and delivered in
accordance with the provisions of the Convertible Debt
Securities and the Indenture, will be duly and validly
issued, fully paid and non-assessable and will conform
to the description of the Stock contained in the
Prospectus as amended or supplemented; and all of the
issued shares of capital stock of the Principal
Subsidiaries have been duly and validly authorized and
issued, are fully paid and non- assessable, and (except
for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel
being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of
officers of the Company or its Principal Subsidiaries,
provided that such counsel shall state that they
believe that both the Representatives and they are
justified in relying upon such opinions and
certificates);

(iii) The Company has been duly qualified
as a foreign corporation for the transaction of
business and is in good standing under the laws of each
other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require
such qualification, or is subject to no material
liability or disability by reason of the failure to be
so qualified in any jurisdiction (such counsel being
entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that
they believe that both the Representatives and they are
justified in relying upon such opinions and
certificates);

(iv) To the best of such counsel's
knowledge and other than as set forth in the
Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of
its subsidiaries, would individually or in the
aggregate have a material adverse effect on the
consolidated financial position, shareholders' equity
or results of operations of the Company and its
subsidiaries; and, to the best of such counsel's
knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened
by others;

(v) This Agreement and the Pricing
Agreement with respect to the Designated Securities
have been duly authorized, executed and delivered by
the Company;

(vi) The Designated Debt Securities have
been duly authorized, executed, authenticated,
issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the
benefits provided by the Indenture; the Underwriters'
Securities have been duly executed, authenticated,
issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the
benefits provided by the Indenture; the Contract
Securities, if any, when executed, authenticated,
issued and delivered pursuant to the Indenture and
Delayed Delivery Contracts, if any, will constitute
valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture; and
the Designated Debt Securities and the Indenture
conform in all material respects to the descriptions
thereof contained in the Prospectus as amended or
supplemented;

(vii) The Indenture has been duly
authorized, executed and delivered by the parties
thereto and constitutes a valid and legally binding
instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to
general equity principles; and the Indenture has been
duly qualified under the Trust Indenture Act;

(viii) In the event that any of the
Designated Securities are Designated Warrants, the
Designated Warrants have been duly authorized,
executed, issued and delivered and, when countersigned
by the Warrant Agent as provided by the Warrant
Agreement, will constitute valid and legally binding
obligations of the Company entitled to the benefits
provided by the Warrant Agreement;

(ix) In the event that any of the
Designated Securities are Designated Warrants, the
Warrant Agreement has been duly authorized, executed
and delivered by the parties thereto and constitutes a
valid and legally binding instrument enforceable in
accordance with its terms subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
the Designated Warrants and the Warrant Agreement
conform in all material respects to the descriptions
thereof contained in the Prospectus as amended or
supplemented;

(x) In the event that any of the
Designated Securities are Designated Warrants, the
Warrant Securities initially issuable upon exercise of
the Warrants have been duly authorized, and, when
issued and delivered in accordance with the provisions
of the Warrant Agreement, will be duly executed,
authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company
entitled to the benefits provided by the
Indenture;

(xi) The issue and sale of the Designated
Securities being delivered at such Time of
Delivery, the issue of the shares of Stock upon
conversion of the Convertible Debt Securities, if
applicable, and the issue and sale of any Warrant
Securities upon the exercise pursuant to the Warrant
Agreement, if applicable, and the compliance by the
Company with all of the provisions of the Designated
Securities, the Indenture, each of the Delayed Delivery
Contracts, if any, this Agreement, the Pricing
Agreement with respect to the Designated Securities and
the Warrant Agreement, if applicable, and the
consummation of the transactions herein and therein
contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture,
mortgage, deed of trust, sale/leaseback agreement, loan
agreement, similar financing agreement or instrument or
other agreement or instrument known to such counsel to
which the Company or any of its subsidiaries is a
party or by which the Company or any of its
subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation
of the provisions of the Charter or By-laws of the
Company or any statute or any order, rule or regulation
known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties;

(xii) In the Event any of the Firm
Securities are to be purchased pursuant to Delayed
Delivery Contracts, each of such Delayed Delivery
Contracts has been duly authorized, executed and
delivered by the Company and, assuming such Contract
has been duly executed and delivered by the purchaser
named therein, constitutes a valid and legally binding
agreement of the Company enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors'
rights and to general equity principles; and any
Delayed Delivery Contracts conform in all material
respects to the description thereof in the Prospectus
as amended or supplemented;

(xiii) No consent, approval, authorization,
order, registration or qualification of or with any
such court or governmental agency or body is required
for the issue and sale of the Designated Securities or
the consummation by the Company of the transactions
contemplated by this Agreement, the Pricing Agreement
with respect to such Designated Securities, the
Indenture, the Warrant Agreement, if applicable, or any
of such Delayed Delivery Contracts, except such as have
been obtained under the Act and the Trust Indenture Act
and such consents, approvals, authorizations,
registrations or qualifications as may be required
under state securities or Blue Sky laws in connection
with the purchase and distribution of the Designated
Securities by the Underwriters;

(xiv) The documents incorporated by
reference in the Prospectus as amended or supplemented
(other than the financial statements, related schedules
and other financial information therein, as to which
such counsel need express no opinion), when they became
effective or were filed with the Commission, as the
case may be, complied as to form in all material
respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and

(xv) The Registration Statement and the
Prospectus as amended or supplemented and any further
amendments and supplements thereto made by the Company
prior to the Time of Delivery for the Designated
Securities (other than the financial statements,
related schedules and other financial information
therein, as to which such counsel need express no
opinion) comply as to form in all material respects
with the requirements of the Act and the Trust
Indenture Act and the rules and regulations thereunder;
and they do not know of any amendment to the
Registration Statement required to be filed or any
contracts or other documents of a character required to
be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the
Prospectus as amended or supplemented or required to
be described in the Registration Statement or the
Prospectus as amended or supplemented which are not
filed or incorporated by reference or described as
required.

(d) General Counsel of the Company or other
counsel satisfactory to the Representatives, shall have
furnished the Representatives their written opinion, dated
each Time of Delivery for such Designated Securities, in
form and substance satisfactory to the Representatives to
the effect that:

(i) The Company has been duly qualified as a
foreign corporation for the transaction of
business and is in good standing under the laws of each
other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require
such qualification, or is subject to no material
liability or disability by reason of the failure to be
so qualified in any jurisdiction (such counsel being
entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that
they believe that both the Representatives and they are
justified in relying upon such opinions and
certificates);

(ii) To the best of such counsel's knowledge
and other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material
adverse effect on the consolidated financial
position, shareholders' equity or results of operations
of the Company and its subsidiaries; and, to the best
of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities
or threatened by others;

(iii) The Company and its subsidiaries have
good and marketable title in fee simple to all real
property and good and marketable title to all personal
property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not
materially affect the value of such property and do not
interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries; and
any real property and buildings held under lease by the
Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with
such exceptions as are not material and do not
interfere with the use made and proposed to be made of
such property and buildings by the Company and its
subsidiaries (in giving the opinion in this clause,
such counsel may state that no examination of record
titles for the purpose of such opinion has been made,
and that they are relying upon a general review of the
titles of the Company and its subsidiaries, upon
opinions of local counsel and abstracts, reports and
policies of title companies rendered or issued at or
subsequent to the time of acquisition of such
property by the Company or its subsidiaries, upon
opinions of counsel to the lessors of such property
and, in respect of matters of fact, upon certificates
of officers of the Company or its subsidiaries,
provided that such counsel shall state that they
believe that both the Representatives and they are
justified in relying upon such opinions, abstracts,
reports, policies and certificates); and

(iv) Each of the Principal Subsidiaries is
duly licensed to conduct an insurance business under
the insurance laws of each jurisdiction in which the
conduct of its business requires such licensing and of
each jurisdiction in which the failure to be so
licensed would have, individually or in the aggregate,
a material adverse effect on the business operations,
consolidated financial position, shareholders' equity
or results of operations of the Company and its
subsidiaries (, taken as a whole); each of the Company
and the Principal Subsidiaries has all consents,
approvals, authorizations, orders, registrations and
qualifications of or with, and is in compliance with,
all statutes, orders, rules and regulations of, all
courts and governmental agencies and bodies having
jurisdiction over it and any of its properties, except
where the failure to have any such consent, approval,
authorization, order, registration or
qualification, or so to comply, would not, individually
or in the aggregate with all other such failures, have
a material adverse effect on the business operations,
consolidated financial position, shareholders' equity
or results of operations of the Company and its
subsidiaries (, taken as a whole); and, to the best of
such counsel's knowledge, there is no pending or
threatened action, suit, proceeding or investigation
that reasonably could lead to the revocation,
termination or suspension of, or render invalid or
otherwise ineffective, any such license, consent,
approval, authorization, order, registration or
qualification, other than any such revocation,
termination, suspension, invalidity or ineffectiveness
that would not, individually or in the aggregate with
all other such revocations, terminations, suspensions,
invalidity and ineffectiveness, have a material adverse
effect on the business operations, consolidated
financial position, shareholders' equity or results of
operations of the Company and its subsidiaries (,
taken as a whole).

In addition to the matters set forth above,
the opinions delivered pursuant to paragraphs (c) and (d)
above shall also contain a statement to the effect that
while such counsel are not passing upon, and do not assume
responsibility for, the accuracy, completeness or fairness
of the Registration Statement or the Prospectus, or any
further amendment or supplement thereto, including the
documents incorporated by reference therein, based upon the
procedures referred to in such opinion nothing has come
to the attention of such counsel which leads them to believe
(i) that the Registration Statement as of its effective date
or the Prospectus as of its date or any further amendment or
supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements, related
schedules and other financial information therein, as to
which such counsel need express no belief) contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) that as
of such Time of Delivery, either the Registration
Statement or the Prospectus (or any such further amendment
or supplement thereto) contains an untrue statement of a
material fact or omits to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading, or (iii) that any of the documents
incorporated by reference in the Prospectus which were
effective or filed with the Commission prior to such Time of
Delivery (other than the financial statements, related
schedules and other financial information therein, as to
which such counsel need express no belief), as of the
respective dates when they became effective or were filed
with the Commission, as the case may be, in each case after
excluding any statement in any such document which does not
constitute part of the Registration Statement or the
Prospectus pursuant to Rule 412 of Regulation C under the
Act and after substituting therefor any statement modifying
or superseding such excluded statement, contained, in the
case of a registration statement which became effective
under the Act, an untrue statement of a material fact or
omitted to state a material fact required to be stated
therein necessary to make the statements therein not
misleading, and in the case of other documents which were
filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made
when such documents were so filed, not misleading.

(e) On the date of the Pricing Agreement for such
Designated Securities and at each Time of Delivery for such
Designated Securities, the independent accountants of the
Company who have certified the financial statements of the
Company and its subsidiaries included or incorporated by
reference in the Registration Statement shall have furnished
to the Representatives a letter, dated the effective date of
the Registration Statement or the date of the most recent
report filed with the Commission containing financial
statements and incorporated by reference in the Registration
Statement, if the date of such report is later than such
effective date, and a letter dated such Time of Delivery,
respectively, to the effect set forth in Annex II hereto,
and with respect to such letter dated such Time of Delivery,
as to such other matters as the Representatives may
reasonably request and in form and substance satisfactory to
the Representatives;

(f) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the
latest audited financial statements included or incorporated
by reference in the Prospectus as amended or supplemented
any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus as amended or
supplemented, and (ii) since the respective dates as of
which information is given in the Prospectus as amended or
supplemented there shall not have been (x) any addition, or
any development involving a prospective addition, to either
the Company's consolidated reserve for property/casualty
insurance claims and claims expense or the consolidated
reserve for life insurance policy benefits, (y) any change
in the capital stock, short- term debt or long-term debt of
the Company or any of its subsidiaries, or (z) any change,
or any development involving a prospective change, in or
affecting the general affairs, management, financial
position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus as amended or
supplemented, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Underwriters' Securities or
the Optional Securities or both on the terms and in the
manner contemplated in the Prospectus as amended or
supplemented;

(g) On or after the date of the Pricing Agreement
relating to the Designated Securities (i) no downgrading
shall have occurred in the rating accorded the Company's
debt securities or preferred stock by any "nationally
recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2)
under the Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any
of the Company's debt securities or preferred stock;

(h) On or after the date of the Pricing Agreement
relating to the Designated Securities there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New
York Stock Exchange; (ii) a general moratorium on commercial
banking activities in New York declared by either Federal or
New York State authorities; (iii) the outbreak or escalation
of hostilities involving the United States or the
declaration by the United States of a national emergency or
war if the effect of any such event specified in this Clause
(iii) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Underwriters' Securities or
the Optional Securities or both on the terms and in the
manner contemplated in the Prospectus as amended or
supplemented; or (iv) the occurrence of any material adverse
change in the existing financial, political or economic
conditions in the United States or elsewhere which, in the
judgment of the Representatives would materially and
adversely affect the financial markets or the market for the
Securities and other debt or equity securities;

(i) On or after the date of the Pricing Agreement
relating to the Designated Securities, (i) no downgrading
shall have occurred in the ratings accorded claims paying
ability of either of the Principal Subsidiaries by Standard
& Poor's Corporation, Moody's Investors Service, Inc., Duff
& Phelps Inc. or A.M. Best Company Inc.; and (ii) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications,
its rating of any of the claims paying ability of the
Principal Subsidiaries; and

(j) The Company shall have furnished or caused to
be furnished to the Representatives at each Time of Delivery
for the Designated Securities a certificate or certificates
of officers of the Company satisfactory to the
Representatives as to the accuracy of the representations
and warranties of the Company herein at and as of such Time
of Delivery, as to the performance by the Company of all of
its obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in
subsections (a) and (e) of this Section and as to such other
matters as the Representatives may reasonably request.

8. (a) The Company will indemnify and hold harmless
each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the
Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other
prospectus relating to the Securities, or any such amendment or
supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter of
Designated Securities through the Representatives expressly for
use in the Prospectus as amended or supplemented relating to
such Securities.

(b) Each Underwriter will indemnify and hold harmless
the Company against any losses, claims, damages or liabilities
to which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other
prospectus relating to the Securities, or any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the
Securities, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the
Company by such Underwriter through the Representatives
expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such action or
claim as such expenses are incurred.

(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement
of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party
under such subsection, notify the indemnifying party in writing
of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of
investigation.

(d) If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless an
indemnified party under subsection (a) or (b) above in respect
of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters of the
Designated Securities on the other from the offering of the
Designated Securities to which such loss, claim, damage or
liability (or action in respect thereof) relates. If, however,
the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party
failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as
is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and the
Underwriters of the Designated Securities on the other in
connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company
on the one hand and such Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions
received by such Underwriters. The relative fault shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or such
Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of
allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall
be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the applicable
Designated Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The
obligations of the Underwriters of Designated Securities in this
subsection (d) to contribute are several in proportion to their
respective underwriting obligations with respect to such
Securities and not joint.

(e) The obligations of the Company under this Section
8 shall be in addition to any liability which the Company may
otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any,
who controls the Company within the meaning of the Act.

9. (a) If any Underwriter shall default in its
obligation to purchase the Underwriters' Securities or Optional
Securities which it has agreed to purchase under the Pricing
Agreement relating to such Underwriters' Securities or Optional
Securities, the Representatives may in their discretion arrange
for themselves or another party or other parties to purchase
such Designated Securities on the terms contained herein. If
within thirty-six hours after such default by any Underwriter
the Representatives do not arrange for the purchase of such
Underwriters' Securities or Optional Securities, as the case may
be, then the Company shall be entitled to a further period of
thirtysix hours within which to procure another party or other
parties satisfactory to the Representatives to purchase such
Underwriters' Securities or Optional Securities on such terms.
In the event that, within the respective prescribed period, the
Representatives notify the Company that they have so arranged
for the purchase of such Underwriters' Securities or Optional
Securities, or the Company notifies the Representatives that it
has so arranged for the purchase of such Underwriters'
Securities or Optional Securities, the Representatives or the
Company shall have the right to postpone such Time of Delivery
for such Underwriters' Securities or Optional Securities for a
period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration
Statement or the Prospectus as amended or supplemented, or in
any other documents or arrangements, and the Company agrees to
file promptly any amendments or supplements to the Registration
Statement or the Prospectus which in the opinion of the
Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such
person had originally been a party to the Pricing Agreement with
respect to such Designated Securities.

(b) If, after giving effect to any arrangements for
the purchase of the Underwriters' Securities or Optional
Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a)
above, the aggregate principal amount or number of such
Underwriters' Securities or Optional Securities, as the case may
be, which remains unpurchased does not exceed one-eleventh of
the aggregate principal amount or number of the Firm Securities
or Optional Securities, as the case may be, to be purchased at
the respective Time of Delivery, then the Company shall have the
right to require each non-defaulting Underwriter to purchase the
principal amount or number of Underwriters' Securities or
Optional Securities, as the case may be, which such Underwriter
agreed to purchase under the Pricing Agreement relating to such
Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based
on the principal amount or number of Firm Securities or Optional
Securities, as the case may be, which such Underwriter agreed to
purchase under such Pricing Agreement) of the Underwriters'
Securities or Optional Securities, as the case may be, of such
defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.

(c) If, after giving effect to any arrangements for
the purchase of the Underwriters' Securities or Optional
Securities, as the case may be, of a defaulting Underwriter or
Underwriters by the Representatives and the Company as provided
in subsection (a) above, the aggregate principal amount or
number of Underwriters' Securities or Optional Securities, as
the case may be, which remains unpurchased exceeds one-eleventh
of the aggregate principal amount or number of the Designated
Securities, as referred to in subsection (b) above, or if the
Company shall not exercise the right described in subsection (b)
above to require nondefaulting Underwriters to purchase
Underwriters' Securities or Optional Securities of a defaulting
Underwriter or Underwriters than the Pricing Agreement relating
to such Underwriters' Securities or the Over-allotment Option
relating to such Optional Securities, as the case may be, shall
thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the
expenses to be borne by the Company and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.

10. The respective indemnities, agreements,
representations, warranties and other statements of the Company
and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling
person of any Underwriter, or the Company, or any officer or
director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.

11. If any Pricing Agreement or Over-allotment Option
shall be terminated pursuant to Section 9 hereof or by the
Representatives pursuant to Section 7(h) hereof, the Company
shall not then be under any liability to any Underwriter with
respect to the Firm Securities or Optional Securities with
respect to which such Pricing Agreement shall have been
terminated except as provided in Section 6 and Section 8 hereof;
but, if for any other reason any Underwriters' Securities are
not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in
writing by the Representatives, including fees and disbursements
of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of such
Designated Securities, but the Company shall then be under no
further liability to any Underwriter with respect to such
Designated Securities except as provided in Section 6 and
Section 8 hereof.

12. In all dealings hereunder, the Representatives of
the Underwriters of Designated Securities shall act on behalf of
each of such Underwriters, and the parties hereto shall be
entitled to act and rely upon any statement, request, notice or
agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if
any, as may be designated for such purpose in the Pricing
Agreement.

All statements, requests, notices and agreements
hereunder shall be in writing, and if to the Underwriters shall
be delivered or sent by mail, telex or facsimile transmission to
the address of the Representatives as set forth in the Pricing
Agreement; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to any Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its
address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied
to the Company by the Representatives upon request. Any such
statements, requests, notices or agreements shall take effect
upon receipt thereof.

13. This Agreement and each Pricing Agreement shall be
binding upon, and inure solely to the benefit of, the
Underwriters, the Company and, to the extent provided in Section
8 and Section 10 hereof, the officers and directors of the
Company and each person who controls the Company or any
Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement or any such Pricing Agreement. No purchaser of any of
the Securities from any Underwriter shall be deemed a successor
or assign by reason merely of such purchase.

14. Time shall be of the essence of each Pricing
Agreement. As used herein, "business day" shall mean any day
when the Commission's office in Washington, D.C. is open for
business.

15. This Agreement and each Pricing Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.

16. This Agreement and each Pricing Agreement may be
executed by any one or more of the parties hereto and thereto in
any number of counterparts, each of which shall be deemed to be
an original, but all such respective counterparts shall together
constitute one and the same instrument.

Very truly yours,

USF&G Corporation

By:___________________________
Name: Title:

ANNEX I

Pricing Agreement

(Name of Representative,) (Name of Co-Representative(s),) As
Representatives of the several Underwriters named in Schedule
I hereto, (c/o Representatives,) (Address of Representatives)

_________, 19__

Dear Sirs:

USF&G Corporation, a Maryland corporation (the
"Company"), proposes, subject to the terms and conditions stated
herein and in the Underwriting Agreement, dated _________ __,
19__ (the "Underwriting Agreement"), to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") the
Securities specified in Schedule II hereto (the "Designated
Securities" (consisting of Firm Securities and any Optional
Securities the Underwriters may elect to purchase)). Each of
the provisions of the Underwriting Agreement is incorporated
herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions
had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed
to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which
refers to the Prospectus in Section 2 of the Underwriting
Agreement shall be deemed to be a representation or warranty as
of the date of the Underwriting Agreement in relation to the
Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to
the Prospectus as amended or supplemented relating to the
Designated Securities which are the subject of this Pricing
Agreement. Each reference to the Representatives herein and in
the provisions of the Underwriting Agreement so incorporated by
reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are
used herein as therein defined. The Representatives designated
to act on behalf of the Representatives and on behalf of each of
the Underwriters of the Designated Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the
Representatives referred to in such Section 12 are set forth at
the end of Schedule II hereto.

An amendment to the Registration Statement, or a
supplement to the Prospectus, as the case may be, relating to
the Designated Securities, in the form heretofore delivered to
you is now proposed to be filed with the Commission.

Subject to the terms and conditions set forth herein
and in the Underwriting Agreement incorporated herein by
reference, ((a)) the Company agrees to issue and sell to each of
the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company, at the time and
place and at the purchase price to the Underwriters set forth in
Schedule II hereto, the principal amount or number of Firm
Securities set forth opposite the name of such Underwriter in
Schedule I hereto, less the principal amount of Firm Securities
covered by Delayed Delivery Contracts, if any, as may be
specified in Schedule II hereto (,and (b) in the event and to
the extent that the Underwriters shall exercise the election to
purchase Optional Securities, as provided below, the Company
agrees to issue and sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to
purchase from the Company at the purchase price to the
Underwriters set out in Schedule II hereto that portion of the
aggregate principal amount or number of Optional Securities as
to which such election shall have been exercised).

(The Company hereby grants to each of the Underwriters
the right to purchase at their election up to the aggregate
principal amount or number of Optional Securities set forth
opposite the name of such Underwriter in Schedule I hereto on
the terms referred to in the paragraph above for the sole
purpose of covering over-allotments in the sale of the Firm
Securities. Any such election to purchase Optional Securities
may be exercised by written notice from the Representatives to
the Company given within a period of 30 calendar days after the
date of this Pricing Agreement, setting forth the aggregate
principal amount or number of Optional Securities to be
purchased and the date on which such Optional Securities are to
be delivered, as determined by the Representatives but in no
event earlier than the First Time of Delivery or, unless the
Representatives and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date
of such notice.)

If the foregoing is in accordance with your
understanding, please sign and return to us (five) counterparts
hereof, and upon acceptance hereof by you, on behalf of each of
the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement
incorporated herein by reference, shall constitute a binding
agreement between each of the Underwriters and the Company. It
is understood that your acceptance of this letter on behalf of
each of the Underwriters is or will be pursuant to the authority
set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination upon
request, but without warranty on the part of the Representatives
as to the authority of the signers thereof.

Very truly yours,

USF&G Corporation

By:_______________________
Name: Title:

Accepted as of the date hereof:

(Name of Representative)

By:____________________________

SCHEDULE I

(MAXIMUM PRINCIPAL
PRINCIPAL AMOUNT OR AMOUNT OR NUMBER OF
NUMBER OF (FIRM) OPTIONAL
SECURITIES SECURITIES WHICH UNDERWRITER TO BE
PURCHASED MAY BE PURCHASED) -----------
- ---------------- ----------------

TOTAL ......... ____________ ___________
============ ===========

SCHEDULE II

Terms and Rights of Debt Securities:

Title of Designated Debt Securities:

(___%) (Floating Rate) (Zero Coupon) (Convertible)
(Notes) (Debentures) due

Aggregate Principal Amount:

Aggregate principal amount of Firm Debt
Securities: $

Maximum aggregate principal amount of
Optional Debt Securities: $

Price to Public:

% of the principal amount of the Designated Debt
Securities, plus accrued interest from ___________
to _________ (and accrued amortization, if any, from
__________ to ___________)

Purchase Price by Underwriters:

% of the principal amount of the Designated Debt
Securities, plus accrued interest from ___________
to _________ (and accrued amortization, if any, from
__________ to ___________)

Specified funds for payment of purchase price:

(New York) Clearing House funds

Indenture and Ranking:

The Designated Debt Securities will be
(senior/subordinated) indebtedness of the Company
issued under the (Senior/Subordinated) Indenture dated
________ __, 19__, between the Company and
_______________, as Trustee

Maturity:

Interest Rate:

(___%) (Zero Coupon) (See Floating Rate
Provisions)

Interest Payment Date:

(months and dates)

Redemption Provisions:

(No provisions for redemption)

(The Designated Debt Securities may be redeemed,
otherwise than through the sinking fund, in whole or
in part at the option of the Company, in the amount of
($)____________ or an integral multiple thereof,

(on or after ___________, __ at the following
redemption prices (expressed in percentages of
principal amount). If (redeemed on or before
____________, ___%, and if) redeemed during the
12-month period beginning _____________,

Redemption
Year Price

and thereafter at 100% of their principal amount,
together in each case with accrued interest to the
redemption date.) (on any interest payment date falling
in or after __________, __, at the election of the
Company, at a redemption price equal to the principal
amount thereof, plus accrued interest to the date of
redemption.)

(Other possible redemption provisions, such as
mandatory redemption upon occurrence of certain events
or redemption for changes in tax law)

(Restriction on refunding)

Sinking Fund Provisions:

(No sinking fund provisions)

(The Designated Debt Securities are entitled to
the benefit of a sinking fund to retire ($)__________
principal amount of Designated Debt Securities on
___________ in each of the years _____ through _____ at
100% of their principal amount plus accrued interest)
(,together with (cumulative) (noncumulative)
redemptions at the option of the Company to retire an
additional ($)__________ principal amount of Designated
Debt Securities in the years _____ through _____ at
100% of their principal amount plus accrued
interest)

(If Designated Debt Securities are extendable, insert-)

(Extendable Provisions:

Designated Debt Securities are repayable on
________, __ (insert day and years), at the option of
the holder, at their principal amount with accrued
interest. Initial annual interest rate will be ___%,
and thereafter annual interest rate will be adjusted on
_________, __ and ______ to a rate not less than ___%
of the effective annual interest rate on U.S. Treasury
obligations with ____-year maturities as of the (insert
date 15 days prior to maturity date) prior to such
(insert maturity date))

(If Designated Debt Securities are floating rate, insert--)

(Floating Rate Provisions:

Initial annual interest rate will be ___% through
________ (and thereafter will be adjusted (monthly)
(on each _________, _________, ________ and __________)
(to an annual rate of ___% above the average rate for
_______-year (month)(securities)(certificates of
deposit) issued by _________ and _________ (insert
names of banks).) (and the annual interest rate
(thereafter) (from _________ through _________) will
be the interest yield equivalent of the weekly average
per annum market discount rate for ___-month Treasury
bills plus ___% of Interest Differential (the excess,
if any, of (i) then currently weekly average per annum
secondary market yield for ___-month certificates of
deposit over (ii) then current interest yield
equivalent of the weekly average per annum market
discount rate for ___-month Treasury bills); (from
_________ and thereafter the rate will be the then
current interest yield equivalent plus ___% of Interest
Differential))

Defeasance Provisions:

(If Designated Debt Securities are convertible,
insert--)

(Conversion Provisions:

Initial Conversion Price: $__________ Per share of
Common Stock

Initial Conversion Date:

Final Conversion Date:)

Delayed Delivery:

(None) (Underwriters' commission shall be ...% of
the principal amount of Designated Debt Securities
for which Delayed Delivery Contracts have been entered
into. Such commission shall be payable to the order
of...)

Terms and Rights of Warrants and Warrant Securities:

Warrants:

Title of Designated Warrants:

(Debt Warrants) to purchase (___%) (Floating Rate)
(Zero Coupon) (Convertible) (Notes) (Debentures)
due

Number of Designated Warrants:

Number of Firm Warrants:

Maximum Number of Optional Warrants:

Price to Public:

$____ per Warrant

Purchase Price by Underwriters:

$____ per Warrant

Specified funds for payment of purchase price:

(New York) Clearing House funds

Warrant Agreement:

The Warrants to be evidenced by warrant
certificates and to be issued pursuant to the
provisions of a Debt Warrant Agreement dated as of
______, 19__ (the "Warrant Agreement") between the
Company and ________, as Warrant Agent

Exercise Date:

Expiration Date:

Exercise Price:

Principal Amount of Warrant Securities Purchasable upon
Exercise of One Warrant:

(Detachable Date:)

(Other Terms:)

Warrant Securities:

Title of Warrant Securities:

(___%) (Floating Rate) (Zero Coupon) (Convertible)
(Notes) (Debentures) due

Indenture and Ranking:

The Warrant Securities will be (Senior/
Subordinated) indebtedness of the Company issued under
the (Senior/Subordinated) Indenture dated ________ __,
19__, between the Company and _______________, as
Trustee

Maturity:

Interest Rate:

(___%) (Zero Coupon) (See Floating Rate
Provisions)

Interest Payment Date:

(months and dates)

Redemption Provisions:

(No provisions for redemption)

(The Designated Securities may be redeemed,
otherwise than through the sinking fund, in whole or in
part at the option of the Company, in the amount of
($)____________ or an integral multiple thereof,

Redemption
Year Price

(Other possible redemption provisions, such as
mandatory redemption upon occurrence of certain events
or redemption for changes in tax law)

(Restriction on refunding)

Sinking Fund Provisions:

(No sinking fund provisions)

(The Designated Securities are entitled to the
benefit of a sinking fund to retire ($)__________
principal amount of Designated Securities on
___________ in each of the years _____ through _____ at
100% of their principal amount plus accrued interest)
(,together with (cumulative) (noncumulative)
redemptions at the option of the Company to retire an
additional ($)__________ principal amount of Designated
Securities in the years _____ through _____ at 100% of
their principal amount plus accrued interest)

(If Warrant Securities are extendable, insert-)

(Extendable Provisions:

Warrant Securities are repayable on ________, __
(insert day and years), at the option of the holder,
at their principal amount with accrued interest.
Initial annual interest rate will be ___%, and
thereafter annual interest rate will be adjusted on
_________, __ and ______ to a rate not less than ___%
of the effective annual interest rate on U.S. Treasury
obligations with ____-year maturities as of the (insert
date 15 days prior to maturity date) prior to such
(insert maturity date))

(If Warrant Securities are floating rate, insert--)

(Floating Rate Provisions:

Defeasance Provisions:

(If Warrant Securities are convertible, insert--)

(Conversion Provisions:

Initial Conversion Price: $__________ Per share of
Common Stock

Initial Conversion Date:

Final Conversion Date:)

For All Designated Securities:

Time of Delivery:

Closing Location for Delivery of Securities:

Names and addresses of Representatives:

Designated Representatives:

Address for Notices, etc.:

(Other Terms)*

* A description of particular tax, accounting or other
unusual features (such as the addition of event risk language)
of the Securities should be set forth, or referenced to an
attached and accompanying description, if necessary to ensure
agreement as to the terms of the Securities to be purchased and
sold. Such a description might appropriately be in the form in
which such features will be described in the Prospectus
Supplement for the offering.

ANNEX II

Pursuant to Section 7(e) of the Underwriting
Agreement, the accountants shall furnish letters to the
Underwriters to the effect that:

(i) They are independent certified public
accountants with respect to the Company and its subsidiaries
within the meaning of the Act and the applicable published
rules and regulations thereunder;

(ii) In their opinion, the consolidated
financial statements and financial schedules (and, if
applicable, prospective financial statements and/or pro
forma financial information) audited by them and included or
incorporated by reference in the Registration Statement or
the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and
regulations;

(iii) On the basis of limited procedures, not
constituting an audit conducted in accordance with generally
accepted auditing standards, consisting of a reading of the
unaudited consolidated financial statements and other
information referred to below, a reading of the latest
available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the
Company and its subsidiaries since the date of the latest
audited consolidated financial statements included or
incorporated by reference in the Prospectus, inquiries of
officials of the Company and its subsidiaries who have
responsibility for financial and accounting matters and such
other inquiries and procedures (including those for a review
of interim financial information as described in SAS 71) as
may be specified in such letter, nothing came to their
attention that caused them to believe that:

(A) any material modifications should be
made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included or
incorporated by reference in the Company's Quarterly
Report on Form 10-Q incorporated by reference in the
Prospectus, for them to be in conformity with generally
accepted accounting principles;

(B) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included or
incorporated by reference in the Company's Quarterly
Reports on Form 10-Q, incorporated by reference in the
Prospectus, do not comply as to form in all material
respects with the applicable accounting requirements of
the Exchange Act as it applies to Form 10-Q and the
related published rules and regulations;

(C) any unaudited pro forma condensed
consolidated financial statements included in or
incorporated by reference in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of Rule 11- 02 of
Regulation S-X and that the pro forma adjustments have
not been properly applied to the historical amounts in
the compilation of those statements;

(D) as of a specified date not more than
five days prior to the date of such letter, there was
any change in the capital stock, increase in long-term
debt, or any decreases in consolidated net current
assets or shareholder's equity of the Company and its
subsidiaries, or any decreases in consolidated net
sales or in the total per-share amounts of income
before extraordinary items of net income, or other
items specified by the representatives of the
Underwriters (the "Representatives"), or any increases
in any items specified by the Representatives, in each
case as compared with amounts shown in the latest
balance sheet included or incorporated by reference in
the Prospectus, except in all instances for changes,
increases or decreases which the Prospectus
discloses have occurred may occur; and

(v) In addition to the examination referred to
in their report(s) included or incorporated by reference in
the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an
examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and
financial information specified by the Representatives
which are derived from the general accounting records of the
Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or in Part
II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives or in documents
incorporated by reference in the Prospectus specified by the
Representatives, and have compared certain of such
amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and
have found them to be in agreement.

All references in this Annex II to the Prospectus
shall be deemed to refer to the Prospectus (including the
documents incorporated by reference therein) as defined in the
Underwriting Agreement as of the date of the letter delivered on
the date of the Pricing Agreement for purposes of such letter
and to the Prospectus as amended or supplemented (including the
documents incorporated by reference therein) in relation to the
applicable Designated Securities for purposes of the letter
delivered at the Time of Delivery for such Designated Securities.

ANNEX III

DELAYED DELIVERY CONTRACT

USF&G Corporation (Address)

Attention............... ................, 19..

Dear Sirs:

The undersigned hereby agrees to purchase from USF&G
Corporation (hereinafter called the "Company"), and the Company
agrees to sell to the undersigned,

$.......

principal amount of Company's (Title of Designated Securities
(3)) (hereinafter called the "Designated Securities"), offered
by the Company's Prospectus dated ......., 19.., as amended or
supplemented, receipt of a copy of which is hereby acknowledged,
at a purchase price of ..% of the principal amount thereof, plus
accrued interest from the date from which interest accrues as
set forth below, and on the further terms and conditions set
forth below, and on the further terms and conditions set forth
in this contract.

The undersigned will purchase the Designated
Securities from the Company on ........., 19.. (the "Delivery
Date") and interest on the Designated Securities so purchased
will accrue from .........., 19..

(The undersigned will purchase the Designated
Securities from the Company on the delivery date or dates and in
the principal amount or amounts set forth below:

Principal Dates from Which
Delivery Date Amount Interest Accrues
_____________ _________ ________________

.........., 19.. $......... .........., 19..
.........., 19.. $......... .........., 19..

Each such date on which Designated Securities are to be
purchased hereunder is hereinafter referred to as a "Delivery
Date.")

Payment for the Designated Securities which the
undersigned has agreed to purchase on (the) (each) Delivery Date
shall be made to the Company or its order by certified or
official bank check in ....... Clearing House funds at the
office of ................... or by wire transfer to a bank
account specified by the Company, on (the) (such) Delivery Date
upon delivery to the undersigned of the Designated Securities
then to be purchased by the undersigned in definitive fully
registered form and in such denominations and registered in such
names as the undersigned may designate by written, telex or
facsimile communication addressed to the Company not less than
five full business days prior to (the) (such) Delivery Date.

The obligation of the undersigned to take delivery of
and make payment for Designated Securities on (the) (each)
Delivery Date shall be subject to the condition that the
purchase of Designated Securities to be made by the undersigned
shall not on (the) (such) Delivery Date be prohibited under the
laws of the jurisdiction to which the undersigned is subject.
The obligation of the undersigned to take delivery of and make
payment for Designated Securities shall not be affected by the
failure of any purchaser to take delivery of and make payment
for Designated Securities pursuant to other contracts similar to
this contract.

(The undersigned understands that Underwriters (the
"Underwriters") are also purchasing Designated Securities from
the Company, but that the obligations of the Undersigned
hereunder are not contingent on such purchases.) Promptly after
completion of the sale to the Underwriters the Company will mail
or deliver to the undersigned at its address set forth below
notice to such effect, accompanied by a copy of the Opinion of
Counsel for the Company delivered to the Underwriters in
connection therewith.

The undersigned represents and warrants that, as of
the date of this contract, the undersigned is not prohibited
from purchasing the Designated Securities hereby agreed to be
purchased by it under the laws of the jurisdiction to which the
undersigned is subject.

This contract will inure to the benefit of and be
binding upon the parties hereto and their respective successors,
but will not be assignable by either party hereto without the
written consent of the other.

This contract may be executed by either of the parties
hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.

It is understood that the acceptance by the Company of
any Delayed Delivery Contract (including this contract) is in
the Company's sole discretion and that, without limiting the
foregoing, acceptances of such contracts need not be on a
first-come, first-served basis. If this contract is acceptable
to the Company, it is requested that the Company sign the form
of acceptance below and mail or deliver one of the counterparts
hereof to the undersigned at its address set forth below. This
will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered by
the Company.

Yours very truly,

.............................

By ..........................
(Authorized Signature)

Name:
Title:

..............................
(Address)

Accepted: ............., 19..

USF&G Corporation

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

USF&G Corporation

Common Stock, par value
$2.50 per share, Preferred Stock, par value $50 per share, and
Warrants to Purchase Common Stock and Preferred Stock

__________

Underwriting Agreement

__________________, 19__

To the Representatives of the several Underwriters named in
the respective Pricing Agreements hereinafter described.

Dear Sirs:

From time to time USF&G Corporation, a Maryland
corporation (the "Company"), proposes to enter into one or more
Pricing Agreements (each a "Pricing Agreement") in the form of
Annex I hereto, with such additions and deletions as the parties
thereto may determine, and, subject to the terms and conditions
stated herein and therein, to issue and sell to the firms named
in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing
Agreement and the securities specified therein) certain of its
(i) shares of common stock, par value $2.50 per share (the
"Common Stock"), (ii) shares of preferred stock, par value $50
per share (the "Preferred Stock"), (iii) shares of convertible
preferred stock, par value $50 per share, convertible into
shares of Common Stock (the "Convertible Preferred Stock"), (iv)
shares of exchangeable preferred stock, par value $50 per share,
exchangeable into debt securities (the "Debt Securities") (the
"Exchangeable Preferred Stock" and, together with the
Convertible Preferred Stock and the Preferred Stock, the
"Offered Preferred Stock"), (v) depositary shares representing
shares of Offered Preferred Stock (the "Depositary Shares" and,
together with the Offered Preferred Stock, the "Shares"), and
(vi) warrants (the "Warrants") to purchase Common Stock or
Offered Preferred Stock (the "Warrant Securities"), in any such
case, as specified in Schedule II to such Pricing Agreement. The
Common Stock, the Offered Preferred Stock, the Depositary Shares
and the Warrants (and, to the extent appropriate, any Debt
Securities and Warrant Securities) are collectively referred to
herein as the "Securities". With respect to any Pricing
Agreement, those Securities which the Underwriters are committed
to purchase are referred to, as appropriate, the "Firm Common
Stock", the "Firm Offered Preferred Stock", the "Firm Depositary
Shares" and the "Firm Warrants", respectively, and collectively,
the "Firm Securities". If specified in the Pricing Agreement,
the Company may grant to the Underwriters the right to purchase
at their election an additional number of Securities, specified
in such Pricing Agreement as provided in Section 3 hereof (the
"Optional Common Stock", the "Optional Offered Preferred Stock",
the "Optional Depositary Shares" and the "Optional Warrants",
respectively, and collectively, the "Optional Securities"). The
Firm Common Stock and any Optional Common Stock are collectively
referred to as the "Designated Common Stock". The Firm Offered
Preferred Stock and any Optional Offered Preferred Stock are
collectively referred to as the "Designated Offered Preferred
Stock." The Firm Depositary Shares and any Optional Depositary
Shares are collectively referred to as the "Designated
Depositary Shares." The Firm Warrants and the Optional Warrants
are collectively referred to as the "Designated Warrants". The
Designated Common Stock, the Designated Offered Preferred Stock,
the Designated Depositary Shares and the Designated Warrants are
collectively referred to as the "Designated Securities." If the
Prospectus (as defined in Section 2(a)) and Pricing Agreement so
provide, the Offered Preferred Stock will be deposited by the
Company against delivery of receipts (the "Depositary Receipts")
to be issued by the depositary (the "Depositary") named in the
deposit agreement, (the "Deposit Agreement"), between the
Company, the Depositary and the holders from time to time of the
Depositary Receipts issued thereunder and evidencing Designated
Depositary Shares. Each Designated Depositary Share will
represent the number of or fraction of the number of deposited
shares of Offered Preferred Stock specified in the applicable
Prospectus and in Schedule II to such Pricing Agreement.

The terms and rights of any particular issuance of
Designated Securities shall be as specified in the Pricing
Agreement relating thereto and in or pursuant to the resolution
or resolutions of the board of directors of the Company
identified in such Pricing Agreement and, with respect to
Designated Warrants, in or pursuant to the warrant agreement
(the "Warrant Agreement") identified in such Pricing Agreement.

1. Particular sales of Designated Securities may be
made from time to time to the Underwriters of such Securities,
for whom the firms designated as representatives of the
Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the
"Representatives"). The term "Representatives" also refers to a
single firm acting as sole representative of the Underwriters
and to Underwriters who act without any firm being designated as
their representative. This Underwriting Agreement shall not be
construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to
purchase any of the Securities. The obligation of the Company to
issue and sell any of the Securities and the obligation of any
of the Underwriters to purchase any of the Securities shall be
evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement
shall specify the aggregate number of Firm Securities, the
maximum number of Optional Securities, if any, the initial
public offering price of such Firm and Optional Securities or
the manner of determining such price, the purchase price to the
Underwriters of such Designated Securities, the names of the
Underwriters of such Designated Securities, the names of the
Representatives of such Underwriters, the number of such
Designated Securities to be purchased by each Underwriter and
the commission, if any, payable to the Underwriters with respect
thereto and shall set forth the date, time and manner of
delivery of such Firm and Optional Securities, if any, and
payment therefor. The Pricing Agreement shall also specify (to
the extent not set forth in the Warrant Agreement or Deposit
Agreement and the registration statement and prospectus with
respect thereto) the terms of such Designated Securities. A
Pricing Agreement shall be in the form of an executed writing
(which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters
under this Agreement and each Pricing Agreement shall be several
and not joint.

2. The Company represents and warrants to, and agrees
with, each of the Underwriters that:

(a) A registration statement in respect of the
Securities, the shares of Common Stock issuable upon
conversion of any Convertible Preferred Stock, the Debt
Securities issuable upon exchange of any Exchangeable
Preferred Stock and the Warrant Securities issuable upon
exercise of any Warrants has been filed with the Securities
and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment
thereto, each in the form heretofore delivered or to be
delivered to the Representatives and, excluding exhibits to
such registration statement, but including all documents
incorporated by reference in the prospectus contained
therein, to the Representatives for each of the other
Underwriters have been declared effective by the Commission
in such form; no other document with respect to such
registration statement or document incorporated by reference
therein has heretofore been filed or transmitted for filing
with the Commission; and no stop order suspending the
effectiveness of such registration statement has been issued
and no proceeding for that purpose has been initiated or, to
the best of the Company's knowledge, threatened by the
Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant
to Rule 424(a) of the rules and regulations of the
Commission under the Securities Act of 1933, as amended (the
"Act"), being hereinafter called a "Preliminary Prospectus";
the various parts of such registration statement, including
all exhibits thereto and the documents incorporated by
reference in the prospectus contained in the registration
statement at the time such part of the registration
statement became effective, each as amended at the time such
part of the registration statement became effective, being
hereinafter called the "Registration Statement"; the
prospectus relating to the Securities, in the form in which
it has most recently been filed, or transmitted for filing,
with the Commission on or prior to the date of this
Agreement, being hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be;
any reference to any amendment or supplement to any
Preliminary Prospectus or Prospectus shall be deemed to
refer to and include any documents filed after the date of
such Preliminary Prospectus or Prospectus, as the case may
be, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and incorporated by reference in such
Preliminary Prospectus or Prospectus, as the case may be;
any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual
report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in
the Registration Statement; any reference to the Prospectus
as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the
applicable Designated Securities in the form in which it is
filed with the Commission pursuant to Rule 424(b) under the
Act in accordance with Section 5(a) hereof, including any
documents incorporated by reference therein as of the date
of such filing); and any reference to the Preliminary
Prospectus, Prospectus or Registration Statement shall be
deemed to mean such document after excluding any statement
in any such document which does not constitute a part
thereof pursuant to Rule 412 of Regulation C under the Act
and after substituting therefor any statement modifying or
superseding such excluded statement;

(c) The Registration Statement and the Prospectus
conform, and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in
all material respects to the requirements of the Act and the
Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), if applicable, and the rules and
regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this
representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to the
Company by an Underwriter of Designated Securities through
the Representatives expressly for use in the Prospectus as
amended or supplemented relating to such Securities;

(d) Neither the Company nor any of its
subsidiaries has sustained since the date of the latest
audited financial statements included or incorporated by
reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated
in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, there has not been (i) any material
addition, or any development involving a prospective
material addition, to either the Company's consolidated
reserve for property/casualty insurance claims and claims
expense or the consolidated reserve for life insurance
policy benefits, (ii) any change in the capital stock,
short-term debt or long-term debt of the Company or any of
its subsidiaries or (iii) any material adverse change, or
any development involving a prospective material adverse
change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of
operations of the Company and its subsidiaries (, taken as a
whole), otherwise than as set forth or contemplated in the
Prospectus;

(g) The Common Stock has been duly and validly
authorized, and, when the Firm Common Stock is issued and
delivered pursuant to this Agreement and the Pricing
Agreement with respect to such Designated Common Stock and,
in the case of any Optional Common Stock, pursuant to
Over-allotment Options (as defined in Section 3 hereof) with
respect to such Common Stock, such Designated Common Stock
will be duly and validly issued and fully paid and
non-assessable; the Common Stock conforms to the description
thereof contained in the Registration Statement and the
Designated Common Stock will conform to the description
thereof contained in the Prospectus as amended or
supplemented with respect to such Designated Common Stock;
the shares of Common Stock initially issuable upon
conversion of any Convertible Preferred Stock, if
applicable, have been duly and validly authorized and
reserved for issuance and, when issued and delivered in
accordance with the provisions of the Convertible Preferred
Stock, will be duly and validly issued, fully paid and
non-assessable and will conform to the description of the
Common Stock contained in the Prospectus as amended or
supplemented with respect to such Convertible Preferred
Stock; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non- assessable
and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims;

(h) The Offered Preferred Stock has been duly
authorized, and, when the Designated Offered Preferred Stock
is duly executed, countersigned, issued and delivered
pursuant to this Agreement and the Pricing Agreement with
respect to such Designated Offered Preferred Stock, the
Designated Offered Preferred Stock will be duly and validly
issued and fully paid and non- assessable; when Depositary
Receipts evidencing any Firm Depositary Shares are issued
and delivered against deposit of Firm Offered Preferred
Stock and against payment for the Firm Depositary Shares
pursuant to this Agreement, the Pricing Agreement relating
to the Designated Depositary Shares and the Deposit
Agreement and, in the case of any Optional Depositary
Shares, pursuant to any Over-allotment Option (as defined in
Section 3), the Depositary Receipts will be legally
issued and will entitle the holders thereof to the rights
specified in the Depositary Receipts and the Deposit
Agreement; and the Designated Offered Preferred Stock and
the Designated Depositary Shares will conform to the
descriptions thereof contained in the Prospectus as amended
or supplemented with respect to such Designated Offered
Preferred Stock and Designated Depositary Shares;

(i) In the event that any of the Designated
Securities are Designated Depositary Shares, the Deposit
Agreement, which will be substantially in the form filed as
an exhibit to the Registration Statement, has been duly
authorized by the Company and, at the Time of Delivery (as
defined in Section 4 hereof) for such Designated Depositary
Shares, assuming due authorization, execution and delivery
by the Deposi- tary, the Deposit Agreement will constitute a
valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement, to
bank- ruptcy, insolvency, reorganization, and other laws of
general applicability relating to or affecting creditors'
rights and to general equity principles, and the Deposit
Agreement conforms to the description thereof contained in
the Prospectus as amended or supplemented with respect to
such Designated Depositary Shares;

(j) In the event any of the Designated Offered
Preferred Stock is Exchangeable Preferred Stock, the Debt
Securities initially issuable upon exchange of the
Exchangeable Preferred Stock have been duly authorized, and,
when the Debt Securities are issued and delivered in
accordance with the provisions of the Exchangeable Preferred
Stock, such Debt Securities will have been duly executed,
authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture (as
defined in the Pricing Agreement), which will be
substantially in the form filed as an exhibit to the
Registration Statement; the Indenture has been duly
authorized and duly qualified under the Trust Indenture Act
and, at the time the Debt Securities are issued, the
Indenture will constitute a valid and legally binding
instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
equity principles; and the Indenture conforms, and the Debt
Securities will conform in all material respects, to the
descriptions thereof contained in the Prospectus as amended
or supplemented with respect to such Debt Securities;

(k) In the event that any of the Designated
Securities are Designated Warrants, the Warrants have been
duly authorized and, when Designated Warrants are issued and
delivered pursuant to this Agreement and the Pricing
Agreement with respect to such Designated Warrants and
countersigned by the Warrant Agent as provided in the
Warrant Agreement, such Designated Warrants will have been
duly executed, countersigned, issued and delivered and will
constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Warrant
Agreement under which they are to be issued, which will be
substantially in the form filed as an exhibit to the
Registration Statement; the Warrant Agreement has been duly
authorized and, at the Time of Delivery for such Designated
Warrants, will constitute a valid and legally binding
instrument enforceable in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles; and the Warrant Agreement conforms, and the
Designated Warrants will conform in all material respects,
to the descriptions thereof in the Prospectus as amended or
supplemented with respect to such Designated Warrants;

(l) In the event that any of the Designated
Securities are Designated Warrants, the Warrant Securities
initially issuable upon exercise of the Designated Warrants
have been duly authorized, and, when duly executed and
countersigned, if applicable, and issued and delivered in
accordance with the provisions of the Warrant Agreement,
will be duly and validly issued and fully paid and
non-assessable; and the Warrant Securities will conform to
the description thereof contained in the Prospectus as
amended or supplemented with respect to such Warrant
Securities;

(m) The issue and sale of the Securities, the
issue of the shares of Common Stock upon conversion of the
Convertible Preferred Stock, if applicable, the issue of the
Debt Securities upon exchange of the Exchangeable Preferred
Stock, if applicable, and the issue and sale of any Warrant
Securities upon the exercise of Warrants pursuant to the
Warrant Agreement, if applicable, and the compliance by the
Company with all of the provisions of the Securities, this
Agreement, any Pricing Agreement, the Deposit Agreement, if
applicable, the Warrant Agreement, if applicable, and each
Over-allotment Option, if any, and the consummation of the
transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement, similar financing agreement or
instrument or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any
violation of the provisions of the Charter or By-laws of the
Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court
or governmental agency or body is required for the issue and
sale of the Securities or the consummation by the Company of
the transactions contemplated by this Agreement or any
Pricing Agreement, the Deposit Agreement, if applicable, the
Warrant Agreement, if applicable, or any Over-allotment
Option, except such as have been, or will have been prior to
each Time of Delivery (as defined in Section 4 hereof),
obtained under the Act and such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in
connection with the purchase and distribution of the
Designated Securities by the Underwriters;

(n) Other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely
to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse
effect on the consolidated financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;

(o) The Company and its subsidiaries have good
and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus
or such as do not materially affect the value of such
property and do not interfere with the use made and proposed
to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;

(p) Ernst & Young, who have certified certain
financial statements of the Company and its subsidiaries,
are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder;

(q) Each of the Principal Subsidiaries is duly
licensed to conduct an insurance business under the
insurance laws of each jurisdiction in which the conduct of
its business requires such licensing and of each
jurisdiction in which the failure to be so licensed would
have, individually or in the aggregate, a material adverse
effect on the business operations, consolidated financial
position, shareholders' equity or results of operations of
the Company and its subsidiaries (, taken as a whole); each
of the Company and the Principal Subsidiaries has all
consents, approvals, authorizations, orders, registrations
and qualifications of or with, and is in compliance with,
all statutes, orders, rules and regulations of, all courts
and governmental agencies and bodies having jurisdiction
over it and any of its properties, except where the failure
to have any such consent, approval, authorization, order,
registration or qualification, or so to comply, would not,
individually or in the aggregate with all other such
failures, have a material adverse effect on the business
operations, consolidated financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries (, taken as a whole); and there is no pending
or, to the knowledge of the Company, threatened action,
suit, proceeding or investigation that reasonably could lead
to the revocation, termination or suspension of, or
render invalid or otherwise ineffective, any such license,
consent, approval, authorization, order, registration or
qualification, other than any such revocation, termination,
suspension, invalidity or ineffectiveness that would not,
individually or in the aggregate with all other such
revocations, terminations, suspensions, invalidity and
ineffectiveness, have a material adverse effect on the
business operations, consolidated financial position,
shareholders' equity or results of operations of the Company
and its subsidiaries (, taken as a whole);

(r) All property-casualty reinsurance treaties
and arrangements to which any of the Company and the
Principal Subsidiaries is the ceding party are in full force
and effect, with such exceptions as would not individually
or in the aggregate have a material adverse effect on the
consolidated financial position, shareholders' equity or
results of operations of the Company and its subsidiaries,
and neither the Company nor any of the Principal
Subsidiaries is in violation of, or in default in the
performance, observance or fulfillment of, any obligation,
agreement, covenant or condition contained therein, except
to the extent that any such violation or default would not,
individually or in the aggregate with all such other
violations and defaults, have a material adverse effect on
the consolidated financial position, shareholders' equity
or results of operations of the Company and its
subsidiaries; neither the Company nor any of the Principal
Subsidiaries has received any notice from any of the other
parties to such treaties, contracts and arrangements that
such other party intends not to perform in any material
respect such treaty, contract or arrangement, and the
Company and the Principal Subsidiaries have no reason to
believe that any of the other parties to such treaties,
contracts and arrangements will be unable to perform in all
material respects its obligations under such treaties,
contracts and arrangements;

(s) The statutory financial statements of the
Principal Subsidiaries required or permitted to be prepared
in accordance with the insurance laws, rules and regulations
of any jurisdiction to which the Principal Subsidiaries are
subject, and from which certain ratios and other financial
and statistical data contained in the Registration Statement
and the Prospectus have been derived, have, for each
relevant period, been prepared in conformity in all material
respects with the requirements of such insurance laws,
rules and regulations and present fairly the information
purported to be shown;

(t) The reserves carried on the books of the
Principal Subsidiaries for payment of all benefits, losses,
claims and expenses under outstanding insurance policies and
programs are adequate, under presently accepted actuarial
principles applied on a consistent basis, to cover the total
amount of all reasonably anticipated liabilities under all
issued and outstanding insurance policies and programs under
which the Principal Subsidiaries may have any liability; and

(u) The Company has complied with all provisions
of Section 517.075 Florida Statutes (Chapter 92-198, Laws of
Florida).

3. Upon the execution of the Pricing Agreement
applicable to any Designated Securities and authorization by the
Representatives of the release of the Firm Securities, the
several Underwriters propose to offer the Firm Securities for
sale upon the terms and conditions set forth in the Prospectus
as amended or supplemented.

The Company may specify in the Pricing Agreement
applicable to any Designated Securities that the Company thereby
grants to the Underwriters the right (an "Overallotment Option")
to purchase at their election up to the number of Optional
Securities set forth in such Pricing Agreement, on the terms set
forth in the paragraph above, for the sole purpose of covering
over-allotments in the sale of the Firm Securities. Any such
election to purchase Optional Securities may be exercised by
written notice from the Representatives to the Company, given
within a period specified in the Pricing Agreement, setting
forth the aggregate number of Optional Securities to be
purchased and the date on which such Optional Securities are to
be delivered, as determined by the Representatives but in no
event earlier than the First Time of Delivery (as defined in
Section 4 hereof) or, unless the Representatives and the Company
otherwise agree in writing, earlier than or later than the
respective number of business days after the date of such notice
set forth in such Pricing Agreement.

The number of Optional Securities to be added to the
number of Firm Securities to be purchased by each Underwriter as
set forth in Schedule I to the Pricing Agreement applicable to
such Securities shall be, in each case, the number of Optional
Securities which the Company has been advised by the
Representatives have been attributed to such Underwriter,
provided that, if the Company has not been so advised, the
number of Optional Securities to be so added shall be, in each
case, that proportion of Optional Securities which the number of
Firm Securities to be purchased by such Underwriter under such
Pricing Agreement bears to the aggregate number of Firm
Securities (rounded as the Representatives may determine to the
nearest 100 shares). The total number of Designated Securities
to be purchased by all the Underwriters pursuant to such Pricing
Agreement shall be the aggregate number of Firm Securities set
forth in Schedule I to such Pricing Agreement plus the aggregate
number of the Optional Securities which the Underwriters elect
to purchase.

4. Certificates for the Firm Securities and Optional
Securities to be purchased by each Underwriter pursuant to the
Pricing Agreement relating thereto, in definitive form and in
such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours'
prior notice to the Company, shall be delivered by or on behalf
of the Company to the Representatives for the account of such
Underwriter, against payment by such Underwriter or on its
behalf of the purchase price therefor by certified or official
bank check or checks, payable to the order of the Company in the
funds specified in such Pricing Agreement, (i) with respect to
the Firm Securities, all at the place and time and date
specified in such Pricing Agreement or at such other place and
time and date as the Representatives and the Company may agree
upon in writing, such time and date being herein called the
"First Time of Delivery", and (ii) with respect to the Optional
Securities, if any, on the time and date specified by the
Representatives in the written notice given by the
Representatives of the Underwriters' election to purchase such
Optional Securities, or at such other time and date as the
Representatives and the Company may agree upon in writing, such
time and date, if not the First Time of Delivery, herein called
the "Second Time of Delivery". Each such time and date for
delivery is herein called a "Time of Delivery".

If applicable, as compensation to the Underwriters for
their commitments to purchase the Designated Securities, the
Company at each Time of Delivery will pay to the
Representatives, for the accounts of the several Underwriters,
an amount per share set forth in the Pricing Agreement relating
to the Designated Securities to be sold by the Company
thereunder.

5. The Company agrees with each of the Underwriters
of any Designated Securities:

(a) To prepare the Prospectus as amended and
supplemented in relation to the applicable Designated
Securities in a form approved by the Representatives and to
file such Prospectus pursuant to Rule 424(b) under the Act
not later than the Commission's close of business on the
second business day following the execution and delivery of
the Pricing Agreement relating to the applicable Designated
Securities or, if applicable, such earlier time as may be
required by Rule 424(b); to make no further amendment or any
supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing
Agreement relating to such Securities and prior to any Time
of Delivery for such Securities which shall be disapproved
by the Representatives for such Securities promptly after
reasonable notice thereof; to advise the Representatives
promptly of any such amendment or supplement after any Time
of Delivery for such Securities and furnish the
Representatives with copies thereof; to file promptly all
reports and any definitive proxy or information statements
required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is
required in connection with the offering or sale of such
Securities, and during such same period to advise the
Representatives, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed with the
Commission, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of
any prospectus relating to the Securities, of the
suspension of the qualification of such Securities for
offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or
for additional information; and, in the event of the
issuance of any such stop order or of any such order
preventing or suspending the use of any prospectus relating
to the Securities or suspending any such qualification, to
use promptly its best efforts to obtain its withdrawal;

(b) Promptly from time to time to take such
action as the Representatives may reasonably request to
qualify the Securities, the shares of Common Stock issuable
upon conversion of the Convertible Preferred Stock, the Debt
Securities issuable upon exchange of the Exchangeable
Preferred Stock and the Warrant Securities issuable upon
exercise of Warrants for offering and sale under the
securities laws of such jurisdictions as the Representatives
may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete
the distribution of the Securities, provided that in
connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;

(c) To furnish the Underwriters with copies of
the Prospectus as amended or supplemented in such quantities
as the Representatives may from time to time reasonably
request, and, if the delivery of a prospectus is required at
any time in connection with the offering or sale of the
Securities and if at such time any event shall have occurred
as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period
to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act, the Exchange Act
or the Trust Indenture Act, if applicable, to notify the
Representatives and upon their request to file such document
and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies
as the Representatives may from time to time reasonably
request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or
effect such compliance;

(e) During the period beginning from the date of
the Pricing Agreement for such Designated Securities and
continuing to and including (____) days after the last Time
of Delivery for such Designated Securities, not to offer,
sell, contract to sell or otherwise dispose of any shares of
capital stock or preferred stock of the Company which are
substantially similar to such Designated Securities or any
securities convertible, exercisable or exchangeable for
securities which are substantially similar to such
Designated Securities, without the prior written consent of
the Representatives;

(f) During a period of five years from the date
of the first Pricing Agreement, to furnish to the
Underwriters (A) copies of all reports or other
communications (financial or other) generally furnished to
stockholders, and deliver to the Underwriters (i) as soon as
they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any
national securities exchange on which the Securities or any
class of securities of the Company is listed and (ii) the
documents specified in Section ___ of the Warrant Agreement,
as in effect at the Time of Delivery; and (B) such
additional information concerning the business and financial
condition of the Company as the Representatives may from
time to time reasonably request (such financial statements
to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the
Commission);

(g) To reserve and keep available at all times,
free of preemptive rights, shares of Common Stock for the
purpose of enabling the Company to satisfy any obligations
to issue shares of its Common Stock upon conversion of the
Convertible Preferred Stock or exercise of Warrants, as the
case may be; and

(h) To use its best efforts to list any shares of
Common Stock on the New York Stock Exchange.

6. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the
registration of the Securities, the Debt Securities and the
Warrant Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, any Pricing Agreement, any
Deposit Agreement, any Warrant Agreement, any Blue Sky and Legal
Investment Memoranda and any other documents in connection with
the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the
Securities, the Debt Securities and the Warrant Securities for
offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and legal
investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) any filing fees incident
to any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities; (vi)
the cost of preparing certificates for the Securities and the
Warrant Securities; (vii) the cost and charges of any transfer
agent or registrar or dividend disbursing agent; (viii) the fees
and expenses of any Warrant Agent and any agent of any Warrant
Agent and the fees and disbursements of counsel for any Warrant
Agent in connection with the Warrant Agreement, the Warrants and
the Warrant Securities; (ix) any cost of preparing Depositary
Receipts evidencing Depositary Shares and the delivery of any
Depositary Shares to the Underwriters; (x) the costs and
expenses of the deposit of Offered Preferred Stock under any
Deposit Agreement in exchange for Depositary Receipts issued
thereunder, including the charges of the Depositary in
connection therewith; (xi) to the extent set forth in any
Deposit Agreement, the fees of the Depositary and any agent
appointed under the Deposit Agreement; and (xii) all other costs
and expenses incident to the performance of its obligations
hereunder and under any Over-allotment Options which are not
otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all
of their own costs and expenses, including the fees of their
counsel, transfer taxes on resale of any of the Securities by
them, and any advertising expenses connected with any offers
they may make.

(b) Davis Polk & Wardwell, counsel for the
Underwriters, shall have furnished to the Representatives
such opinion or opinions, dated each Time of Delivery for
such Designated Securities, with respect to the
incorporation of the Company, this Agreement, the Pricing
Agreement, the Warrant Agreement, if applicable, the Deposit
Agreement, if applicable, the validity of the Designated
Securities being delivered at such Time of Delivery, the
shares of Common Stock initially issuable upon conversion of
the Convertible Preferred Stock, if applicable, the Debt
Securities initially issuable upon exchange of the
Exchangeable Preferred Stock, if applicable, the Warrant
Securities issuable upon exercise of the Warrants, if
applicable, the Registration Statement, the Prospectus as
amended or supplemented and other related matters as the
Representatives may reasonably request, and such counsel
shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;

(ii) The Company has authorized capital
stock as set forth in the Prospectus as amended or
supplemented, and all of the issued shares of capital
stock of the Company (including, if applicable, the
Designated Common Stock being delivered at such Time of
Delivery) have been duly and validly authorized and
issued and are fully paid and non-assessable; and the
Designated Common Stock conforms to the description
thereof in the Prospectus as amended or supplemented;
the shares of Common Stock initially issuable upon
conversion of any Convertible Preferred Stock, if
applicable, have been duly and validly authorized and
reserved for issuance and, when issued and delivered in
accordance with the provisions of the Convertible
Preferred Stock, will be duly and validly issued and
fully paid and non-assessable; and all of the issued
shares of capital stock of the Principal Subsidiaries
of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable, and
(except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims (such
counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel
and in respect of matters of fact upon certificates of
officers of the Company or its Principal Subsidiaries,
provided that such counsel shall state that they
believe that both the Representatives and they are
justified in relying upon such opinions and
certificates);

(v) This Agreement and the Pricing
Agreement with respect to the Designated Securities
have been duly authorized, executed and delivered by
the Company;

(vi) The Designated Offered Preferred
Stock has been duly authorized; when the Designated
Offered Preferred Stock being delivered at such Time of
Delivery is countersigned, and paid for pursuant to
this Agreement and the Pricing Agreement with respect
to such Designated Offered Preferred Stock, such
Designated Offered Preferred Stock will be duly and
validly issued and fully paid and non-assessable; when
Depositary Receipts evidencing any Firm Depositary
Shares are issued and delivered against payment for the
Firm Offered Preferred Stock and against payment for
the Firm Depositary Shares pursuant to this
Agreement, the Pricing Agreement relating to the
Designated Depositary Shares and the Deposit Agreement
and, in the case of any Optional Depositary Shares,
pursuant to any Over-allotment Option, the Depositary
Receipts will be legally issued and will entitle the
holders thereof to the rights specified in the
Depositary Receipts and the Deposit Agreement; and the
Designated Offered Preferred Stock and the Designated
Depositary Shares conform to the descriptions thereof
contained in the Prospectus as amended or supple-
mented;

(vii) In the event that any of the
Designated Securities are Designated Depositary Shares,
the Deposit Agreement has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery by the
Depositary, constitutes a valid and legally binding
instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general
applicability relating to or affecting creditors'
rights and to general equity principles; and the
Deposit Agreement conforms to the description thereof
contained in the Prospectus as amended or supplemented;

(viii) In the event any of the Designated
Offered Preferred Stock is Exchangeable Preferred
Stock, the Debt Securities initially issuable upon
exchange of the Exchangeable Preferred Stock have been
duly authorized, and, when the Debt Securities are
issued and delivered in accordance with the provisions
of the Exchangeable Preferred Stock, such Debt
Securities will have been duly executed, authenticated,
issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to
the benefits provided by the Indenture; the Indenture
has been duly authorized and duly qualified under
the Trust Indenture Act and, at the time the Debt
Securities are issued, the Indenture will constitute a
valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
the Indenture conforms to the description thereof
contained in the Prospectus as amended or
supplemented;

(ix) In the event that any of the
Designated Securities are Designated Warrants, the
Designated Warrants have been duly authorized,
executed, issued and delivered and, when countersigned
by the Warrant Agent as provided by the Warrant
Agreement, will constitute valid and legally binding
obligations of the Company entitled to the benefits
provided by the Warrant Agreement;

(x) In the event that any of the
Designated Securities are Designated Warrants, the
Warrant Agreement has been duly authorized, executed
and delivered by the parties thereto and constitutes a
valid and legally binding instrument enforceable in
accordance with its terms subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
the Warrants and the Warrant Agreement conform to the
descriptions thereof contained in the Prospectus
as amended or supplemented;

(xi) In the event that any of the
Designated Securities are Designated Warrants, the
Warrant Securities initially issuable upon exercise of
the Designated Warrants have been duly authorized,
and, when duly executed and countersigned, if
applicable, and issued and delivered in accordance with
the provisions of the Warrant Agreement, will be duly
and validly issued and fully paid and non-assessable;

(xii) The issue and sale of the Designated
Securities being delivered at such Time of Delivery,
the issue of the shares of Common Stock upon conversion
of the Convertible Preferred Stock, if applicable, the
issue of the Debt Securities upon exchange of the
Exchangeable Preferred Stock, if applicable, and the
issue and sale of any Warrant Securities upon the
exercise of Warrants pursuant to the Warrant Agreement,
if applicable, and the compliance by the Company with
all of the provisions of this Agreement, the
Pricing Agreement with respect to the Designated
Securities, the Deposit Agreement, if applicable, and
the Warrant Agreement, if applicable, and the
consummation of the transactions herein and therein
contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture,
mortgage, deed of trust, sale/leaseback agreement, loan
agreement, similar financing agreement or instrument or
other agreement or instrument known to such counsel to
which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions
of the Charter or By-laws of the Company or any statute
or any order, rule or regulation known to such counsel
of any court or governmental agency or body having
jurisdiction over the Company or any of its
subsidiaries or any of their properties;

(xiii) No consent, approval, authorization,
order, registration or qualification of or with any
such court or governmental agency or body is required
for the issue and sale of the Designated Securities or
the consummation by the Company of the transactions
contemplated by this Agreement, such Pricing Agreement,
the Deposit Agreement, if applicable, and the Warrant
Agreement, if applicable, except such as have been
obtained under the Act and the Trust Indenture Act, if
applicable, and such consents, approvals,
authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the
Designated Securities by the Underwriters;

(xv) The Registration Statement and the
Prospectus as amended or supplemented and any further
amendments and supplements thereto made by the Company
prior to the Time of Delivery for the Designated
Securities (other than the financial statements,
related schedules and other financial information
therein, as to which such counsel need express no
opinion) comply as to form in all material respects
with the requirements of the Act and the Trust
Indenture Act, if applicable, and the rules and
regulations thereunder; and they do not know of any
amendment to the Registration Statement required to be
filed or any contracts or other documents of a
character required to be filed as an exhibit to the
Registration Statement or required to be incorporated
by reference into the Prospectus as amended or
supplemented or required to be described in the
Registration Statement or the Prospectus as amended or
supplemented which are not filed or incorporated
by reference or described as required.

(i) The Company has been duly qualified as a
foreign corporation for the transaction of business
and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such
qualification, or is subject to no material liability
or disability by reason of the failure to be so
qualified in any jurisdiction (such counsel being
entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that
they believe that both the Representatives and they are
justified in relying upon such opinions and
certificates);

(ii) To the best of such counsel's knowledge
and other than as set forth in the Prospectus, there
are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party
or of which any property of the Company or any of its
subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material
adverse effect on the consolidated financial
position, shareholders' equity or results of operations
of the Company and its subsidiaries; and, to the best
of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities
or threatened by others;

In addition to the matters set forth above,
the opinions delivered pursuant to paragraphs (c) and (d)
above shall also contain a statement to the effect that
while such counsel are not passing upon, and do not assume
responsibility for, the accuracy, completeness or fairness
of the Registration Statement or the Prospectus, or any
further amendment or supplement thereto, including the
documents incorporated by reference therein, based upon the
procedures referred to in such opinion nothing has come to
the attention of such counsel which leads them to believe
(i) that the Registration Statement as of its effective date
or the Prospectus as of its date or any further amendment or
supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements, related
schedules and other financial information therein, as to
which such counsel need express no belief) contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) that as
of such Time of Delivery, either the Registration
Statement or the Prospectus (or any such further amendment
or supplement thereto) contains an untrue statement of a
material fact or omits to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading, or (iii) that any of the documents
incorporated by reference in the Prospectus which were
effective or filed with the Commission prior to such Time of
Delivery (other than the financial statements, related
schedules and other financial information therein, as to
which such counsel need express no belief), as of the
respective dates when they became effective or were filed
with the Commission, as the case may be, in each case after
excluding any statement in any such document which does not
constitute part of the Registration Statement or the
Prospectus pursuant to Rule 412 of Regulation C under the
Act and after substituting therefor any statement modifying
or superseding such excluded statement, contained, in the
case of a registration statement which became effective
under the Act, an untrue statement of a material fact or
omitted to state a material fact required to be stated
therein necessary to make the statements therein not
misleading, and in the case of other documents which were
filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made
when such documents were so filed, not misleading.

(f) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the
latest audited financial statements included or incorporated
by reference in the Prospectus as amended or supplemented
any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus as amended or
supplemented, and (ii) since the respective dates as of
which information is given in the Prospectus as amended or
supplemented there shall not have been (x) any addition, or
any development involving a prospective addition, to either
the Company's consolidated reserve for property/casualty
insurance claims and claims expense or the consolidated
reserve for life insurance policy benefits, (y) any change
in the capital stock, short- term debt or long-term debt of
the Company or any of its subsidiaries, or (z) any change,
or any development involving a prospective change, in or
affecting the general affairs, management, financial
position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus as amended or
supplemented, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Firm Securities or the
Optional Securities or both on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;

(g) On or after the date of the Pricing Agreement
relating to the Designated Securities (i) no downgrading
shall have occurred in the rating accorded the Company's
debt securities or preferred stock by any "nationally
recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2)
under the Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of
the Company's debt securities or preferred stock;

(h) On or after the date of the Pricing Agreement
relating to the Designated Securities there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New
York Stock Exchange; (ii) a general moratorium on commercial
banking activities in New York declared by either Federal or
New York State authorities; (iii) the outbreak or escalation
of hostilities involving the United States or the
declaration by the United States of a national emergency or
war if the effect of any such event specified in this Clause
(iii) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Firm Securities or the
Optional Securities or both on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;
or (iv) the occurrence of any material adverse change in the
existing financial, political or economic conditions in
the United States or elsewhere which, in the judgment of the
Representatives would materially and adversely affect the
financial markets or the market for the Securities and other
debt or equity securities;

9. (a) If any Underwriter shall default in its
obligation to purchase the Firm Securities or Optional
Securities which it has agreed to purchase under the Pricing
Agreement relating to such Securities, the Representatives may
in their discretion arrange for themselves or another party or
other parties to purchase such Securities on the terms contained
herein. If within thirty-six hours after such default by any
Underwriter the Representatives do not arrange for the purchase
of such Firm Securities or Optional Securities, as the case may
be, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other
parties satisfactory to the Representatives to purchase such
Securities on such terms. In the event that, within the
respective prescribed period, the Representatives notify the
Company that they have so arranged for the purchase of such
Securities, or the Company notifies the Representatives that it
has so arranged for the purchase of such Securities, the
Representatives or the Company shall have the right to postpone
such Time of Delivery for such Securities for a period of not
more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the
Prospectus as amended or supplemented, or in any other documents
or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the
Prospectus which in the opinion of the Representatives may
thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any person substituted under this
Section with like effect as if such person had originally been a
party to the Pricing Agreement with respect to such Designated
Securities.

(b) If, after giving effect to any arrangements for
the purchase of the Firm Securities or Optional Securities, as
the case may be, of a defaulting Underwriter or Underwriters by
the Representatives and the Company as provided in subsection
(a) above, the aggregate number of such Securities which remains
unpurchased does not exceed one-eleventh of the aggregate number
of the Firm Securities or Optional Securities, as the case may
be, to be purchased at the respective Time of Delivery, then the
Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Firm Securities or
Optional Securities, as the case may be, which such Underwriter
agreed to purchase under the Pricing Agreement relating to such
Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based
on the number of Firm Securities or Optional Securities, as the
case may be, which such Underwriter agreed to purchase under
such Pricing Agreement) of the Firm Securities or Optional
Securities, as the case may be, of such defaulting Underwriter
or Underwriters for which such arrangements have not been made;
but nothing herein shall relieve a defaulting Underwriter from
liability for its default.

(c) If, after giving effect to any arrangements for
the purchase of the Firm Securities or Optional Securities, as
the case may be, of a defaulting Underwriter or Underwriters by
the Representatives and the Company as provided in subsection
(a) above, the aggregate number of Firm Securities or Optional
Securities, as the case may be, which remains unpurchased
exceeds one-eleventh of the aggregate number of the Firm
Securities or Optional Securities, as the case may be, to be
purchased at the respective Time of Delivery, as referred to in
subsection (b) above, or if the Company shall not exercise the
right described in subsection (b) above to require
non-defaulting Underwriters to purchase Firm Securities or
Optional Securities, as the case may be, of a defaulting
Underwriter or Underwriters, then the Pricing Agreement relating
to such Firm Securities or the Over-allotment Option relating to
such Optional Securities, as the case may be, shall thereupon
terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6
hereof and the indemnity and contribution agreements in Section
8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.

11. If any Pricing Agreement or Over-allotment Option
shall be terminated pursuant to Section 9 hereof or by the
Representatives pursuant to Section 7(h) hereof, the Company
shall not then be under any liability to any Underwriter with
respect to the Firm Securities or Optional Securities with
respect to which such Pricing Agreement shall have been
terminated except as provided in Section 6 and Section 8 hereof;
but, if for any other reason Designated Securities are not
delivered by or on behalf of the Company as provided herein, the
Company will reimburse the Underwriters through the
Representatives for all out-ofpocket expenses approved in
writing by the Representatives, including fees and disbursements
of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of such
Designated Securities, but the Company shall then be under no
further liability to any Underwriter with respect to such
Designated Securities except as provided in Section 6 and
Section 8 hereof.

13. This Agreement and each Pricing Agreement shall
be binding upon, and inure solely to the benefit of, the
Underwriters, the Company and, to the extent provided in Section
8 and Section 10 hereof, the officers and directors of the
Company and each person who controls the Company or any
Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement or any such Pricing Agreement. No purchaser of any of
the Securities from any Underwriter shall be deemed a successor
or assign by reason merely of such purchase.

14. Time shall be of the essence of each Pricing
Agreement. As used herein, "business day" shall mean any day
when the Commission's office in Washington, D.C. is open for
business.

15. This Agreement and each Pricing Agreement shall
be governed by and construed in accordance with the laws of the
State of New York.

Very truly yours,

USF&G Corporation

By:_____________________
Name: Title:

ANNEX I

Pricing Agreement

(Name of Representative,) (Name of Co-Representative(s),) As
Representatives of the several Underwriters named in Schedule I
hereto, (c/o Representatives,) (Address of Representatives)

____________________, 19__

Dear Sirs:

USF&G Corporation, a Maryland corporation (the
"Company"), proposes, subject to the terms and conditions stated
herein and in the Underwriting Agreement, dated ____________ __,
19__ (the "Underwriting Agreement"), to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") the
Securities specified in Schedule II hereto (the "Designated
Securities" (consisting of Firm Securities and any Optional
Securities the Underwriters may elect to purchase)). Each of
the provisions of the Underwriting Agreement is incorporated
herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions
had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed
to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which
refers to the Prospectus in Section 2 of the Underwriting
Agreement shall be deemed to be a representation or warranty as
of the date of the Underwriting Agreement in relation to the
Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to
the Prospectus as amended or supplemented relating to the
Designated Securities which are the subject of this Pricing
Agreement. Each reference to the Representatives herein and in
the provisions of the Underwriting Agreement so incorporated by
reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are
used herein as therein defined. The Representatives designated
to act on behalf of the Representatives and on behalf of each of
the Underwriters of the Designated Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the
Representatives referred to in such Section 12 are set forth at
the end of Schedule II hereto.

Subject to the terms and conditions set forth herein
and in the Underwriting Agreement incorporated herein by
reference, ((a)) the Company agrees to issue and sell to each of
the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company, at the time and
place and at the purchase price to the Underwriters set forth in
Schedule II hereto, the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule I hereto (,
and (b) in the event and to the extent that the Underwriters
shall exercise the election to purchase Optional Securities, as
provided below, the Company agrees to issue and sell to each of
the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company at the purchase
price to the Underwriters set out in Schedule II hereto that
portion of the number of Optional Securities as to which such
election shall have been exercised).

(The Company hereby grants to each of the Underwriters
the right to purchase at their election up to the number of
Optional Securities set forth opposite the name of such
Underwriter in Schedule I hereto on the terms referred to in the
paragraph above for the sole purpose of covering over-allotments
in the sale of the Firm Securities. Any such election to
purchase Optional Securities may be exercised by written notice
from the Representatives to the Company given within a period of
30 calendar days after the date of this Pricing Agreement,
setting forth the aggregate number of Optional Securities to be
purchased and the date on which such Optional Securities are to
be delivered, as determined by the Representatives but in no
event earlier than the First Time of Delivery or, unless the
Representatives and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date
of such notice.)

Very truly yours,

USF&G Corporation

By:________________________
Name:
Title:

Accepted as of the date hereof:

(Name of Representative)

By:_____________________________

SCHEDULE I

(Maximum Number of
Number of (Firm) Optional
Securities Securities Which
Underwriter to be Purchased May be Purchased)

Total . . . . . ____________

============

SCHEDULE II

Title of Designated Common Stock:

Number of Shares of Designated Common Stock:

Number of Shares of Firm Common Stock:

Maximum Number of Shares of Optional Common Stock:

Initial Offering Price to Public:

($________ per Share) (Formula)

Purchase Price by Underwriters:

($________ per Share) (Formula)

(Commission Payable to Underwriters: $_______ per Share)

Specified Funds for Payment of Purchase Price:

(New York) Clearinghouse Funds

Title of Designated Offered Preferred Stock (including
Designated Depositary Shares):

(Date of Board Resolution Fixing the Terms and Conditions of the
Designated Offered Preferred Stock: ........, 19..)

Number of Shares of Designated Offered Preferred Stock
(Designated Depositary Shares):

Number of Shares of Firm Offered Preferred Stock (Firm
Depositary Shares):

Maximum Number of Shares of Optional Offered Preferred
Stock (Optional Depositary Shares):

(If Depositary Shares are to be issued:

_____ Depositary Shares shall represent the right to
receive an aggregate of ____ shares of Designated Offered
Preferred Stock. Each Designated Depositary Share will
represent one-___( ) of a share of Designated Offered
Preferred Stock.)

Initial Offering Price to Public:

($...... per (Depositary) Share) (Formula)

Purchase Price by Underwriters:

($...... per (Depositary) Share) (Formula)

Specified Funds for Payment of Purchase Price:

(New York) Clearinghouse Funds

Dividend Rate:

(.....% per annum)

Dividend Payment Dates:

(months and dates)

Dividend Rights:

(Non-) cumulative, (deferred)

Voting Rights:

Liquidation Rights:

Preemptive Rights:

Redemption Provisions:

(No provisions for redemption)

(The Designated Offered Preferred Stock (Designated
Depositary Shares) may be redeemed, (otherwise than through
the sinking fund,) in whole or in part at the option of the
Company, on or after ________, ____ at the following
redemption prices:

Redemption Year
Price ----
----------

and thereafter at $.... per share, together in each
case with accrued dividends to the redemption date.) (On any
dividend payment date falling on or after ________, ____, at
the election of the Company, at a redemption price equal to
the stated amount thereof, plus accrued dividends to the
date of redemption.)

(Other possible redemption provisions, such as
mandatory redemption upon occurrence of certain events or
redemption for changes in tax law)

Sinking Fund Provisions:

(None)

(The shares of Designated Offered Preferred Stock
(Designated Depositary Shares) are entitled to the benefit
of a sinking fund to retire ______ shares of Designated
Offered Preferred Stock (Designated Depositary Shares) on
________ in each of the years ____ through ____ at 100% of
their stated amount plus accrued dividends) (,together with
(cumulative) (non- cumulative) redemptions at the option of
the Company to retire an additional ...... shares of
Designated Offered Preferred Stock (Designated Depositary
Shares) in the years ____ through ____ at 100% of their
stated amount plus accrued dividends.)

(Convertible into Common Stock:)

(Exchangeable into Debt Securities:)

Title of Designated Warrants:

Number of Designated Warrants:

Number of Firm Warrants:

Maximum Number of Optional Warrants:

Initial Offering Price to Public:

($____ per Warrant)

Purchase Price By Underwriters:

($____ per Warrant)

Specified Funds for Payment of Purchase Price:

(New York) Clearinghouse Funds

Warrant Agreement:

The Warrants to be evidence by warrant certificates and
to be issued pursuant to the provisions of a Warrant
Agreement dated as of _________, 19__ (the "Warrant
Agreement") between the Company and ____________, and
Warrant Agent

Exercise Date:

Expiration Date:

Exercise Price:

Number of Shares of Warrant Securities Purchasable Upon Exercise
of One Warrant:

(Detachable Date:)

(Other Terms:)

Title and Terms of Warrant Securities:

For All Designated Securities:

Time of Delivery:

___________, 19__

Closing Location for Delivery of Securities:

Names and addresses of Representatives:

Designated Representatives:

Address for Notices, etc.:

(Other Terms):(*)

- ------------(*) A description of particular tax, accounting or
other unusual features (including any event risk provisions) of
the Designated Securities should be set forth, or referenced to
an attached and accompanying description, if necessary to ensure
agreement as to the terms of the Securities to be purchased and
sold. Such a description might appropriately be in the form
which such features will be described in the Prospectus
Supplement for the offering.

ANNEX II

Pursuant to Section 7(e) of the Underwriting
Agreement, the accountants shall furnish letters to the
Underwriters to the effect that:

(i) They are independent certified public
accountants with respect to the Company and its subsidiaries
within the meaning of the Act and the applicable published
rules and regulations thereunder;

(A) any material modifications should be
made to the unaudited condensed consolidated statements
of income, consolidated balance sheets and consolidated
statements of cash flows included or incorporated by
reference in the Company's Quarterly Report on Form
10-Q incorporated by reference in the Prospectus, for
them to be in conformity with generally accepted
accounting principles;

USF&G CORPORATION

SIGNET TRUST COMPANY,

TRUSTEE

INDENTURE

Dated as of January 28, 1994

Senior Debt Securities

USF&G CORPORATION

Reconciliation and tie between certain Sections of
this Indenture, dated as of January 28, 1994, and
Section 310 through 318, inclusive, of
the Trust Indenture Act of 1939:

Trust Indenture Indenture
Act Section 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(a)
(b) . . . . . . . . . . . . . . . . . . 702(b)

Section 313(a) . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . 703(b)

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(c)
Section 317(a)(1) . . . . . . . . . . . . . . . . . .503
(a)(2) . . . . . . . . . . . . . . . . . .504
(b) . . . . . . . . . . . . . . . . . .1003
Section 318(a) . . . . . . . . . . . . . . . . . .107

- --

271.Z02058B:1/20/94
4523-20

TABLE OF CONTENTS

PAGE

PARTIES. . . . . . . . . . . . . . . . . . . . . . . . .1
RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . .1

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 101. Definitions. . . . . . . . . . . . . . . . .1
Act. . . . . . . . . . . . . . . . . . . . .2
Authenticating Agent . . . . . . . . . . . .2
Board of Directors . . . . . . . . . . . . .2
Board Resolution . . . . . . . . . . . . . .2
Business Day . . . . . . . . . . . . . . . .3
Commission . . . . . . . . . . . . . . . . .3
Common Stock . . . . . . . . . . . . . . . .3
Company. . . . . . . . . . . . . . . . . . .3
Company Request; Company Order . . . . . . .3
Corporate Trust Office . . . . . . . . . . .4
Corporation. . . . . . . . . . . . . . . . .4
Covenant Defeasance. . . . . . . . . . . . .4
Defaulted Interest . . . . . . . . . . . . .4
Defeasance . . . . . . . . . . . . . . . . .4
Depositary . . . . . . . . . . . . . . . . .4
Event of Default . . . . . . . . . . . . . .4
Exchange Act . . . . . . . . . . . . . . . .4
Floating or Adjustable Rate Provision. . . .4
Floating or Adjustable Rate Security . . . .4
Foreign Government Obligations . . . . . . .4
Global Security. . . . . . . . . . . . . . .4
Holder . . . . . . . . . . . . . . . . . . .5
Indenture. . . . . . . . . . . . . . . . . .5
Interest . . . . . . . . . . . . . . . . . .5
Interest Payment Date. . . . . . . . . . . .5
Maturity . . . . . . . . . . . . . . . . . .5
Notice of Default. . . . . . . . . . . . . .5
Officers' Certificate. . . . . . . . . . . .5

Opinion of Counsel . . . . . . . . . . . . .6
Original Issue Discount Security . . . . . .6
Outstanding. . . . . . . . . . . . . . . . .6
Paying Agent . . . . . . . . . . . . . . . .7
Person . . . . . . . . . . . . . . . . . . .7
Place of Payment . . . . . . . . . . . . . .7
Predecessor Security . . . . . . . . . . . .7
Principal Insurance Subsidiary . . . . . . .8
Redempton Date . . . . . . . . . . . . . . .8
Redemption Price . . . . . . . . . . . . . .8
Regular Record Date. . . . . . . . . . . . .8
Responsible Officer. . . . . . . . . . . . .8
Securities . . . . . . . . . . . . . . . . .8
Security Register and Security Registrar . .8
Special Record Date. . . . . . . . . . . . .9
Stated Maturity. . . . . . . . . . . . . . .9
Subsidiary . . . . . . . . . . . . . . . . .9
Trustee. . . . . . . . . . . . . . . . . . .9
Trust Indenture Act. . . . . . . . . . . . .9
U.S. Government Obligations. . . . . . . . .9
Vice President . . . . . . . . . . . . . . .9

Section 102. Compliance Certificates and Opinions . . . .9

Section 103. Form of Documents Delivered to Trustee . . .10

Section 104. Acts of Holders; Record Dates. . . . . . . .11

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 . . . . . . . . . . . . . . .15

Section 114. Personal Immunity from Liability for
Incorporators, Stockholders, Etc . . . . . .15

ARTICLE TWO

SECURITY FORMS

Section 201. Forms Generally. . . . . . . . . . . . . . .15

Section 202. Form of Face of Security . . . . . . . . . .16

Section 203. Form of Reverse of Security. . . . . . . . .19

Section 204. Form of Legend for Global Securities . . . .24

Section 205. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . .25

Section 206. Form of Conversion Notice. . . . . . . . . .25

ARTICLE THREE

THE SECURITIES

Section 301. Amount Unlimited; Issuable in Series . . . .27

Section 302. Denominations. . . . . . . . . . . . . . . .30

Section 303. Execution, Authentication, Delivery
and Dating . . . . . . . . . . . . . . . . .30

Section 304. Temporary Securities . . . . . . . . . . . .32

Section 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . .33

Section 306. Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . .35

Section 307. Payment of Interest; Interest Rights
Preserved . . . . . . . . . . . . . . . . .36

Section 308. Persons Deemed Owners. . . . . . . . . . . .38

Section 309. Cancellation . . . . . . . . . . . . . . . .38

Section 310. Computation of Interest. . . . . . . . . . .39

ARTICLE FOUR

SATISFACTION AND DISCHARGE

Section 401. Satisfaction and Discharge of Indenture. . .39

Section 402. Application of Trust Fund. . . . . . . . . .41

ARTICLE FIVE

REMEDIES

Section 501. Events of Default. . . . . . . . . . . . . .41

Section 502. Acceleration of Maturity; Rescission
and Annulment. . . . . . . . . . . . . . . .45

Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . .47

Section 504. Trustee May File Proofs of Claim . . . . . .48

Section 505. Trustee May Enforce Claims Without
Possession of Securities . . . . . . . . . .89

Section 506. Application of Money Collected . . . . . . .49

Section 507. Limitation on Suits. . . . . . . . . . . . .49

Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest
and to Convert . . . . . . . . . . . . . .50

Section 509. Restoration of Rights and Remedies . . . . .50

Section 510. Rights and Remedies Cumulative . . . . . . .51

Section 511. Delay or Omission Not Waiver . . . . . . . .51

Section 512. Control by Holders . . . . . . . . . . . . .51

Section 513. Waiver of Past Defaults. . . . . . . . . . .52

Section 514. Undertaking for Costs. . . . . . . . . . . .53

ARTICLE SIX

THE TRUSTEE

Section 601. Certain Duties and Responsibilities. . . . .53

Section 602. Notice of Defaults . . . . . . . . . . . . .53

Section 603. Certain Rights of Trustee. . . . . . . . . .54

Section 604. Not Responsible for Recitals or
Issuance of Securities . . . . . . . . . . .55

Section 605. May Hold Securities. . . . . . . . . . . . .55

Section 606. Money Held in Trust. . . . . . . . . . . . .56

Section 607. Compensation and Reimbursement . . . . . . .56

Section 608. Disqualification; Conflicting
Interests. . . . . . . . . . . . . . . . . .57

Section 609. Corporate Trustee Required; Eligibility. . .57

Section 610. Resignation and Removal; Appointment
of Successor . . . . . . . . . . . . . . . .57

Section 611. Acceptance of Appointment by Successor . . .59

Section 612. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . .61

Section 613. Preferential Collection of Claims
Against Company. . . . . . . . . . . . . . .61

Section 614. Appointment of Authenticating Agent. . . . .61

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

Section 701. Company to Furnish Trustee Names and
Addresses of Holders . . . . . . . . . . . .63

Section 702. Preservation of Information;
Communications to Holders. . . . . . . . . .64

Section 703. Reports by Trustee . . . . . . . . . . . . .64

Section 704. Reports by Company . . . . . . . . . . . . .64

ARTICLE EIGHT

CONSOLIDATION, MERGER OR SALE OF ASSETS

Section 801. Company May Consolidate, Etc., Only on
Certain Terms. . . . . . . . . . . . . . . .65

Section 802. Successor Substituted. . . . . . . . . . . .66

ARTICLE NINE

SUPPLEMENTAL INDENTURES

Section 901. Supplemental Indentures Without Consent
of Holders . . . . . . . . . . . . . . . . .67

Section 902. Supplemental Indentures with Consent
of Holders . . . . . . . . . . . . . . . . .68

Section 903. Execution of Supplemental Indentures . . . .70

Section 904. Effect of Supplemental Indentures. . . . . .70

Section 905. Conformity with Trust Indenture Act. . . . .70

Section 906. Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . . .71

Section 907. Waiver of Compliance by Holders. . . . . . .71

ARTICLE TEN

COVENANTS

Section 1001. Payment of Principal, Premium and Interest .71

Section 1002. Maintenance of Office or Agency. . . . . . .71

Section 1003. Money for Securities Payments to be
Held in Trust. . . . . . . . . . . . . . . .72

Section 1004. Statement by Officers as to Default. . . . .73

Section 1005. Limitations on Liens on Common Stock of
Principal Insurance Subsidiaries . . . . . .74

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

Section 1101. Applicability of Article . . . . . . . . . .74

Section 1102. Election to Redeem, Notice to Trustee. . . .74

Section 1103. Selection by Trustee of Securities
to Be Redeemed . . . . . . . . . . . . . . .75

Section 1104. Notice of Redemption . . . . . . . . . . . .75

Section 1105. Deposit of Redemption Price. . . . . . . . .76

Section 1106. Securities Payable on Redemption Date. . . .77

Section 1107. Securities Redeemed in Part. . . . . . . . .77

ARTICLE TWELVE

CONVERSION OF SECURITIES

Section 1201. Applicability of Article . . . . . . . . . .78

Section 1202. Exercise of Conversion Privilege . . . . . .78

Section 1203. No Fractional Shares . . . . . . . . . . . .79

Section 1204. Adjustment of Conversion Price . . . . . . .80

Section 1205. Notice of Certain Corporate Actions. . . . .80

Section 1206. Reservation of Shares of Common Stock. . . .82

Section 1207. Payment of Certain Taxes Upon Conversion . .82

Section 1208. Nonassessability . . . . . . . . . . . . . .82

Section 1209. Effect of Consolidation or Merger on
Conversion Privilege . . . . . . . . . . . .82

Section 1210. Duties of Trustee Regarding Conversion . . .84

Section 1211. Repayment of Certain Funds Upon Conversion .84

ARTICLE THIRTEEN

DEFEASANCE AND COVENANT DEFEASANCE

Section 1301. Company's Option to Effect Defeasance or
Covenant Defeasance. . . . . . . . . . . . .85

Section 1302. Defeasance and Discharge . . . . . . . . . .85

Section 1303. Covenant Defeasance. . . . . . . . . . . . .85

Section 1304. Conditions to Defeasance or
Covenant Defeasance. . . . . . . . . . . . .86

Section 1305. Deposited Money and U.S. Government
Obligations or Foreign Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions . . . . . . .90

Section 1306. Reinstatement. . . . . . . . . . . . . . . .91

ARTICLE FOURTEEN

SINKING FUNDS

Section 1401. Applicability of Article . . . . . . . . . .91

Section 1402. Satisfaction of Sinking Fund Payments
with Securities. . . . . . . . . . . . . . .91

Section 1403. Redemption of Securities for Sinking Fund. .92

TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . .93

SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . .94

ACKNOWLEDGMENTS. . . . . . . . . . . . . . . . . . . . . .94

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

INDENTURE, dated as of January 28, 1994, between USF&G
CORPORATION, a Maryland corporation (herein called the
"Company"), having its principal office at 100 Light Street,
Baltimore, Maryland 21202, and SIGNET TRUST COMPANY, a banking
association incorporated and existing under the laws of the
Commonwealth of Virginia, as Trustee (herein called the
"Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time

of its debentures, notes or other evidences of indebtedness
(herein called the "Securities"), to be issued in one or more
series as in this Indenture provided.

All things necessary to make this Indenture a valid
agreement of the Company, in accordance with 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 or of series thereof, as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

Section 101. Definitions.

For all purposes of this Indenture and of any indenture
supplemental hereto, 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;

(2) all other terms used herein which are
defined in the Trust Indenture Act or the
Securities Act of 1933, as amended, 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 at the date of such
computation;

(4) the words "Article" and "Section" refer
to an Article and Section, respectively, 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.

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

to authenticate Securities of one or more series.

"Board of Directors" means either (i) the board of
directors of the Company, the executive committee of such board
of directors or any other duly authorized committee of
directors and/or officers appointed by such board of directors
or executive committee, or (ii) one or more duly authorized
officers of the Company to whom the board of directors of the
Company or a committee thereof has delegated the authority to
act with respect to the matters contemplated by this Indenture.

"Board Resolution" means (i) a copy of a resolution
certified by the Corporate Secretary or an Assistant Corporate
Secretary of the Company to have been duly adopted by the Board
of Directors or a committee thereof and to be in full force and

effect on the date of such certification or (ii) a certificate
signed by the authorized officer or officers of the Company to
whom the board of directors of the Company or a committee
thereof has delegated its authority (as described in the
definition of Board of Directors), and in each case, delivered
to the Trustee.

"Business Day", when used with respect to any Place of
Payment, means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in that

Place of Payment are authorized or obligated by law, regulation or
executive order to close.

"Commission" means the Securities and Exchange Commission,
as 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.

"Common Stock" means, with respect to the Company, its
common stock, $2.50 par value per share, or any other shares of capital
stock of the Company into which the Common Stock shall be reclassified or
changed and with respect to any Principal Insurance Subsidiary, stock of
any class, however designated, except stock which is non-participating
beyond fixed dividend and liquidation preferences and the holders of
which have either no voting rights or limited voting rights
entitling them, only in the case of certain contingencies, to
elect less than a majority of the directors (or persons
performing similar functions) of such Principal Insurance
Subsidiary, and shall include securities of any class, however
designated, which are convertible into such Common Stock.

"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 (i) any
two of the following individuals: the Chairman, the President,
an Executive Vice President or a Vice President or (ii) by one
of the foregoing individuals and by any other Vice President,
the Treasurer, an Assistant Treasurer, the Corporate Secretary
or an Assistant Corporate Secretary or any other individual
authorized by the Board of Directors for such purpose, and
delivered to the Trustee.

"conversion price" means the amount of Common Stock issuable upon
conversion of any Securities and, in the case of any specific series of
Securities may be expressed in terms of either a conversion price or a
conversion rate.

"Corporate Trust Office" means the principal office of the
Trustee currently located at 7 St. Paul Street, Baltimore, Maryland 21202
at which at any particular time its corporate trust business
shall be administered.

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

"Covenant Defeasance" has the meaning specified in Section
1303.

"Defaulted Interest" has the meaning specified in Section
307.

"Defeasance" has the meaning specified in Section 1302.

"Depositary" means, with respect to Securities of any
series issuable in whole or in part in the form of one or more
Global Securities, a clearing agency registered under the
Exchange Act that is designated to act as Depositary for such
Securities as contemplated by Section 301.

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

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

"Floating or Adjustable Rate Provision" means a formula or
provision, specified in or pursuant to a Board Resolution or an
indenture supplemental hereto, providing for the determination,

whether pursuant to objective factors or pursuant to the sole
discretion of any Person (including the Company), and periodic
adjustment of the interest rate borne by a Floating or
Adjustable Rate Security.

"Floating or Adjustable Rate Security" means any Security
which provides for interest thereon at a periodic rate that may
vary from time to time over the term thereof in accordance with
a Floating or Adjustable Rate Provision.

"Foreign Government Obligations" has the meaning specified
in Section 1304.

"Global Security" means a Security that evidences all or
part of the Securities of any series and is authenticated and
delivered to, and registered in the name of, the Depositary for
such Securities or a nominee thereof.

"Holder" means a Person in whose name a Security is
registered in the Security Register.

"Indenture" means this instrument as originally executed
or 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 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. The term "Indenture"
shall also include the terms of particular series of Securities
established as contemplated by Section 301.

"interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after
Maturity, means interest payable after Maturity.

"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an instalment of
interest on such Security.

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

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

"Officers' Certificate" means a certificate signed by (i)
any two of the following individuals: the Chairman, the
President, an Executive Vice President or a Vice President, or
(ii) by one of the foregoing individuals and by any other Vice
President, the Treasurer, an Assistant Treasurer, the Corporate
Secretary or an Assistant Corporate Secretary, of the Company,
or any other individual authorized by the Board of Directors
for such purpose, and delivered to the Trustee.

"Opinion of Counsel" means a written opinion of counsel,
who may be an employee of or counsel to the Company or other counsel, and
who is reasonably satisfactory to the Trustee.

"Original Issue Discount Security" means any Security
which provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502.

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

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

(ii) 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 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;

(iii) Securities as to which Defeasance has
been effected pursuant to Section 1302; and

(iv) 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 any request, demand, authorization, direction,
notice, consent or waiver hereunder, (A) the principal amount
of an Original Issue Discount Security that shall be deemed to
be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof
pursuant to Section 502, (B) the principal amount of a Security
denominated in one or more foreign currencies or currency units
shall be the U.S. dollar equivalent, determined in the manner
provided as contemplated by Section 301 on the date of original
issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar
equivalent on the date of original issuance of such Security of
the amount determined as provided in (A) above) of such
Security, and (C) Securities owned by the Company or any other
obligor upon the Securities or any Subsidiary 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 or waiver, 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 Subsidiary 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, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

"Place of Payment", when used with respect to the
Securities of any series, means the place or places where the
principal of and any premium and interest on the Securities of
that series are payable as specified as contemplated by Section
301.

"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.

"Principal Insurance Subsidiary" means only United States
Fidelity and Guaranty Company and Fidelity and Guaranty Life
Insurance Company, and any other Subsidiary of the Company
which shall hereafter succeed by merger or otherwise to a major
part of the business of one or more of the Principal Insurance
Subsidiaries. The decision as to whether a Subsidiary shall
have succeeded to a major part of the business of one or more
of the Principal Insurance Subsidiaries shall be made in good
faith by the board of directors of the Company or a committee
thereof by the adoption of a resolution so stating, and the
Company shall within 30 days of the date of the adoption of
such resolution deliver to the Trustee a copy thereof,
certified by the Corporate Secretary or an Assistant Corporate
Secretary of the Company.

"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.

"Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series means the
date specified for that purpose as contemplated by Section 301.

"Responsible Officer", when used with respect to the
Trustee, means the chairman or any vice-chairman of the board
of directors, the chairman or any vice-chairman of the
executive committee of the board of directors, the chairman of
the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller or any
assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by
any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.

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

"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.

"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 instalment of principal thereof or interest thereon,
means the date specified in such Security as the fixed date on
which the principal of such Security or such instalment of
principal or interest is due and payable.

"Subsidiary" means a corporation more than 50% of the
voting power of which is controlled, 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 power" means the power to vote 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.

"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, and if at any time
there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee
with respect to Securities of that series.

"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.

"U.S. Government Obligations" has the meaning specified in
Section 1304.

"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
(excluding 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, such individual has made such
examination or investigation as is necessary to
enable such individual 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 certificate or opinion or
representations with respect to the matters upon which its
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.

Any certificate, statement or opinion of an officer of the
Company or of counsel may be based, insofar as it relates to
accounting matters, upon a certificate, opinion or
representation by an accountant or firm of accountants in the
employ of the Company, unless such officer or counsel, as the
case may be, knows, or in the exercise of reasonable care
should know, that the certificate, opinion or representation
with respect to such accounting matters upon which its
certificate, statement or opinion may be based is 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.

(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided or permitted
by this Indenture to be given 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.

(b) 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 or her
the execution thereof. Where such execution is by a signer
acting in a capacity other than such signer's individual
capacity, such certificate or affidavit shall also constitute
sufficient proof of such signer's 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.

(c) 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 Holders of Outstanding Securities of
any series 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 of Outstanding Securities of such
series. If not set by the Company prior to the first
solicitation of a Holder of Securities of such series 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 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 for
action to be taken by the Holders of one or more series of
Securities, only the Holders of Securities of such series on
such date (or their duly designated proxies) shall be entitled
to give or take, or vote on, the relevant action.

(d) The ownership of Securities shall be proved by the
Security Register or by a certificate of the Security
Registrar.

(e) 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.

(f) Without limiting the foregoing, a Holder entitled
hereunder to give or take any action hereunder with regard to
any particular Security may do so with regard to all or any
part of the principal amount of such Security or by one or more
duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such
principal amount.

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: Corporate Trust Department,
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,
Attention: Treasurer, (until another address is
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 its 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; provided, however, that the Company or the Trustee,
upon a good faith determination that mailing is in the
circumstances impractical, may give such notice by any other
method which, in the reasonable belief of the Company or, in
the case of the Trustee, of the Company and the Trustee, is
likely to be received by the Holders. 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.

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 that 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 that 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.

This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York,
but without regard to principles of conflicts of laws.

Section 113. Legal Holidays.

In any case where any Interest Payment Date, Redemption
Date or Stated Maturity of any Security or the last day on
which a Holder has the right to convert a Security at a
particular conversion price shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of
this Indenture or of the Securities (other than a provision of
the Securities of any series which specifically states that
such provision shall apply in lieu of this Section)) payment of
interest or principal (and premium, if any) or conversion need
not be made at such Place of Payment on such date, but may be
made on the next succeeding Business Day at such Place of
Payment 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 with respect
to such payment for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case
may be.

Section 114. Personal Immunity from Liability for
Incorporators, Stockholders, Etc.

No recourse shall be had for the payment of the principal
of or premium, if any, or interest, if any, on any Security, or
for any claim based thereon, or otherwise in respect of any
Security, or based on or in respect of this Indenture or any
indenture supplemental hereto, against any incorporator, or
against any past, present or future stockholder, director or
officer, as such, of the Company or of any successor
corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty
or otherwise, all such liability being expressly waived and
released as a condition of, and as consideration for, the
execution of this Indenture and the issue of the Securities.

ARTICLE TWO

Security Forms

Section 201. Forms Generally.

The Securities of each series shall be in substantially
the form set forth in this Article, or in such other form as
shall be established by or pursuant to a Board Resolution or in
one or more indentures supplemental hereto, in each case 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
as may, consistent herewith, be determined by the officers
executing such Securities, as evidenced by their execution of
the Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a
copy of an appropriate record of such action shall be certified
by the Corporate Secretary or an Assistant Corporate Secretary
of the Company and delivered to the Trustee at or prior to the
delivery of the Company Order contemplated by Section 303 for
the authentication and delivery 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.

Section 202. Form of Face of Security.

(Insert any legend required by the Internal Revenue Code
and the regulations thereunder.)

USF&G CORPORATION

No. $

USF&G CORPORATION, a Maryland corporation (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. If other than Dollars, substitute other currency or
currency unit. If the Security is to bear interest prior to
Maturity, insert -- , and to pay interest thereon from
or from the most recent Interest Payment Date to which
interest has been paid or duly provided for,) semi-annually on
............ and ............ in each year. (If other than
semi-annual payments, insert frequency of payments and payment
dates, commencing , at) if the Security is to bear
interest at a fixed rate, insert - the rate of ....% per annum
if the Security is a Floating or Adjustable Rate Security,
insert -- a rate per annum computed-determined in accordance
with, -- insert defined name of Floating or Adjustable Rate
Provision set forth below. If the security is to bear interest
at a rate determined with reference to an index, refer to
description of index below) until the principal hereof is paid
or made available for payment if applicable, insert -- , and
(to the extent that the payment of such interest shall be
legally enforceable) at the rate of % per annum on any
overdue principal and premium and on any overdue instalment of
interest. 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 the or (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 of this series not less than 10
days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities
of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said
Indenture.

(If the Securities are Floating or Adjustable Rate
Securities with respect to which the principal of or any
premium or interest may be determined with reference to an
index, insert the text of the Floating or Adjustable Rate
Provision.)

(If the Security is not to bear interest prior to
Maturity, insert -- The principal of this Security shall not
bear interest except in the case of a default in payment of
principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this
Security shall bear interest at the rate of % per annum compounded
semi-annually (to the extent that the payment of such interest shall be
legally enforceable), which shall accrue from the date of such default
in payment to the date payment of such principal, including interest
thereon, has been made or duly provided for. All interest on any overdue
principal shall be payable on demand. Any such interest on any overdue
principal that is not so paid on demand shall bear interest at
the rate of ......% per annum (to the extent that the payment
of such interest shall be legally enforceable), which shall
accrue from the date of such demand for payment to the date
payment of such interest has been made or duly provided for,
and such interest shall also be payable on demand.)

Payment of the principal of (and premium, if any) and (if
applicable, insert -- any such interest on this Security will
be made at the office or agency of the Company maintained for
that purpose in , in such coin or currency of the
United States of America. If the Security is denominated in a
currency other than U.S. dollars, specify other currency or
currency unit in which payment of the principal of and any
premium or interest may be made as at the time of payment is
legal tender for payment of public and private debts, if
applicable, insert -- ; 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 under its corporate seal.

Dated:

USF&G CORPORATION

Attest:

Section 203. Form of Reverse of Security.

This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an
Indenture, dated as of (herein called the
"Indenture"), between the Company and , as
Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of
rights, obligations, 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. This Security is one of the series designated on
the face hereof(, limited in aggregate principal amount to $

(If applicable, insert -- The Securities of this series
are subject to redemption upon not less than 30 days' nor more
than 60 days' notice by mail, (if applicable, insert -- (1) on
...................
in any year commencing with the year ...... and
ending with the year....... through operation of the sinking
fund for this series at a Redemption Price equal to 100% of the
principal amount, and (2) at any time (on or after ,
19.., as a whole or in part, at the election of the Company, at
the following Redemption Prices (expressed as percentages of
the principal amount): If redeemed (on or before

, %, and if redeemed) during the 12-month period beginning

of the years indicated,

Redemption Redemption
Year Price Year Price

and thereafter at a Redemption Price equal to % of the
principal amount, together in the case of any such redemption.
If applicable, insert -- (whether through operation of the
sinking fund or otherwise) with accrued interest to the
Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable
to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in
the Indenture.)

(If applicable, insert -- The Securities of this series
are subject to redemption upon not less than 30 days' nor more
than 60 days' notice by mail, (1) on in any year
commencing with the year and ending with the year
through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the
sinking fund (expressed as percentages of the principal amount)
set forth in the table below, and (2) at any time on or after
..........., as a whole or in part, at the election of the
Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below: If
redeemed during the 12-month period beginning of
the years indicated.

Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund

and thereafter at a Redemption Price equal to % of the
principal amount, together in the case of any such redemption
(whether through operation of the sinking fund or otherwise)
with accrued interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Dates referred to
on the face hereof, all as provided in the Indenture. The
sinking fund for this series provides for the redemption on

in each year beginning with the year

and ending with the year of not less
than $ ("mandatory sinking fund") and not more than $

aggregate principal amount of Securities of this
series. Securities of this series acquired or redeemed by the
Company otherwise than through mandatory sinking fund payments
may be credited against subsequent mandatory sinking
fund payments otherwise required to be made in the inverse
order in which they become due.

(If the Security is subject to redemption, insert -- In
the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the
unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.)

The Indenture contains provisions for defeasance at any
time of (1) the entire indebtedness of this Security or (2)
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.

(If the Security is convertible into Common Stock of the
Company, insert -- Subject to the provisions of the Indenture,
the Holder of this Security is entitled, at its option, at any
time on or before ___________ (except that, in case this
Security or any portion hereof shall be called for redemption,
such right shall terminate with respect to this Security or
portion hereof, as the case may be, so called for redemption at
the close of business on the date fixed for redemption as
provided in the Indenture unless the Company defaults in making
the payment due upon redemption), to convert the principal
amount of this Security (or any portion hereof which is $1,000
or an integral multiple thereof), into fully paid and
non-assessable shares (calculated as to each conversion to the
nearest 1/100th of a share) of the Common Stock of the Company,
as said shares shall be constituted at the date of conversion,
at the conversion price of $_____ principal amount of
Securities for each share of Common Stock, or at the adjusted
conversion price in effect at the date of conversion determined
as provided in the Indenture, upon surrender of this Security,
together with the conversion notice hereon duly executed, to
the Company at the designated office or agency of the Company
in __________________, accompanied (if so required by the
Company) by instruments of transfer, in form satisfactory to
the Company and to the Trustee, duly executed by the Holder or
by its duly authorized attorney in writing. Such surrender
shall, if made during any period beginning at the close of
business on a Regular Record Date and ending at the opening of
business on the Interest Payment Date next following such
Regular Record Date (unless this Security or the portion being
converted shall have been called for redemption on a Redemption
Date during such period), also be accompanied by payment in
funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal
amount of this Security then being converted. Subject to the
aforesaid requirement for payment and, in the case of a
conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment
Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to
receive an installment of interest (with certain exceptions
provided in the Indenture), no adjustment is to be made on
conversion for interest accrued hereon or for dividends on
shares of Common Stock issued on conversion. The Company is
not required to issue fractional shares upon any such
conversion, but shall make adjustment therefor in cash on the
basis of the current market value of such fractional interest
as provided in the Indenture. The conversion price is subject
to adjustment as provided in the Indenture. In addition, the
Indenture provides that in case of certain consolidations,
mergers or share exchanges to which the Company is a party or
the sale of substantially all of the assets of the Company, the
Indenture shall be amended, without the consent of any Holders
of securities, so that this Security, if then outstanding, will
be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and
amount of securities, cash and other property receivable upon
the consolidation, merger, share exchange or sale by a holder
of the number of shares of Common Stock into which this
Security might have been converted immediately prior to such
consolidation, merger, share exchange or sale (assuming such
holder of Common Stock failed to exercise any rights of
election and received per share the kind and amount received
per share by a plurality of non-electing shares) (, assuming if
such consolidation, merger, share exchange or sale is prior to
, 19 , that this Security were convertible at the time
of such consolidation, merger, share exchange or sale at the initial
conversion price specified above as adjusted from , 19
to such time pursuant to the Indenture. In the event of
conversion of this Security in part only, a new Security or
Securities for the unconverted portion hereof shall be issued
in the name of the Holder hereof upon the cancellation hereof.

(If the Security is convertible into other securities of
the Company, specify the conversion features.)

(If the Security is not an Original Issue Discount
Security, insert -- If an Event of Default with respect to
Securities of this series shall occur and be continuing, the
principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the
Indenture.)

(If the Security is an Original Issue Discount Security,
insert -- If an Event of Default with respect to Securities of
this series shall occur and be continuing, an amount of
principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for
determining the amount. Upon payment (i) of the amount of
principal so declared due and payable and (ii) of interest on
any overdue principal and overdue interest (in each case to the
extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of
the payment of the principal of and interest, if any, on the
Securities of this series shall terminate.)

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 of each series to be affected under
the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of
the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the
Securities of each series at the time Outstanding, on behalf of
the Holders of all Securities of such series, 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 hereof or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.

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 rates, 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
registerable 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 duly
authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations
and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.

The Securities of this series are issuable only in
registered form without coupons in denominations of $
and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor
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 is overdue, and neither the
Company, the Trustee nor any such agent shall be affected by
notice to the contrary.

No recourse shall be had for the payment of the principal
of (and premium, if any) or interest on this Security, or for
any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, stockholder,
officer or director, as such, past, present or future, of the
Company or of any successor corporation, whether by virtue of
any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and
released.

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 a legend in substantially the following
form or such other legends as may be required:

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
transferred to, or registered or exchanged for
Securities registered in the name of, any Person
other than the Depositary or a nominee thereof
and no such transfer may be registered, except
in the limited circumstances described in the
Indenture. Every Security authenticated and
delivered upon registration of transfer of, or
in exchange for or in lieu of, this Security
shall be a Global Security subject to the
foregoing, except in such limited circumstances.

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

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

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

As Trustee

By
Authorized Officer

Section 206. Form of Conversion Notice.

To USF&G Corporation

The undersigned owner of this Security hereby irrevocably
exercises the option to convert this Security, or portion
hereof (which is $1,000 or an integral multiple thereof) below
designated, into shares of Common Stock of the Company in
accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable
upon the conversion, together with any check in payment for
fractional shares and any Securities representing any
unconverted principal amount hereof, be issued and delivered to
the registered holder hereof unless a different name has been
indicated below. If this Notice is being delivered on a date
after the close of business on a Regular Record Date and prior
to the opening of business on the related Interest Payment Date
(unless this Security or the portion thereof being converted
has been called for redemption on a Redemption Date within such
period), this Notice is accompanied by payment, in funds
acceptable to the Company, of an amount equal to the interest
payable on such Interest Payment Date of the principal of this
Security to be converted. If shares are to be issued in the
name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect hereto. Any
amount required to be paid by the undersigned on account of
interest accompanies this Security.

Principal Amount to be Converted
(in an integral multiple of
$1,000, if less than all):
$____________

Dated

Signature

Signature(s) must be guaranteed
by a commercial bank or trust
company or a member firm of a
national stock exchange if shares
of Common Stock are to be
delivered, or Securities to be
issued, other than to and in the
name of the registered holder.

Signature Guarantee

Fill in for registration of shares of Common Stock and
Security if to be issued otherwise than to the registered
holder.

Social Security or other Taxpayer
(Name) Identifying Number

(Address)

Please print Name and
Address (including zip
code number)

ARTICLE THREE

THE SECURITIES

Section 301. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution or
established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series,

(1) the title of the Securities of the
series (which shall distinguish the Securities
of the series from Securities of any other
series);

(2) any limit upon the aggregate principal
amount of the Securities of the series which may
be authenticated and delivered under this
Indenture (except for Securities authenticated
and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other
Securities of the series pursuant to Sections
304, 305, 306, 906 or 1107 and except for any
Securities which, pursuant to Section 303, are
deemed never to have been authenticated and
delivered hereunder);

(3) the Person to whom any interest on a
Security of the series shall be payable, if
other than 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;

(4) the date or dates on which the
principal of the Securities of the series is
payable;

(5) the rate or rates at which the
Securities of the series shall bear interest, if
any, or the Floating or Adjustable Rate
Provision pursuant to which such rates shall be
determined, the date or dates from which such
interest shall accrue, the Interest Payment
Dates on which any such interest shall be
payable and the Regular Record Date for any
interest payable on any Interest Payment Date;

(6) whether the Securities of the series
would be secured pursuant to Section 901(6);

(7) the place or places where the
principal of and any premium and interest on
Securities of the series shall be payable;

(8) the period or periods within which,
the price or prices at which (including premium,
if any) and the terms and conditions upon which
Securities of the series may be redeemed, in
whole or in part, at the option of the Company
pursuant to a sinking fund or otherwise;

(9) the obligation, if any, of the Company
to redeem or purchase Securities of the series
pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof
and the period or periods within which, the
price or prices at which and the terms and
conditions upon which Securities of the series
shall be redeemed or purchased, in whole or in
part, pursuant to such obligation;

(10) the terms of any right to convert
Securities of the series into shares of Common
Stock of the Company or other securities or
property;

(11) if other than denominations of $1,000
and any integral multiple thereof, the
denominations in which Securities of the series
shall be issuable;

(12) the currency or currencies, including
composite currencies, or currency units in which
payment of the principal of and any premium and
interest on any Securities of the series shall
be payable if other than the currency of the
United States of America and the manner of
determining the equivalent thereof in the
currency of the United States of America for
purposes of the definition of "Outstanding" in
Section 101;

(13) if the amount of payments of principal
of or any premium or interest on any Securities
of the series may be determined with reference
to one or more indices, the manner in which such
amounts shall be determined;

(14) if the principal of or any premium or
interest on any Securities of the series is to
be payable, at the election of the Company or a
Holder thereof, in one or more currencies,
including composite currencies, or currency
units other than that or those in which the
Securities are stated to be payable, the
currency, currencies, including composite
currencies, or currency units in which payment
of the principal of and any premium and interest
on Securities of such series as to which such
election is made shall be payable, and the
periods within which and the terms and
conditions upon which such election is to be
made;

(15) if other than the principal amount
thereof, the portion of the principal amount of
Securities of the series which shall be payable
upon declaration of acceleration of the Maturity
thereof pursuant to Section 502 or provable
under any applicable federal or state bankruptcy
or similar law pursuant to Section 503;

(16) if and as applicable, that the
Securities of the series shall be issuable in
whole or in part in the form of one or more
Global Securities and, in such case, the
Depositary or Depositaries for such Global
Security or Global Securities and any
circumstance other than those set forth in
Section 305 in which any such Global Security
may be transferred to, and registered and
exchanged for Securities registered in the name
of, a Person other than the Depositary for such
Global Security or a nominee thereof and in
which any such transfer may be registered;

(17) any other event or events of default
applicable with respect to the Securities of the
series in addition to those provided in Section
501(1) through (7);

(18) any other covenant or warranty
included for the benefit of Securities of the
series in addition to (and not inconsistent
with) those included in this Indenture for the
benefit of Securities of all series, or any
other covenant or warranty included for the
benefit of Securities of the series in lieu of
any covenant or warranty included in this
Indenture for the benefit of Securities of all
series, or any provision that any covenant or
warranty included in this Indenture for the
benefit of Securities of all series shall not be
for the benefit of Securities of the series, or
any combination of such covenants, warranties or
provisions;

(19) any restriction or condition on the
transferability of the Securities of the series;

(20) any authenticating or paying agents,
registrars, conversion agents or any other
agents with respect to the Securities of the
series; and

(21) any other terms of the series (which
terms shall not be inconsistent with the
provisions of this Indenture, except as
permitted by Section 901(5)).

All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise
be provided in or pursuant to the Board Resolution referred to
above or in any such indenture supplemental hereto.

If any of the terms of the series are established by
action taken pursuant to a Board Resolution, a copy of such
action shall be delivered to the Trustee.

Section 302. Denominations.

The Securities of each series shall be issuable in
registered form without coupons in such denominations as shall
be specified as contemplated by Section 301. In the absence of
any such provisions with respect to the Securities of any
series, the Securities of such series shall be issuable 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, its President, any Executive Vice President,
any Vice President, its Treasurer or Assistant Treasurer, under
its corporate seal reproduced thereon attested by its Corporate
Secretary or one of its Assistant Corporate Secretaries. The
signature of any of these officers on the Securities may be
manual or facsimile.

The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Securities. 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. Minor typographical and other minor
errors in the text of any Security or minor defects in the seal
or facsimile signature on any Security shall not affect the
validity or enforceability of such Security if it has been duly
authenticated and delivered by the Trustee.

At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities
of any series 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 the Company Order shall authenticate and
deliver such Securities. If the form or terms of the
Securities of the series have been established in or pursuant
to one or more Board Resolutions as permitted by Sections 201
and 301, in authenticating such 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,

(a) if the form of such Securities has
been established by or pursuant to a Board
Resolution as permitted by Section 201, that
such form has been established in conformity
with the provisions of this Indenture;

(b) if the terms of such Securities have
been established by or pursuant to a Board
Resolution as permitted by Section 301, that
such terms have been established in conformity
with the provisions of this Indenture; and

(c) that such Securities, when
authenticated and delivered by the Trustee and
issued by the Company in the manner and subject
to any conditions specified in such Opinion of
Counsel, will constitute valid and legally
binding obligations of the Company enforceable
in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, rehabilitation and
similar laws of general applicability relating to
or affecting creditors' rights generally or the rights of
creditors of insurance companies or insurance
holding companies generally and to general
equity principles.

The Trustee shall have the right to decline to
authenticate and deliver any Securities under this Section if
the Trustee, being advised by counsel, determines that such
action may not lawfully be taken or if the Trustee in good
faith by its board of directors, executive committee, or a
trust committee of directors or responsible officers of the
Trustee shall determine that such action would expose the
Trustee to personal liability to existing Holders of
Securities.

Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all Securities of a series are not to
be originally issued at one time, it shall not be necessary to
deliver the Board Resolution otherwise required pursuant to
Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or
prior to the time of authentication of each Security of such
series if such documents are delivered at or prior to the
authentication upon original issuance of the first Security of
such series to be issued.

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. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall deliver
such Security to the Trustee for cancellation as provided in
Section 309, for all purposes of this Indenture such Security
shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this
Indenture.

Section 304. Temporary Securities.

Pending the preparation of definitive Securities of any
series, 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. Every temporary security shall be executed
by the Company and authenticated by the Trustee upon the same conditions
and in substantially the same manner, and with like effect, as the
definitive Securities.

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

Section 305. Registration, Registration of Transfer and
Exchange.

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 of the Company in
a Place of Payment being herein sometimes collectively referred
to as the "Security Register") in which, subject to such
reasonable regulations as it or the Trustee may prescribe, the
Company shall provide for the registration of Securities and of
transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.

Upon surrender for registration of transfer of any
Security of any series at the office or agency in a Place of
Payment for that series, 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 the same series, of any authorized denominations
and of a like aggregate principal amount and tenor.

At the option of the Holder, Securities of any series may
be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal
amount and tenor, 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 and bearing
numbers not contemporaneously outstanding.

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, exchange, redemption or payment 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
or the Trustee 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 304, 906
or 1107 not involving any transfer.

Neither the Company nor the Trustee shall be required (i)
to issue, register the transfer of or exchange Securities of
any series during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption
of Securities of that series selected for redemption under
Section 1103 and ending at the close of business on the day of
such mailing, or (ii) 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.

Notwithstanding any other provision in this Indenture, no
Global Security may be transferred to, or registered or
exchanged for Securities registered in the name of, any Person
other than the Depositary for such Global Security or any
nominee thereof, and no such transfer may be registered, unless
(1) such Depositary (A) notifies the Company and the Trustee
that it is unwilling or unable to continue as Depositary for
such Global Security or (B) ceases to be a clearing agency
registered under the Exchange Act, (2) the Company executes and
delivers to the Trustee a Company Order that such Global
Security shall be so transferable, registrable and
exchangeable, and such transfers shall be registrable, (3)
there shall have occurred and be continuing an Event of Default
with respect to the Securities evidenced by such Global
Security or (4) there shall exist such other circumstances, if
any, as have been specified for this purpose as contemplated by
Section 301. Notwithstanding any other provision in this
Indenture, a Global Security to which the restriction set forth
in the preceding sentence shall have ceased to apply may be
transferred only to, and may be registered and exchanged for
Securities registered only in the name or names of, such Person
or Persons as the Depositary for such Global Security shall
have directed and no transfer thereof other than such a
transfer may be registered.

Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of,
a Global Security to which the restriction set forth in the
first sentence of the preceding paragraph shall apply, whether
pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated and delivered in the form of,
and shall be, a Global Security.

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

If there shall be delivered to the Company and the Trustee
(i) a mutilated Security, or (ii) evidence to their
satisfaction of the destruction, loss or theft of any Security
and in either case such security or indemnity as may be
required by either of 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
mutilated, destroyed, lost or stolen Security, a new Security
of the same series and 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 or the Trustee 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 of any series 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 anyone, and shall be
entitled to all the benefits of (but shall be subject to all the
limitaions of rights set forth in) this Indenture equally and
proportionately with any and all other Securities of that
series 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.

Except as otherwise provided as contemplated by Section
301 with respect to any series of Securities, 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 of any series 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 of such series (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 of such
series 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
15 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
mailed, first-class postage prepaid, to each
Holder of Securities of such series at its
address as it appears in the Security Register,
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 of such series (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).

(2) The Company may make payment of any
Defaulted Interest on the Securities of any
series in any other lawful manner not
inconsistent with the requirements of any
securities exchange on which such 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.

Subject to the provisions of Section 1202, in the case of
any Security which is converted after any Regular Record Date
and on or prior to the next succeeding Interest Payment Date
(other than any Security the principal of (or premium, if any,
on) which shall become due and payable, whether at a Stated
Maturity or by declaration of acceleration, call for
redemption, or otherwise, prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date
shall be payable on such Interest Payment Date notwithstanding
such conversion and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose
name that Security (or any one or more Predecessor Securities)
is registered at the close of business on such Regular Record
Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security
which is converted, interest whose Stated Maturity is after
the date of conversion of such Security shall not be payable.

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 or for credit against any
sinking fund or analogous payment or for conversion 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 may
deliver to the Trustee (or to any other Person for delivery to
the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and
sold, 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. Acquisition by
the Company of any Security shall not operate as a redemption
or satisfaction of the indebtedness represented by such
Security unless and until the same is delivered to the Trustee
for cancellation.

Section 310. Computation of Interest.

Except as otherwise specified as contemplated by Section
301 for Securities of any series, interest on the Securities of
each series shall be computed on the basis of a 360-day year of
twelve 30-day months.

ARTICLE FOUR

SATISFACTION AND DISCHARGE

Section 401. Satisfaction and Discharge of Indenture.

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

(1) either

(A) all Securities of such series 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 of
such series 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 of such series 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 reasonably satisfactory to the
Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense,
of the Company,

and the Company, in the case of
(i), (ii) or (iii) above, has irrevocably deposited or
caused to be deposited with the Trustee in trust
for the purpose (A) money (either in United
States dollars or such other currency or
currency unit in which the Securities of any
series may be payable) in an amount, or (B) U.S.
Government Obligations (or Foreign Government
Obligations if the Securities are denominated in
a foreign currency or currencies) that 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, sufficient
to pay and discharge the entire indebtedness on
such Securities of such series not theretofore
delivered to the Trustee for cancellation, for
principal of (and premium, if any) and interest
to the date of such deposit (in the case of
Securities of such series 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 and an Opinion of Counsel,
each stating that all conditions precedent
herein provided for relating to the satisfaction
and discharge of this Indenture with respect to
such series have been complied with.

In the event there are Securities of two or more series
outstanding hereunder, the Trustee shall be required to execute
an instrument acknowledging satisfaction and discharge of this
Indenture only if requested to do so with respect to Securities
of a particular series as to which it is Trustee and if the
other conditions thereto are met. In the event that there are
two or more Trustees hereunder, then the effectiveness of any
such instrument shall be conditioned upon receipt of such
instruments from all Trustees hereunder.

Notwithstanding the satisfaction and discharge of this
Indenture with respect to a particular series, 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 until there
are no Securities Outstanding with respect to a particular
series and the obligations of the Company and the Trustee with
respect to all other series of Securities shall survive.

Section 402. Application of Trust Fund.

Subject to provisions of the last paragraph of Section
1003, all amounts 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 funds have been deposited with the Trustee.

ARTICLE FIVE

REMEDIES

Section 501. Events of Default.

"Event of Default" whenever used with respect to
Securities of a series means any one of the following events
and such other events as may be established with respect to the
Securities of such series as contemplated by Section 301
hereof:

(1) Default in the payment of any instalment of
interest upon any of the Securities of such
series as and when the same shall become 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 premium, if any, on any of the Securities of
such series as and when the same shall become
due and payable either at maturity, upon
redemption, by declaration or otherwise; or

(3) Default in the making of any sinking fund
payment, whether mandatory or optional, as and
when the same shall become due and payable by
the terms of the Securities of such series; or

(4) Failure on the part of the Company duly to
observe or perform in any material respect any
other of the covenants or agreements on the part
of the Company contained in this Indenture or in the Securities
(other than those set forth exclusively in the
terms of any other particular series of
Securities established as contemplated by this
Indenture for the benefit of such other series)
and written notice of such failure, stating that
such notice is a "Notice of Default" hereunder,
and requiring the Company to remedy the same,
shall have been given by registered or certified
mail, return receipt requested, to the Company
by the Trustee, or to the Company and the
Trustee by the holders of at least 25% in
aggregate principal amount of the Outstanding
Securities of that series, and such failure
shall have continued unremedied for a period of
90 days after the date of the Company's receipt
of such Notice of Default; or

(5) An event of default, as defined in any
indenture or instrument evidencing or under
which the Company or any Principal Insurance
Subsidiary shall have outstanding indebtedness
for borrowed money in a principal amount in
excess of $50,000,000, shall happen and be
continuing and such indebtedness shall have been
accelerated so that the same shall be or become
due and payable prior to the date on which the
same would otherwise have become due and payable
or the Company or any Principal Insurance
Subsidiary shall default in the payment at final
maturity of outstanding indebtedness for
borrowed money in a principal amount in excess
of $50,000,000, and such acceleration or default
at maturity shall not be waived, rescinded or
annulled within 30 days after written notice
thereof, stating that such notice is a "Notice
of Default" hereunder, shall have been given to
the Company by the Trustee (if such event be
known to it), or to the Company and the Trustee
by the holders of at least 25% in aggregate
principal amount of the Outstanding Securities
of that series; provided, however, that if such
acceleration under such indenture or instrument
or default at maturity shall be remedied or
cured by the Company or Principal Insurance
Subsidiary, or waived, rescinded or annulled by
the requisite holders of such
indebtedness, then the Event of Default
hereunder by reason thereof shall be deemed
likewise to have been thereupon remedied, cured
or waived without further action upon the part
of either the Trustee or any of the Holders; and
provided further, that, subject to the
provisions of Sections 601 and 602, the Trustee
shall not be charged with knowledge of any such
default unless written notice thereof shall have
been given to the Trustee by the Company, by the
holder of any such indebtedness or an agent of
the holder of any such indebtedness, by the
trustee then acting under any such indenture or
other instrument under which such default shall
have occurred, or by the holders of at least 25%
in aggregate principal amount of the Outstanding
Securities of that series; or

(6) A decree or order by a court having
jurisdiction in the premises shall have been
entered adjudging the Company or any Principal Insurance
Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement,
adjustment or composition of the Company or any Principal
Insurance Subsidiary under any applicable Federal or State
bankruptcy or similar law, and such decree or order shall have
continued undischarged and unstayed for a period
of 90 days; or a decree or order of a court
having jurisdiction in the premises for the
appointment of a receiver, liquidator, trustee,
assignee, sequestrator or similar official in
bankruptcy or insolvency of the Company or any Principal
Insurance Subsidiary or of all or substantially all of its
property, or for the winding up or liquidation of its affairs,
shall have been entered, and such decree or
order shall have continued undischarged and
unstayed for a period of 90 days; or

(7) The Company or any Principal Insurance
Subsidiary shall institute proceedings to
be adjudicated a voluntary bankrupt, or shall
consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer
or consent seeking reorganization, arrangement,
adjustment or composition under any applicable
Federal or State bankruptcy or similar law, or
shall consent to the filing of any such
petition, or shall consent to the appointment of
a receiver, liquidator, trustee, assignee,
sequestrator or similar official in bankruptcy
or insolvency of the Company or any Principal Insurance
Subsidiary or of all or substantially all of its
property, or shall make an assignment for the benefit
of creditors, or shall admit in writing its inability to pay its
debts generally as they become due and its
willingness to be adjudged a bankrupt, or
corporate action shall be taken by the Company or any Principal Insurance
Subsidiary in furtherance of any of the aforesaid purposes.

Section 502. Acceleration of Maturity; Rescission and
Annulment.

If an Event of Default with respect to Securities of any
series at the time Outstanding 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 of that
series may declare the principal amount (or, if any of the
Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such
Securities as may be specified in the terms thereof) of all of
the Securities of that series 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 amount (or specified amount) shall become
immediately due and payable; provided, however, that if an Event of Default
specified in Section 501(6) or (7) occurs and is continuing, such principal
amount of all such Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the
Trustee or any Holders; provided further, that, except in the case of a
default in the payment of the principal of (or premium, if any) or interest
on any Security or in the payment of any sinking fund payment, the Trustee
shall be protected in withholding such notice if and so long as the board
of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Holders of such
Securities.

At any time after such a declaration of acceleration with
respect to Securities of any series 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 of that series, by written notice to the
Company and the Trustee, may waive all defaults and 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
of that series,

(B) the principal of (and premium, if any,
on) any Securities of that series which
have become due otherwise than by such
declaration of acceleration and any
interest thereon at the rate or rates
prescribed therefor in such Securities,

(C) to the extent that payment of such
interest is lawful, interest upon overdue
interest at the rate or rates prescribed
therefor in such 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 due the Trustee under Section 607;

and

(2) all Events of Default with respect to
Securities of that series, other than the
non-payment of the principal of and interest, if
any, on the Securities of that series 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 written 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 or rates prescribed therefor in such
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, except such costs and expenses as are a result of
negligence or bad faith on the part of the Trustee. Until such
demand is made by the Trustee, the Company may pay the
principal of and premium, if any, and interest, if any, on the
Securities of any series to the registered holders, whether or
not the Securities of such series are overdue.

If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the
rights of the Holders of Securities of such series 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.

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 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 due the Trustee under
Section 607, 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;

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; and

THIRD: To the payment of the remainder,
if any, to the Company or any other Person
lawfully entitled thereto.

Section 507. Limitation on Suits.

No Holder of any Security of any series 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 with respect to the Securities
of that series;

(2) the Holders of not less than 25% in
principal amount of the Outstanding Securities
of that series 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 indemnity reasonably satisfactory in
form and substance to the Trustee 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 of that series;

it being understood and intended that no one or more of such
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 of such
Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all of such
Holders.

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

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) any interest on such
Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption
Date) and to convert such Securities in accordance with Article
Twelve and to institute suit for the enforcement of any such
payment or such right of conversion, and such rights shall not
be impaired without the consent of such Holder.

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 Securities 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. Subject to Section 507, 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 of any series 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, with respect to the
Securities of such series, provided that

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

(2) the Trustee may take any other action
deemed proper by the Trustee which is not
inconsistent with such direction, and

(3) the Trustee need not take any action
which might involve it in personal liability or
be unduly prejudicial to the Holders of such
series not joining therein.

Upon receipt by the Trustee of any such direction with
respect to Securities of any series, a record date shall be set
for determining the Holders of Outstanding Securities of such
series entitled to join in such direction, which record date
shall be the close of business on the day the Trustee receives
such direction. The Holders of Outstanding Securities of such
series on such record date (or their duly appointed agents),
and only such Persons, shall be entitled to join in such
direction, whether or not such Holders remain Holders after
such record date; provided that, unless such direction shall
have become effective by virtue of Holders of at least a
majority in principal amount of Outstanding Securities of such
series on such record date (or their duly appointed agents)
having joined therein on or prior to the 90th day after such
record date, such direction shall automatically and without any
action by any Person be cancelled and of no further effect.
Nothing in this paragraph shall prevent a Holder (or a duly
appointed agent thereof) from giving, before or after the
expiration of such 90-day period, a direction contrary to or
different from, or, after the expiration of such period,
identical to, a direction that has been cancelled pursuant to
the proviso to the preceding sentence, in which event a new
record date in respect thereof shall be set pursuant to this
paragraph.

Section 513. Waiver of Past Defaults.

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

(1) in the payment of the principal of or
any premium or interest on any Security of such
series, 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 of such
series affected.

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.

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.

If a default occurs hereunder with respect to Securities
of any series, the Trustee shall give the Holders of Securities
of such series notice of such default 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(4) with respect to Securities of such series, 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 with
respect to Securities of such series.

Section 603. Certain Rights of Trustee.

Subject to the provisions of Section 601:

(a) 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;

(b) 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 may
be sufficiently evidenced by a Board Resolution;

(c) 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 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;

(d) 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;

(e) 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 security or
indemnity reasonably satisfactory in form and
substance to the Trustee against the costs,
expenses and liabilities which might be incurred
by it in compliance with such request or
direction;

(f) 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 upon reasonable notice to the Company
be entitled to examine the books, records and
premises of the Company, personally or by agent
or attorney at a time and place reasonably
acceptable to the Company; and

(g) 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.

Except as otherwise required by the Trust Indenture Act, the
Trustee undertakes to perform only such duties as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee.

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 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
written 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 reasonable expenses and
disbursements of its agents and outside
counsel), except any such expense, disbursement
or advance as may be attributable to its
negligence or bad faith; and

(3) to indemnify the Trustee for, and to
hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith
on its part, arising out of or in connection
with the acceptance or administration of the
trust or trusts hereunder, including the
reasonable 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.

As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior
to the Securities upon all property and funds held or collected
by the Trustee, in its capacity as Trustee (but not in any other capacity),
except funds held in trust for the payment of principal of (or premium, if
any) or interest on particular Secutities or any coupons. The provisions
of this Section shall survive the termination of this Identure.

When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(6)
or (7), the expenses (including reasonable charges and expenses
of its counsel) and the compensation for the services are
intended to constitute expenses of administration under any
applicable federal or state bankruptcy, insolvency or other
similar law.

Section 608. Disqualification; 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.

There shall at all times be a 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 $50,000,000 or is a subsidiary of a
corporation which shall be a Person that has a combined capital
and surplus of at least $50,000,000 and which unconditionally
guarantees the obligations of the Trustee hereunder. If such
Person 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 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.

(a) 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.

(b) The Trustee may resign at any time with respect to
the Securities of one or more series 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 with respect to the Securities of such
series.

(c) The Trustee may be removed at any time with respect
to the Securities of any series by Act of the Holders of a
majority in principal amount of the Outstanding Securities of
such series, delivered to the Trustee and to the Company.

(d) 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, (i) the Company by a Board Resolution
may remove the Trustee with respect to all Securities, or (ii)
subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of
itself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor
Trustee or Trustees.

(e) 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, with respect to the Securities of one
or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood
that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that
at any time there shall be only one Trustee with respect to the
Securities of any particular series) 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 with respect to
the Securities of any Series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
Securities of such series 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 with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the
Securities of any Series 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 of such series for at least six months
may, on behalf of itself and all others similarly situated,
petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the
Securities of such series.

(f) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of
any series and each appointment of a successor Trustee with
respect to the Securities of any series to all Holders of
Securities of such series in the manner provided in Section
106. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the
address of its Corporate Trust Office.

Section 611. Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor
Trustee so appointed 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, subject nevertheless to its claim,
if any, provided for in Section 607.

(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not
all) series, the Company, the retiring Trustee and each
successor Trustee with respect to the Securities of such series
shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be
necessary or desirable to transfer the rights, powers, trust
and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or
change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental
indenture shall constitute such Trustee co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the
execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each 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 with respect to the Securities
of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or
any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to
the Securities of that or those series to which the appointment
of such successor Trustee relates, subject nevertheless to its
claim, if any, provided for in Section 607.

(c) 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 referred to in
paragraphs (a) and (b) of this Section, as the case may be.

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

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 with the consent of the Company appoint an
Authenticating Agent or Agents with respect to one or more
series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued
upon original issue and upon exchange, registration of
transfer, partial conversion 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
$50,000,000 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 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 or the Company may at any time terminate the agency of
an Authenticating Agent by giving written notice thereof to
such Authenticating Agent and to the Company or the Trustee, as
the case may be. 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 mail written notice of such appointment by
first-class mail, postage prepaid, to all Holders of Securities
of the series with respect to which such Authenticating Agent
will serve, as their names and addresses appear in the Security
Register. 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 Company agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services
under this Section.

If an appointment with respect to one or more series is
made pursuant to this Section, the Securities of such series
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 of the series designated
therein referred to in the within-mentioned Indenture.

SIGNET TRUST COMPANY,
As Trustee

By:
,
As Authenticating
Agent

By:
,
Authorized
Officer

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

(a) semi-annually, not later than 10 days
after each Regular Record Date in each year, a
list for each series of Securities, in such form
as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities
of such series as of the preceding Regular
Record Date, and

(b) 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.

(a) 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.

(b) The rights of the 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.

(c) 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.

(a) 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. To the
extent that any such report is required by the Trust Indenture
Act with respect to any 12 month period, such report shall
cover the 12 month period ending May 15 and shall be
transmitted by the next succeeding July 15.

(b) 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, OR SALE OR ASSETS

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

(1) in case the Company shall consolidate
with or merge into another Person or sell its
properties and assets as, or 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, transfer,
lease or sale the properties and assets of the Company as, or
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
satisfactory to the Trustee, all of the obligations of the
Company under the Securities, including without limitation,
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 and the conversion
rights, if any, shall be provided for in
accordance with Article Twelve, by supplemental
indenture satisfactory in form to the Trustee,
executed and delivered to the Trustee, by the
Person (if other than the Company) formed by
such consolidation or into which the Company
shall have been merged or by the corporation
which shall have acquired or leased the Company's assets;

(2) immediately after giving effect to
such transaction, no Event of Default shall have
happened and be continuing; and

(3) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation,
merger, conveyance, transfer, lease or sale 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.

For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of the properties and assets of United States Fidelity and
Guaranty Company (other than to the Company or another Subsidiary), which,
if such assets were owned by the Company, would constitute all or
substantially all of the properties and assets of the Company, shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company.

Section 802. Successor Substituted.

Upon any consolidation of the Company with, or merger of
the Company into, any other Person or any sale of the
properties and assets of the Company as, or 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 sale 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, 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.

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 of all or any
series of Securities (and if such covenants are
to be for the benefit of less than all series of
Securities, stating that such covenants are
expressly being included solely for the benefit
of such series) or to surrender any right or
power herein conferred upon the Company; or

(3) to add any additional Events of
Default; 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 to permit or
facilitate the issuance of Original Issue
Discount Securities; or

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

(6) to secure the Securities pursuant to
the requirements of Section 1005, or to
otherwise secure the Securities of any series;
or

(7) to establish the form or terms of
Securities of any series as permitted by
Sections 201 and 301; or

(8) to evidence and provide for the
acceptance of appointment hereunder by a
successor Trustee with respect to the Securities
of one or more series and to add to or change
any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the
administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements
of Section 611(b); or

(9) to cure any ambiguity, to correct or
supplement any provision herein which may be
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 (9) shall not adversely affect the
interests of the Holders of Securities of any
series in any material respect; or

(10) to make provision with respect to the
conversion rights of Holders pursuant to the
requirements of Article Twelve, including
providing for the conversion of the securities
into any security (other than the Common Stock
of the Company) or property of the Company; or

(11) to conform to any mandatory
provisions of law.

Section 902. Supplemental Indentures with Consent of Holders.

With the consent of the Holders of not less than a
majority of principal amount of the Outstanding Securities of
each series affected by such supplemental indenture, 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 modifying in any manner the rights of the Holders of
Securities of such series 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 instalment of principal of
or interest on, any Security, or reduce the
principal amount thereof or the rate of interest
thereon (including any change in the Floating or
Adjustable Rate Provision pursuant to which such
rate is determined that would reduce such rate
for any period) or any premium payable upon the
redemption thereof, or reduce the amount of the
principal of an Original Issue Discount Security
that would be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant
to Section 502, or change any 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 of any
series, 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) if applicable, make any change that
adversely affects the right to convert any
security to which the provisions of Article
Twelve are applicable or, except as provided in
this Indenture, decrease the conversion rate or
increase the conversion price of any such
security, or

(4) modify any of the provisions of this
Section, Section 513 or Section 907, 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 907, or the
deletion of this proviso, in accordance with the
requirements of Sections 611(b) and 901(8).

A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has
expressly been included solely for the benefit of one or more
particular series of Securities, or which modifies the rights
of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of
any other series.

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.

Section 904. Effect of Supplemental Indentures.

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 of any series 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 of any series 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 of such series.

Section 907. Waiver of Compliance by Holders.

Anything in this Indenture to the contrary
notwithstanding, any of the acts which the Company is required
to do, or is prohibited from doing, by any of the provisions of
this Indenture may, to the extent that such provisions might be
changed or eliminated by a supplemental indenture pursuant to
Section 902 upon consent of holders of not less than a majority
in aggregate principal amount of the then Outstanding
Securities of the series affected, be omitted or done by the
Company, if there is obtained the prior consent or waiver of
the holders of at least a majority in aggregate principal
amount of the then Outstanding Securities of such series.

ARTICLE TEN

COVENANTS

Section 1001. Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit of each
series of Securities that it will duly and punctually pay or
cause to be paid the principal of and any premium and interest
on the Securities of that series in accordance with the terms
of the Securities and this Indenture.

Section 1002. Maintenance of Office or Agency.

So long as any Securities are Outstanding, the Company
will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series
may be presented or surrendered for payment, where Securities
of that series may be surrendered for registration of transfer
or exchange, where Securities of that series may be surrendered
for conversion and where notices and demands to or upon the
Company in respect of the Securities of that series 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 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 of one or
more series 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 each Place of Payment for Securities of
any series 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 with respect to any series of Securities, it will, on or
before each due date of the principal of or any premium or
interest on any of the Securities of that series, 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
for any series of Securities, it will, prior to each due date
of the principal of or any premium or interest on any
Securities of that series, 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 for any series of
Securities 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 (i) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and
(ii) during the continuance of any default by the Company (or
any other obligor upon the Securities of that series) in the
making of any payment in respect of the Securities of that
series, and upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent
for payment in respect of the Securities of that series.

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 Security of any
series 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 the Borough of Manhattan, the
City of 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, a certificate signed by the Company's
principal executive officer, principal financial officer or
principal accounting officer stating whether or not to the best
knowledge of the signer thereof the Company is in compliance
with all terms, conditions and covenants of this Indenture
(without regard to any period of grace or requirement of notice
provided hereunder) and if the signer has obtained knowledge of
any continuing default by the Company in the performance,
observation or fulfillment of any such term, condition or
covenant, specifying each such default and the nature thereof.

Section 1005. Limitations on Liens on Common Stock of
Principal Insurance Subsidiaries.

As long as any of the Securities remains outstanding, the
Company will not, and will not permit any Principal Insurance
Subsidiary to, issue, assume, incur or guarantee any
indebtedness for borrowed money secured by a mortgage, pledge,
lien or other encumbrance, directly or indirectly, on any of
the Common Stock of a Principal Insurance Subsidiary, which
Common Stock is owned by the Company or by any Principal
Insurance Subsidiary, unless the Securities and, if the Company
so elects, any other indebtedness of the Company ranking on a
parity with the Securities, shall be secured equally and
ratably with, or prior to, such secured indebtedness for
borrowed money so long as it is outstanding.

ARTICLE ELEVEN

Redemption of Securities

Section 1101. Applicability of Article.

Securities of any series which are redeemable before their
Stated Maturity shall be redeemable in accordance with their
terms and (except as otherwise specified as contemplated by
Section 301 for Securities of any series) in accordance with
this Article.

Section 1102. Election to Redeem; Notice to Trustee.

In case of any redemption at the election of the Company
of less than all the Securities of any series, 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, of
the principal amount of Securities of such series to be
redeemed and, if applicable, of the tenor of the Securities to
be redeemed. In the case of any redemption of Securities prior
to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such
restriction.

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

If less than all the Securities of any series are to be
redeemed (unless all of the Securities of such series and of a
specified tenor are to be redeemed), the particular Securities
to be redeemed shall be selected not more than 45 days prior to
the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption,
by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of
portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination
for Securities of that series. If less than all of the
Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be
selected not more than 45 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in
accordance with the preceding sentence.

If any Security selected for partial redemption is
converted in part before termination of the conversion right
with respect to the portion of the Security so selected, the
converted portion of such Security shall be deemed (so far as
may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to
be redeemed shall be treated by the Trustee as Outstanding for
the purpose of such selection.

The Trustee shall promptly notify the Company in writing
of the Securities selected for redemption and, in the case of
any Securities selected for partial redemption, 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 its address appearing in the Security Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all the Outstanding
Securities of any series 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, if
applicable, that interest thereon will cease to
accrue on and after said date,

(5) if applicable, the conversion price,
and that the date on which the right to convert
the principal of the Securities or the portions
thereof to be redeemed will terminate will be
the Redemption Date and the place or places
where such Securities may be surrendered for
conversion,

(6) the place or places where such
Securities are to be surrendered for payment of
the Redemption Price, and

(7) that the redemption is for a sinking
fund, if such is the case.

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.

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, other than
any Securities called for redemption on that date which have
been converted prior to the date of such deposit.

If any Security or portion thereof called for redemption
is converted, any money deposited with the Trustee or with any
Paying Agent or so segregated and held in trust for the
redemption of such Security or portion thereof shall (subject
to any right of the Holder of such Security or any Predecessor
Security to receive interest as provided in the last paragraph
of Section 307) be paid to the Company upon Company Request or,
if then held by the Company, shall be discharged from such
trust.

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, unless
otherwise specified as contemplated by Section 301,
installments of interest whose Stated Maturity is on or prior
to the Redemption Date shall 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.

Section 1107. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (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 the same series and of like tenor, 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

CONVERSION OF SECURITIES

Section 1201. Applicability of Article.

The provisions of this Article shall be applicable to the
Securities of any series which are convertible into shares of
Common Stock of the Company, and the issuance of such shares of
Common Stock upon the conversion of such Securities, except as
otherwise specified as contemplated by Section 301 for the
Securities of such series.

Section 1202. Exercise of Conversion Privilege.

In order to exercise a conversion privilege, the Holder of
a Security of a series with such a privilege shall surrender
such Security to the Company at the office or agency maintained
for that purpose pursuant to Section 1002, accompanied by
written notice to the Company that the Holder elects to convert
such Security or a specified portion thereof. Such notice
shall also state, if different from the name and address of
such Holder, the name or names (with address) in which the
certificate or certificates for shares of Common Stock which
shall be issuable on such conversion shall be issued.
Securities surrendered for conversion shall (if so required by
the Company or the Trustee) be duly endorsed by or accompanied
by instruments of transfer in forms satisfactory to the Company
and the Trustee duly executed by the registered Holder or its
attorney duly authorized in writing; and Securities so
surrendered for conversion during the period from the close of
business on any Regular Record Date to the opening of business
on the next succeeding Interest Payment Date (excluding
Securities or portions thereof called for redemption during
such period) shall also be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount
of such Security then being converted, and such interest shall
be payable to such registered Holder notwithstanding the
conversion of such Security, subject to the provisions of
Section 307 relating to the payment of Defaulted Interest by
the Company. As promptly as practicable after the receipt of
such notice and of any payment required pursuant to a Board
Resolution and, subject to Section 303, set forth, or
determined in the manner provided, in an Officers' Certificate,
or established in one or more indentures supplemental hereto
setting forth the terms of such series of Security, and the
surrender of such Security in accordance with such reasonable
regulations as the Company may prescribe, the Company shall
issue and shall deliver, at the office or agency at which such
Security is surrendered, to such Holder or on its written
order, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such
Security (or specified portion thereof), in accordance with the
provisions of such Board Resolution, Officers' Certificate or
supplemental indenture, and cash as provided therein in respect
of any fractional share of such Common Stock otherwise issuable
upon such conversion. Such conversion shall be deemed to have
been effected immediately prior to the close of business on the
date on which such notice and such payment, if required, shall
have been received in proper order for conversion by the
Company and such Security shall have been surrendered as
aforesaid (unless such Holder shall have so surrendered such
Security and shall have instructed the Company to effect the
conversion on a particular date following such surrender and
such Holder shall be entitled to convert such Security on such
date, in which case such conversion shall be deemed to be
effected immediately prior to the close of business on such
date) and at such time the rights of the Holder of such
Security as such Security Holder shall cease and the person or
persons in whose name or names any certificate or certificates
for shares of Common Stock of the Company shall be issuable
upon such conversion shall be deemed to have become the Holder
or Holders of record of the shares represented thereby. Except
as set forth above and subject to the final paragraph of
Section 307, no payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Securities
surrendered for conversion or on account of any dividends on
the Common Stock of the Company issued upon such conversion.

In the case of any Security which is converted in part
only, upon such conversion the Company shall execute and the
Trustee shall authenticate and deliver to or on the order of
the Holder thereof, at the expense of the Company, a new
Security or Securities of the same series, of authorized
denominations, in aggregate principal amount equal to the
unconverted portion of such Security.

Section 1203. No Fractional Shares.

No fractional share of Common Stock of the Company shall
be issued upon conversions of Securities of any series. If
more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which
shall be issuable upon conversion shall be computed on the
basis of the aggregate principal amount of the Securities (or
specified portions thereof to the extent permitted hereby) so
surrendered. If, except for the provisions of this Section
1203, any Holder of a Security or Securities would be entitled
to a fractional share of Common Stock of the Company upon the
conversion of such Security or Securities, or specified
portions thereof, the Company shall pay to such Holder an
amount in cash equal to the current market value of such
fractional share computed, (i) if such Common Stock is listed
or admitted to unlisted trading privileges on a national
securities exchange, on the basis of the last reported sale
price regular way on such exchange on the last trading day
prior to the date of conversion upon which such a sale shall
have been effected, or (ii) if such Common Stock is not at the
time so listed or admitted to unlisted trading privileges on a
national securities exchange, on the basis of the average of
the bid and asked prices of such Common Stock in the
over-the-counter market, on the last trading day prior to the
date of conversion, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System, or if not
so available, the fair market price as determined by the Board
of Directors. For purposes of this Section, "trading day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
other than any day on which the Common Stock is not traded on
the New York Stock Exchange, or if the Common Stock is not
traded on the New York Stock Exchange, on the principal
exchange or market on which the Common Stock is traded or
quoted.

Section 1204. Adjustment of Conversion Price.

The conversion price of Securities of any series that is
convertible into Common Stock of the Company shall be adjusted
for any stock dividends, stock splits, reclassification,
combinations or similar transactions in accordance with the
terms of the supplemental indenture or Board Resolutions
setting forth the terms of the Securities of such series.

Whenever the conversion price is adjusted, the Company
shall compute the adjusted conversion price in accordance with
terms of the applicable Board Resolution or supplemental
indenture and shall prepare an Officers' Certificate setting
forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency
maintained for the purpose of conversion of Securities pursuant
to Section 1002 and, if different, with the Trustee. The
Company shall forthwith cause a notice setting forth the
adjusted conversion price to be mailed, first class postage
prepaid, to each Holder of Securities of such series at its
address appearing on the Security Register and to any
conversion agent other than the Trustee.

Section 1205. Notice of Certain Corporate Actions.

In Case:

(a) the Company shall declare a dividend
(or any other distribution) on its Common Stock
(other than dividends or distributions which will not
require an adjustment of the conversion price of
Securities of any series pursuant to Section 1204); or

(b) the Company shall authorize the
granting to the holders of its Common Stock of
rights, options or warrants to subscribe for or
purchase any shares of capital stock of any
class or of any other rights (other than any
such grant for which approval of any
shareholders of the Company is required or which
will not require an adjustment of the conversion
price of Securities of any series pursuant to Section 1204); or

(c) of any reclassification of the Common
Stock of the Company (other than a subdivision
or combination of its outstanding shares of
Common Stock, or of any consolidation, merger or
share exchange to which the Company is a party
and for which approval of any shareholders of
the Company is required or which will not require
an adjustment of the conversion price of Securities
of any series pursuant to Section 1204 ), or of the
sale of all or substantially all of the assets of the
Company; or

(d) of the voluntary or involuntary
dissolution, liquidation or winding up of the
Company;

then the Company shall cause to be filed with the Trustee, and
shall cause to be mailed to all Holders at their last addresses
as they shall appear in the Securities Register, at least 20
days (or 10 days in any case specified in clause (a) or (b)
above) prior to the applicable record date hereinafter
specified, a notice stating (i) the date on which a record is
to be taken for the purpose of such dividend, distribution,
rights, options or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined, or (ii) the date on
which such reclassification, consolidation, merger, share
exchange, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale,
dissolution, liquidation or winding up. If at any time the
Trustee shall not be the conversion agent, a copy of such
notice shall also forthwith be filed by the Company with the
conversion agent.

Section 1206. Reservation of Shares of Common Stock.

The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued
Common Stock, for the purpose of effecting the conversion of
Securities, the full number of shares of Common Stock of the
Company then issuable upon the conversion of all outstanding
Securities of any series that have conversion rights.

Section 1207. Payment of Certain Taxes Upon Conversion.

The Company will pay any and all taxes that may be payable
in respect of the issue or delivery of shares of its Common
Stock on conversion of Securities pursuant hereto. The Company
shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and
delivery of shares of its Common Stock in a name other than
that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the
Company the amount of any such tax, or has established, to the
satisfaction of the Company, that such tax has been paid.

Section 1208. Nonassessability.

The Company covenants that all shares of its Common Stock
which may be issued upon conversion of Securities will upon
issue in accordance with the terms hereof be duly and validly
issued and fully paid and nonassessable.

Section 1209. Effect of Consolidation or Merger on Conversion
Privilege.

In case of any consolidation of the Company with, or
merger of the Company into or with any other Person, or in the
case of a statutory share exchange to which the Company is a
party or in case of any sale or conveyance of all or substantially all of
the properties or assets of the Company (including cash), the Company or
the Person formed by such consolidation or the Person into which the
Company shall have been merged or the Person which shall have acquired such
assets, or the surviving entity in such share exchange, as the
case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each
Security then outstanding of any series that is convertible
into Common Stock of the Company shall have the right, which
right shall be the exclusive conversion right thereafter
available to said Holder (until the expiration of the
conversion right of such Security), to convert such Security
into the kind and amount of shares of stock or other securities
or property (including cash) receivable upon such
consolidation, merger, share exchange, conveyance or sale by a holder of
the number of shares of Common Stock of the Company into which
such Security might have been converted immediately prior to
such consolidation, merger, share exchange, conveyance or sale, subject to
compliance with the other provisions of this Indenture, such
Security and such supplemental indenture. Such supplemental
indenture shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in such Security. The above provisions of this
Section shall similarly apply to successive consolidations,
mergers, share exchanges, conveyances or sales. It is expressly agreed and
understood that anything in this Indenture to the contrary
notwithstanding, if, pursuant to such merger, consolidation, share
exchange, conveyance or sale, holders of outstanding shares of Common Stock
of the Company do not receive shares of common stock of the surviving
corporation but receive other securities, cash or other property or any
combination thereof, Holders of Securities shall not have the
right to thereafter convert their Securities into common stock
of the surviving corporation or the corporation which shall
have acquired such assets, but rather, shall have the right
upon such conversion to receive the other securities, cash or
other property receivable by a holder of the number of shares
of Common Stock of the Company into which the Securities held
by such holder might have been converted immediately prior to
such consolidation, merger, share exchange, conveyance or sale, all as more
fully provided in the first sentence of this Section 1209.
Anything in this Section 1209 to the contrary notwithstanding,
the provisions of this Section 1209 shall not apply to a merger
or consolidation of another corporation with or into the
Company or any share exchange to which the Company is a party
pursuant to which both of the following conditions are
applicable: (i) the Company is the surviving or successor
corporation and (ii) the outstanding shares of Common Stock of
the Company are not changed or converted into any other
securities or property (including cash) or changed in number or
character or reclassified pursuant to the terms of such merger,
consolidation or share exchange.

As evidence of the kind and amount of shares of stock or other
securities or property (including cash) into which Securities may properly
be convertible after any such consolidation, merger, share
exchange, conveyance or sale, or as to the appropriate adjustments of the
conversion prices applicable with respect thereto, the Trustee
shall be furnished with and may accept the certificate or
opinion of an independent certified public accountant with
respect thereto; and, in the absence of bad faith on the part
of the Trustee, the Trustee may conclusively rely thereon, and
shall not be responsible or accountable to any Holder of
Securities for any provision in conformity therewith or
approved by such independent certified accountant which may be
contained in said supplemental indenture.

Section 1210. Duties of Trustee Regarding Conversion.

Neither the Trustee nor any conversion agent shall at any
time be under any duty or responsibility to any Holder of
Securities of any series that is convertible into Common Stock
of the Company to determine whether any facts exist which may
require any adjustment of the conversion price, or with respect
to the nature or extent of any such adjustment when made, or
with respect to the method employed, whether herein or in any
supplemental indenture, any resolutions of the Board of
Directors or written instrument executed by one or more
officers of the Company provided to be employed in making the
same. Neither the Trustee nor any conversion agent shall be
accountable with respect to the validity or value (or the kind
or amount) of any shares of Common Stock of the Company, or of
any securities or property, which may at any time be issued or
delivered upon the conversion of any Securities and neither the
Trustee nor any conversion agent makes any representation with
respect thereto. Subject to the provisions of Section 601,
neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer
or deliver any shares of its Common Stock or stock certificates
or other securities or property upon the surrender of any
Security for the purpose of conversion or to comply with any of
the covenants of the Company contained in this Article Twelve
or in the applicable supplemental indenture, resolutions of the
Board of Directors or written instrument executed by one or
more duly authorized officers of the Company.

Section 1211. Repayment of Certain Funds Upon Conversion.

Any funds which at any time shall have been deposited by
the Company or on its behalf with the Trustee or any other
paying agent for the purpose of paying the principal of, and
premium, if any, and interest, if any, on any of the Securities
(including funds deposited for the sinking fund referred to in
Article Three hereof) and which shall not be required for such
purposes because of the conversion of such Securities as
provided in this Article Twelve shall after such conversion be
repaid to the Company by the Trustee upon the Company's written
request.

ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE

Section 1301. Company's Option to Effect Defeasance or
Covenant Defeasance.

The Company may elect, at any time, to have either Section
1302 or Section 1303 applied to the Outstanding Securities of
any series, upon compliance with the conditions set forth below
in this Article Thirteen.

Section 1302. Defeasance and Discharge.

Upon the Company's exercise of the option provided in
Section 1301 to have this Section 1302 applied to the
Outstanding Securities of any series, the Company shall be
deemed to have been discharged from its obligations with
respect to the Outstanding Securities of such series as
provided in this Section on and after the date the conditions
set forth in Section 1304 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 the Outstanding Securities
of such series and to have satisfied all its other obligations
under the Securities of such series and this Indenture insofar
as the Securities of such series 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 Securities of such
series to receive, solely from the trust fund described in
Section 1304 and as more fully set forth in such Section,
payments in respect of the principal of and any premium and
interest on such Securities of such series when payments are
due, (2) the Company's obligations with respect to the
Securities of such series under Sections 304, 305, 306, 1002
and 1003, (3) the rights, powers, trusts, duties and immunities
of the Trustee hereunder, including, without limitation, its
rights under Section 607 and (4) this Article Thirteen.
Subject to compliance with this Article Thirteen, the Company
may exercise its option provided in Section 1301 to have this
Section 1302 applied to the Outstanding Securities of any
series notwithstanding the prior exercise of its option
provided in Section 1301 to have Section 1303 applied to the
Outstanding Securities of such series.

Section 1303. Covenant Defeasance.

Upon the Company's exercise of the option provided in
Section 1301 to have this Section 1303 applied to the
outstanding Securities of any series, (1) the Company shall be
released from its obligations under Section 1005 and Section
801 and any provision of a supplemental indenture specified for
release pursuant to the terms thereof and (2) the occurrence of
any event specified in Sections 501(3), 501(4) (with respect to
Section 1005 and Section 801) and 501(5) shall be deemed not to
be or result in an Event of Default, in each case with respect
to the Outstanding Securities of such series as provided in
this Section on and after the date the conditions set forth in
Section 1304 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means
that 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(4)), 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 the Securities of such series shall be
unaffected thereby.

Section 1304. Conditions to Defeasance or Covenant Defeasance.

The following shall be the conditions to application of
either Section 1302 or Section 1303 to the Outstanding
Securities of any series:

(1) The Company shall irrevocably have
deposited or caused to be deposited with the
Trustee (or another trustee that satisfies the
requirements contemplated by Section 609 and
agrees to comply with the provisions of this
Article Thirteen 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
benefit of the Holders of Outstanding Securities
of such series, (A) in the case of Securities of
such series denominated in U.S. dollars, (i)
money in an amount, or (ii) U.S. Government
Obligations that 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 (iii) 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 the
Securities of such series on the respective
Stated Maturities, in accordance with the terms
of this Indenture and the Securities of such
series. As used herein, "U.S. Government
Obligation" means (x) any security that is (i) a
direct obligation of the United States of
America for the payment of which 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 for the United States
of America the payment of which is
unconditionally guaranteed as a full faith and
credit obligation by the United States of
America, which, in either case (i) or (ii), is
not callable or redeemable at the option of the
issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2)
of the Securities Act of 1933, as amended) as
custodian with respect to any specific payment
of principal of or interest on any such U.S.
Government Obligation specified in Clause (x)
and held by such custodian for the account of
the holder of such depositary receipt, or with
respect to any specific payment of principal of
or interest on any such U.S. Government
Obligation, 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; or (B) in the case of
Securities of such series denominated in a
currency other than the U.S. dollar, (i) money
in such currency in an amount, or (ii) Foreign
Government Obligations that 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 such currency
in an amount, or (iii) 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 the Securities of such
series on the respective Stated Maturities, in
accordance with the terms of this Indenture and
the Securities of such series. As used herein,
"Foreign Government Obligation" means (x) any
security that is (i) a direct obligation of the
government that issued such currency for the
payment of which full faith and credit of such
government is pledged or (ii) an obligation of a
Person controlled or supervised by and acting as
an agency or instrumentality for such government
the payment of which is unconditionally
guaranteed as a full faith and credit obligation
by such government, 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 of
1933, as amended) as custodian with respect to
any specific payment of principal of or interest
on any such Foreign Government Obligation
specified in Clause (x) and held by such
custodian for the account of the holder of such
depositary receipt, or with respect to any
specific payment of principal of or interest on
any such Foreign Government Obligation, 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 Foreign Government
Obligation or the specific payment of principal
or interest evidenced by such depositary
receipt.

(2) In the case of an election under
Section 1302, the Company shall have delivered
to the Trustee an Opinion of Counsel stating
that the Holders of the Outstanding Securities
of such series 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 the Securities of such
series 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 case of an election under
Section 1303, the Company shall have delivered
to the Trustee an Opinion of Counsel to the
effect that the Holder of the Outstanding
Securities of such series will not recognize
gain or loss for Federal income tax purposes as
result of the deposit and Covenant Defeasance to
be effected with respect to the Securities of
such series 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 Officers' Certificate to the effect
that the Securities of such series, if then
listed on any securities exchange, will not be
delisted as a result of such deposit.

(5) No Event of Default or event that
(after notice or lapse of time or both) would
become an Event of Default shall have occurred
and be continuing at the time of such deposit
or, with regard to any Event of Default or any
such event specified in Sections 501(6) and
501(7), 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) 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.

(7) 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
of 1940, as amended, unless such trust shall be
qualified under such Act or exempt from
regulation thereunder.

Section 1305. Deposited Money and U.S. Government Obligations
or Foreign Government Obligations to be Held In
Trust; Other Miscellaneous Provisions.

Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations or Foreign
Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely
for purposes of this Section and Section 1306, the Trustee and
any such other trustee are referred to collectively as the
"Trustee") pursuant to Section 1304 in respect of the
Securities of any Defeasible Series shall be held in trust and
applied by the Trustee, in accordance with the provisions of
the Securities of such series 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 Securities of such
series, 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 or Foreign Government Obligations
deposited pursuant to Section 1304 or the principal and
interest received in respect thereof other than any such tax,
fee or other charge that by law is for the account of the
Holders of Outstanding Securities.

Anything in this Article Thirteen 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 or Foreign Government Obligations
held by it as provided in Section 1304 with respect to
Securities of any Defeasible Series that, 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 that would then be
required to be deposited to effect an equivalent
Defeasancseries.
series.

Section 1306. Reinstatement.

If the Trustee or the Paying Agent is unable to apply any
money in accordance with this Article Thirteen with respect to
the Securities of any series by reason of any order or judgment
of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities of such
series shall be revived and reinstated as though no deposit had
occurred pursuant to this Article Thirteen with respect to
Securities of such series until such time as the Trustee or
Paying Agent is permitted to apply all money held in trust
pursuant to Section 1305 with respect to Securities of such
series in accordance with this Article Thirteen; provided,
however, that if the Company makes any payment of principal of
or any premium or interest on any Security of such series
following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of Securities
of such series to receive such payment from the money so held
in trust.

ARTICLE FOURTEEN

SINKING FUNDS

Section 1401. Applicability of Article.

The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 301
for Securities of such series.

The minimum amount of any sinking fund payment provided
for by the terms of Securities of any series is herein referred
to as a "mandatory sinking fund payment", and any payment in
excess of such minimum amount provided for by the terms of
Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of
Securities of any series, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section
1402. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the
terms of Securities of such series.

Section 1402. Satisfaction of Sinking Fund Payments with
Securities.

The Company (1) may deliver Outstanding Securities of a
series (other than any previously called for redemption) and
(2) may apply as a credit Securities of a series which have
been converted pursuant to Article Twelve or Securities of a
series which have been acquired or redeemed either at the
election of the Company pursuant to the terms of such
Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities
or otherwise, in each case in satisfaction of all or any part
of any sinking fund payment with respect to the Securities of
such series required to be made pursuant to the terms of such
Securities as provided for by the terms of such series;
provided that such Securities have not been previously so
credited. Such Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified
in such Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.

Section 1403. Redemption of Securities for Sinking Fund.

Not less than 45 days prior to each sinking fund payment
date for any series of Securities, the Company will deliver to
the Trustee an Officers' Certificate specifying the amount of
the next ensuing sinking fund payment for that series pursuant
to the terms of that series, the portion thereof, if any, which
is to be satisfied by payment of cash and the portion thereof,
if any, which is to be satisfied by delivering and crediting
Securities of that series pursuant to Section 1402 and will
also deliver to the Trustee any Securities to be so delivered.
Not less than 15 nor more than 45 days before each such sinking
fund payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall
be made upon the terms and in the manner stated in Sections
1106 and 1107.

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.

USF&G CORPORATION

By:
Name:
Title:

Attest::

SIGNET TRUST COMPANY

By:
Name:
Title:

Attest:

STATE OF )
) ss.:
COUNTY OF )

On the day of January, 1994, before me personally
came , to me known, who, being by me duly

sworn, did depose and say that (s)he is of

USF&G CORPORATION, one of the corporations described in and
which executed the foregoing instrument; that (s)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 (s)he signed her/his name thereto by like authority.

Notary Public

My Commission expires:

STATE OF )
) ss.:
COUNTY OF )

On the day of January, 1994, before me personally
came , to me known, who, being by me duly
sworn, did depose and say that (s)he is

of SIGNET TRUST COMPANY, one of the corporations described in
and which executed the foregoing instrument; that (s)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 (s)he signed her/his name thereto by like authority.

Notary Public

My Commission expires:

USF&G CORPORATION

AND

CHEMICAL BANK,

TRUSTEE

INDENTURE

Dated as of January 28, 1994

Subordinated Debt Securities

USF&G CORPORATION

Reconciliation and tie between certain Sections of this
Indenture, dated as of January 28, 1994, and Section 310 through
318, inclusive, of the Trust Indenture Act of 1939:

Trust Indenture
Indenture Act Section
Section

Section 313(a) . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . 703(b)

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(c)
Section 317(a)(1) . . . . . . . . . . . . . . . . . .503
(a)(2) . . . . . . . . . . . . . . . . . .504
(b) . . . . . . . . . . . . . . . . . .1003
Section 318(a) . . . . . . . . . . . . . . . . . .107

TABLE OF CONTENTS

PAGE

PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . .

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 101. Definitions. . . . . . . . . . . . 1
Act. . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . 3
Company. . . . . . . . . . . . . . . . . . 3
Company Request; Company Order . . . . . . 3
Corporate Trust Office . . . . . . . . . . 3
Corporation. . . . . . . . . . . . . . . . 3
Covenant Defeasance. . . . . . . . . . . . 3
Debt . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . 4
Defeasance . . . . . . . . . . . . . . . . 4
Depositary . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . 4
Floating or Adjustable Rate Provision. . . 4
Floating of Adjustable Rate Security . . . 5
Foreign Government Obligations . . . . . . 5
Global Security. . . . . . . . . . . . . . 5
Holder . . . . . . . . . . . . . . . . . . 5
Indenture. . . . . . . . . . . . . . . . . 5
Interest . . . . . . . . . . . . . . . . . 5
Interest Payment Date. . . . . . . . . . . 5
Maturity . . . . . . . . . . . . . . . . . 5
Normal Cash Dividends . . . . . . . . . . 6
Notice of Default. . . . . . . . . . . . . 6
Officers' Certificate. . . . . . . . . . . 6
Opinion of Counsel . . . . . . . . . . . . 6
Original Issue Discount Security . . . . . 6
Outstanding. . . . . . . . . . . . . . . . 6
Paying Agent . . . . . . . . . . . . . . . 8
Person . . . . . . . . . . . . . . . . . . 8
Place of Payment . . . . . . . . . . . . . 8
Predecessor Security . . . . . . . . . . . 8
Principal Insurance Subsidiary . . . . . . 8
Proceeding . . . . . . . . . . . . . . . . 8
Redempton Date . . . . . . . . . . . . . . 8
Redemption Price . . . . . . . . . . . . . 9
Regular Record Date. . . . . . . . . . . . 9
Responsible Officer. . . . . . . . . . . . 9
Securities . . . . . . . . . . . . . . . . 9
Security Register and Security Registrar . 9
Senior Debt. . . . . . . . . . . . . . . . 9
Special Record Date. . . . . . . . . . . . 10
Stated Maturity. . . . . . . . . . . . . . 10
Subsidiary . . . . . . . . . . . . . . . . 10
Trustee. . . . . . . . . . . . . . . . . . 10
Trust Indenture Act. . . . . . . . . . . . 10
U.S. Government Obligations. . . . . . . . 10
Vice President . . . . . . . . . . . . . . 10

Section 102. Compliance Certificates and Opinions . .10

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. . . . . . . .14

Section 107. Conflict with Trust Indenture Act. . . .15

Section 108. Effect of Headings and Table of Contents15

Section 109. Successors and Assigns . . . . . . . . .15

Section 110. Separability Clause. . . . . . . . . . .15

Section 111. Benefits of Indenture. . . . . . . . . .15

Section 112. Governing Law. . . . . . . . . . . . . .15

Section 113. Legal Holidays . . . . . . . . . . . . .16

Section 114. Personal Immunity from Liability for
Incorporators, Stockholders, Etc . . . .16

ARTICLE TWO

SECURITY FORMS

Section 201. Forms Generally. . . . . . . . . . . . .16

Section 202. Form of Face of Security . . . . . . . .17

Section 203. Form of Reverse of Security. . . . . . .20

Section 204. Form of Legend for Global Securities . .25

Section 205. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . .26

Section 206. Form of Conversion Notice. . . . . . . .26

ARTICLE THREE

THE SECURITIES

Section 301. Amount Unlimited; Issuable in Series . .28

Section 302. Denominations. . . . . . . . . . . . . .31

Section 303. Execution, Authentication, Delivery
and Dating . . . . . . . . . . . . . . .32

Section 304. Temporary Securities . . . . . . . . . .34

Section 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . 35

Section 306. Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . 37

Section 307. Payment of Interest; Interest Rights
Preserved. . . . . . . . . . . . . . . . . 37

Section 308. Persons Deemed Owners. . . . . . . . . .39

Section 309. Cancellation . . . . . . . . . . . . . .40

Section 310. Computation of Interest. . . . . . . . .40

ARTICLE FOUR

SATISFACTION AND DISCHARGE

Section 401. Satisfaction and Discharge of Indenture.40

Section 402. Application of Trust Fund. . . . . . . .43

ARTICLE FIVE

REMEDIES

Section 501. Events of Default. . . . . . . . . . . .43

Section 502. Acceleration of Maturity; Rescission and
Annulment. . . . . . . . . . . . . . . 47

Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . 49

Section 504. Trustee May File Proofs of Claim . . . .50

Section 505. Trustee May Enforce Claims Without
Possession of Securities . . . . . . . . . 51

Section 506. Application of Money Collected . . . . .51

Section 507. Limitation on Suits. . . . . . . . . . .52

Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest. . . . . . 52

Section 509. Restoration of Rights and Remedies . . .53

Section 510. Rights and Remedies Cumulative . . . . .53

Section 511. Delay or Omission Not Waiver . . . . . .53

Section 512. Control by Holders . . . . . . . . . . .54

Section 513. Waiver of Past Defaults. . . . . . . . .55

Section 514. Undertaking for Costs. . . . . . . . . .55

ARTICLE SIX

THE TRUSTEE

Section 601. Certain Duties and Responsibilities. . .55

Section 602. Notice of Defaults . . . . . . . . . . .56

Section 603. Certain Rights of Trustee. . . . . . . .56

Section 604. Not Responsible for Recitals or Issuance
of Securities . . . . . . . . . . 58

Section 605. May Hold Securities. . . . . . . . . . .58

Section 606. Money Held in Trust. . . . . . . . . . .58

Section 607. Compensation and Reimbursement . . . . .58

Section 608. Disqualification; Conflicting
Interests. . . . . . . . . . . . . . . . 59

Section 609. Corporate Trustee Required; Eligibility.59

Section 610. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . 60

Section 611. Acceptance of Appointment by Successor .62

Section 612. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . 63

Section 613. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . 64

Section 614. Appointment of Authenticating Agent. . .64

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

Section 701. Company to Furnish Trustee Names and
Addresses of Holders . . . . . . . . . . . 66

Section 702. Preservation of Information;
Communications to Holders. . . . . . . . . 66

Section 703. Reports by Trustee . . . . . . . . . . .67

Section 704. Reports by Company . . . . . . . . . . .67

ARTICLE EIGHT

CONSOLIDATION, MERGER OR SALE OF ASSETS

Section 801. Company May Consolidate, Etc., Only on 68
Certain Terms. . . . . . . . . . . . . . .

Section 802. Successor Substituted. . . . . . . . . .69

ARTICLE NINE

SUPPLEMENTAL INDENTURES

Section 901. Supplemental Indentures Without Consent
of Holders . . . . . . . . . . . . . . . . 69

Section 902. Supplemental Indentures with Consent of
Holders . . . . . . . . . . . . . . . . 71

Section 903. Execution of Supplemental Indentures . .73

Section 904. Effect of Supplemental Indentures. . . .74

Section 905. Conformity with Trust Indenture Act. . .74

Section 906. Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . . 74

Section 907. Waiver of Compliance by Holders. . . . .74

Section 908. Subordination Unimpaired . . . . . . . .75
ARTICLE TEN

COVENANTS

Section 1001. Payment of Principal, Premium and
Interest . . . . . . . . . . . . . . . . . 75

Section 1002. Maintenance of Office or Agency. . . . .75

Section 1003. Money for Securities Payments to be Held
in Trust. . . . . . . . . . . . . . . 76

Section 1004. Statement by Officers as to Default. . .76

Section 1005. Limitations on Liens on Common Stock of
Principal Insurance Subsidiaries . . . . . 77

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

Section 1101. Applicability of Article . . . . . . . .78

Section 1102. Election to Redeem, Notice to Trustee. .78

Section 1103. Selection by Trustee of Securities to Be
Redeemed . . . . . . . . . . . . . . 78

Section 1104. Notice of Redemption . . . . . . . . . .79

Section 1105. Deposit of Redemption Price. . . . . . .80

Section 1106. Securities Payable on Redemption Date. .81

Section 1107. Securities Redeemed in Part. . . . . . .81

ARTICLE TWELVE

CONVERSION OF SECURITIES

Section 1201. Applicability of Article . . . . . . . . 81

Section 1202. Exercise of Conversion Privilege . . . . 82

Section 1203. No Fractional Shares . . . . . . . . . . 83

Section 1204. Adjustment of Conversion Price . . . . . 84

Section 1205. Notice of Certain Corporate Actions. . . 84

Section 1206. Reservation of Shares of Common Stock. . 86

Section 1207. Payment of Certain Taxes Upon Conversion 86

Section 1208. Nonassessability . . . . . . . . . . . . 86

Section 1209. Effect of Consolidation or Merger on
Conversion Privilege . . . . . . . . . . . 86

Section 1210. Duties of Trustee Regarding Conversion . 88

Section 1211. Repayment of Certain Funds Upon
Conversion . . . . . . . . . . . . . . . . 88

ARTICLE THIRTEEN

DEFEASANCE AND COVENANT DEFEASANCE

Section 1301. Company's Option to Effect Defeasance or
Covenant Defeasance. . . . . . . . . . . . 89

Section 1302. Defeasance and Discharge . . . . . . . . 89

Section 1303. Covenant Defeasance. . . . . . . . . . . 90

Section 1304. Conditions to Defeasance or Covenant
Defeasance. . . . . . . . . . . . 90

Section 1305. Deposited Money and U.S. Government
Obligations or Foreign Government Obligations to be Held
in Trust; Other Miscellaneous Provisions . . . . . .
94

Section 1306. Reinstatement. . . . . . . . . . . . . . 95

ARTICLE FOURTEEN

SINKING FUNDS

Section 1401. Applicability of Article . . . . . . . . 96

Section 1402. Satisfaction of Sinking Fund Payments 96
with Securities. . . . . . . . . . . . . .

Section 1403. Redemption of Securities for Sinking Fund97

ARTICLE FIFTEEN

SUBORDINATION OF SECURITIES

Section 1501. Securities Subordinate to Senior Debt. . 97

Section 1502. Payment Over of Proceeds Upon
Dissolution, Etc . . . . . . . . . . . . . 97

Section 1503. Prior Payment to Senior Debt Upon
Acceleration of Securities . . . . . . . . 99

Section 1504. No Payment When Senior Debt in Default .100

Section 1505. Payment Permitted If No Default. . . . .101

Section 1506. Subrogation to Rights of Holders of

Senior Debt. . . . . . . . . . . . . . . . 101

Section 1507. Provisions Solely to Define Relative
Rights . . . . . . . . . . . . . . . . . . 102

Section 1508. Trustee to Effectuate Subordination. . .102

Section 1509. No Waiver of Subordination Provisions. .102

Section 1510. Notice to Trustee. . . . . . . . . . . .103

Section 1511. Reliance on Judicial Order or Certificate
of Liquidating Agent . . . . . . . . . . . 104

Section 1512. Trustee Not Fiduciary For Holders of
Senior Debt. . . . . . . . . . . . . . . . 104

Section 1513. Rights of Trustee as Holder of Senior
Debt; Preservation of Trustee's Rights . . 105

Section 1514. Article Applicable to Paying Agents. . .105

Section 1515. Defeasance of This Article Fifteen . . .105

Section 1516. Certain Conversions Deemed Payment . . .105

TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . .106

SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . .106

ACKNOWLEDGMENTS. . . . . . . . . . . . . . . . . . . . .108

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

INDENTURE, dated as of January 28, 1994, between USF&G
CORPORATION, a Maryland corporation (herein called the
"Company"), having its principal office at 100 Light Street,
Baltimore, Maryland 21202, and CHEMICAL BANK, a New York
corporation, as Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time
to time of its debentures, notes or other evidences of
indebtedness (herein called the "Securities"), to be issued in
one or more series as in this Indenture provided.

All things necessary to make this Indenture a valid
agreement of the Company, in accordance with 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 or of series thereof, as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 101. Definitions.

For all purposes of this Indenture and of any indenture
supplemental hereto, 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;

(2) all other terms used herein which are defined in
the Trust Indenture Act or the Securities Act of 1933, as
amended, 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 at the date of such computation;

(4) the words "Article" and "Section" refer to an
Article and Section, respectively, 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.

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

"Board of Directors" means either (i) the board of
directors of the Company, the executive committee of such board
of directors or any other duly authorized committee of directors
and/or officers appointed by such board of directors or
executive committee, or (ii) one or more duly authorized
officers of the Company to whom the board of directors of the
Company or a committee thereof has delegated the authority to
act with respect to the matters contemplated by this Indenture.

"Board Resolution" means (i) a copy of a resolution
certified by the Corporate Secretary or an Assistant Corporate
Secretary of the Company to have been duly adopted by the Board

of Directors or a committee thereof and to be in full force and

"Business Day", when used with respect to any Place of
Payment, means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in that

Place of Payment are authorized or obligated by law, regulation
or executive order to close.

"Commission" means the Securities and Exchange
Commission, as 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.

"Common Stock" means, with respect to the Company, its
common stock, $2.50 par value per share, or any other shares of
capital stock of the Company into which the Common Stock shall
be reclassified or changed and with respect to any Principal
Insurance Subsidiary, stock of any class, however designated,
except stock which is non-participating beyond fixed dividend
and liquidation preferences and the holders of which have either
no voting rights or limited voting rights entitling them, only
in the case of certain contingencies, to elect less than a
majority of the directors (or persons performing similar
functions) of such Principal Insurance Subsidiary, and shall
include securities of any class, however designated, which are
convertible into such Common Stock.

"Company Request" or "Company Order" means a written
request or order signed in the name of the Company by (i) any
two of the following individuals: the Chairman, the President,
an Executive Vice President or a Vice President, or (ii) by one
of the foregoing individuals and by any other Vice President,
the Treasurer, an Assistant Treasurer, the Corporate Secretary
or an Assistant Corporate Secretary or any other individual
authorized by the Board of Directors for such purpose, and
delivered to the Trustee.

"conversion price" means the amount of Common Stock
issuable upon conversion of any Securities and, in the case of
any specific series of Securities, may be expressed in terms of
either a conversion price or a conversion rate.

"Corporate Trust Office" means the principal office of
the Trustee at which at any particular time its corporate trust
business shall be administered.

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

"Covenant Defeasance" has the meaning specified in
Section 1303.

"Debt" means (without duplication and without regard to
any portion of principal amount that has not accrued and to any
interest component thereof (whether accrued or imputed) that is
not due and payable) with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person
for money borrowed, (ii) every obligation of such Person
evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to letters
of credit, bankers' acceptances or similar facilities issued for
the account of such Person, (iv) every obligation of such Person
issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v)
every capital lease obligation of such Person, (vi) every
Hedging Obligation, (vii) every obligation of others secured by
a lien on any asset of such Person, whether or not such
obligation is assumed by such Person, (viii) every obligation of
the type referred to in clauses (i) through (vii) of another
Person and all dividends of another Person the payment of which,
in either case, such Person has guaranteed or is responsible or
liable, directly or indirectly, as obligor or otherwise, and
(ix) any and all deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements to any liability
of the kind described in any of the preceding clauses (i)
through (viii).

"Defaulted Interest" has the meaning specified in
Section 307.

"Defeasance" has the meaning specified in Section 1302.

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

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

"Floating or Adjustable Rate Provision" means a formula
or provision, specified in or pursuant to a Board Resolution or
an indenture supplemental hereto, providing for the
determination, whether pursuant to objective factors or pursuant
to the sole discretion of any Person (including the Company),
and periodic adjustment of the interest rate borne by

a Floating or Adjustable Rate Security.

"Floating or Adjustable Rate Security" means any
Security which provides for interest thereon at a periodic rate
that may vary from time to time over the term thereof in
accordance with a Floating or Adjustable Rate Provision.

"Foreign Government Obligations" has the meaning
specified in Section 1304.

"Global Security" means a Security that evidences all or
part of the Securities of any series and is authenticated and
delivered to, and registered in the name of, the Depositary

for such Securities or a nominee thereof.

"Hedging Obligations" means, with respect to any Person,
all obligations of such Person under (i) interest rate swap
agreements, interest rate cap agreements and interest rate
collar agreements, (ii) foreign exchange contracts, currency
swap agreements or similar agreements, and (iii) other
agreements or arrangements designed to protect such Person
against fluctuations, or otherwise to establish financial hedges
in respect of, exchange rates, currency rates or interest rates.

"Holder" means a Person in whose name a Security is
registered in the Security Register.

"Indenture" means this instrument as originally executed
or 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 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. The term "Indenture" shall also
include the terms of particular series of Securities

established as contemplated by Section 301.

"interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after
Maturity, means interest payable after Maturity.

"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an instalment of interest
on such Security.

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

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

"Officers' Certificate" means a certificate signed by
(i) any two of the following individuals: the Chairman, the
President, an Executive Vice President or a Vice President, or
(ii) by one of the foregoing individuals and by any other Vice
President, the Treasurer, an Assistant Treasurer, the Corporate
Secretary or an Assistant Corporate Secretary, of the Company,
or any other individual authorized by the Board of Directors for
such purpose, and delivered to the Trustee.

"Opinion of Counsel" means a written opinion of counsel,
who may be an employee of or counsel to the Company or other
counsel, and who is reasonably satisfactory to the Trustee.

"Original Issue Discount Security" means any Security
which provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration
of the Maturity thereof pursuant to Section 502.

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

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

(ii) 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
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;

(iii) Securities as to which Defeasance has been
effected pursuant to Section 1302; and

(iv) 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 any request,
demand, authorization, direction, notice, consent or waiver
hereunder, (A) the principal amount of an Original Issue
Discount Security that shall be deemed to be Outstanding shall
be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration
of the Maturity thereof pursuant to Section 502, (B) the
principal amount of a Security denominated in one or more
foreign currencies or currency units shall be the U.S. dollar
equivalent, determined in the manner provided as contemplated by
Section 301 on the date of original issuance of such Security,
of the principal amount (or, in the case of an Original Issue
Discount Security, the U.S. dollar equivalent on the date of
original issuance of such Security of

the amount determined as provided in (A) above) of such
Security, and (C) Securities owned by the Company or any other
obligor upon the Securities or any Subsidiary 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 or waiver, 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 Subsidiary 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, association, joint-stock company, 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.

"Principal Insurance Subsidiary" means only United
States Fidelity and Guaranty Company and Fidelity and Guaranty
Life Insurance Company, and any other Subsidiary of the Company
which shall hereafter succeed by merger or otherwise to a major
part of the business of one or more of the Principal Insurance
Subsidiaries. The decision as to whether a Subsidiary shall
have succeeded to a major part of the business of one or more of
the Principal Insurance Subsidiaries shall be made in good faith
by the board of directors of the Company or a committee thereof
by the adoption of a resolution so stating, and the Company
shall within 30 days of the date of the adoption of such
resolution deliver to the Trustee a copy thereof, certified by
the Corporate Secretary or an Assistant Corporate Secretary of
the Company.

"Proceeding" has the meaning specified in Section 1502.

"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.

"Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series means the

date specified for that purpose as contemplated by Section 301.

"Responsible Officer", when used with respect to the
Trustee, means the chairman or any vice-chairman of the board of
directors, the chairman or any vice-chairman of the executive
committee of the board of directors, the chairman of the trust
committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the
particular subject.

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

"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.

"Senior Debt" means the principal of (and premium, if
any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for
reorganization relating to the Company to the extent that such
claim for post-petition interest is allowed in such proceeding)
payable on, and fees, expenses, reimbursement obligations,
indemnity obligations and other amounts due on or in connection
with, any Debt incurred, assumed or guaranteed by the Company,
whether on or prior to the date of the Indenture or thereafter
incurred, assumed or guaranteed, unless, in the instrument
creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not
superior in right of payment to the Securities or to other Debt
which is pari passu with, or subordinated to the Securities;
provided, however, that Senior Debt shall not be deemed to
include the Securities.

"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 instalment of principal thereof or interest
thereon, means the date specified in such Security as the fixed
date on which the principal of such Security or such instalment
of principal or interest is due and payable.

"Subsidiary" means a corporation more than 50% of the
voting power of which is controlled, 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 power" means the power to vote 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.

"U.S. Government Obligations" has the meaning specified
in Section 1304.

"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.

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
(excluding 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, such individual has made such examination or
investigation as is

necessary to enable such individual 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.

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.

representations with respect to the matters upon which its
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.

Any certificate, statement or opinion of an officer of
the Company or of counsel may be based, insofar as it relates to
accounting matters, upon a certificate, opinion or
representation by an accountant or firm of accountants in the
employ of the Company, unless such officer or counsel, as the
case may be, knows, or in the exercise of reasonable care should
know, that the certificate, opinion or representation with
respect to such accounting matters upon which its certificate,
statement or opinion may be based is 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.

(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided or permitted by
this Indenture to be given 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.

(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.

to be given or taken by Holders of Outstanding Securities of
such series. If not set by the Company prior to the first
solicitation of a Holder of Securities of such series 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 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 for action to be
taken by the Holders of one or more series of Securities, only
the Holders of Securities of such series on such date (or their
duly designated proxies) shall be entitled to give or take, or
vote on, the relevant action.

(d) The ownership of Securities shall be proved by
the Security Register or by a certificate of the Security
Registrar.

(e) 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.

duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such
principal amount.

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 450 West
33rd Street, New York, New York 10001, Attention: Corporate
Trust Group, 15th Floor, 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, Attention: Treasurer, (until
another address is 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 its 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; provided, however, that the Company or the Trustee, upon
a good faith determination that mailing is in the circumstances
impractical, may give such notice by any other method which, in
the reasonable belief of the Company or, in the case of the
Trustee, of the Company and the Trustee, is likely to be
received by the Holders. 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.

Section 107. Conflict with Trust Indenture Act.

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.

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.

This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New
York, but without regard to principles of conflicts of laws.

Section 113. Legal Holidays.

interest or principal (and premium, if any) or conversion need
not be made at such Place of Payment on such date, but may be
made on the next succeeding Business Day at such Place of
Payment 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 with respect to
such payment for the period from and after such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be.

Section 114. Personal Immunity from Liability for
Incorporators, Stockholders, Etc.

No recourse shall be had for the payment of the
principal of or premium, if any, or interest, if any, on any
Security, or for any claim based thereon, or otherwise in
respect of any Security, or based on or in respect of this
Indenture or any indenture supplemental hereto, against any
incorporator, or against any past, present or future
stockholder, director or officer, as such, of the Company or of
any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise, all such liability being
expressly waived and released as a condition of, and as
consideration for, the execution of this Indenture and the issue
of the Securities.

ARTICLE TWO

SECURITY FORMS

Section 201. Forms Generally.

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.

Section 202. Form of Face of Security.

(Insert any legend required by the Internal Revenue Code
and the regulations thereunder.)

USF&G CORPORATION

No. $

registered assigns, the principal sum of dollars (if other than
Dollars, substitute other currency or currency units) (if the
Security is to bear interest prior to Maturity, insert -- , and
to pay interest thereon from

or from the most recent Interest Payment
Date to which interest has been paid or duly provided for,
semi-annually on and in

each year) (if other than semi-annual payments, insert frequency
of payments and payment dates), commencing

, at (if the Security is to bear interest at a fixed rate,
insert -- the rate of % per annum) (if the Security is a
Floating or Adjustable Rate Security, insert -- a rate per annum
computed-determined in accordance with, - - insert defined name
of Floating or Adjustable Rate Provision set forth below) (if
the security is to bear interest at a rate determined with
reference to an index, refer to description of index below)
until the principal hereof is paid or made available for payment
(if applicable, insert -- , and (to the extent that the

payment of such interest shall be legally enforceable) at the
rate of % per annum on any overdue principal and premium and

on any overdue installment of interest.) 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 the
or (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 of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.

The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of all Senior

Debt, and this Security is issued subject to the provisions of
the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee
on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such
purposes.

(If the Securities are Floating or Adjustable Rate
Securities with respect to which the principal of or any premium
or interest may be determined with reference to an index, insert
the text of the Floating or Adjustable Rate Provision.)

(If the Security is not to bear interest prior to
Maturity, insert -- The principal of this Security shall not
bear interest except in the case of a default in payment of
principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security
shall bear interest at the rate of % per annum compounded
semi-annually (to the extent that the payment of such interest
shall be legally enforceable), which shall accrue from the date
of such default in payment to the date payment of such
principal, including interest thereon, has been made or duly
provided for. All interest on any overdue principal shall be
payable on demand. Any such interest on any overdue principal
that is not so paid on demand shall bear interest at the rate of
% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from
the date of such demand for payment to the date payment of such
interest has been made or duly provided for, and such interest
shall also be payable on demand.)

Payment of the principal of (and premium, if any) and
(if applicable, insert -- any such interest on this Security)
will be made at the office or agency of the Company maintained
for that purpose in , in such coin or
currency of the United States of America (if the Security is
denominated in a currency other than U.S. dollars, specify other
currency or currency unit in which payment of the principal of
and any premium or interest may be made) as at the

time of payment is legal tender for payment of public and
private debts (if applicable, insert -- ; 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 under its corporate seal.

Dated: USF&G CORPORATION

By:

Attest:

Section 203. Form of Reverse of Security.

as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights,
obligations, 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. This Security is one of the series designated on the
face hereof(, limited in aggregate principal amount to $

(If applicable, insert -- The Securities of this series
are subject to redemption upon not less than 30 days' nor more
than 60 days' notice by mail, (if applicable, insert-- (1) on
in any year commencing with the year

and ending with the year through operation of the
sinking fund for this series at a Redemption Price equal to 100%
of the principal amount, and (2)) at any time on or after

, 19 ), as a whole or in part, at the election of the

Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed (on or before
, __%, and if redeemed) during the 12-month
period beginning of the years indicated,

Redemption Redemption Year Price
Year Price

and thereafter at a Redemption Price equal to % of the
principal amount, together in the case of any such redemption
(if applicable, insert -- (whether through operation of the
sinking fund or otherwise)) with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable

to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in

the Indenture.)

If applicable, insert -- The Securities of this series
are subject to redemption upon not less than 30 days'

nor more than 60 days' notice by mail, (1) on

in any year commencing with the year and ending with the

year through operation of the sinking fund for this series
at the Redemption Prices for redemption through operation of the
sinking fund (expressed as percentages of the principal amount)
set forth in the table below, and (2) at any time on or after
, as a whole or in part, at the election of the
Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund

(expressed as percentages of the principal amount) set forth in

the table below: If redeemed during the 12-month period
beginning of the years indicated,

Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation Year
Sinking Fund of the Sinking Fund

the close of business on the relevant Record Dates referred to
on the face hereof, all as provided in the Indenture.)

(The sinking fund for this series provides for the
redemption on in each year beginning with the year

and ending with the year of (not less than $

("mandatory sinking fund") and not more than $ )
aggregate principal amount of Securities of this series.
Securities of this series acquired or redeemed by the Company
otherwise than through (mandatory) sinking fund payments may be

credited against subsequent (mandatory) sinking fund payments
otherwise required to be made in the inverse order in which they
become due.)

(If the Security is subject to redemption, insert -In
the event of redemption of this Security in part only, a new

Security or Securities of this series and of like tenor for the

unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.)

The Indenture contains provisions for defeasance at any
time of (1) the entire indebtedness of this Security or (2)
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.

the principal amount of this Security (or any portion hereof
which is $1,000 or an integral multiple thereof), into fully
paid and non-assessable shares (calculated as to each conversion
to the nearest 1/100th of a share) of the Common Stock of the
Company, as said shares shall be constituted at the date of
conversion, at the conversion price of $_____ principal amount
of Securities for each share of Common Stock, or at the adjusted
conversion price in effect at the date of conversion determined
as provided in the Indenture, upon surrender of this Security,
together with the conversion notice

hereon duly executed, to the Company at the designated office or
agency of the Company in __________________, accompanied (if

so required by the Company) by instruments of transfer, in form

satisfactory to the Company and to the Trustee, duly executed by
the Holder or by its duly authorized attorney in writing. Such
surrender shall, if made during any period beginning at the
close of business on a Regular Record Date and ending at the
opening of business on the Interest Payment Date next following
such Regular Record Date (unless this Security or the

portion being converted shall have been called for redemption on
a Redemption Date during such period), also be accompanied by
payment in funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the
principal amount of this Security then being converted. Subject
to the aforesaid requirement for payment and, in the case of a
conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment
Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to
receive an installment of interest (with

certain exceptions provided in the Indenture), no adjustment is

to be made on conversion for interest accrued hereon or for
dividends on shares of Common Stock issued on conversion. The
Company is not required to issue fractional shares upon any

such conversion, but shall make adjustment therefor in cash on
the basis of the current market value of such fractional
interest as provided in the Indenture. The conversion price is

subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that in case of certain
consolidations, mergers or share exchanges to which the Company

is a party or the sale of substantially all of the assets of the
Company, the Indenture shall be amended, without the consent of
any Holders of Securities, so that this Security, if

then outstanding, will be convertible thereafter, during the
period this Security shall be convertible as specified above,
only into the kind and amount of securities, cash and other
property receivable upon the consolidation, merger, share
exchange or sale by a holder of the number of shares of Common
Stock into which this Security might have been converted
immediately prior to such consolidation, merger, share exchange

or sale (assuming such holder of Common Stock failed to exercise
any rights of election and received per share the kind

and amount received per share by a plurality of non-electing
shares) (, assuming if such consolidation, merger, share
exchange or sale is prior to _________, 19__, that this Security
were convertible at the time of such consolidation, merger,
share exchange or sale at the initial conversion price specified
above as adjusted from _ ____, 19__ to such time pursuant to
the Indenture. In the event of conversion of this Security in
part

only, a new Security or Securities for the unconverted portion
hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.)

(If the Security is convertible into other securities of
the Company, specify the conversion features.)

the amount of principal so declared due and payable and (ii) of

interest on any overdue principal and overdue interest (in each

case to the extent that the payment of such interest shall be
legally enforceable), all of the Company's obligations in

respect of the payment of the principal of and interest, if any,
on the Securities of this series shall terminate.)

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 of each series to be affected under
the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of
the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the

Securities of each series at the time Outstanding, on behalf of

the Holders of all Securities of such series, 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
hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.

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 rates, 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

registerable 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 duly
authorized in writing, and thereupon one or more new Securities

of this series and of like tenor, of authorized denominations
and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.

Securities of this series are exchangeable for a like aggregate

principal amount of Securities of this series and of like tenor

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 is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.

by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and
released.

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 a legend in substantially the following
form or such other legends as may be required:

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 transferred to, or registered or exchanged for Securities
registered in the name of, any Person other than the Depositary
or a nominee thereof and no such transfer may be registered,
except in the limited circumstances described in the Indenture.

Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of,
this Security shall be a Global Security subject to the
foregoing, except in such limited circumstances.

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

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

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

As Trustee

By Authorized
Officer

Section 206. Form of Conversion Notice.

To USF&G Corporation

Interest Payment Date (unless this Security or the portion
thereof being converted has been called for redemption on a
Redemption Date within such period), this Notice is accompanied

by payment, in funds acceptable to the Company, of an amount
equal to the interest payable on such Interest Payment Date of
the principal of this Security to be converted. If shares are
to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes

payable with respect hereto. Any amount required to be paid by

the undersigned on account of interest accompanies this Security.

Principal Amount to be Converted (in an integral multiple
of $1,000, if less than all): $____________

Dated

Signature

Signature(s) must be
guaranteed by a commercial bank or trust company or a member
firm of a national stock exchange if shares of Common Stock are
to be delivered, or Securities to be issued, other than to and
in the name of the registered holder.

______________________________
Signature Guarantee

Fill in for registration of shares of Common Stock and
Security if to be issued otherwise than to the registered holder.

Social Security or other Taxpayer
(Name) Identifying
Number_______________

(Address)

Please print Name and Address (including zip code number)

ARTICLE THREE

THE SECURITIES

Section 301. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series.
There shall be established in or pursuant to a Board Resolution

or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series,

(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from Securities
of any other series);

(2) any limit upon the aggregate principal amount of
the Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series
pursuant to Sections 304, 305, 306, 906 or 1107 and except for
any Securities which, pursuant to Section 303, are deemed never
to have been authenticated and delivered hereunder);

(3) the Person to whom any interest on a Security of
the series shall be payable, if other than 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;

(4) the date or dates on which the principal of the
Securities of the series is payable;

(5) the rate or rates at which the Securities of the
series shall bear interest, if any, or the Floating or
Adjustable Rate Provision pursuant to which such rates shall be
determined, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which any such interest
shall be payable and the Regular

Record Date for any interest payable on any Interest
Payment Date;

(6) whether the Securities of the series would be
secured pursuant to Section 901(6);

(7) the place or places where the principal of and
any premium and interest on Securities of the series shall be
payable;

(8) the period or periods within which, the price or
prices at which (including premium, if any) and the terms and
conditions upon which Securities of the series may be redeemed,
in whole or in part, at the option of the Company pursuant to a
sinking fund or otherwise;

(9) the obligation, if any, of the Company to redeem
or purchase Securities of the series pursuant to any sinking
fund or analogous provisions or at the option of a Holder
thereof and the period or periods within which, the price or
prices at which and the terms and conditions upon which
Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;

(10) the terms of any right to convert Securities of
the series into shares of Common Stock of the Company or other
securities or property;

(11) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which Securities
of the series shall be issuable;

(12) the currency or currencies, including composite
currencies, or currency units in which payment of the principal
of and any premium and interest on any Securities of the series
shall be payable if other than the currency of the United States
of America and the manner of determining the equivalent thereof
in the currency of the United States of America for purposes of
the definition of "Outstanding" in Section 101;

(13) if the amount of payments of principal of or any
premium or interest on any Securities of the series may be
determined with reference to one or more indices, the manner in
which such amounts shall be determined;

(14) if the principal of or any premium or interest
on any Securities of the series is to be payable, at the
election of the Company or a Holder thereof, in one or more
currencies, including composite currencies, or currency units
other than that or those in which the Securities are stated to
be payable, the currency, currencies, including composite
currencies, or currency units in which payment of the principal
of and any premium and interest on Securities of such series as
to which such election is made shall be payable, and the periods
within which and the terms and conditions upon which such
election is to be made;

(15) if other than the principal amount thereof, the
portion of the principal amount of Securities of the series
which shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 502 or provable under any
applicable federal or state bankruptcy or similar law pursuant
to Section 503;

(16) if and as applicable, that the Securities of the
series shall be issuable in whole or in part in the form of one
or more Global Securities and, in such case, the Depositary or
Depositaries for such Global Security or Global Securities and
any circumstance other than those set forth in Section 305 in
which any such Global Security may be transferred to, and
registered and exchanged for Securities registered in the name
of, a Person other than the Depositary for such Global Security
or a nominee thereof and in which any such transfer may be
registered;

(17) any other event or events of default applicable
with respect to the

Securities of the series in addition to those provided
in Section 501(1) through (7);

(18) any other covenant or warranty included for the
benefit of Securities of the series in addition to (and not
inconsistent with) those included in this Indenture for the
benefit of Securities of all series, or any other covenant or
warranty included for the benefit of Securities of the series in
lieu of any covenant or warranty included in this Indenture for
the benefit of Securities of all series, or any provision that
any covenant or warranty included in this Indenture for the
benefit of Securities of all series shall not be for the benefit
of Securities of the series, or any combination of such
covenants, warranties or provisions;

(19) any restriction or condition on the
transferability of the Securities of the series;

(20) any authenticating or paying agents, registrars,
conversion agents or any other agents with respect to the
Securities of the series; and

(21) any other terms of the series (which terms shall
not be inconsistent with the provisions of this Indenture,
except as permitted by Section 901(5)).

All Securities of any one series shall be substantially
identical except as to denomination and except as

may otherwise be provided in or pursuant to the Board Resolution
referred to above or in any such indenture supplemental hereto.

If any of the terms of the series are established by
action taken pursuant to a Board Resolution, a copy of such
action shall be delivered to the Trustee.

Section 302. Denominations.

The Securities of each series shall be issuable in
registered form without coupons in such denominations as shall
be specified as contemplated by Section 301. In the absence of

any such provisions with respect to the Securities of any

series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.

Section 303. Execution, Authentication, Delivery and Dating.

by its Corporate Secretary or one of its Assistant Corporate
Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.

The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Securities. 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. Minor typographical and other minor
errors in the text of any Security or minor defects in the seal

or facsimile signature on any Security shall not affect the
validity or enforceability of such Security if it has been duly

authenticated and delivered by the Trustee.

At any time and from time to time after the execution
and delivery of this Indenture, the Company may deliver
Securities of any series 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 the Company Order shall authenticate and
deliver such Securities. If the form or terms of the Securities
of the series have been established in or pursuant to one or
more Board Resolutions as permitted by Sections 201 and 301, in
authenticating such 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,

(a) if the form of such Securities has been
established by or pursuant to a Board Resolution as permitted by
Section 201, that such form has been established in conformity
with the provisions of this Indenture;

(b) if the terms of such Securities have been
established by or pursuant to a

Board Resolution as permitted by Section 301, that such
terms have been established in conformity with the provisions of
this Indenture; and

(c) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner
and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium , rehabilitation and similar laws of
general applicability relating to or affecting creditors' rights
generally or the rights of creditors of insurance companies or
insurance holding companies generally and to general equity
principles.

The Trustee shall have the right to decline to
authenticate and deliver any Securities under this Section if
the Trustee, being advised by counsel, determines that such
action may not lawfully be taken or if the Trustee in good faith
by its board of directors, executive committee, or a trust
committee of directors or responsible officers of the Trustee
shall determine that such action would expose the Trustee to
personal liability to existing Holders of Securities.

Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all Securities of a series are not to be
originally issued at one time, it shall not be necessary to
deliver the Board Resolution otherwise required pursuant to
Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or
prior to the time of authentication of each Security of such
series if such documents are delivered at or prior to the
authentication upon original issuance of the first Security of
such series to be issued.

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. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never

issued and sold by the Company, and the Company shall deliver
such Security to the Trustee for cancellation as provided in
Section 309, for all purposes of this Indenture such Security
shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this
Indenture.

Section 304. Temporary Securities.

Pending the preparation of definitive Securities of any
series, 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. Every temporary Security shall be
executed by the Company and authenticated by the Trustee upon
the same conditions and in substantially the same manner, and
with like effect, as the definitive Securities.

surrender for cancellation of any one or more temporary
Securities of any series, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor one

or more definitive Securities of the same series, of any
authorized denominations and of a like aggregate principal
amount and tenor. Until so exchanged the temporary Securities
of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of such
series and tenor.

Section 305. Registration, Registration of Transfer and
Exchange.

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 of the Company

in a Place of Payment being herein sometimes collectively
referred to as the "Security Register") in which, subject to
such reasonable regulations as it or the Trustee may prescribe,

the Company shall provide for the registration of Securities

and of transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.

Upon surrender for registration of transfer of any
Security of any series at the office or agency in a Place of
Payment for that series, 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 the same series, of any authorized denominations and of a
like aggregate principal amount and tenor.

the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive and
bearing numbers not contemporaneously outstanding.

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, exchange, redemption or payment 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 or the
Trustee 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 304, 906 or 1107 not
involving any transfer.

under Section 1103 and ending at the close of business on the

day of such mailing, or (ii) 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.

(1) such Depositary (A) notifies the Company and the Trustee
that it is unwilling or unable to continue as Depositary for
such Global Security or (B) ceases to be a clearing agency
registered under the Exchange Act, (2) the Company executes and

delivers to the Trustee a Company Order that such Global
Security shall be so transferable, registrable and exchangeable,
and such transfers shall be registrable, (3) there shall have
occurred and be continuing an Event of Default

with respect to the Securities evidenced by such Global Security
or (4) there shall exist such other circumstances, if any, as
have been specified for this purpose as contemplated by

Section 301. Notwithstanding any other provision in this
Indenture, a Global Security to which the restriction set forth

in the preceding sentence shall have ceased to apply may be
transferred only to, and may be registered and exchanged for
Securities registered only in the name or names of, such Person

or Persons as the Depositary for such Global Security shall have
directed and no transfer thereof other than such a transfer may
be registered.

Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a
Global Security to which the restriction set forth in the first
sentence of the preceding paragraph shall apply, whether
pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated and delivered in the form of,

and shall be, a Global Security.

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

by a bona fide purchaser, the Company shall execute and the
Trustee shall authenticate and deliver, in lieu of any such
mutilated, destroyed, lost or stolen Security, a new Security

of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.

Upon the issuance of any new Security under this
Section, the Company or the Trustee 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 of any series 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 anyone, and shall be
entitled to all the benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Securities of that series
duly issued hereunder.

Section 307. Payment of Interest; Interest Rights Preserved.

Any interest on any Security of any series 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 of such series (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 of such series 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 15 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 mailed, first-class postage prepaid,
to each Holder of Securities of such series at its address as it
appears in the Security Register, 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 of such series (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).

(2) The Company may make payment of any Defaulted
Interest on the Securities of

any series in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such
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.

interest whose Stated Maturity is on such Interest Payment Date

shall be payable on such Interest Payment Date notwithstanding
such conversion and such interest (whether or not punctually
paid or duly provided for) shall be paid to the person in whose

name that Security (or any one or more Predecessor Securities)
is registered at the close of business on such Regular Record
Date. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of any Security which is
converted, interest whose Stated Maturity is after the

date of conversion of such Security shall not be payable.

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.

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 shall be destroyed by the
Trustee and a certificate of destruction shall be sent to the
Company, unless otherwise instructed by the Company. Acquisition
by the Company of any Security shall not operate as

a redemption or satisfaction of the indebtedness represented by

such Security unless and until the same is delivered to the
Trustee for cancellation.

Section 310. Computation of Interest.

ARTICLE FOUR

SATISFACTION AND DISCHARGE

Section 401. Satisfaction and Discharge of
Indenture.

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

(1) either

(A) all Securities of such series
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 of such series
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 of such
series 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 reasonably satisfactory to
the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company,

and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee
in trust for the purpose (A) money (either in United States
dollars or such other currency or currency unit in which the
Securities of any series may be payable) in an amount, or (B)
U.S. Government Obligations (or Foreign Government Obligations
if the Securities are denominated in a foreign currency or
currencies) that 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,
sufficient to pay and discharge the entire indebtedness on

such Securities of such series not theretofore
delivered to the Trustee for cancellation, for principal of (and
premium, if any) and interest to the date of such deposit (in
the case of Securities of such series 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 including, but not
limited to, all amounts due the Trustee under Section 607; and

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

In the event there are Securities of two or more series
outstanding hereunder, the Trustee shall be required to execute

an instrument acknowledging satisfaction and discharge of this
Indenture only if requested to do so with respect to Securities

of a particular series as to which it is Trustee and if the
other conditions thereto are met. In the event that there are
two or more Trustees hereunder, then the effectiveness of any
such instrument shall be conditioned upon receipt of such
instruments from all Trustees hereunder.

Notwithstanding the satisfaction and discharge of this
Indenture with respect to a particular series, 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 until there are no
Securities Outstanding with respect to a particular series and
the obligations of the Company and the Trustee with respect to
all other series of Securities shall survive.

Section 402. Application of Trust Fund.

Subject to provisions of the last paragraph of Section
1003, all amounts 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 funds have been
deposited with the Trustee. Money deposited pursuant to this
Section not in violation of this Indenture shall not be subject
to claims of the holders of

Senior Debt under Article Fifteen.

ARTICLE FIVE

REMEDIES

Section 501. Events of Default.

"Event of Default" whenever used with respect to
Securities of a series means any one of the following events and
such other events as may be established with respect to the

Securities of such series as contemplated by Section 301 hereof

(whether or not it shall be occasioned by the provisions of
Article Fifteen):

(1) Default in the payment of any instalment of
interest upon any of the Securities of such series as and when
the same shall become 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
premium, if any, on any of the Securities of such series as and
when the same shall become due and payable either at maturity,
upon redemption, by declaration or otherwise; or

(3) Default in the making of any sinking fund
payment, whether mandatory or optional, as and when the same
shall become due and payable by the terms of the Securities of
such series; or

(4) Failure on the part of the Company duly to
observe or perform in any material respect any other of the
covenants or

agreements on the part of the Company contained in this
Indenture or in the Securities (other than those set forth
exclusively in the terms of any other particular series of
Securities established as contemplated by this Indenture for the
benefit of such other series) and written notice of such
failure, stating that such notice is a "Notice of Default"
hereunder, and requiring the Company to remedy the same, shall
have been given by registered or certified mail, return receipt
requested, to the Company by the Trustee, or to the Company and
the Trustee by the holders of at least 25% in aggregate
principal amount of the Outstanding Securities of that series,
and such failure shall have continued unremedied for a period of
90 days after the date of the Company's receipt of such Notice
of Default; or

Company or Principal Insurance Subsidiary, or waived,
rescinded or annulled by the requisite holders of such
indebtedness, then the Event of Default hereunder by reason
thereof shall be deemed likewise to have been thereupon
remedied, cured or waived without further action upon the part
of either the Trustee or any of the Holders; and provided
further, that, subject to the provisions of Sections 601 and
602, the Trustee shall not be charged with knowledge of any such
default unless written notice thereof shall have been given to
the Trustee by the Company, by the holder of any such
indebtedness or an agent of the holder of any such indebtedness,
by the trustee then acting under any such indenture or other
instrument under which such default shall have occurred, or by
the holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series; or

(6) A decree or order by a court having jurisdiction
in the premises shall have been entered adjudging the Company or
any Principal Insurance Subsidiary a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of the Company or any
Principal Insurance Subsidiary under any applicable Federal or
State bankruptcy or similar law, and such decree or order shall
have continued undischarged and unstayed for a period of 90
days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, trustee,
assignee, sequestrator or similar official in bankruptcy or
insolvency of the Company or any Principal Insurance Subsidiary
or of all or substantially all of its property, or for the
winding up or liquidation of its affairs, shall have been
entered, and such decree or order shall have continued
undischarged and unstayed for a period of 90 days; or

(7) The Company or any Principal Insurance
Subsidiary shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization, arrangement, adjustment
or composition under any applicable Federal or State bankruptcy
or similar law, or shall consent to the filing of any such
petition, or shall consent to the appointment of a receiver,
liquidator, trustee, assignee, sequestrator or similar official
in bankruptcy or insolvency of the Company or any Principal
Insurance Subsidiary or of all or substantially all of its
property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its
debts generally as they become due and its willingness to be
adjudged a bankrupt, or corporate action shall be taken by the
Company or any Principal Insurance Subsidiary in furtherance of
any of the aforesaid purposes.

Section 502. Acceleration of Maturity; Rescission
and Annulment.

If an Event of Default with respect to Securities of any
series at the time Outstanding 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 of that series
may declare the principal amount (or, if any of the Securities
of that series are Original Issue Discount Securities, such
portion of the principal amount of such Securities as may be
specified in the terms thereof) of all of the Securities of that
series 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 amount (or specified
amount) shall become immediately due and payable; provided,
however, that if an Event of Default specified in Section 501(6)
or (7) occurs and is continuing, such principal amount of all
such Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of
the Trustee or any Holders; provided, further, that, except in
the case of a default in the payment of the principal of (or
premium, if any) or interest on any Security or in the payment
of any sinking fund payment, the Trustee shall be protected in
withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the
interests of the Holders of such Securities.

At any time after such a declaration of acceleration
with respect to Securities of any series 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 of that series, by written notice to the
Company and the Trustee, may waive all defaults and 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
of that series,

(B) the principal of (and premium, if any,
on) any Securities of that series which have become due
otherwise than by such declaration of acceleration and any
interest thereon at the rate or rates prescribed therefor in
such Securities,

(C) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate
or rates prescribed therefor in such 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 except such costs and expenses as

are a result of negligence or bad faith on the part of
the Trustee;

and

(2) all Events of Default with respect to
Securities of that series, other than the non-payment
of the principal of and interest, if any, on the
Securities of that series 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 written 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
or rates prescribed therefor in such 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, except such costs and
expenses as are a result of negligence or bad faith on the part
of the Trustee. Until such demand is made by the Trustee, the
Company may pay the principal of and premium, if any, and
interest, if any, on the Securities of any series to the
registered holders, whether or not the Securities of such series
are overdue.

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.

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 except such costs and

expenses, as are a result of negligence or bad faith on the part
of the Trustee.

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 except such costs and
expenses, as are a result of negligence or bad faith on the part
of the Trustee, 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.

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

SECOND: Subject to Article 15, 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; and

THIRD: To the payment of the remainder, if any,
to the Company.

Section 507. Limitation on Suits.

(1) such Holder has previously given written notice
to the Trustee of a continuing Event of Default with respect to
the Securities of that series;

(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities of that series 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 indemnity reasonably satisfactory in form and substance
to the Trustee 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 of that series;

it being understood and intended that no one or more of such
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 of such
Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all of such Holders.

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

Notwithstanding any other provision in this Indenture,
but subject to Article 15, 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) any interest on such Security on the Stated
Maturity or Maturities expressed in such

Security (or, in the case of redemption, on the Redemption Date)
and to convert such Securities in accordance with Article

Twelve and to institute suit for the enforcement of any such
payment or such right of conversion, and such rights shall not
be impaired without the consent of such Holder.

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 Securities 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. Subject to Section 507, 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 of any series 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, with respect to the
Securities of such series, provided that

(1) such direction shall not be in conflict with any
rule of law or with this Indenture, shall not expose the Trustee
to personal liability and shall not unduly prejudice Holders not
joining therein, and

(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.

Upon receipt by the Trustee of any such direction with
respect to Securities of any series, a record date shall be set

for determining the Holders of Outstanding Securities of such
series entitled to join in such direction, which record date
shall be the close of business on the day the Trustee receives
such direction. The Holders of Outstanding Securities of such
series on such record date (or their duly appointed agents), and
only such Persons, shall be entitled to join in such

direction, whether or not such Holders remain Holders after such
record date; provided that, unless such direction shall have
become effective by virtue of Holders of at least a majority in
principal amount of Outstanding Securities of such series on
such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date, such
direction shall automatically and without any

action by any Person be cancelled and of no further effect.
Nothing in this paragraph shall prevent a Holder (or a duly
appointed agent thereof) from giving, before or after the
expiration of such 90-day period, a direction contrary to or
different from, or, after the expiration of such period,
identical to, a direction that has been cancelled pursuant to
the proviso to the preceding sentence, in which event a new
record date in respect thereof shall be set pursuant to this
paragraph.

Section 513. Waiver of Past Defaults.

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

(1) in the payment of the principal of or any
premium or interest on any Security of such series, 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 of such
series affected.

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.

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.

If a default occurs hereunder with respect to Securities
of any series, the Trustee shall give the Holders of
Securities of such series notice of such default 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(4) with respect to Securities of such series, 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 with
respect to Securities of such series.

Section 603. Certain Rights of Trustee.

Subject to the provisions of Section 601:

(a) 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;

(b) 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 may be sufficiently evidenced by a Board Resolution;

(c) 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 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;

(d) 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;

(e) 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 security or indemnity reasonably
satisfactory in form and substance to the Trustee against the
costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;

(f) prior to the occurrence of an Event of Default
and after the remedy or waiver of all Events of Default, 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 upon reasonable notice to the Company be
entitled to examine the books, records and premises of the
Company, personally or by agent or attorney at a time and place
acceptable to the Company; and

(g) 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 the Trustee or any
Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Securities.

The Trustee or any Authenticating Agent shall not 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 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 in
writing 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 written 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 reasonable
expenses and disbursements of its agents and outside counsel),
except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and

(3) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust
or trusts hereunder, including the reasonable 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.

To secure the Company's payment obligations in this
Section 607, the Trustee shall have a lien prior to the
Securities on all assets or money held or collected by the
Trustee, in its capacity as Trustee (but not in any other
capacity), except assets or money held in trust to pay principal
of (premium, if any) or interest on particular Securities.

When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 501(6) or (7)
occurs, such expenses and the compensation for such services are
intended to constitute expenses of administration under any
bankruptcy, insolvency or other similar law.

Section 608. Disqualification; 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.

and surplus of at least $50,000,000 and which unconditionally
guarantees the obligations of the Trustee hereunder. If such
Person 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 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.

(b) The Trustee may resign at any time with respect
to the Securities of one or more series 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 with respect to the Securities of such series.

(c) The Trustee may be removed at any time with
respect to the Securities of any series by Act of the Holders of
a majority in principal amount of the Outstanding Securities

of such series, delivered to the Trustee and to the Company.

(d) 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,

competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor
Trustee or Trustees.

(e) 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, with respect to the Securities
of one

or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to
the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that
at any time there shall be only one Trustee with respect to the
Securities of any particular series) 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 with respect to
the Securities of any Series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
Securities of such series 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 with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the
Securities of any Series 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 of such series for at least six months may,
on behalf of itself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.

(f) The Company shall give notice of each
resignation and each removal of the Trustee with respect to the
Securities of any series and each appointment of a successor
Trustee with respect to the Securities of any series to all
Holders of Securities of such series in the manner provided in
Section 106. Each notice shall include the name of the
successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.

Section 611. Acceptance of Appointment by
Successor.

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 and all other amounts due it under Section 607,
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, subject nevertheless to its lien, if
any, provided for in Section 607.

shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and
which (1) shall contain such provisions as shall be necessary or
desirable to transfer the rights, powers, trust and duties of
the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such

provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or
change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, it being understood
that nothing herein or in such supplemental indenture shall
constitute such Trustee co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the
execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each 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 with respect to the Securities of
that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to
the Securities of that or those series to which the appointment
of such successor Trustee relates, subject nevertheless to its
lien, if any, provided for in Section 607.

(c) 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 referred to in paragraphs (a)
and (b) of this Section, as the case may be.

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

Section 612. Merger, Conversion, Consolidation
or Succession to Business.

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.

Section 614. Appointment of Authenticating Agent.

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 $50,000,000 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 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 or the Company may at any time terminate the agency of
an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company or the Trustee, as the
case may be. 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 mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders
of Securities of the series with respect to which such
Authenticating Agent will serve, as their names and addresses
appear in the Security Register. 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 with respect to one or more series is
made pursuant to this Section, the Securities of such series

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 of the series designated
therein referred to in the within-mentioned Indenture.

CHEMICAL BANK,
As Trustee

By,
As Authenticating Agent

By,
Authorized Officer
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

(a) semi-annually, not later than 10 days after each
Regular Record Date in each year, a list for each series of
Securities, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders of Securities of such
series as of the preceding Regular Record Date, and

provided no such list need be furnished if the Trustee shall be
the Security Registrar.

Section 702. Preservation of Information;
Communications to Holders.

(a) 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.

(b) The rights of the 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.

(c) 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.

(a) 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. To the
extent that any such report is required by the Trust Indenture
Act with respect to any 12 month period, such report shall cover
the 12 month period ending May 15 and shall be transmitted by
the next succeeding July 15.

(b) 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, OR SALE OF ASSETS

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

(1) in case the Company shall consolidate with or
merge into another Person or convey, transfer, lease or sell its
properties and assets as, or 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, transfer, lease or sale the properties and assets of
the Company as, or 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 satisfactory to the
Trustee, all of the obligations of the Company under the
Securities, including without limitation, 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 and the conversion rights, if any, shall
be provided for in accordance with Article Twelve, by
supplemental indenture satisfactory in form to the Trustee,
executed and delivered to the Trustee, by the Person (if other
than the Company) formed by such consolidation or into which the
Company shall have been merged or by the corporation which shall
have acquired or leased the Company's assets;

(2) immediately after giving effect to such
transaction, no Event of Default shall have happened and be
continuing; and

(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, or conveyance, transfer, lease
or sale 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.

For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of the properties and assets of
United States Fidelity and Guaranty Company (other than to the
Company or another Subsidiary), which, if such assets were owned
by the Company, would constitute all or substantially all of the
properties and assets of the Company, shall be deemed to be the
transfer of all or substantially all of the properties and
assets of the Company.

Section 802. Successor Substituted.

Upon any consolidation of the Company with, or merger of
the Company into, any other Person or any sale of the properties
and assets of the Company as, or 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 sale 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, 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.

(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 of all or any series of Securities (and
if such covenants are to be for the benefit of less

than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of
such series) or to surrender any right or power herein conferred
upon the Company; or

(3) to add any additional Events of Default; 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 to permit or
facilitate the issuance of Original Issue Discount Securities; or

(5) to add to, change or eliminate any of the
provisions of this Indenture in respect of one or more series of
Securities, including, without limitation, with respect to any
of the provisions set forth in Article Fifteen, provided that
any such addition, change or elimination (i) shall neither (A)
apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the
benefit of such provision nor (B) modify the rights of the
Holder of any such Security with respect to such provision or
(ii) shall become effective only when there is no such Security
Outstanding; or

(6) to secure the Securities pursuant to the
requirements of Section 1005, or to otherwise secure the
Securities of any series; or

(7) to establish the form or terms of Securities of
any series as permitted by Sections 201 and 301; or

(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add

to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 611(b); or

(9) to cure any ambiguity, to correct or supplement
any provision herein which may be 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 (9) shall not adversely
affect the interests of the Holders of Securities of any series
in any material respect; or

(10) to make provision with respect to the conversion
rights of Holders pursuant to the requirements of Article
Twelve, including providing for the conversion of the securities
into any security (other than the Common Stock of the Company)
or property of the Company; or

(11) to conform to any mandatory provisions of law.

Section 902. Supplemental Indentures with Consent
of Holders.

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 modifying in any manner the rights of the Holders of
Securities of such series 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 instalment of principal of or interest on, any Security,
or reduce the principal amount thereof or the rate of

interest thereon (including any change in the Floating
or Adjustable Rate Provision pursuant to which such rate is
determined that would reduce such rate for any period) or any
premium payable upon the redemption thereof, or reduce the
amount of the principal of an Original Issue Discount Security
that would be due and payable upon a declaration of acceleration
of the Maturity thereof pursuant to Section 502, or change any
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 modify
the provisions of this Indenture with respect to the
subordination of the Securities of any series in a manner
adverse to the Holders, or

(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, 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) if applicable, make any change that adversely
affects the right to convert any security to which the
provisions of Article Twelve are applicable or, except as
provided in this Indenture, decrease the conversion rate or
increase the conversion price of any such security, or

Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section
907, or the deletion of this proviso, in accordance with the
requirements of Sections 611(b) and 901(8).

A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has
expressly been included solely for the benefit of one or more
particular series of Securities, or which modifies the rights of
the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect

the rights under this Indenture of the Holders of Securities of

any other series.

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 and, to the extent that such supplemental indenture
establishes the form or terms of Securities of any series,
covering the matters that would be included in the Opinion of
Counsel described in Section 303 if such Securities were
established by Board Resolution. 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.

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.

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 of such series.

Section 907. Waiver of Compliance by Holders.

Anything in this Indenture to the contrary
notwithstanding, any of the acts which the Company is required
to do, or is prohibited from doing, by any of the provisions of
this Indenture may, to the extent that such provisions might be
changed or eliminated by a supplemental indenture pursuant to
Section 902 upon consent of holders of not less than a majority
in aggregate principal amount of the then Outstanding Securities
of the series affected, be omitted or done by the Company, if
there is obtained the prior consent or waiver of the holders of
at least a majority in aggregate principal amount of the then
Outstanding Securities of such series.

Section 908. Subordination Unimpaired.

No provision in any supplemental indenture that affects
the superior position of the holders of Senior Debt shall be
effective against holders of Senior Debt.

ARTICLE TEN

COVENANTS

Section 1001. Payment of Principal, Premium and Interest.

Section 1002. Maintenance of Office or Agency.

surrendered for conversion and where notices and demands to or
upon the Company in respect of the Securities of that series 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 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.

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

If the Company shall at any time act as its own Paying
Agent with respect to any series of Securities, it will,
on or before each due date of the principal of or any premium or
interest on any of the Securities of that series, 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 for any series of Securities, it will, on or prior to
each due date of the principal of or any premium or interest on
any Securities of that series, 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 for any series
of Securities 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 (i) comply with the
provisions of the Trust Indenture Act applicable to it as a
Paying Agent and (ii) during the continuance of any default by
the Company (or any other obligor upon the Securities of that
series) in the making of any payment in respect of the
Securities of that series, and upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by
such Paying Agent for payment in respect of the Securities of
that series.

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 Security of
any series 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 mail
to all Holders or cause to be published once, in a newspaper
published in the English language, customarily published on each
Business Day and of general circulation in the Borough of
Manhattan, the City of 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 mailing or
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 (which as of the date hereof
is December 31) of the Company ending after the date hereof, a
certificate signed by the Company's principal executive officer,
principal financial officer or principal accounting officer
stating whether or not to the best knowledge
of the signer thereof the Company is in compliance with all
terms, conditions and covenants of this Indenture (without
regard to any period of grace or requirement of notice provided
hereunder) and if the signer has obtained knowledge of any
continuing default by the Company in the performance,
observation or fulfillment of any such term, condition or
covenant, specifying each such default and the nature thereof.

Section 1005. Limitations on Liens on Common Stock of
Principal Insurance Subsidiaries.

As long as any of the Securities remains outstanding,
the Company will not, and will not permit any Principal
Insurance Subsidiary to, issue, assume, incur or guarantee any
indebtedness for borrowed money secured by a mortgage, pledge,
lien or other encumbrance, directly or indirectly, on any of the
Common Stock of a Principal Insurance Subsidiary, which Common
Stock is owned by the Company or by any Principal Insurance
Subsidiary, unless the Securities and, if the Company
so elects, any other indebtedness of the Company ranking on a
parity with the Securities, shall be secured equally and ratably
with, or prior to, such secured indebtedness for borrowed money
so long as it is outstanding.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

Section 1101. Applicability of Article.

Securities of any series which are redeemable before
their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated
by Section 301 for Securities of any series) in accordance with
this Article.

Section 1102. Election to Redeem; Notice to Trustee.

In case of any redemption at the election of the Company
of less than all the Securities of any series, 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, of the
principal amount of Securities of such series to be redeemed
and, if applicable, of the tenor of the Securities to be
redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in
the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.

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

If less than all the Securities of any series are to be
redeemed (unless all of the Securities of such series and of
a specified tenor are to be redeemed), the particular Securities
to be redeemed shall be selected not more than 45 days prior to
the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for
redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such
series of a denomination larger than the minimum authorized
denomination for Securities of that series. If less than all of
the Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be
selected not more than 45 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in
accordance with the preceding sentence.

If any Security selected for partial redemption is
converted in part before termination of the conversion right
with respect to the portion of the Security so selected, the
converted portion of such Security shall be deemed (so far as
may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be
redeemed shall be treated by the Trustee as Outstanding for the
purpose of such selection.

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 its address appearing in the Security
Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all the Outstanding Securities of
any series 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, if applicable, that interest thereon will cease to
accrue on and after said date,

(5) if applicable, the conversion price, and that
the date on which the right to convert the principal of the
Securities or the portions thereof to be redeemed will terminate
will be the Redemption Date and the place or places where such
Securities may be surrendered for conversion,

(6) the place or places where such Securities are to
be surrendered for payment of the Redemption Price, and

(7) that the redemption is for a sinking fund, if
such is the case.

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.

Section 1105. Deposit of Redemption Price.

On or 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, other than any Securities called for redemption on
that date which have been converted prior to the date of such
deposit.

If any Security or portion thereof called for redemption
is converted, any money deposited with the Trustee or with any
Paying Agent or so segregated and held in trust for

the redemption of such Security or portion thereof shall
(subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in the last
paragraph of Section 307) be paid to the Company upon Company
Request or, if then held by the Company, shall be discharged
from such trust.

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, unless
otherwise specified as contemplated by Section 301, installments
of interest whose Stated Maturity is on or prior to the
Redemption Date shall 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.

Section 1107. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall
be surrendered at a Place of Payment therefor (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 the same series and of like tenor, 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

CONVERSION OF SECURITIES

Section 1201. Applicability of Article.

The provisions of this Article shall be applicable to
the Securities of any series which are convertible into shares
of Common Stock of the Company, and the issuance of such shares
of Common Stock upon the conversion of such Securities, except
as otherwise specified as contemplated by Section 301 for the
Securities of such series.

Section 1202. Exercise of Conversion Privilege.

Such notice shall also state, if different from the name and
address of such Holder, the name or names (with address) in
which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued.
Securities surrendered for conversion shall (if so required by
the Company or the Trustee) be duly endorsed by or accompanied
by instruments of transfer in forms satisfactory to
the Company and the Trustee duly executed by the registered
Holder or its attorney duly authorized in writing; and
Securities so surrendered for conversion during the period from
the close of business on any Regular Record Date to the opening
of business on the next succeeding Interest Payment Date
(excluding Securities or portions thereof called for redemption
during such period) shall also be accompanied by payment in
funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal
amount of such Security then being converted, and such interest
shall be payable to such registered Holder notwithstanding the
conversion of such Security, subject to the provisions of
Section 307 relating to the payment of Defaulted Interest by the
Company. As promptly as practicable after the receipt of such
notice and of any payment required pursuant to a Board
Resolution and, subject to Section 303, set forth, or determined
in the manner provided, in an Officers' Certificate,
or established in one or more indentures supplemental hereto
setting forth the terms of such series of Security, and the
surrender of such Security in accordance with such reasonable
regulations as the Company may prescribe, the Company shall
issue and shall deliver, at the office or agency at which such
Security is surrendered, to such Holder or on its written order,
a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such Security (or
specified portion thereof), in accordance with the
provisions of such Board Resolution, Officers' Certificate or
supplemental indenture, and cash as provided therein in respect
of any fractional share of such Common Stock otherwise issuable
upon such conversion. Such conversion shall be deemed to have
been effected immediately prior to the close of business on the
date on which such notice and such payment, if required, shall
have been received in proper order for conversion by the Company
and such Security shall have been surrendered as aforesaid
(unless such Holder shall have so surrendered such Security and
shall have instructed the Company to effect the conversion on a
particular date following such surrender and such Holder shall
be entitled to convert such Security on such date, in which case
such conversion shall be deemed to be effected immediately prior
to the close of business on such date) and at such time the
rights of the Holder of such Security as such Security Holder
shall cease and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock of the
Company shall be issuable upon such conversion shall be deemed
to have become the Holder or Holders of record of the shares
represented thereby. Except

as set forth above and subject to the final paragraph of Section
307, no payment or adjustment shall be made upon any conversion
on account of any interest accrued on the Securities

surrendered for conversion or on account of any dividends on the
Common Stock of the Company issued upon such conversion.

In the case of any Security which is converted in part
only, upon such conversion the Company shall execute and the
Trustee shall authenticate and deliver to or on the order of the
Holder thereof, at the expense of the Company, a new Security or
Securities of the same series, of authorized denominations, in
aggregate principal amount equal to the unconverted portion of
such Security.

Section 1203. No Fractional Shares.

shall be issuable upon conversion shall be computed on the

basis of the aggregate principal amount of the Securities (or
specified portions thereof to the extent permitted hereby) so
surrendered. If, except for the provisions of this Section
1203, any Holder of a Security or Securities would be entitled
to a fractional share of Common Stock of the Company upon the
conversion of such Security or Securities, or specified portions
thereof, the Company shall pay to such Holder an amount in cash
equal to the current market value of such fractional share
computed, (i) if such Common Stock is listed or admitted to
unlisted trading privileges on a national securities exchange,
on the basis of the last reported sale price regular way on such
exchange on the last trading day prior to the date of conversion
upon which such a sale shall have been effected, or (ii) if such
Common Stock is not at the time so listed or admitted to
unlisted trading privileges on a national securities exchange,
on the basis of the average of the bid and asked prices of such
Common Stock in the over-the-counter market, on the last trading
day prior to the date of conversion, as reported by the National
Association of Securities Dealers Automated Quotation System, or
if not so available, the fair market price as determined by the
Board of Directors. For purposes of this Section, "trading day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday

other than any day on which the Common Stock is not traded on
the New York Stock Exchange, or if the Common Stock is not
traded on the New York Stock Exchange, on the principal exchange
or market on which the Common Stock is traded or quoted.

Section 1204. Adjustment of Conversion Price.

The conversion price of Securities of any series that is
convertible into Common Stock of the Company shall be adjusted
for any stock dividends, stock splits, reclassification,
combinations or similar transactions in accordance with the
terms of the supplemental indenture or Board Resolutions setting
forth the terms of the Securities of such series.

a notice setting forth the adjusted conversion price to be

mailed, first class postage prepaid, to each Holder of
Securities of such series at its address appearing on the
Security Register and to any conversion agent other than the
Trustee.

Section 1205. Notice of Certain Corporate Actions.

In case:

(a) the Company shall declare a dividend (or any
other distribution) on its Common Stock (other than dividends or
distributions which will not require an adjustment of the
conversion price of Securities of any series pursuant to Section
1204); or

(b) the Company shall authorize the granting to the
holders of its Common Stock of rights, options or warrants to
subscribe for or purchase any shares of capital stock of any
class or of any other rights (other than any such grant for
which approval of any shareholders of the Company is required or
which will not require an adjustment of the conversion price of
Securities of any series pursuant to Section 1204); or

(c) of any reclassification of the Common Stock of
the Company (other than a subdivision or combination of its
outstanding shares of Common Stock, or any consolidation, merger
or share exchange to which the Company is a party and for which
approval of any shareholders of the Company is required or which
will not require an adjustment of the conversion price of
Securities of any series pursuant to Section 1204), or of the
sale of all or substantially all of the assets of the Company; or

(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then the Company shall cause to be filed with the Trustee, and

shall cause to be mailed to all Holders at their last addresses

as they shall appear in the Securities Register, at least 20
days (or 10 days in any case specified in clause (a) or (b)
above) prior to the applicable record date hereinafter
specified, a notice stating (i) the date on which a record is to
be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be

taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined, or (ii) the date on
which such reclassification, consolidation, merger, share
exchange, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale,
dissolution, liquidation or winding up. If at any time the
Trustee shall not be the conversion agent, a copy of such notice
shall also forthwith be filed by the Company with the conversion
agent.

Section 1206. Reservation of Shares of Common Stock.

The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized
but unissued Common Stock, for the purpose of effecting the
conversion of Securities, the full number of shares of Common
Stock of the Company then issuable upon the conversion of all
outstanding Securities of any series that have conversion rights.

Section 1207. Payment of Certain Taxes Upon Conversion.

and delivery of shares of its Common Stock in a name other than

that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the
Company the amount of any such tax, or has established, to the
satisfaction of the Company, that such tax has been paid.

Section 1208. Nonassessability.

The Company covenants that all shares of its Common
Stock which may be issued upon conversion of Securities will
upon issue in accordance with the terms hereof be duly and
validly issued and fully paid and nonassessable.

Section 1209. Effect of Consolidation or Merger on
Conversion Privilege.

or property (including cash) receivable upon such consolidation,
merger, share exchange, conveyance or sale by a holder of the
number of shares of Common Stock of the Company into which such
Security might have been converted immediately prior to such
consolidation, merger, share exchange, conveyance or sale,
subject to compliance with the other provisions of this
Indenture, such Security and such supplemental indenture. Such
supplemental indenture shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments
provided for in such Security. The above provisions of this
Section shall similarly apply to successive consolidations,
mergers, share exchanges, conveyances or sales. It is expressly
agreed and understood that anything in this Indenture to the
contrary notwithstanding, if, pursuant to such merger,
consolidation, share exchange, conveyance or sale, holders of
outstanding shares of Common

Stock of the Company do not receive shares of common stock of
the surviving corporation but receive other securities, cash or
other property or any combination thereof, Holders of Securities
shall not have the right to thereafter convert their

Securities into common stock of the surviving corporation or the
corporation which shall have acquired such assets, but rather,
shall have the right upon such conversion to receive the other
securities, cash or other property receivable by a holder of the
number of shares of Common Stock of the Company into which the
Securities held by such holder might have been converted
immediately prior to such consolidation, merger, share exchange,
conveyance or sale, all as more fully provided in the first
sentence of this Section 1209. Anything in this Section 1209 to
the contrary notwithstanding, the provisions of this Section

1209 shall not apply to a merger or consolidation of another
corporation with or into the Company or any share exchange to
which the Company is a party pursuant to which both of the
following conditions are applicable: (i) the Company is the
surviving or successor corporation and (ii) the outstanding
shares of Common Stock of the Company are not changed or
converted into any other securities or property (including
cash) or changed in number or character or reclassified pursuant
to the terms of such merger, consolidation or share exchange.

As evidence of the kind and amount of shares of stock or
other securities or property (including cash) into which
Securities may properly be convertible after any such
consolidation, merger, share exchange, conveyance or sale, or as
to the appropriate adjustments of the conversion prices
applicable with respect thereto, the Trustee shall be furnished
with and may accept the certificate or opinion of an independent
certified public accountant with respect thereto; and, in the
absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely thereon, and shall not be responsible or
accountable to any Holder of Securities for any provision in
conformity therewith or approved by such independent certified
accountant which may be contained in said supplemental indenture.

Section 1210. Duties of Trustee Regarding Conversion.

Trustee nor any conversion agent makes any representation with
respect thereto. Subject to the provisions of Section 601,
neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or
deliver any shares of its Common Stock or stock certificates
or other securities or property upon the surrender of any
Security for the purpose of conversion or to comply with any of
the covenants of the Company contained in this Article Twelve or
in the applicable supplemental indenture, resolutions of the
Board of Directors or written instrument executed by one or more
duly authorized officers of the Company.

Section 1211. Repayment of Certain Funds Upon Conversion.

ARTICLE THIRTEEN

DEFEASANCE AND COVENANT DEFEASANCE

Section 1301. Company's Option to Effect Defeasance or
Covenant Defeasance.

The Company may elect, at any time, to have either
Section 1302 or Section 1303 applied to the Outstanding
Securities of any series, upon compliance with the conditions
set forth below in this Article Thirteen.

Section 1302. Defeasance and Discharge.

Upon the Company's exercise of the option provided in
Section 1301 to have this Section 1302 applied to the
Outstanding Securities of any series, the Company shall be
deemed to have been discharged from its obligations, and the
provisions of Article Fifteen shall cease to be effective, with
respect to the Outstanding Securities of such series as provided
in this Section on and after the date the conditions set forth
in Section 1304 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 the Outstanding Securities of such series and to
have satisfied all its other obligations under the Securities of
such series and this Indenture insofar as the Securities of such
series 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 Securities of such series to receive, solely from the
trust fund described in Section 1304 and as more fully set forth
in such Section, payments in respect of the principal of and any
premium and interest on such Securities of such series when
payments are due, (2) the Company's obligations with respect to
the Securities of such series under Sections 304, 305, 306, 1002
and 1003, (3) the rights, powers, trusts, duties and immunities
of the Trustee hereunder, including, without limitation, its
rights under Section 607 and (4) this Article Thirteen. Subject
to compliance with this Article Thirteen, the Company may
exercise its option provided in Section 1301 to have this
Section 1302 applied to the Outstanding Securities of any series
notwithstanding the prior exercise of its option provided in
Section 1301 to have Section 1303 applied to the Outstanding
Securities of such series.

Section 1303. Covenant Defeasance.

Upon the Company's exercise of the option provided in
Section 1301 to have this Section 1303 applied to the
outstanding Securities of any series, (1) the Company shall be
released from its obligations under Section 1005 and Section 801
and any provision of a supplemental indenture specified for
release pursuant to the terms thereof and (2) the occurrence of
any event specified in Sections 501(3), 501(4) (with respect to
Section 1005 and Section 801) and 501(5) shall be deemed not to
be or result in an Event of Default, and (3) the provisions of
Article Fifteen shall cease to be effective, in each case with
respect to the Outstanding Securities of such series as provided
in this Section on and after the date the conditions set forth
in Section 1304 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means
that 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(4)), 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 the Securities
of such series shall be unaffected thereby.

Section 1304. Conditions to Defeasance or Covenant
Defeasance.

The following shall be the conditions to application of
either Section 1302 or Section 1303 to the Outstanding
Securities of any series:

for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of Outstanding Securities of such
series, (A) in the case of Securities of such series denominated
in U.S. dollars, (i) money in an amount, or (ii) U.S. Government
Obligations that 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 (iii) 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 the Securities of
such series on the respective Stated Maturities, in accordance
with the terms of this Indenture and the Securities of such
series. As used herein, "U.S. Government Obligation" means (x)
any security that is (i) a direct obligation of the United
States of America for the payment of which 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 for the United States of America the payment
of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in
either case (i) or (ii), is not callable or redeemable at the
option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with respect to
any specific payment of principal of or interest on any such
U.S. Government Obligation specified in Clause (x) and held by
such custodian for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of
or interest on any such U.S.

Government Obligation, 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; or (B) in the
case of Securities of such series denominated in a currency
other than the U.S. dollar, (i) money in such currency in an
amount, or (ii) Foreign Government Obligations that 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 such currency
in an amount, or (iii) 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 the Securities of
such series on the respective Stated Maturities, in accordance
with the terms of this Indenture and the Securities of such
series. As used herein, "Foreign Government Obligation" means
(x) any security that is (i) a direct obligation of the
government that issued such currency for the payment of which
full faith and credit of such government is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as
an agency or instrumentality for such government the payment of
which is unconditionally guaranteed as a full faith and credit
obligation by such government, 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 of 1933, as
amended) as custodian with respect to any

specific payment of principal of or interest on any such
Foreign Government Obligation specified in Clause (x) and held
by such custodian for the account of the holder of such
depositary receipt, or with respect to any specific payment of
principal of or interest on any such Foreign Government
Obligation, 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 Foreign
Government Obligation or the specific payment of principal or
interest evidenced by such depositary receipt.

(2) In the case of an election under Section 1302,
the Company shall have delivered to the Trustee an Opinion of
Counsel stating that the Holders of the Outstanding Securities
of such series 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 the Securities of such
series 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 case of an election under Section 1303,
the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holder of the Outstanding
Securities of such series will not recognize gain or loss for
Federal income tax purposes as result of the deposit and
Covenant Defeasance to be effected with respect to the
Securities of such series 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 Officers' Certificate to the effect that the Securities of
such

series, if then listed on any securities exchange, will
not be delisted as a result of such deposit.

(5) No Event of Default or event that (after notice
or lapse of time or both) would become an Event of Default shall
have occurred and be continuing at the time of such deposit or,
with regard to any Event of Default or any such event specified
in Sections 501(6) and 501(7), 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) 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.

(7) 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 of 1940, as amended, unless such trust shall be qualified
under such Act or exempt from regulation thereunder.

(8) At the time of such deposit: (A) no default in
the payment of principal of (or premium, if any) or interest on
any Senior Debt shall have occurred and be continuing or (B) no
other event of default with respect to any Senior Debt shall
have occurred and be continuing and shall have resulted in such
Senior Debt becoming or being declared due and payable prior to
the date on which it would otherwise have become due and
payable, or, in the case of either Clause (A) or Clause (B)
above, each such default or event of default shall have been
cured or waived or shall have ceased to exist.

Section 1305. Deposited Money and U.S. Government Obligations
or Foreign Government

Obligations to be Held In Trust; Other
Miscellaneous Provisions.

Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations or
Foreign Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely
for purposes of this Section and Section 1306, the Trustee and
any such other trustee are referred to collectively as the
"Trustee") pursuant to Section 1304 in respect of the Securities
of any Defeasible Series shall be held in trust and applied by
the Trustee, in accordance with the provisions of the Securities
of such series 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 Securities of such series, 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. Money so held in trust shall not be
subject to the provisions of Article Fifteen.

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 or Foreign Government Obligations
deposited pursuant to Section 1304 or the principal and interest
received in respect thereof.

Anything in this Article Thirteen 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 or Foreign Government Obligations held by
it as provided in Section 1304 with respect to Securities of any
Defeasible Series that, 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 that would then be
required to be deposited to effect an equivalent Defeasance or
Covenant Defeasance with respect to the Securities of such
series.

Section 1306. Reinstatement.

If the Trustee or the Paying Agent is unable to apply
any money in accordance with this Article Thirteen with respect
to the Securities of any series by reason of any order or
judgment

of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's

obligations under this Indenture and the Securities of such
series shall be revived and reinstated as though no deposit had
occurred pursuant to this Article Thirteen with respect to
Securities of such series until such time as the Trustee or
Paying Agent is permitted to apply all money held in trust
pursuant to Section 1305 with respect to Securities of such
series in accordance with this Article Thirteen; provided,
however, that if the Company makes any payment of principal of
or any premium or interest on any Security of such series
following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of Securities
of such series to receive such payment from the money so held in
trust.

ARTICLE FOURTEEN

SINKING FUNDS

Section 1401. Applicability of Article.

The provisions of this Article shall be applicable to
any sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 301 for
Securities of such series.

The minimum amount of any sinking fund payment provided
for by the terms of Securities of any series is herein

referred to as a "mandatory sinking fund payment", and any
payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms
of Securities of any series, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section

1402. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the
terms of Securities of such series.

Section 1402. Satisfaction of Sinking Fund Payments
with Securities.

of any sinking fund payment with respect to the Securities of
such series required to be made pursuant to the terms of such
Securities as provided for by the terms of such series; provided
that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities
for redemption through operation of the sinking fund and the
amount of such sinking fund payment shall be reduced accordingly.

Section 1403. Redemption of Securities for Sinking Fund.

pursuant to the terms of that series, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering

and crediting Securities of that series pursuant to Section 1402
and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 nor more than 45 days before each
such sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the

expense of the Company in the manner provided in Section 1104.

Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated
in Sections 1106 and 1107.

ARTICLE FIFTEEN

SUBORDINATION OF SECURITIES

Section 1501. Securities Subordinate to Senior Debt.

The Company covenants and agrees, and each Holder of a
Security, by its acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set
forth in this Article (subject to the provisions of Article Four
and Article Thirteen), the payment of the principal of (and
premium, if any) and interest on each and all of the Securities
are hereby expressly made subordinate and subject in
right of payment to the prior payment in full of all amounts
then due and payable in respect of all Senior Debt.

Section 1502. Payment Over of Proceeds Upon Dissolution, Etc.

In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, arrangement,
reorganization, debt restructuring or other similar case or
proceeding in connection therewith, relative to the Company, or
its creditors as such, or to its assets, or (b) any liquidation,
dissolution or other winding up of the Company, whether
voluntary or involuntary and whether or not involving insolvency
or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and

liabilities of the Company, then and in any such event specified
in (a), (b) or (c) above (each such event, if any, herein
sometimes referred to as a "Proceeding") the holders of Senior
Debt shall be entitled to receive payment in full of all
amounts due or to become due on or in respect of all Senior
Debt, or provision shall be made for such payment in cash or
cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, before the Holders of the Securities are
entitled to receive any payment or distribution of any kind
or character, whether in cash, property or securities (including
any payment or distribution which may be payable or deliverable
by reason of the payment of any other Debt of the Company
subordinated to the payment of the Securities, such payment or
distribution being hereinafter referred to as "Junior
Subordinated Payment"), on account of principal of (or premium,
if any) or interest on the Securities or on account of
the purchase or other acquisition of Securities by the Company
or any Subsidiary and to that end the holders of Senior Debt
shall be entitled to receive, for application to the payment
thereof, any payment or distribution of any kind or character,
whether in cash, property or securities, including any Junior
Subordinated Payment, which may be payable or deliverable in
respect of the Securities in any such Proceeding.

In the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of any
Security shall have received any payment or distribution of
assets of the Company of any kind or character, whether in cash,
property or securities, including any Junior Subordinated
Payment, before all Senior Debt is paid in full or payment
thereof is provided for in cash or cash equivalents or otherwise
in a manner satisfactory to the holders of Senior Debt, and if
such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or, as the
case may be, such Holder, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution
of assets of the Company for application to the payment of all
Senior Debt remaining unpaid,

to the extent necessary to pay all Senior Debt in full, after
giving effect to any concurrent payment or distribution to or
for the holders of Senior Debt. Any taxes that have been
withheld or deducted from any payment or distribution in respect
of the Securities, or any taxes that ought to have been
withheld or deducted from any such payment or distribution that
have been remitted to the relevant taxing authority, shall not
be considered to be an amount that the Trustee or the Holder of
any Security receives for purposes of this Section.

For purposes of this Article only, the words "any
payment or distribution of any kind or character, whether in
cash, property or securities" shall not be deemed to include
shares of stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment which securities are
subordinated in right of payment to all then outstanding Senior
Debt to substantially the same extent as the Securities are so
subordinated as provided in this Article. The consolidation of
the Company with, or the merger of the Company

into, another Person or the liquidation or dissolution of the
Company following the sale of all or substantially all of its
properties and assets as an entirety to another Person or the
liquidation or dissolution of the Company following the sale of

all or substantially all of its properties and assets as an
entirety to another Person upon the terms and conditions set
forth in Article Eight shall not be deemed a Proceeding for the
purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the Person
which acquires by sale such properties and assets as an
entirety, as the case may be, shall, as a part of such
consolidation, merger, or sale comply with the conditions set
forth in Article Eight.

Section 1503. Prior Payment to Senior Debt Upon Acceleration
of Securities.

In the event that any Securities are declared due and
payable before their Stated Maturity, then and in such event the
holders of the Senior Debt outstanding at the time such
Securities so become due and payable shall be entitled to
receive payment in full of all amounts due on or in respect of
such Senior Debt, or provision shall be made for such payment in
cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Debt, before the Holders of the
Securities are entitled to receive any payment (including any
payment which may be payable by reason of the payment of any
other indebtedness of the Company being subordinated to the
payment of the Securities) by the Company on account of the
principal of (or premium, if any) or interest
on the Securities or on account of the purchase or other
acquisition of Securities by the Company or any Subsidiary;
provided, however, that nothing in this Section shall prevent
the satisfaction of any sinking fund payment in accordance with
Article Fourteen by delivering and crediting pursuant to Section
1402 Securities which have been acquired (upon redemption or
otherwise) prior to such declaration of acceleration or which
have been converted pursuant to Article Twelve.

In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of
any Security prohibited by the foregoing provisions of this
Section, and if such fact shall, at or prior to the time of such
payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be
paid over and delivered forthwith to the Company.

The provisions of this Section shall not apply to any
payment with respect to which Section 1502 would be applicable.

Section 1504. No Payment When Senior Debt in Default.

(a) In the event and during the continuation
of any default in the payment of principal of (or premium, if
any)

or interest or any other payment on any Senior Debt, or in the
event that any event of default with respect to any Senior Debt
shall have occurred and be continuing and shall have resulted in
such Senior Debt becoming or being declared due and payable
prior to the date on

which it would otherwise have become due and payable, unless and
until such event of default shall have been cured or waived

or shall have ceased to exist and such acceleration shall have
been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in

payment or such event of default, then no payment (including any
payment which may be payable by reason of the payment of any
other indebtedness of the Company being subordinated to the

payment of the Securities) shall be made by the Company on
account of principal of (or premium, if any) or interest on the

Securities or on account of the purchase or other acquisition of
Securities by the Company or any Subsidiary; provided, however,
that nothing in this Section shall prevent the satisfaction of
any sinking fund payment in accordance with Article Fourteen by
delivering and crediting pursuant to Section 1402 Securities
which have been acquired (upon redemption or otherwise) prior to
such default in payment or event of default or which have been
converted pursuant to Article Twelve.

In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of

any Security prohibited by the foregoing provisions of this
Section, and if such fact shall, at or prior to the time of such
payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be
paid over and delivered forthwith to the Company.

The provisions of this Section shall not apply to any
payment with respect to which Section 1502 would be applicable.

Section 1505. Payment Permitted If No Default.

Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent (a) the
Company, at any time except during the pendency of any
Proceeding referred to in Section 1502 or under the conditions
described in Sections 1503 and 1504, from making payments at any
time of principal of (and premium, if any) or interest on the
Securities, or (b) the application by the Trustee of any money
deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the
Securities or the retention of such payment by the Holders, if,
at the time of such application by the Trustee, it

did not have knowledge that such payment would have been
prohibited by the provisions of this Article.

Section 1506. Subrogation to Rights of Holders of Senior Debt.

Subject to the payment in full of all Senior Debt, or
the provision for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior
Debt, the Holders of the Securities shall be subrogated to the
extent of the payments or distributions made to the holders of
such Senior Debt pursuant to the provisions of this Article
(equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as

the Securities are subordinated to the Senior Debt and is
entitled to like rights of subrogation by reason of any payments
or distributions made to holders of such Senior Debt) to the
rights of the holders of such Senior Debt to receive payments or
distributions of cash, property and securities applicable to the
Senior Debt until the principal of (and premium, if any) and
interest on the Securities shall be paid in full. If the
Trustee or the Holders of the Securities are not for any reason
entitled to be subrogated to the rights of holders of Senior
Debt in respect of such payment or distribution, then the
Trustee or the Holders of the Securities

may require each holder of Senior Debt to whom any such payment

or distribution is made as a condition to such payment or
distribution to assign its Senior Debt to the extent of such

payment or distribution and all rights with respect thereto to
the Trustee on behalf of the Holders. Such assignment shall not
be effective until such time as all Senior Debt has been paid in
full or payment thereof provided for. For purposes of such
subrogation or assignment, no payments or distributions to

the holders of the Senior Debt of any cash, property or
securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and
no payments over pursuant to the provisions of this Article to
the holders of Senior Debt by Holders of the Securities or the
Trustee, shall, as among the Company, its creditors other than
holders of Senior Debt, and the Holders of

the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Debt.

Section 1507. Provisions Solely to Define Relative Rights.

The provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of
Senior Debt on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Debt, and the Holders of

the Securities, the obligations of the Company, which are
absolute and unconditional (and which, subject to the rights
under this Article of the holders of Senior Debt are intended to
rank equally with all other general unsecured obligations of

the Company), to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the
Securities as and when the same shall become due and payable in

accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and
creditors of the Company other than the holders of Senior Debt;

or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law
upon default under this Indenture including, without limitation,
filing and voting claims in any Proceeding, subject

to the rights, if any, under this Article of the holders of
Senior Debt to receive cash, property or securities otherwise
payable or deliverable to the Trustee or such Holder.

Section 1508. Trustee to Effectuate Subordination.

Each Holder of a Security by his or her acceptance
thereof authorizes and directs the Trustee on his or her behalf

to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination provided in this
Article and appoints the Trustee his or her attorney-in-fact for
any and all such purposes.

Section 1509. No Waiver of Subordination Provisions.

No right of any present or future holder of any Senior
Debt to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by (i) any amendment
of or addition or supplement to any Senior Debt or any
instrument or agreement relating thereto (unless otherwise
expressly provided therein) or (ii) any act or failure to act on
the part of the Company or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the
Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such
holder may have or be otherwise charged with.

Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Debt may, at any

time and from time to time, without the consent of or notice to

the Trustee or the Holders of the Securities, without incurring

responsibility to the Holders of the Securities, and without
impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the
Securities to the holders of Senior Debt, do any one or more of

the following: (i) change the manner, place or terms of payment

or extend the time of payment of, or renew or alter or increase,
Senior Debt, or otherwise amend or supplement in any manner
Senior Debt or any instrument evidencing the same or any

agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt; (iii) release any
Person liable in any manner for the collection of Senior Debt;
and (iv) exercise or refrain from exercising any rights against

the Company and any other Person.

Section 1510. Notice to Trustee.

The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit
the making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article

or any other provision of this Indenture, the Trustee shall not

be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a
holder of Senior Debt or from any trustee, agent or
representative therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of
Section 601, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section

at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of

(and premium, if any) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such
money and to apply the same to the purpose for which such money

was received and shall not be affected by any notice to the
contrary which may be received by it within two Business Days
prior to such date.

Subject to the provisions of Section 601, the Trustee
shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or herself to be a
holder of Senior Debt (or a trustee, agent or representative
therefor) to establish that such notice has been given by a

holder of Senior Debt (or a trustee, agent or representative
therefor). In the event that the Trustee determines in good
faith that further evidence is required with respect to the
right of any Person as a holder of Senior Debt to participate in
any payment or distribution pursuant to this Article, the
Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of
Senior Debt held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under
this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such
payment.

Section 1511. Reliance on Judicial Order or Certificate of
Liquidating Agent.

Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee, subject to the
provisions of Section 601, and the Holders of the Securities
shall be entitled to rely upon any order or decree entered by
any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the
benefit of creditors, agent or other Person making such

payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution,
the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article.

Section 1512. Trustee Not Fiduciary For Holders of Senior Debt.

The Trustee, in its capacity as trustee under this
Indenture, shall not be deemed to owe any fiduciary duty to the

holders of Senior Debt and shall not be liable to any such
holders if it shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any

other Person cash, property or securities to which any holders
of Senior Debt shall be entitled by virtue of this Article or
otherwise.

Section 1513. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights.

The Trustee in its individual capacity shall be entitled
to all the rights set forth in this Article with

respect to any Senior Debt which may at any time be held by it,

to the same extent as any other holder of Senior Debt, and
nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.

Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.

Section 1514. Article Applicable to Paying Agents.

In case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then
acting hereunder, the term "Trustee" as used in this Article
shall in such case (unless the context otherwise requires) be
construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article in addition to or in
place of the Trustee.

Section 1515. Defeasance of This Article Fifteen.

The subordination of the Securities provided by this
Article Fifteen is expressly made subject to the provisions for

defeasance or covenant defeasance in Article Thirteen and,
anything herein to the contrary notwithstanding, upon the
effectiveness of any such defeasance or covenant defeasance, the
Securities then outstanding shall thereupon cease to be
subordinated pursuant to this Article Fifteen.

Section 1516. Certain Conversions Deemed Payment.

For the purposes of this Article only, (1) the issuance
and delivery of junior securities upon conversion of Securities
in accordance with Article Twelve shall not be deemed to
constitute a payment or distribution on account of the principal
of (or premium, if any) or interest on Securities

or on account of the purchase or other acquisition of
Securities, and (2) the payment, issuance or delivery of cash,
property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment
on account of the principal of such security. For the purposes

of this Section, the term "junior securities" means (a) shares
of any stock of any class of the Company, (b) securities of the
Company which are subordinated in right of payment to all Senior
Debt which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as,
or to a greater extent than, the Securities are so subordinated
as provided in this Article and (c) any securities into which
securities become convertible pursuant to Section 1209 which are
securities of a Person required to enter into a supplemental
indenture pursuant to such Section (or Section 801) and are
either (x) shares of any stock of any class of such Person, or
(y) securities of such Person which are subordinated in right of
payment to all Senior Debt which may be outstanding at the time
of issuance or delivery of such securities to substantially the
same extent as, or to a greater extent than, the Securities are
so subordinated as provided in this Article. Nothing contained
in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the

Company, its creditors other than holders of Senior Debt and the
Holders of the Securities, the right, which is absolute and

unconditional, of the Holder of any Security to convert such
Security in accordance with Article Twelve.

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.

USF&G CORPORATION

By
Name:
Title:

Attest:

CHEMICAL BANK, as Trustee

By
Name:
Title:

Attest:

STATE OF ) ) ss.:
COUNTY OF )

On the day of , 1994, before me
personally came , to me known, who,
being by me duly sworn, did depose and say that (s)he is

of USF&G CORPORATION, one of the corporations
described in and which executed the foregoing instrument; that
(s)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 (s)he signed her/his name thereto by like
authority.

STATE OF ) ) ss.:
COUNTY OF )

On the day of , 1994, before me
personally came , to me known, who,
being by me duly sworn, did depose and say that (s)he is

of CHEMICAL BANK, one of the corporations
described in and which executed the foregoing instrument; that
(s)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 (s)he signed her/his name thereto by like
authority.

======================================================================

USF&G CORPORATION

AND

_____________________________________

as Stock Warrant Agent

_____________________

STOCK WARRANT AGREEMENT

Dated as of __________________

_____________________

=====================================================================

TABLE OF CONTENTS*

PARTIES . . . . . . . . . . . . . . . . . . . . . . . .

RECITALS . . . . . . . . . . . . . . . . . . . . . . .

SECTION 1. Appointment of Stock Warrant Agent. . . . 1

SECTION 2. Form of Stock Warrant Certificates . . . 1

SECTION 3. Execution of Stock Warrant Certificates 1

SECTION 4. Registration and Countersignature . . . 2

SECTION 5. Registration of Transfers and Exchanges 2

SECTION 6. Duration and Exercise of Stock Warrants 3

SECTION 7. Payment of Taxes . . . . . . . . . . . . 5

SECTION 8. Mutilated, Lost, Stolen or Destroyed . .
Stock Warrant Certificates . . . . . . . 5

SECTION 9. Reservation of Shares . . . . . . . . . 6

SECTION 10. Obtaining of Governmental Approvals and
Stock Exchange Listings; Registration
of Shares . . . . . . . . . . . . . . 6

SECTION 11. Adjustment of Exercise Price and Number
of Shares Purchasable or Number of
Stock Warrants . . . . . . . . . . . . 7

SECTION 12. Optional Reduction of Exercise Price . . 11

SECTION 13. Fractional Stock Warrants and Fractional
Shares . . . . . . . . . . . . . . . . 12

SECTION 14. Notices to Stock Warrant Holders . . . . 13

SECTION 15. Merger, Consolidation or Change of Name
of Stock Warrant Agent . . . . . . . . 14

SECTION 16. Stock Warrant Agent . . . . . . . . . . 15

__________________________
*This Table of Contents does not constitute a part of
this Agreement or have any bearing upon the interpretation
of any of its terms or provisions.

SECTION 17. Disposition of Proceeds of Exercise of
Stock Warrants . . . . . . . . . . . . 18

SECTION 18. Change of Stock Warrant Agent . . . . . 18

SECTION 19. Notices to Company and Stock Warrant
Agent . . . . . . . . . . . . . . . . 19

SECTION 20. Supplements and Amendments . . . . . . . 20

SECTION 21. Successors . . . . . . . . . . . . . . . 20

SECTION 22. Termination . . . . . . . . . . . . . . 20

SECTION 23. Governing Law . . . . . . . . . . . . . 20

SECTION 24. Benefits of this Agreement . . . . . . . 21

SECTION 25. Counterparts . . . . . . . . . . . . . . 21

TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . .

SIGNATURES . . . . . . . . . . . . . . . . . . . . . .

EXHIBIT A. Form of Stock Warrant Certificate . . . 23

STOCK WARRANT AGREEMENT dated as of _________________,
199_, between USF&G CORPORATION, a Maryland corporation (the
"Company"), and _____________________, a banking association
organized under the laws of the State of ____________, as Stock
Warrant Agent (the "Stock Warrant Agent").

WHEREAS, the Company proposes to issue and sell stock
warrants ("Stock Warrants") to purchase shares of the Company's
common stock, $____ par value per share ("Common Stock"), each
whole Stock Warrant exercisable to purchase one share of Common
Stock (such shares which may be purchased upon the exercise of
Stock Warrants at any time being hereinafter referred to as the
"Shares"); and

WHEREAS, the Company desires the Stock Warrant Agent to
act on behalf of the Company, and the Stock Warrant Agent is
willing so to act, in connection with the issuance and exercise
of Stock Warrants and the registration, transfer, exchange and
replacement of Stock Warrant Certificates and other matters as
provided herein;

NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as
follows:

SECTION 1. Appointment of Stock Warrant Agent. The
Company hereby appoints the Stock Warrant Agent to act as agent
for the Company in accordance with the instructions set forth
hereinafter in this Agreement, and the Stock Warrant Agent hereby
accepts such appointment.

SECTION 2. Form of Stock Warrant Certificates. The
Stock Warrant Certificates to be delivered pursuant to this
Agreement shall be in registered form only and shall be
substantially in the form set forth in Exhibit A attached hereto,
and may have such letters, numbers or other marks of
identification or designation or such legends, summaries or
endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation under such
law.

SECTION 3. Execution of Stock Warrant Certificates.
Stock Warrant Certificates shall be signed on behalf of the
Company by its Chairman of the Board, President, an Executive
Vice President or a Vice President and shall be attested by its
Secretary or an Assistant Secretary under its corporate seal.
Each such signature upon the Stock Warrant Certificates may be in
the form of a facsimile signature of the present or any future
Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary. The Seal of the Company may be in the form
of a facsimile thereof and may be impressed, affixed, imprinted
or otherwise reproduced on the Stock Warrant Certificates.

If the Chairman of the Board or any officer of the
Company who shall have signed any of the Stock Warrant
Certificates shall cease to be such Chairman of the Board or
officer before the Stock Warrant Certificates so signed shall
have been countersigned by the Stock Warrant Agent and delivered
to or disposed of by the Company, such Stock Warrant Certificates
nevertheless may be countersigned and delivered to or disposed of
as though such person had not ceased to be such Chairman of the
Board or officer of the Company; and any Stock Warrant
Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Stock Warrant
Certificate, was such Chairman of the Board or officer although
at the date of this Stock Warrant Agreement any such person was
not such Chairman of the Board or officer.

In connection with the initial issuance of the Stock
Warrant Certificates, upon receipt of Stock Warrant Certificates
executed by the Company and a written order of the Company
executed by its Chairman of the Board, President, an Executive
Vice President, a Vice President, Secretary or Assistant
Secretary, the Stock Warrant Agent will countersign and deliver
Stock Warrant Certificates in accordance with the instructions
contained in such order.

Stock Warrant Certificates shall be dated the date of
countersignature by the Stock Warrant Agent.

SECTION 4. Registration and Countersignature. Stock
Warrant Certificates distributed as provided in Section 11 shall
be registered in the names of the record holders of the Stock
Warrant Certificates to whom they are to be distributed.

Stock Warrant Certificates shall be manually
countersigned by the Stock Warrant Agent and shall not be valid
for any purpose unless so countersigned.

The Company and the Stock Warrant Agent may deem and
treat the registered holder of a Stock Warrant Certificate as the
absolute owner thereof (notwithstanding any notation of ownership
or other writing thereon made by anyone), for the purpose of any
exercise thereof and any distribution to the holder thereof and
for all other purposes, and neither the Company nor the Stock
Warrant Agent shall be affected by any notice to the contrary.

SECTION 5. Registration of Transfers and Exchanges.
The Stock Warrant Agent shall from time to time register the
transfer of any outstanding Stock Warrant Certificates upon the
records to be maintained by it for that purpose, upon surrender
thereof duly endorsed, or accompanied (if so required by it) by a
written instrument or instruments of transfer in form
satisfactory to the Stock Warrant Agent, duly executed by the
registered holder or holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Stock Warrant
Certificate shall be issued to the transferee and the surrendered
Stock Warrant Certificate shall be canceled by the Stock Warrant
Agent. The Stock Warrant Agent shall destroy canceled Stock
Warrant Certificates and deliver a certificate of such
destruction to the Company.

One or more Stock Warrant Certificates may be exchanged
at the option of the holder thereof, when surrendered to the
Stock Warrant Agent at its office maintained for the purpose of
exchanging, transferring and exercising the Stock Warrants in the
Borough of Manhattan, The City of New York, State of New York
(the "Stock Warrant Agent Office") or at the office of any
successor Stock Warrant Agent as provided in Section 18 hereof,
for another Stock Warrant Certificate or other Stock Warrant
Certificates of like tenor and representing in the aggregate a
like number of Stock Warrants. Stock Warrant Certificates
surrendered for exchange or transfer shall be canceled by the
Stock Warrant Agent. Such canceled Stock Warrant Certificates
shall be destroyed by the Stock Warrant Agent and a certificate
of such destruction shall be delivered to the Company.

The Stock Warrant Agent is hereby authorized to
countersign, in accordance with the provisions of this Section 5
and of Section 4, and deliver the new Stock Warrant Certificates
required pursuant to the provisions of this Section and for the
purpose of any distribution of Stock Warrant Certificates
contemplated by Section 11.

SECTION 6. Duration and Exercise of Stock Warrants.
The Stock Warrants shall expire on (i) the close of business on
____________ or (ii) such earlier date after _______________ as
shall be determined by the Company and of which 90 days prior
notice to the registered holders of Stock Warrants and the Stock
Warrant Agent shall have been given in accordance with the
provisions of Sections 14 and 19 hereof, if the closing sale
price of the Company's Common Stock (New York Stock Exchange
composite transactions) shall be not less than 125 percent of the
then current Stock Warrant exercise price for 20 trading days in
a period of 30 consecutive trading days ending not more than 10
calendar days immediately prior to the date of such notice (such
date of expiration being herein referred to as the "Expiration
Date"). Each Stock Warrant may be exercised on any business day
prior to the close of business on the Expiration Date. After the
close of business on the Expiration Date, the Stock Warrants will
become wholly void and of no value.

No fractional Shares shall be issued upon surrender of
Stock Warrant Certificates but, in lieu of fractional Shares, the
registered holder of Stock Warrant Certificates may elect (a) to
be paid an amount in cash equal to the same fraction of the
current market value of a Share of Common Stock or (b) to have
the amount of the cash payment determined in (a) credited against
the Exercise Price payable for Shares to be received upon
exercise of the holder's whole Stock Warrants. For purposes of
(a) and (b), the current market value of Common Stock shall be
the closing price of a Share of Common Stock (determined pursuant
to the second sentence of Section 11(d)) on the last trading day
immediately prior to the day on which a Stock Warrant is
exercised.

Subject to the provisions of this Agreement, including
Section 11, the holder of each whole Stock Warrant shall have the
right to purchase from the Company (and the Company shall issue
and sell to such holder) one fully paid and nonassessable Share
at the initial exercise price (the "Exercise Price") of $_____
upon the surrender on any business day prior to the close of
business on the Expiration Date to the Stock Warrant Agent at the
Stock Warrant Agent Office of the Stock Warrant Certificate
evidencing such Stock Warrant, with the form of election to
exercise on the reverse thereof duly filled in and signed, and
upon payment of the Exercise Price in lawful money of the United
States of America by means of a certified or official bank check
payable to the Company.

The Stock Warrants evidenced by a Stock Warrant
Certificate shall be exercisable prior to the close of business
on the Expiration Date, at the election of the registered holder
thereof, either as an entirety or from time to time for part of
the number of Stock Warrants specified in the Stock Warrant
Certificates, but in no event shall any fractional Share be
issued with regard to such Stock Warrant Certificates. In the
event that less than all the Stock Warrant Certificates evidenced
by a Stock Warrant Certificate surrendered upon the exercise of
Stock Warrants are exercised at any time prior to the close of
business on the Expiration Date, a new Stock Warrant Certificate
or Certificates will be issued for the remaining number of Stock
Warrants. No adjustments shall be made for any cash dividends on
Shares issuable on the exercise of a Stock Warrant.

Subject to Section 7, upon such surrender of a Stock
Warrant Certificate, and payment of the Exercise Price, the Stock
Warrant Agent shall requisition from First Chicago Trust Company,
New York, New York the transfer agent for the Common Stock (the
"Transfer Agent"), for issuance and delivery to or upon the
written order of the registered holder of such Stock Warrant
Certificate and in such name or names as such registered holder
may designate, a certificate for the Share or Shares issuable
upon the exercise of the Stock Warrants evidenced by such Stock
Warrant Certificates. Such certificate shall be deemed to have
been issued and any person so designated to be named therein
shall be deemed to have become the holder of record of such Share
or Shares as of the date of the surrender of such Stock Warrant
Certificates and payment of the Exercise Price. The Stock
Warrant Agent is hereby authorized to countersign and deliver the
required new Stock Warrant Certificate or Certificates pursuant
to the provisions of this Section 6 and of Section 5.

All Stock Warrant Certificates surrendered upon exercise
of Stock Warrants shall be canceled by the Stock Warrant Agent.
Such canceled Stock Warrant Certificates shall then be destroyed
by the Stock Warrant Agent and a certificate of such destruction
shall be sent to the Company.

SECTION 7. Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of
Shares upon the exercise of Stock Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the
issue of any Stock Warrant Certificates or any certificates for
Shares in a name other than that of the registered holder of a
Stock Warrant Certificate surrendered upon the exercise of a
Stock Warrant, and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.

SECTION 8. Mutilated, Lost, Stolen or Destroyed Stock
Warrant Certificates. If any Stock Warrant Certificate is
mutilated, lost, stolen or destroyed, the Company may in its
discretion issue, and the Stock Warrant Agent shall countersign
and deliver, in exchange and substitution for and upon
cancellation of the mutilated Stock Warrant Certificate, or in
lieu of and substitution for the Stock Warrant Certificate lost,
stolen or destroyed, a new Stock Warrant Certificate of like
tenor and representing the same number of Stock Warrants, but
only upon receipt of evidence satisfactory to the Company and the
Stock Warrant Agent of such loss, theft or destruction of such
Stock Warrant Certificate and indemnity or bond, if requested,
also satisfactory to them. Applicants for such substitute Stock
Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company
or the Stock Warrant Agent may prescribe.

SECTION 9. Reservation of Shares. For the purpose
of enabling it to satisfy any obligation to issue Shares upon
exercise of Stock Warrants, the Company will at all times through
the close of business on the Expiration Date, reserve and keep
available, free from preemptive rights and out of its aggregate
authorized but unissued Common Stock, the number of Shares
deliverable upon the exercise of all outstanding Stock Warrants
and the Transfer Agent for such Common Stock are hereby
irrevocably authorized and directed at all times to reserve such
number of authorized and unissued shares of Common Stock as shall
be required for such purpose. The Company will deposit a copy of
this Agreement with such Transfer Agent. The Stock Warrant Agent
is hereby irrevocably authorized to requisition from time to time
from such Transfer Agent stock certificates issuable upon
exercise of outstanding Stock Warrants, and the Company will
supply such Transfer Agent with duly executed stock certificates
for such purpose.

Before taking any action which would cause an adjustment
pursuant to Section 11 reducing the Exercise Price below the then
par value (if any) of the Shares issuable upon exercise of the
Stock Warrants, the Company will take any corporate action which
may, in the opinion of its counsel (which may be counsel employed
by the Company), be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Shares at
the Exercise Price as so adjusted.

The Company covenants that all Shares issued upon
exercise of the Stock Warrants will, upon issuance in accordance
with the terms of this Agreement, be fully paid and nonassessable
and free from all preemptive rights and taxes, liens, charges and
security interests created by the Company with respect to the
issuance and holding thereof.

SECTION 10. Obtaining of Governmental Approvals and
Stock Exchange Listings; Registrations of Shares. The Company
from time to time will use its best efforts (i) to obtain and
keep effective any and all permits, consents and approvals of
governmental agencies and authorities and to file such documents
under federal and state securities laws, which may be or become
requisite in connection with the issuance, sale, transfer and
delivery of the Stock Warrant Certificates and the exercise of
the Stock Warrants; provided, however, if any such permits,
consents, approvals or documents are not so obtained or
effective, the Company will immediately notify the Stock Warrant
Agent; (ii) to have the Stock Warrants listed on the New York
Stock Exchange or on the principal United States securities
exchange or exchanges on which the Common Stock is listed; (iii)
immediately upon the issuance of Shares upon exercise of Stock
Warrants, to have such Shares listed on the New York Stock
Exchange or on the principal United States securities exchange or
exchanges on which the Common Stock is listed; and (iv)
immediately upon any adjustment in the number of Shares
purchasable upon exercise of the Stock Warrants to register such
Shares with the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

SECTION 11. Adjustment of Exercise Price and Number of
Shares Purchasable or Number of Stock Warrants. The Exercise
Price, the number of Shares purchasable upon the exercise of each
Stock Warrant and the number of Stock Warrants outstanding are
subject to adjustment from time to time upon the occurrence of
the events enumerated in this Section 11.

(a) If the Company shall at any time after the date of
this Agreement (i) declare a dividend on the Common Stock payable
in shares of Common Stock; (ii) subdivide the outstanding Common
Stock; (iii) combine the outstanding Common Stock into a smaller
number of shares; or (iv) issue any shares of its capital stock
in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation), the Exercise
Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and/or the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holders of any Stock Warrant exercised after such time
shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Stock Warrant had been
exercised immediately prior to such date, such Stock Warrant
holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.

(b) If the Company shall at any time after the date of
this Agreement issue rights or warrants to all holders of Common
Stock entitling them to subscribe for or purchase Common Stock
(or securities convertible into Common Stock) at a price per
share of Common Stock (or having a conversion price per share of
Common Stock, if a security convertible into Common Stock) that
is less than 95 percent of the then current market price per
share of Common Stock (as defined in Section 11(d)) on the record
date fixed for such issuance, the Exercise Price in effect after
such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of
shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so to be offered (or the
aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price and
of which the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of
additional shares of Common Stock to be offered for subscription
or purchase (or into which the convertible securities so to be
offered are initially convertible). If such subscription price
may be paid in consideration part or all of which shall be in a
form other than cash, the value of such consideration shall be
determined by the Board of Directors of the Company, whose
determination shall be conclusive. Shares of Common Stock owned
by or held for the account of the Company or any majority-owned
subsidiary shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and if such rights or
warrants are not so issued, the Exercise Price shall again be
adjusted to be the Exercise Price which would then be in effect
if such record date had not been fixed, but such subsequent
adjustments shall not affect the number of Shares issued upon any
exercise of Stock Warrants prior to the date such subsequent
adjustment is made.

(c) If the Company shall fix a record date for the
making of a distribution to all holders of Common Stock
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness or assets (excluding
(i) cash dividends or distributions paid from consolidated
earnings or consolidated earned surplus of the Company
(determined in accordance with generally accepted accounting
principles), or (ii) quarterly Common Stock dividends at the rate
of $.05 per share or increases therein out of consolidated net
income of the Company (determined in accordance with generally
accepted accounting principles) for the period from the end of
its most recent fiscal year to the date of the most recent
consolidated quarterly financial statements of the Company as of
the time of the declaration of the dividend, or subscription
rights or warrants (excluding those referred to in Section
11(b)), the Exercise Price in effect after such record date shall
be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, of which the
numerator shall be the current market price per share of Common
Stock (as defined in Section 11(d)) on such record date less the
fair market value (determined by the Board of Directors of the
Company, whose determination shall be conclusive, and described
in a statement filed with the Stock Warrant Agent) of the portion
of the assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants allocable to one share
of Common Stock and of which the denominator shall be such
current market price per share of Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed;
and if such distribution is not so made, the Exercise Price shall
again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed, but such
subsequent adjustment shall not affect the number of Shares
issued upon any exercise of Stock Warrants prior to the date such
subsequent adjustment is made.

(d) For the purpose of any computation under Section
11(b), (c) or as elsewhere referenced in this Agreement, the
current market price per share of Common Stock or Stock Warrants
on any date shall be deemed to be the average of the daily
closing prices, respectively, for the Common Stock and the Stock
Warrants, for the 30 consecutive trading days commencing 45
trading days before such date. The closing price for each day
shall be as reported as New York Stock Exchange composite
transactions.

(e) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least 1 percent in such price; provided, however,
that (x) any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken
into account in any subsequent adjustment and (y) notwithstanding
the provisions of this subsection, any adjustments in the
Exercise Price will be made not later than the third anniversary
of the occurrence of the event upon which such adjustment is
based. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one-hundredth of a Share, as
the case may be, but in no event shall the Company be obligated
to issue a fractional Share upon the exercise of any Stock
Warrant.

(f) In the event that at any time, as a result of an
adjustment made pursuant to Section 11(a), the holder of any
Stock Warrant thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than
shares of Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Stock Warrant shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Section 6, 7, 9, 10, 11(e),
11(j) and 13 with respect to the Shares shall apply on like terms
to any such other shares.

(g) In any case in which this Section 11 shall require
that an adjustment in the Exercise Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Stock Warrant exercised after such record date of
the Shares and other capital stock of the Company, if any,
issuable upon such exercise over and above the Shares and other
capital stock of the Company, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.

(h) Unless the Company has exercised its election to
adjust the number of Stock Warrants as provided in Section 11(i),
upon each adjustment of the Exercise Price as a result of the
calculations made in Section 11(a), (b) or (c), each Stock
Warrant outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at
the adjusted Exercise Price, that number of Shares (calculated to
the nearest hundredth) obtained by (A) multiplying the number of
Shares purchasable upon exercise of a Stock Warrant immediately
prior to such adjustment of the number of Shares by the Exercise
Price in effect immediately prior to such adjustment of the
Exercise Price and (B) dividing the product so obtained by the
Exercise Price in effect immediately after such adjustment of the
Exercise Price.

(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Stock
Warrants, in substitution for an adjustment in the number of
Shares purchasable upon the exercise of a Stock Warrant as
provided in Section 11(h). Each Stock Warrant outstanding after
such adjustment of the number of Stock Warrants shall be
exercisable for the same number of Shares as immediately prior to
such adjustment. Each Stock Warrant held of record prior to such
adjustment of the number of Stock Warrants shall become that
number of Stock Warrants (calculated to the nearest hundredth)
obtained by dividing the Exercise Price in effect prior to
adjustment of the Exercise Price by the Exercise Price in effect
after adjustment of the Exercise Price. The Company shall notify
the holder of Stock Warrants in the same manner as provided in
the first paragraph of Section 14, of its election to adjust the
number of Stock Warrants, indicating the record date for the
adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but shall
be at least 10 days later than the date of the notice. Upon each
adjustment of the number of Stock Warrants pursuant to this
subsection (i) the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Stock Warrants on
such record date Stock Warrant Certificates evidencing, subject
to Section 13, the additional Stock Warrants to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Stock
Warrant Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Stock Warrant Certificates evidencing all the Stock
Warrants to be issued, executed and registered in the manner
specified in Sections 4 and 5 (and which may bear, at the option
of the Company, the adjusted Exercise Price) and shall be
registered in the names of the holders of record of Warrant
Certificates on the record date specified in the public
announcement.

(j) In case of any capital reorganization of the
Company, or of any reclassification of the Common Stock (other
than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of subdivision or
combination), or in case of the consolidation of the Company with
or the merger of the Company into any other corporation or in
case of a statutory share exchange to which the Company is a
party (other than a consolidation, merger or share exchange in
which the Company is the continuing or successor corporation) or
of the sale of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation, each
Stock Warrant shall after such reorganization, reclassification,
consolidation, merger, share exchange or sale be exercisable upon
the terms and conditions specified in this Agreement, for the
number of shares of stock or other securities or property to
which a holder of the number of Shares purchasable (at the time
of such reorganization, reclassification, consolidation, merger,
share exchange or sale) upon exercise of such Stock Warrant would
have been entitled upon such reorganization, reclassification,
consolidation, merger, share exchange or sale; and in any such
case, if necessary, the provisions set forth in this Section 11
with respect to the rights and interests thereafter of the
holders of the Stock Warrants shall be appropriately adjusted so
as to be applicable, as early as may reasonably be, to any shares
of stock or other securities or Warrants. The subdivision or
combination of shares of Common Stock at any time outstanding
into a greater or lesser number of shares shall not be deemed to
be a reclassification of the Common Stock for the purposes of
this Section 11(j). The Company shall not effect any such
consolidation, merger, share exchange or sale, unless prior to or
simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such
consolidation, merger or share exchange or the corporation
purchasing such assets or other appropriate corporation or entity
shall assume, by written instrument executed and delivered to the
Stock Warrant Agent, the obligation to deliver to the holder of
each Stock Warrant such shares of stock, securities or assets as,
in accordance with the foregoing provisions, such holders may be
entitled to purchase under this Agreement.

SECTION 12. Optional Reduction of Exercise Price. The
Company may, at any time or from time to time, voluntarily reduce
the then current Exercise Price by an amount not in excess of 33
percent of such then current Exercise Price for such period or
periods of time as the Board of Directors of the Company may
determine; provided, however that each such period shall be at
least 30 days. In each such event, the Company shall prepare a
certificate of an officer of the Company stating (i) the election
of the Company to reduce the then current Exercise Price in
accordance with this Section 12; (ii) the period in which such
reduced Exercise Price shall be in effect; and (iii) that such
election is irrevocable during such period. The Company shall
mail a brief summary of the provisions of such certificate at
least 15 days prior to the date fixed for the commencement of any
period in which the reduced Exercise Price shall be in effect to
the Stock Warrant Agent at the address provided in Section 19
hereof and to each registered holder of Stock Warrant
Certificates at such Stock Warrant holder's address appearing on
the Stock Warrant register. Failure on the part of the holders
of Stock Warrant Certificates to receive such notice by mail, or
any defect therein, shall not affect the validity of the
reduction of the then current Exercise Price during such period.
During such period, any adjustment in the Exercise Price pursuant
to Section 11 hereof shall be made to the reduced Exercise Price
as provided by this Section 12 in the manner specified in such
Section 11. After the termination of such period, the Exercise
Price shall be such Exercise Price which would have been in
effect, as adjusted pursuant to the provisions of Section 11, had
there been no reduction in the Exercise Price pursuant to the
provisions of this Section 12. No reduction of the then current
Exercise Price pursuant to the provisions of this Section 12
shall be deemed for the purposes of Section 11 hereof to alter or
adjust the Exercise Price.

SECTION 13. Fractional Stock Warrants and Fractional
Shares. (a) The Company shall not be required to issue fractions
of Stock Warrants on any distribution of Stock Warrants to
holders of Stock Warrant Certificates pursuant to Section 11(i)
or to distribute Stock Warrant Certificates which evidence
fractional Stock Warrants. In lieu of such fractional Stock
Warrants, the registered holder of a Stock Warrant Certificate
with regard to which such a fractional Stock Warrant would
otherwise be issuable shall receive an amount in cash equal to
the same fraction of the current market value of a whole Stock
Warrant. For purposes of this Section 13(a), the current market
value of a Stock Warrant shall be determined under Section 11(d)
for the last trading day immediately prior to the date on which
such fractional Stock Warrant would have been otherwise issuable.

(b) Notwithstanding an adjustment pursuant to Section
11(h) in the number of Shares purchasable upon the exercise of a
Stock Warrant, the Company shall not be required to issue
fractions of Shares upon exercise of the Stock Warrants or to
distribute certificates which evidence fractional Shares. The
registered holders of Stock Warrant Certificates at the time such
Stock Warrants are exercised as herein provided may elect (i) to
receive an amount in cash equal to the same fraction of the
current market value of a share of Common Stock or (ii) to have
the cash payment credited against the Exercise Price of Shares to
be received upon exercise of whole Stock Warrants. Such election
shall be made on the form provided for such purpose by the
Company. For purposes of this Section 13(b), the current market
value of a share of Common Stock shall be as determined under
Section 11(d) for the last trading day immediately prior to the
date of such exercise.

SECTION 14. Notices to Stock Warrant Holders. Upon
adjustment of the Exercise Price pursuant to Section 11, the
Company within 20 calendar days thereafter shall (i) cause to be
filed with the Stock Warrant Agent a certificate of a firm of
independent public accountants of recognized standing selected by
the Company (who may be the regular auditors of the Company)
setting forth the Exercise Price after such adjustment and
setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based and setting
forth the number of Shares purchasable upon exercise of a Stock
Warrant after such adjustment in the Exercise Price, which
certificate shall be conclusive evidence of the correctness of
the matters set forth therein and (ii) cause to be given to each
of the registered holders of the Stock Warrant Certificates at
such Stock Warrant holder's address appearing on the Stock
Warrant register written notice of such adjustments by first-
class mail, postage prepaid. Where appropriate, such notice may
be given in advance and included as a part of the notice required
to be mailed under the other provisions of this Section 14.

If:

(a) the Company authorizes the issuance to all holders
of Common Stock or rights or warrants to subscribe for or
purchase capital stock of the Company or of any other
subscription rights or warrants; or

(b) the Company authorizes the distribution to all
holders of Common Stock of evidences of its indebtedness or
assets (excluding (i) cash dividends or distributions paid
from consolidated earnings or consolidated earned surplus of
the Company (determined in accordance with generally accepted
accounting principles), or (ii) quarterly Common Stock
dividends at the rate of $.05 per share or increases therein
out of consolidated net income of the Company (determined in
accordance with generally accepted accounting principles) for
the period from the end of its most recent fiscal year to the
date of the most recent consolidated quarterly financial
statements of the Company as of the time of the declaration of
the dividend, and (iii) dividends payable in Common Stock); or

(c) there is any consolidation, share exchange or merger
to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the conveyance
or transfer of the properties and assets of the Company
substantially as an entirety, or of any capital reorganization
or any reclassification of the Common Stock (other than a
change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a
subdivision or combination);

(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or

(e) the Company proposes to take any other action which
would require an adjustment of the Exercise Price pursuant to
Section 11;

the Company shall file with the Stock Warrant Agent and give to
each registered holder of a Stock Warrant Certificate at such
Stock Warrant holder's address appearing on the Stock Warrant
register, at least 20 calendar days (or 10 calendar days in any
case specified in clauses (a) or (b) above) prior to the
applicable record date hereinafter specified in (i) or (ii)
below, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares
of Common Stock to be entitled to receive any such rights,
warrants or distribution are to be determined or (ii) the date on
which any such consolidation, merger, share exchange, conveyance,
transfer, reorganization, reclassification, dissolution,
liquidation or winding up is expected to become effective, and
the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares
for securities or other property, if any, deliverable upon such
consolidation, share exchange, merger, conveyance, transfer,
reorganization, reclassification, dissolution, liquidation or
winding up. Failure to give the notice required by this Section
14 or any defect therein shall not affect the legality or
validity of any distribution, right, warrant, consolidation,
share exchange, merger, conveyance, transfer, reorganization,
reclassification, dissolution, liquidation or winding up or the
vote upon any action.

Nothing in this Agreement or in any Stock Warrant
Certificate shall be construed as conferring upon the holder
thereof the right to vote or to consent or to receive notice as a
stockholder in respect of the meetings of stockholders or the
election of directors of the Company or on any other matter, or
any rights whatsoever as a stockholder of the Company.

SECTION 15. Merger, Consolidation or Change of Name of
Stock Warrant Agent. Any corporation into which the Stock
Warrant 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 the Stock Warrant Agent
shall be a party, or any corporation succeeding to the corporate
trust business of the Stock Warrant Agent, shall be the successor
to the Stock Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible
for appointment as a successor Stock Warrant Agent under the
provisions of Section 18. If at the time such successor to the
Stock Warrant Agent shall succeed under this Agreement, any of
the Stock Warrant Certificates shall have been countersigned but
not delivered, any such successor to the Stock Warrant Agent may
adopt the countersignature of the original Stock Warrant Agent;
and in case at that time any of the Stock Warrant Certificates
shall not have been countersigned, any successor to the Stock
Warrant Agent may countersign such Stock Warrant Certificates
either in the name of the predecessor Stock Warrant Agent or in
the name of the successor Stock Warrant Agent. In all such cases
such Stock Warrant Certificates shall have the full force
provided in the Stock Warrant Certificates and in this Agreement.

If at any time the name of the Stock Warrant Agent shall
be changed and at such time any of the Stock Warrant Certificates
shall have been countersigned but not delivered, the Stock
Warrant Agent whose name has changed may adopt the
countersignature under its prior name, and if at that time any
of the Stock Warrant Certificates shall not have been
countersigned, the Stock Warrant Agent may countersign such Stock
Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Stock Warrant Certificates shall
have the full force provided in the Stock Warrant Certificates
and in this Agreement.

SECTION 16. Stock Warrant Agent. The Stock Warrant
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Stock Warrants, by their
acceptance thereof, shall be bound:

(a) The statements contained herein and in the Stock
Warrant Certificates shall be taken as statements of the
Company, and the Stock Warrant Agent assumes no responsibility
for the correctness of any of the same except such statements
as describe the Stock Warrant Agent or action taken or to be
taken by it. Except as herein otherwise provided, the Stock
Warrant Agent assumes no responsibility with respect to the
execution, delivery or distribution of the Stock Warrant
Certificates.

(b) The Stock Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants
contained in this Agreement or in the Stock Warrant
Certificates to be complied with by the Company, nor shall the
Stock Warrant Agent at any time be under any duty or
responsibility to any holder of a Stock Warrant to make or
cause to be made any adjustment in the Exercise Price (except
that the Stock Warrant Agent shall receive the certificate of
the Company's independent accountants required to be delivered
in connection with any adjustment of the Exercise Price) or in
the number of Shares issuable upon exercise of the Stock
Warrants (except as instructed by the Company), or to
determine whether any facts exist which may require any such
adjustments, or with respect to the nature or extent of or
method employed in making any such adjustments when made.

(c) The Stock Warrant Agent may consult at any time with
counsel satisfactory to it (who may be counsel for the
Company) and the Stock Warrant Agent shall incur no liability
or responsibility to the Company or to any holder of any Stock
Warrant Certificate in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance
with the opinion or the advice of such counsel.

(d) The Stock Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Stock
Warrant Certificate for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties.

(e) The Company agrees (i) to pay to the Stock Warrant
Agent reasonable compensation for all services rendered by the
Stock Warrant Agent under this Agreement; (ii) to reimburse
the Stock Warrant Agent upon demand for all expenses, taxes
and governmental charges and other charges of any kind and
nature incurred by the Stock Warrant Agent in the execution of
its duties under this Agreement; and (iii) to indemnify the
Stock Warrant Agent and hold it harmless against any and all
losses, liabilities and expenses, including judgments, costs
and counsel fees, for anything done or omitted by the Stock
Warrant Agent arising out of or in connection with this
Agreement, except as a result of its negligence or bad faith.

(f) The Stock Warrant Agent shall be under no obligation
to institute any action, suit or legal proceeding or to take
any other action likely to involve expense unless the Company
or one or more registered holders of Stock Warrant
Certificates shall furnish the Stock Warrant Agent with
reasonable security and indemnity for any costs and expenses
which may be incurred. All rights of action under this
Agreement or under any of the Stock Warrants may be enforced
by the Stock Warrant Agent without the possession of any of
the Stock Warrant Certificates or the production thereof at
any trial or other proceeding relative thereto, and any such
action, suit or proceeding instituted by the Stock Warrant
Agent shall be brought in its name as Stock Warrant Agent, and
any recovery or judgment shall be for the ratable benefit of
the registered holders of the Stock Warrants, as their
respective rights or interests may appear.

(g) The Stock Warrant Agent, and any stockholder,
director, officer or employee thereof, may buy, sell or deal
in any of the Stock Warrants or other securities of the
Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not the Stock Warrant Agent under this
Agreement. Nothing herein shall preclude the Stock Warrant
Agent from acting in any other capacity for the Company or for
any other legal entity.

(h) The Stock Warrant Agent shall act hereunder solely
as agent for the Company, and its duties shall be determined
solely by the provisions hereof. The Stock Warrant Agent
shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement, except for its
own negligence or bad faith.

(i) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Stock Warrant Agent for the carrying out or performing of
the provisions of this Agreement.

(j) The Stock Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Stock Warrant Agent) or in respect of the
validity or execution of any Stock Warrant Certificate (except
its countersignature thereof); nor shall the Stock Warrant
Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of the Shares to be issued pursuant to this
Agreement or any Stock Warrant Certificate or as to whether
the Shares will, when issued, be validly issued, fully paid
and nonassessable or as to the Exercise Price or the number of
Shares issuable upon exercise of any Stock Warrant.

(k) The Stock Warrant Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the
Board, the President, any Executive Vice President or Vice
President, the Secretary or Assistant Secretary of the
Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be
liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer
or in good faith reliance upon any statement signed by any one
of such officers of the Company with respect to any fact or
matter (unless other evidence in respect thereof is herein
specifically prescribed) which may be deemed to be
conclusively proved and established by such signed statement.

(l) The Company will furnish to the Stock Warrant Agent,
upon request but not more often than annually, an opinion of
counsel (who may be counsel to the Company) acceptable to the
Stock Warrant Agent, to the effect that (i) a Registration
Statement under the Securities Act of 1933, as amended, is
then in effect with respect to the Shares issuable on the
exercise of the Stock Warrants and that the Prospectuses
hereinafter referred to comply as to form in all material
respects with the requirements of said Act and the rules and
regulations of the Securities and Exchange Commission
thereunder or (ii) a Registration Statement under said Act
with respect to the Shares issuable on the exercise of the
Stock Warrants is not required. If said opinion states that
such a Registration Statement is in effect, the Company will,
from time to time, furnish the Stock Warrant Agent with
current Prospectuses meeting the requirements of said Act and
all rules and regulations thereunder in sufficient quantity to
permit the Stock Warrant Agent to deliver a Prospectus to each
holder of a Stock Warrant upon exercise thereof. The Company
further agrees to pay all fees, costs and expenses in
connection with the preparation and delivery to the Stock
Warrant Agent of the foregoing opinions and Prospectuses.

SECTION 17. Disposition of Proceeds of Exercise of Stock
Warrants. The Stock Warrant Agent shall account promptly to the
Company with respect to Stock Warrants exercised and concurrently
pay to the Company all moneys received by the Stock Warrant Agent
on the purchase of Shares through the exercise of Stock Warrants.

SECTION 18. Change of Stock Warrant Agent. If the Stock
Warrant Agent shall resign (such resignation to become effective
not earlier than 30 days after the giving of written notice
thereof to the Company and the registered holders of Stock
Warrant Certificates) or shall become incapable of acting as
Stock Warrant Agent, the Company shall appoint a successor to the
Stock Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been so
notified in writing by the Stock Warrant Agent or by the
registered holder of a Stock Warrant Certificate (in the case of
incapacity), then the registered holder of any Stock Warrant
Certificate may apply to any court of competent jurisdiction for
the appointment of a successor to the Stock Warrant Agent.
Pending appointment of a successor to the Stock Warrant Agent,
either by the Company or by such a court, the duties of the Stock
Warrant Agent shall be carried out by the Company. Any successor
Stock Warrant Agent whether appointed by the Company or by such a
court shall be a bank or trust company, in good standing,
incorporated under the laws of the United States of America or
any state thereof, and having an office in the Borough of
Manhattan, The City of New York, State of New York, and shall
have at the time of its appointment as Stock Warrant Agent a
combined capital and surplus of at least 50 million dollars. As
soon as practicable after appointment of the successor Stock
Warrant Agent, the Company shall cause to be given to each of the
registered holders of the Stock Warrant Certificates at such
Stock Warrant holder's address appearing on the Stock Warrant
register written notice of the change in the Stock Warrant Agent
by first-class mail, postage prepaid. After appointment, the
successor Stock Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been
originally named as Stock Warrant Agent without further act or
deed; but the former Stock Warrant Agent shall deliver and
transfer to the successor Stock Warrant Agent any property at the
time held by it hereunder and execute and deliver, at the expense
of the Company, any further assurance, conveyance, act or deed
necessary for the purpose. Failure to give any notice provided
for in this Section 18, however, or any defect therein, shall not
affect the legality or validity of the removal of the Stock
Warrant Agent or the appointment of a successor Stock Warrant
Agent, as the case may be.

SECTION 19. Notices to Company and Stock Warrant Agent.
Any notice or demand authorized by this Agreement to be given or
made by the Stock Warrant Agent or by the registered holder of
any Stock Warrant Certificate to or on the Company shall be
sufficiently given or made if sent by mail, first class or
registered, postage prepaid, addressed (until another address is
filed in writing by the Company with the Stock Warrant Agent), as
follows:

USF&G Corporation
100 Light Street
Baltimore, Maryland 21202

Attention: Secretary

If the Company shall fail to maintain such office or
agency or shall fail to give such notice of the location or of
any change in the location thereof, presentations may be made and
notices and demands may be served at the corporate trust office
of the Stock Warrant Agent.

Any notice pursuant to this Agreement to be given by the
Company or by the registered holder of any Stock Warrant
Certificate to the Stock Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing by the Stock Warrant
Agent with the Company) to the Stock Warrant Agent as follows:

_______________________________
_______________________________
_______________________________
_______________________________

Notwithstanding the foregoing, no notice pursuant to this
Agreement shall be effective until received by the Stock Warrant
Agent.

SECTION 20. Supplements and Amendments. The Company and
the Stock Warrant Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Stock
Warrant Certificates in order to cure any ambiguity, manifest
error or other mistake in this Agreement, or to correct or
supplement any provision contained herein which may be defective
or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising
hereunder which the Company and the Stock Warrant Agent may deem
necessary or desirable and which shall not adversely affect,
alter or change the interest of the holders of Stock Warrant
Certificates.

SECTION 21. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Stock Warrant Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.

SECTION 22. Termination. This Agreement shall terminate
at the close of business on the Expiration Date. Notwithstanding
the foregoing, this Agreement will terminate on any earlier date
if all Stock Warrants have been exercised. The provisions of
Section 16 shall survive such termination.

SECTION 23. Governing Law. This Agreement and each
Stock Warrant Certificate issued hereunder shall be deemed to be
a contract made under the laws of the State of New York and for
all purposes shall be construed in accordance with the laws of
such State.

SECTION 24. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Company, the Stock Warrant Agent and the
registered holders of the Stock Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the
Company, the Stock Warrant Agent and the registered holders of
the Stock Warrant Certificates.

SECTION 25. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.

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

USF&G CORPORATION

By:_____________________
Title:

_________________________
as Stock Warrant Agent

By:______________________
Title:

EXHIBIT A

No. W-

(FORM OF STOCK WARRANT CERTIFICATE)

(FACE)

EXERCISABLE ON OR BEFORE __________________________
UNLESS SUCH DATE IS ACCELERATED BY THE COMPANY AS PROVIDED
IN THE STOCK WARRANT AGREEMENT REFERRED TO BELOW

Certificate for Stock Warrants

STOCK WARRANT CERTIFICATE

USF&G CORPORATION

This Stock Warrant Certificate certifies that or
registered assigns, is the registered holder of the number of
Stock Warrants (the "Stock Warrants") of USF&G Corporation, a
Maryland corporation (the "Company"), set forth elsewhere on this
certificate. Each Stock Warrant expires at the close of business
on , or such earlier date after
as shall be determined pursuant to the Stock Warrant Agreement
referred to on the reverse hereof, and entitles the holder to
purchase from the Company one fully paid and nonassessable share
of Common Stock, $____ par value, of the Company (the "Share") at
the initial exercise price (the "Exercise Price") of $
payable in lawful money of the United States of America by means
of a certified or official bank check payable to the Company upon
surrender of this Stock Warrant Certificate and payment of the
Exercise Price at the office or agency of the Stock Warrant Agent
in the Borough of Manhattan, The City of New York, State of New
York (the "Stock Warrant Agent Office"), but only subject to the
conditions set forth herein and in the Stock Warrant Agreement.
The Exercise Price and number of Shares purchasable upon exercise
of the Stock Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Stock Warrant
Agreement.

No Stock Warrant may be exercised after the close of
business on (i) or (ii) such earlier date, on
or subsequent to , as shall be determined by
the Company and of which 90 days prior notice shall have been
given to the registered holder hereof, if the closing sale price
for the Company's Common Stock shall be not less than 125 percent
of the then current Stock Warrant exercise price for 20 trading
days in a period of 30 consecutive trading days ending not more
than 10 calendar days immediately prior to the date of such
notice (such date of expiration, or such earlier date, is
hereafter referred to as the "Expiration Date"). After the close
of business on the Expiration Date, the Stock Warrants will
become wholly void and of no value.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS STOCK WARRANT CERTIFICATE SET FORTH ON THE REVERSE HEREOF
AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.

This Stock Warrant Certificate shall not be valid unless
countersigned by the Stock Warrant Agent, as such term is used in
the Stock Warrant Agreement.

WITNESS the facsimile seal of the Company and the
facsimile signatures of its duly authorized officers.

USF&G CORPORATION

Dated:
By:_________________
Title:

Attest:_____________
Title:

(SEAL)

Countersigned:

___________________________
as Stock Warrant Agent

By:_________________________
Authorized Signature

(FORM OF STOCK WARRANT CERTIFICATE)

(REVERSE)

USF&G CORPORATION

The Stock Warrants evidenced by this Stock Warrant
Certificate are part of a duly authorized issue of Stock Warrants
expiring at the close of business on , unless such
date is accelerated at the option of the Company pursuant to the
Stock Warrant Agreement, to purchase shares of Common Stock,
$____ par value per share, of the Company in aggregate up to the
number of Stock Warrants evidenced by this Stock Warrant
Certificate, and are issued or to be issued pursuant to a Stock
Warrant Agreement dated as of (the "Stock Warrant
Agreement"), duly executed and delivered by the Company to
, as Stock Warrant Agent (the "Stock Warrant Agent").
The Stock Warrant Agreement is hereby incorporated by reference
and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Stock Warrant Agent, the
Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the Stock
Warrants.

Stock Warrants may be exercised to purchase Shares from
the Company on or before the close of business on the Expiration
Date, at the Exercise Price set forth on the face hereof, subject
to adjustment, as hereinafter referred to. The holder of Stock
Warrants evidenced by this Stock Warrant Certificate may exercise
them by surrendering the Stock Warrant Certificate, with the form
of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price at the
Stock Warrant Agent Office. If upon any exercise of Stock
Warrants evidenced hereby the number of Stock Warrants exercised
shall be less than the total number of Stock Warrants evidenced
hereby, there shall be issued to the holder hereof or such
holder's assignee a new Stock Warrant Certificate evidencing the
number of Stock Warrants not exercised. No adjustment shall be
made for any cash dividends on any Shares issuable upon exercise
of this Stock Warrant. After the close of business on the
Expiration Date, unexercised Stock Warrants shall become wholly
void and of no value.

The Stock Warrant Agreement provides that, upon the
occurrence of certain events, the Exercise Price set forth on the
face hereof may, subject to certain conditions, be adjusted. If
the Exercise Price is adjusted, the Stock Warrant Agreement
provides that, at the election of the Company, either (i) the
number of Shares purchasable upon the exercise of each Stock
Warrant shall be adjusted or (ii) each outstanding Stock Warrant
shall be adjusted to become a different number of Stock Warrants.
In the latter event, the Company will cause to be distributed to
registered holders of Stock Warrant Certificates either Stock
Warrant Certificates representing the additional Stock Warrants
issuable pursuant to the adjustment or substitute Stock Warrant
Certificates to replace all outstanding Stock Warrant
Certificates.

At any time or from time to time, the Company shall have
the right to reduce the then current Exercise Price by an amount
not in excess of 33 percent for a period or periods to be
determined by the Company, but in any event not less than 30
days. The Company shall make a public announcement of the
reduction in Exercise Price and shall mail a notice to each
registered holder of Stock Warrant Certificates.

The Company shall not be required to issue fractional
Stock Warrants or fractional Shares upon the exercise of Stock
Warrants or any certificates which evidence fractional Stock
Warrants or fractional Shares. In lieu of such fractional Stock
Warrants, the registered holder of a Stock Warrant Certificate
with regard to which a fractional Stock Warrant would otherwise
be issuable shall receive an amount in cash equal to the same
fraction of the current market value of a whole Stock Warrant (as
determined pursuant to the Stock Warrant Agreement). In lieu of
such fractional Shares the registered holders of the Stock
Warrant Certificates with regard to which such fractional Shares
would otherwise be issuable may elect, at the time of the
exercise of Stock Warrants, (i) to receive an amount in cash
equal to the same fraction of the current market value (as
determined pursuant to the Stock Warrant Agreement) of a full
Share or (ii) to credit such cash payment against the Exercise
Price of Shares to be received upon exercise of whole Stock
Warrants.

One or more Stock Warrant Certificates, when surrendered
at the Stock Warrant Agent Office by the registered holder
thereof in person or by legal representative or by attorney duly
authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Stock Warrant
Agreement, but without payment of any service charge, for another
Stock Warrant Certificate or Stock Warrant Certificates of like
tenor evidencing in the aggregate a like number of Stock
Warrants.

Upon due presentment for registration of transfer of this
Stock Warrant Certificate at the Stock Warrant Agent Office, a
new Stock Warrant Certificate or Stock Warrant Certificates of
like tenor and evidencing in the aggregate a like number of Stock
Warrants shall be issued to the transferee in exchange for this
Stock Warrant Certificate, subject to the limitations provided in
the Stock Warrant Agreement, without charge except for any tax or
other governmental charge imposed in connection therewith.

The Company and the Stock Warrant Agent may deem and
treat the registered holder hereof as the absolute owner of this
Stock Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone) for the purpose
of any exercise or exchange hereof and for all other purposes,
and neither the Company nor the Stock Warrant Agent shall be
affected by any notice to the contrary.

(FORM OF ELECTION TO EXERCISE)

(To be executed upon exercise of Stock Warrant prior to
the close of business on the Expiration Date)

The undersigned hereby irrevocably elects to exercise the
right, represented by this Stock Warrant Certificate, to purchase
_____ Shares and herewith tenders payment for such Shares in the
amount of $__________ in the form of a certified or official bank
check payable to the Company. The undersigned requests that a
certificate representing the Shares be registered in the name of
_____________________________ whose address is _____________________
and that such certificate be delivered to __________________________
whose address is _______________________. If said number of
Shares is less than all the Shares purchasable hereunder, the
undersigned requests that a new Stock Warrant Certificate
representing the right to purchase the balance of the Shares be
registered in the name of_________________ whose address is
___________________ and that such Stock Warrant Certificate be
delivered to _______________ whose address is ___________________.
In lieu of receipt of a fractional Share, if any, the undersigned
hereby elects (i) to receive a cash payment made to_______________
____ whose address is ___________________ and the check
representing payment thereof should be delivered to _______________
____ whose address is _______________ or (ii) elects to credit
the amount of such payment against the Exercise Price payable for
Shares to be received upon the exercise of Stock Warrants.

Dated:________________________ , 19__

______________________________________
Social Security or other Taxpayer's
Identification Number

Name of registered holder of Stock Warrant
Certificate:_______________________________

(Please print)

Address:___________________________________________________
___________________________________________________

Signature:_________________________________________________
Note: The above signature must correspond with the
name as written upon the face of this Stock
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever and if the certificate
representing the Shares or any Stock Warrant
Certificate representing Stock Warrants not
exercised is to be registered in a name other
than that in which this Stock Warrant
Certificate is registered, the signature of
the holder hereof must be guaranteed.

Signature Guaranteed:

(FORM OF ASSIGNMENT)

For value received hereby sells,
assigns and transfers unto the within Stock
Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
attorney, to transfer said Stock Warrant Certificate on
the books of the within-named Company, with full power of
substitution in the premises.

Dated:_________________________, 19__.

____________________________________________
Note: The above signature must correspond
with the name as written upon the
face of this Stock Warrant Certifi-
cate in every particular, without
alteration or enlargement or any
change whatever.

Signature Guaranteed:

USF&G CORPORATION

and

_____________________,

as Warrant Agent

__________________________

DEBT WARRANT AGREEMENT

Dated as of ________________

____________________________

Warrants to Purchase ________

____________________

TABLE OF CONTENTS*
-----------------

PAGE
----
PARTIES . . . . . . . . . . . . . . . . . . . . . .

RECITALS . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I

ISSUANCE OF WARRANTS (AND TEMPORARY GLOBAL SECURITY)
AND EXECUTION AND DELIVERY
OF WARRANT CERTIFICATES

SECTION 1.01. Issuance of Warrants . . . . . . . 2

SECTION 1.02. Execution and Delivery
of Warrant Certificates . . . . 2

SECTION 1.03. Issuance of Warrant Certificates 4

(SECTION 1.04. Temporary Global Security . . . . 5)

ARTICLE II

WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS

SECTION 2.01. Warrant Price . . . . . . . . . . . 5

SECTION 2.02. Duration of Warrants . . . . . . . . 6

SECTION 2.03. Exercise of Warrants . . . . . . . . 6

- -----------
* The Table of Contents is not a part of the Agreement.

ARTICLE III

OTHER PROVISIONS RELATING TO RIGHTS OF
HOLDERS OF WARRANT CERTIFICATES

SECTION 3.01. No Rights as Warrant Securityholder
Conferred by Warrants or Warrant
Certificates . . . . . . . . . 10

SECTION 3.02. Lost, Mutilated, Stolen or
Destroyed Warrant Certificates 11

SECTION 3.03. Enforcement of Rights . . . . . . 11

SECTION 3.04. Merger, Consolidation, Conveyance
or Transfer . . . . . . . . . . 11

ARTICLE IV

EXCHANGE AND TRANSFER

SECTION 4.01. Exchange and Transfer . . . . . . 12

SECTION 4.02. Treatment of Holders of
Warrant Certificates . . . . . 13

SECTION 4.03. Cancellation of Warrant
Certificates . . . . . . . . . 14

ARTICLE V

CONCERNING THE WARRANT AGENT

SECTION 5.01. Warrant Agent . . . . . . . . . . 15

SECTION 5.02. Conditions of Warrant Agent's
Obligations . . . . . . . . . . 15

SECTION 5.03. Resignation and Appointment
of Successor . . . . . . . . . 17

ARTICLE VI

MISCELLANEOUS

SECTION 6.01. Amendment . . . . . . . . . . . . 19

SECTION 6.02. Notices and Demands to the Company
and Warrant Agent . . . . . . . 19

SECTION 6.03. Addresses . . . . . . . . . . . . 19

SECTION 6.04. Applicable Law . . . . . . . . . . 19

SECTION 6.05. Delivery of Prospectus . . . . . . 19

SECTION 6.06. Obtaining of Governmental
Approval . . . . . . . . . . . 20

SECTION 6.07. Persons Having Rights Under
Warrant Agreement . . . . . . . 20

SECTION 6.08. Headings . . . . . . . . . . . . . 20

SECTION 6.09. Counterparts . . . . . . . . . . . 20

SECTION 6.10. Inspection of Agreement . . . . . 20

SECTION 6.11. Notices to Holders of Warrants . . 20

TESTIMONIUM . . . . . . . . . . . . . . . . . . . 22

SIGNATURES . . . . . . . . . . . . . . . . . . . 22

(EXHIBIT A - Form of Warrant Certificate
(in Registered Form)

(EXHIBIT B - Form of Global Warrant Certificate in Bearer
Form)

(EXHIBIT C - Form of Certificate to be Delivered to
the Warrant Agent by the Euro-clear Operator or
CEDEL)

(EXHIBIT D - Form of Warrant Exercise Notice)

(EXHIBIT E - Form of Confirmation to be Delivered to
Purchasers of Warrant Securities in Bearer
Form)

DEBT WARRANT AGREEMENT*

THIS AGREEMENT dated as of between USF&G
CORPORATION, a corporation duly organized and existing under
the laws of the State of Maryland (the "Company"), and, a
(bank) (trust company) duly incorporated and existing under
the laws of , as Warrant Agent (the "Warrant Agent").

W I T N E S S E T H :

WHEREAS, the Company has entered into an Indenture
dated as of _____________, 19__ (the "Indenture") between
the Company and ________________, as Trustee (the
"Trustee"), providing for the issuance from time to time of
its debt securities to be issued in one or more series as
provided in the Indenture; and

WHEREAS, the Company proposes to sell (Title of
such debt securities being offered) (the "Offered
Securities") with one or more warrants (the "Warrants")
representing the right to purchase (title of such debt
securities purchasable through exercise of Warrants) (the
"Warrant Securities"), the Warrants to be evidenced by
Warrant certificates issued pursuant to this Agreement (the
"Warrant Certificates") and

WHEREAS, the Company desires the Warrant Agent to
act on behalf of the Company in connection with the
issuance, transfer, exchange, exercise and replacement of
the Warrant Certificates, and in this Agreement wishes to
set forth, among other things, the form(s) and provisions of
the Warrant Certificates and the terms and conditions on
which they may be issued, transferred, exchanged, exercised
and replaced;

- --------------
* Complete or modify the provisions as appropriate
to reflect the terms of the Warrants and Warrant Securities.
Monetary amounts may be in U.S. dollars in a foreign
currency or in a composite currency, including but not
limited to the European Currency Unit.

Bracketed language here and throughout this Agreement
should be inserted as follows:

1. If Warrants are immediately detachable from the
Offered Securities; and

2. If Warrants are detachable from the Offered
Securities only after the Detachable Date.

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

ARTICLE I

ISSUANCE OF WARRANTS (AND TEMPORARY GLOBAL SECURITY)
AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES

SECTION 1.01. Issuance of Warrants. The Warrants
shall be evidenced by one or more Warrant Certificates.
Each Warrant evidenced thereby shall represent the right,
subject to the provisions contained herein and therein, to
purchase a Warrant Security in the principal amount of
and shall be initially issued in connection with the
issuance of the Offered Securities (1: and shall be
separately transferable immediately thereafter) (2: but
shall not be separately transferable until on and after
, 19 (the "Detachable Date")). The Warrants shall be
initially issued (in units) with the Offered Securities, and
each Warrant (included in such a unit) shall evidence the
right, subject to the provisions contained herein and in the
Warrant Certificates, to purchase ( ) principal amount
of Warrant Securities (included in such a unit).

SECTION 1.02. Execution and Delivery of Warrant
Certificates. Each Warrant, whenever issued, shall be
evidenced by a Warrant Certificate in registered form (or a
global Warrant Certificate in bearer form (the "Global
Warrant Certificate")) (the form to be the same as that of
the Warrant Security in connection with which the Warrant
Certificate is issued), substantially in the form(s) set
forth in Exhibit A (and Exhibit B, respectively,) hereto,
shall be dated and may have such letters, numbers or
other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved
thereon as the officers of the Company executing the same
may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the
provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may be listed, or to conform
to usage. The Warrant Certificates shall be signed on
behalf of the Company by its chairman of the Board of
Directors, the president, any executive vice president or
vice president or the treasurer of the Company, in each case
under its corporate seal, which may but need not be,
attested by its Secretary or one of its Assistant
Secretaries (, except that the Global Warrant Certificate
may be executed by any such officer without any necessity
that such signature be under seal as aforesaid). Such
signatures may be manual or facsimile signatures of such
authorized officers and may be imprinted or otherwise
reproduced on the Warrant Certificates. The corporate seal
of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced
on the Warrant Certificates.

No Warrant Certificate shall be valid for any
purpose, and no Warrant evidenced thereby shall be
exercisable, until such Warrant Certificate has been
countersigned by the Warrant Agent by manual signature.
Such signature by the Warrant Agent upon any Warrant
Certificate executed by the Company shall be conclusive
evidence, and the only evidence, that the Warrant
Certificate so countersigned has been duly issued hereunder.

(The Global Warrant Certificate shall be and
remain subject to the provisions of this Agreement until
such time as all of the Warrants evidenced thereby shall
have been duly exercised or shall have expired or been
canceled in accordance with the terms thereof.)

In case any officer of the Company who shall have
signed any of the Warrant Certificates either manually or by
facsimile signature shall cease to be such officer before
the Warrant Certificates so signed shall have been
countersigned and delivered by the Warrant Agent as provided
herein, such Warrant Certificates may be countersigned and
delivered notwithstanding that the person who signed such
Warrant Certificates ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf
of the Company by such persons as, at the actual date of the
execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the
execution of this Agreement any such person was not such
officer.

The term "Holder", when used with respect to any
Warrant Certificate (in registered form) shall mean any person
in whose name at the time such Warrant Certificate
shall be registered upon the books to be maintained by the
Warrant Agent for that purpose (2: or, prior to the
Detachable Date, any person in whose name at the time the
Offered Security to which such Warrant Certificate is
attached is registered upon the register of the Offered
Securities. Prior to the Detachable Date, the Company will,
or will cause the registrar of the Offered Securities to,
make available at all times to the Warrant Agent such
information as to holders of the Offered Securities with
Warrants as may be necessary to keep the Warrant Agent's
records up to date.)

(The term "Holder", when used with respect to the
Global Warrant Certificate, shall mean (2:, prior to the
Detachable Date, the bearer of the Temporary Global Security
(as defined in Section 1.04) evidencing the Offered
Securities to which the Warrants evidenced by the Global
Warrant Certificate were initially attached and, after the
Detachable Date,) the bearer of the Global Warrant
Certificate.)

SECTION 1.03. Issuance of Warrant Certificates.
Warrant Certificates evidencing the right to purchase an
aggregate principal amount not exceeding aggregate
principal amount of Warrant Securities (except as provided
in Sections 2.03, 3.02 and 4.01) may be executed by the
Company and delivered to the Warrant Agent upon the
execution of this Warrant Agreement or from time to time
thereafter. The Warrant Agent shall, upon receipt of
Warrant Certificates duly executed on behalf of the Company,
countersign Warrant Certificates evidencing
Warrants representing the right to purchase up to
aggregate principal amount of Warrant Securities and shall
(, in the case of Warrant Certificates in registered form,)
deliver such Warrant Certificates to or upon the order of
the Company (and, in the case of the Global Warrant
Certificate, upon the order of the Company, deposit the
Global Warrant Certificate with , as common depositary
(the "Common Depositary") for Morgan Guaranty Trust Company
of New York, Brussels office (or any successor), as operator
of the Euro-clear System (the "Euro-clear Operator"), and
for Centrale de Livraison de Valeurs Mobilieres S.A.
("CEDEL") for credit to the accounts of persons appearing
from time to time on the records of the Euro-clear Operator
or of CEDEL as being entitled to any portion thereof. (2:
The Temporary Global Security (, as defined in Section
1.04,) will at the same time be deposited with the Common
Depositary.) (The Global Warrant Certificate shall be held
by the Common Depositary outside the United Kingdom.))
Subsequent to such original issuance of the Warrant
Certificates, the Warrant Agent shall countersign a Warrant
Certificate only if the Warrant Certificate is issued in
exchange or substitution for one or more previously
countersigned Warrant Certificates or (, with respect to
Warrant Certificates in registered form,) in connection with
their transfer as hereinafter provided or as provided in the
antepenultimate paragraph of Section 2.03).

Pending the preparation of definitive Warrant
Certificates (in registered form) evidencing Warrants, the
Company may execute and the Warrant Agent shall countersign
and deliver temporary Warrant Certificates (in registered
form) evidencing such Warrants (printed, lithographed,
typewritten or otherwise produced, in each case in form
satisfactory to the Warrant Agent). Such temporary Warrant
Certificates shall be issuable substantially in the form of
the definitive Warrant Certificates (in registered form) but
with such omissions, insertions and variations as may be
appropriate for temporary Warrant Certificates, all as may
be determined by the Company with the concurrence of the
Warrant Agent. Such temporary Warrant Certificates may
contain such reference to any provisions of this Warrant
Agreement as may be appropriate. Every such temporary
Warrant Certificate shall be executed by the Company and
shall be countersigned by the Warrant Agent upon the same
conditions and in substantially the same manner, and with
like effect, as the definitive Warrant Certificates (in
registered form). Without unreasonable delay, the Company
shall execute and shall furnish definitive Warrant
Certificates (in registered form) and thereupon such
temporary Warrant Certificates may be surrendered in
exchange therefor without charge pursuant to and subject to
the provisions of Section 4.01, and the Warrant Agent shall
countersign and deliver in exchange for such temporary
Warrant Certificates definitive Warrant Certificates (in
registered form) of authorized denominations evidencing a
like aggregate number of Warrants evidenced by such
temporary Warrant Certificates. Until so exchanged, such
temporary Warrant Certificates shall be entitled to the same
benefits under this Warrant Agreement as definitive Warrant
Certificates (in registered form).

(2: SECTION 1.04. Temporary Global Security.
Prior to the Detachable Date, each Offered Security to be
issued with Warrants evidenced by the Global Warrant
Certificate shall, whenever issued, be evidenced by a single
temporary global Offered Security in bearer form without
interest coupons (the "Temporary Global Security") to be
issued by the Company as provided in the Indenture.)

ARTICLE II

WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS

SECTION 2.01. Warrant Price. On
________________, 19__ the exercise price of each Warrant
will be . During the period from , 19 through
and including , 19 , the exercise price of each
Warrant will be plus (accrued amortization of the
original issue discount) (accrued interest) from , 19
. On , 19 the exercise price of each Warrant will
be . During the period from , 19 through and
including , 19 , the exercise price of each Warrant
will be plus (accrued amortization of the original
issue discount) (accrued interest) from , 19 . (In
each case, the original issue discount will be amortized at
a % annual rate, computed on an annual basis using the
"interest" method and using a 360-day year consisting of
twelve 30-day months). Such exercise price of Warrant
Securities is referred to in this Agreement as the "Warrant
Price". (The original issue discount for each principal
amount of Warrant Securities is ).

SECTION 2.02. Duration of Warrants. Subject to
Section 4.03(b), each Warrant may be exercised (in whole but
not in part) (in whole or in part) (at any time, as
specified herein, on or after (the date thereof) ( ,
19 ) and at or before (time, location) on , 19
(each day during such period may hereinafter be referred to
as an "Exercise Date")) (on (list of specific dates) (each,
an "Exercise Date")), or such later date as the Company may
designate by notice to the Warrant Agent and the Holders of
Warrant Certificates (in registered form and to the
beneficial owners of the Global Warrant Certificate) (the
"Expiration Date"). Each Warrant not exercised at or before
(time, location) on the Expiration Date shall become void,
and all rights of the Holder (and any beneficial owners) of
the Warrant Certificate evidencing such Warrant under this
Agreement shall cease.

SECTION 2.03. Exercise of Warrants. (During)
(With respect to Warrants evidenced by Warrant Certificates
in registered form, during) the period specified in Section
2.02, any whole number of Warrants may be exercised by
providing certain information as set forth on the reverse
side of the Warrant Certificates evidencing such Warrants
and by paying in full (in lawful money of the United States
of America) (in applicable currency) (in cash) (by certified
check or official bank check or by bank wire transfer, in
each case,) (by bank wire transfer) (in immediately
available funds,) the Warrant Price for each Warrant
exercised (plus accrued interest, if any, on the Warrant
Securities to be issued upon exercise of such Warrant from
and including the Interest Payment Date (as defined in the
Indenture), if any, in respect of such Warrant Securities
immediately preceding the Exercise Date to and including the
Exercise Date (unless the Exercise Date is after the Regular
Record Date (as defined in the Indenture), if any, for such
Interest Payment Date, but on or before the immediately
succeeding Interest Payment Date for such Warrant
Securities, in which event no such accrued interest shall be
payable in respect of Warrant Securities to be issued in
registered form)) to the Warrant Agent at its corporate
trust office at (address) (or at ), provided that
such exercise is subject to receipt within five business
days of such (payment) (wire transfer) by the Warrant Agent
of the Warrant Certificate evidencing each Warrant exercised
with the form of election to purchase Warrant Securities set
forth on the reverse side of the Warrant Certificate
properly completed and duly executed.

(With respect to Warrants evidenced by the Global
Warrant Certificate, during the period specified in Section
2.02, any whole number of Warrants may be exercised by the
Holder by presentation to the Warrant Agent at its office at
(address located outside the United States (and the United
Kingdom)), at or prior to (time), on any day on which the
Warrants are exercisable, of (i) the Global Warrant
Certificate (2: together with, if prior to the Detachable
Date, the Temporary Global Security) (or written
confirmation reasonably satisfactory to the Warrant Agent
that the Global Warrant Certificate (1: is) (2: and, if
prior to the Detachable Date, the Temporary Global Security
are) held by the Euro-clear Operator and CEDEL and will be
duly endorsed to reflect the exercise of Warrants (2: and,
if prior to the Detachable Date, the surrender to the
Warrant Agent of the Offered Securities to which the
Warrants are attached) by the Euro-clear Operator and
CEDEL), (ii) a duly executed certification from the
Euro-clear Operator or CEDEL, as the case may be,
substantially in the form set forth in Exhibit C hereto and
(iii) payment in full (in lawful money of the United States
of America) (in applicable currency) (in cash) (by certified
check or official bank check or by bank wire transfer, in
each case,) (by bank wire transfer) (in immediately
available funds,) of the Warrant Price for each Warrant
exercised (plus accrued interest, if any, on the Warrant
Securities to be issued upon exercise of such Warrant from
and including the Interest Payment Date, if any, in respect
of such Warrant Securities immediately preceding the
Exercise Date to and including the Exercise Date (unless the
Exercise Date is after the Regular Record Date, if any, for
such Interest Payment Date, but on or before the immediately
succeeding Interest Payment Date for such Warrant
Securities, in which event no such accrued interest shall be
payable in respect of Warrant Securities to be issued in
registered form)). Notwithstanding the foregoing, the
Holder may exercise Warrants as aforesaid on the Expiration
Date at any time prior to (time) in (city of Warrant Agent's
office). Any Warrants exercised as set forth in this
paragraph shall be deemed exercised at the (country) office
of the Warrant Agent.)

(The Warrant Agent shall retain each certificate
received by it from the Euro-clear Operator or CEDEL through
the Expiration Date (or such earlier date by which all of
the Warrants may have been exercised or cancelled) and
thereafter shall dispose of them or deliver them to the
Company pursuant to the instructions of the Company.)

(The delivery to the Warrant Agent by the Euro-
clear Operator or CEDEL of any certification referred
to above may be relied upon by the Company, the Warrant
Agent and the Trustee as conclusive evidence that a
corresponding certificate or certificates substantially in
the form of Exhibit D hereto has or have been delivered to
the Euro-clear Operator or CEDEL, as the case may be.)

(The Company will maintain in (location) (or in
such other city (in western Europe) as the Company may deem
advisable), until the right to exercise the Warrants shall
expire or be earlier cancelled as hereinafter provided, an
agency where the Global Warrant Certificate (2: and, if
prior to the Detachable Date, the Temporary Global Security)
may be presented for exercise of the Warrants represented
thereby (2: and, if prior to the Detachable Date, for
surrender for cancellation of the Offered Securities to
which such Warrants are attached) and notices and demands to
or upon the Company in respect of the Warrants or of this
Agreement may be made.)

The date on which payment in full of the Warrant
Price (plus any such accrued interest) is received by the
Warrant Agent shall, subject to receipt of the Warrant
Certificate (in registered form or, as the case may be, the
Global Warrant Certificate (2: and, if required, the
Temporary Global Security) and the certification of Euro-
clear Operator or CEDEL) as aforesaid, be deemed to be
the date on which the Warrant is exercised. The Warrant
Agent shall deposit all funds received by it in payment for
the exercise of Warrants in an account of the Company
maintained with it (or in such other account as may be
designated by the Company) and shall advise the Company, by
telephone or by facsimile transmission or other form of
electronic communication available to both parties, at the
end of each day on which a payment for the exercise of
Warrants is received of the amount so deposited to its
account. The Warrant Agent shall promptly confirm such
advice to the Company in writing.

If a day on which Warrants may be exercised in the
city in which such Warrants are to be exercised shall be a
Saturday or Sunday or a day on which banking institutions in
such city are authorized or required to be closed, then,
notwithstanding any other provision of this Agreement or the
Warrant Certificate evidencing such Warrants, but subject to
the limitation that no Warrant may be exercised after the
Expiration Date, the Warrants shall be exercisable on the
next succeeding day which in such city is not a Saturday or
Sunday or a day on which banking institutions in such city
are authorized or required to be closed.

The Warrant Agent shall, from time to time, as
promptly as practicable, advise the Company (and)(,) the
Trustee (and the Common Depositary at (both) its London and
(location) office(s)) in writing ((which, in the case of
exercised Warrants represented by the Global Warrant
Certificate, shall be tested telex with appropriate
answerback received,)) of (i) the number of Warrants
exercised, (ii) the instructions of each Holder of the
Warrant Certificates (in registered form) evidencing such
Warrants (or of the Euro-clear Operator or CEDEL, as the
case may be,) with respect to delivery of the Warrant
Securities to be issued upon such exercise, (iii) delivery
of any Warrant Certificates (in registered form) evidencing
the balance, if any, of the Warrants remaining after such
exercise, and (iv) such other information as the Company or
the Trustee shall reasonably require. (In addition, in the
case of exercised Warrants evidenced by the Global Warrant
Certificate, the Warrant Agent shall, as promptly as
practicable, endorse, or cause the Common Depositary,
(location) office, or one of the Warrant Agent's agents to
endorse, Schedule A annexed to the Global Warrant
Certificate to reflect the exercise of such Warrants (2: and
the Temporary Global Security to reflect the surrender for
cancellation of the Offered Securities to which such
Warrants are attached) and, if applicable, return the Global
Warrant Certificate (2: and the Temporary Global Security)
to the Common Depositary or to its order.)

As soon as practicable after the exercise of any
Warrant (evidenced by a Warrant Certificate in registered
form), but subject to receipt by the Warrant Agent of the
Warrant Certificate evidencing such Warrant as provided in
this Section, the Company shall issue, pursuant to the
Indenture, in authorized denominations to or upon the order
of the Holder of the Warrant Certificate evidencing each
Warrant, the Warrant Securities to which such Holder is
entitled, in fully registered form, registered in such name
or names as may be directed by such Holder. If fewer than
all of the Warrants evidenced by such Warrant Certificate
are exercised, the Company shall execute, and an authorized
officer of the Warrant Agent shall manually countersign and
deliver, a new Warrant Certificate (in registered form)
evidencing the number of such Warrants remaining
unexercised.

(As soon as practicable after the exercise of any
Warrant evidenced by the Global Warrant Certificate, the
Company shall issue, pursuant to the Indenture, the Warrant
Securities issuable upon such exercise, in authorized
denominations (i) in fully registered form, registered in
such name or names as may be directed by the Euro-clear
Operator or CEDEL, as the case may be, to or upon order of
the Euro-clear Operator or CEDEL, as the case may be, or
(ii) in bearer form to the Common Depositary to be held for
the account of the Euro-clear Operator or CEDEL, as the case
may be, together with a written confirmation substantially
in form of Exhibit E hereto; provided, however, that no
Warrant Security in bearer form shall be mailed or otherwise
delivered to any location in the United States of America,
its territories or possessions or areas subject to its
jurisdiction or the Commonwealth of Puerto Rico.)

The Company shall not be required to pay any stamp
or other tax or other governmental charge required to be
paid in connection with any transfer involved in the
issuance of the Warrant Securities, and in the event that
any such transfer is involved, the Company shall not be
required to issue or deliver any Warrant Security until such
tax or other charge shall have been paid or it has been
established to the Company's satisfaction that no such tax
or other charge is due.

ARTICLE III

OTHER PROVISIONS RELATING TO RIGHTS OF
HOLDERS OF WARRANT CERTIFICATES

SECTION 3.01. No Rights as Warrant Securityholder
Conferred by Warrants or Warrant Certificates. No Warrant
Certificate or Warrant evidenced thereby shall entitle the
Holder or any beneficial owner thereof to any of the rights
of a holder or beneficial owner of Warrant Securities,
including, without limitation, the right to receive the
payment of principal of (premium, if any) or interest, if
any, on Warrant Securities or to enforce any of the
covenants in the Indenture.

SECTION 3.02. Lost, Mutilated, Stolen, or
Destroyed Warrant Certificates. Upon receipt by the Warrant
Agent of evidence reasonably satisfactory to it and the
Company of the ownership of and the loss, mutilation, theft
or destruction of any Warrant Certificate and of such
security or indemnity as may be required by the Company and
the Warrant Agent to hold each of them and any agent of them
harmless and, in the case of mutilation of a Warrant
Certificate, upon surrender thereof to the Warrant Agent for
cancellation, then, in the absence of notice to the Company
or the Warrant Agent that such Warrant Certificate has been
acquired by a bona fide purchaser, the Company shall
execute, and an authorized officer of the Warrant Agent
shall manually countersign and deliver, in exchange for or
in lieu of the lost, mutilated, stolen or destroyed Warrant
Certificate, a new Warrant Certificate of the same tenor and
evidencing a like number of Warrants(; provided, however,
that any Global Warrant Certificate shall be so delivered
only to the Common Depositary.) Upon the issuance of any
new Warrant Certificate under this Section, the Company may
require the payment of a sum sufficient to cover any stamp
or other tax or other governmental charge that may be
imposed in relation thereto and any other expenses
(including the fees and expenses of the Warrant Agent) in
connection therewith. Every substitute Warrant Certificate
executed and delivered pursuant to this Section in lieu of
any lost, mutilated, stolen or destroyed Warrant Certificate
shall represent an additional contractual obligation of the
Company, whether or not the lost, stolen or destroyed
Warrant Certificate shall be at any time enforceable by
anyone, and shall be entitled to the benefits of this
Agreement equally and proportionately with any and all other
Warrant Certificates duly executed and delivered 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 of lost, mutilated,
stolen or destroyed Warrant Certificates.

SECTION 3.03. Enforcement of Rights.
Notwithstanding any of the provisions of this Agreement, any
Holder of a Warrant Certificate (in registered form or the
beneficial owner of any Warrant evidenced by the Global
Warrant Certificate), without the consent of (the Common
Depositary,) the Warrant Agent, the Trustee, the holder of
any Offered Securities or the Holder of any other Warrant
Certificate, may, in its own behalf and for its own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or
otherwise in respect of, its right to exercise its Warrants
in the manner provided in its Warrant Certificate (or the
Global Warrant Certificate, as the case may be,) and in this
Agreement. (Neither the Company nor the Warrant Agent shall
be required to treat any person as a beneficial owner of any
Warrant evidenced by the Global Warrant Certificate unless
such person is so certified as such a beneficial owner by
the Euro-clear Operator or CEDEL.)

SECTION 3.04. Merger, Consolidation, Share
Exchange, Conveyance or Transfer. (a) If at any time there
shall be a merger or consolidation of the Company or a
statutory share exchange to which the Company is a party or
a conveyance or transfer of its property and assets
substantially as an entirety as permitted under the
Indenture, then in any such event the successor or assuming
corporation referred to therein shall succeed to and be
substituted for the Company, with the same effect, subject
to the Indenture, as if it had been named herein and in the
Warrant Certificates as the Company; the Company shall
thereupon, except in the case of a transfer by way of lease,
be relieved of any further obligation hereunder and under
the Warrants and the Warrant Certificates, and the Company
as the predecessor corporation, except in the case of a
transfer by way of lease, may thereupon or at any time
thereafter be dissolved, wound up or liquidated. Such
successor or assuming corporation may thereupon cause to be
signed, and may issue either in its own name or in the name
of the Company, Warrant Certificates evidencing any or all
of the Warrants issuable hereunder which theretofore shall
not have been signed by the Company, and may execute and
deliver Warrant Securities in its own name pursuant to the
Indenture, in fulfillment of its obligations to deliver
Warrant Securities upon exercise of the Warrants. All the
Warrants so issued shall in all respects have the same legal
rank and benefit under this Agreement as the Warrants
theretofore or thereafter issued in accordance with the
terms of this Agreement as though all of such Warrants had
been issued at the date of the execution hereof. In any
case of any such merger, consolidation, share exchange,
conveyance or transfer, such changes in phraseology and form
(but not in substance) may be made in the Warrant
Certificates representing the Warrants thereafter to be
issued as may be appropriate.

(b) The Warrant Agent may receive a written
opinion of legal counsel (who shall be acceptable to the
Warrant Agent) as conclusive evidence that any such merger,
consolidation, share exchange, conveyance or transfer
complies with the provisions of this Section and the
Indenture.

ARTICLE IV

EXCHANGE AND TRANSFER

SECTION 4.01. Exchange and Transfer. (a) (1:
Upon) (2: Prior to the Detachable Date, a Warrant
Certificate (in registered form) may be exchanged or
transferred only together with the Offered Security to which
such Warrant Certificate was initially attached, and only
for the purpose of effecting, or in conjunction with, an
exchange or transfer of such Offered Security. Prior to the
Detachable Date, the transfer of the beneficial ownership of
any Warrant evidenced by the Global Warrant Certificate
shall effect and shall be deemed to effect the transfer of
the beneficial ownership of any Offered Securities evidenced
by the Temporary Global Security that are attached to such
Warrants. Prior to any Detachable Date, each transfer of
the Offered Security (on the register maintained with
respect to the Offered Securities, in the case of an Offered
Security that is in registered form), shall operate also to
transfer the related Warrant Certificates. Similarly, prior
to the Detachable Date, the transfer of the beneficial
ownership of any Offered Security evidenced by the Temporary
Global Security shall be deemed to be the transfer of the
beneficial ownership of any Warrants evidenced by the Global
Warrant Certificate that are attached to such Offered
Securities. The transfer of the beneficial ownership of
Warrants and Warrant Securities hereunder shall be effected
only as provided in Section 4.01. On or after the
Detachable Date, upon) surrender at the corporate trust
office of the Warrant Agent at (address) (or ), Warrant
Certificates (in registered form) evidencing Warrants may be
exchanged for Warrant Certificates (in registered form) in
other authorized denominations evidencing such Warrants or
the transfer thereof may be registered in whole or in part;
provided, however, that such other Warrant Certificates
shall evidence the same aggregate number of Warrants as the
Warrant Certificates so surrendered.

(b) The Warrant Agent shall keep, at its
corporate trust office at (address) (and at ), books in
which, subject to such reasonable regulations as it may
prescribe, it shall register Warrant Certificates (in
registered form) and exchanges and transfers of outstanding
Warrant Certificates (in registered form) upon surrender of
such Warrant Certificates to the Warrant Agent at its
corporate trust office at (address) or ( ) for
exchange or registration of transfer, properly endorsed (or
accompanied by appropriate instruments of registration of
transfer and written instructions for transfer, all in form
satisfactory to the Company and the Warrant Agent.)

(c) No service charge shall be made for any
exchange or registration of transfer of Warrant Certificates
(in registered form), but the Company may require payment of
a sum sufficient to cover any stamp or other tax or other
governmental charge that may be imposed in connection with
any such exchange or registration of transfer.

(d) Whenever any Warrant Certificates (in
registered form), are so surrendered for exchange or
registration of transfer, an authorized officer of the
Warrant Agent shall manually countersign and deliver to the
person or persons entitled thereto a Warrant Certificate or
Warrant Certificates (in registered form) , duly authorized
and executed by the Company, as so requested. The Warrant
Agent shall not effect any exchange or registration of
transfer which will result in the issuance of a Warrant
Certificate (in registered form), evidencing a fraction of a
Warrant or a number of full Warrants and a fraction of a
Warrant.

(e) All Warrant Certificates (in registered
form), issued upon any exchange or registration of transfer
of Warrant Certificates shall be the valid obligations of
the Company, evidencing the same obligations, and entitled
to the same benefits under this Agreement, as the Warrant
Certificates surrendered for such exchange or registration
or transfer.

SECTION 4.02. Treatment of Holders of Warrant
Certificates. (With respect to the Global Warrant
Certificate, the Holder thereof may be treated by the
Company, the Warrant Agent and all other persons dealing
with such Holder as the absolute owner thereof for any
purpose and as the person entitled to exercise the rights
represented by the Warrants evidenced thereby, any notice to
the contrary notwithstanding.) (Each) (With respect to
Warrant Certificates in registered form, each) Holder of a
Warrant Certificate, by accepting the same, consents and
agrees with the Company, the Warrant Agent and every
subsequent Holder of such Warrant Certificate that until the
transfer of such Warrant Certificate is registered on the
books of such Warrant Agent (2: or, prior to the Detachable
Date, until the transfer of the Offered Security to which
such Warrant Certificate is attached, is registered in the
register of the Offered Securities), the Company and the
Warrant Agent may treat the registered Holder of such
Warrant Certificate as the absolute owner thereof for any
purpose and as the person entitled to exercise the rights
represented by the Warrants evidenced thereby, any notice to
the contrary notwithstanding.

SECTION 4.03. Cancellation of Warrant
Certificates. (a) Any Warrant Certificate surrendered for
exchange or registration of transfer or exercise of the
Warrants evidenced thereby shall, if surrendered to the
Company, be delivered to the Warrant Agent, and all Warrant
Certificates surrendered or so delivered to the Warrant
Agent shall be promptly cancelled by the Warrant Agent and
shall not be reissued and, except as expressly permitted by
this Agreement, no Warrant Certificate shall be issued
hereunder in exchange therefor or in lieu thereof. The
Warrant Agent shall cause all cancelled Warrant Certificates
to be destroyed and shall deliver a certificate of such
destruction to the Company.

(b) If the Company notifies the Trustee of its
election to redeem (2: prior to the Detachable Date) (, as a
whole but not in part,) (2: the Offered Securities (or)
(and) the Warrant Securities pursuant to the Indenture or
the terms thereof, the Company may elect, and shall give
notice to the Warrant Agent of its election, to cancel the
unexercised Warrants, the Warrant Certificates and the
rights evidenced thereby. Promptly after receipt of such
notice by the Warrant Agent, the Company shall, or, at the
Company's request, the Warrant Agent shall in the name of
and at the expense of the Company, give notice of such
cancellation to the Holders of the Warrant Certificates (in
registered form and to the beneficial owners of the Global
Warrant Certificate (except that such notice shall be
required to be published only once)), such notice to be so
given not less than 30 nor more than 60 days prior to the
date fixed for the redemption of (2: the Offered Securities
(or) (and)) the Warrant Securities pursuant to the Indenture
or the terms thereof. The unexercised Warrants, the Warrant
Certificates and the rights evidenced thereby shall be
cancelled and become void on the 15th day prior to such date
fixed for redemption.

ARTICLE V

CONCERNING THE WARRANT AGENT

SECTION 5.01. Warrant Agent. The Company hereby
appoints as Warrant Agent of the Company in respect of
the Warrants and the Warrant Certificates upon the terms and
subject to the conditions herein and in the Warrant
Certificates set forth; and hereby accepts such
appointment. The Warrant Agent shall have the powers and
authority granted to and conferred upon it in the Warrant
Certificates and herein and such further powers and
authority to act on behalf of the Company as the Company may
hereafter grant to or confer upon it. All of the terms and
provisions with respect to such powers and authority
contained in the Warrant Certificates are subject to and
governed by the terms and provisions hereof.

SECTION 5.02. Conditions of Warrant Agent's
Obligations. The Warrant Agent accepts its obligations
herein set forth upon the terms and conditions hereof,
including the following, to all of which the Company agrees
and to all of which the rights hereunder of the Holders from
time to time of the Warrant Certificates shall be subject:

(a) Compensation and Indemnification. The
Company agrees promptly to pay the Warrant Agent the
compensation to be agreed upon with the Company for all
services rendered by the Warrant Agent and to reimburse
the Warrant Agent for reasonable out-of-pocket expenses
(including reasonable attorneys' fees) incurred by the
Warrant Agent without negligence, bad faith or breach
of this Agreement on its part in connection with the
services rendered hereunder by the Warrant Agent. The
Company also agrees to indemnify the Warrant Agent for,
and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on the
part of the Warrant Agent, arising out of or in
connection with its acting as Warrant Agent hereunder,
as well as the reasonable costs and expenses of
defending against any claim of such liability.

(b) Agent for the Company. In acting under this
Agreement and in connection with the Warrants and the
Warrant Certificates, the Warrant Agent is acting
solely as agent of the Company and does not assume any
obligation or relationship of agency or trust for or
with any of the Holders of Warrant Certificates or
beneficial owners of Warrants.

(c) Counsel. The Warrant Agent may consult with
counsel satisfactory to it in its reasonable judgment,
and the advice of such 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 accordance with the advice of such
counsel.

(d) Documents. The Warrant Agent shall be
protected and shall incur no liability for or in
respect of any action taken or thing suffered by it in
reliance upon any Warrant Certificate, notice,
direction, consent, certificate, affidavit, statement
or other paper or document reasonably believed by it to
be genuine and to have been presented or signed by the
proper parties.

(e) Certain Transactions. The Warrant Agent, and
its officers, directors and employees, may become the
owner of, or acquire any interest in, Warrants, with
the same rights that it or they would have if it were
not the Warrant Agent hereunder, and, to the extent
permitted by applicable law, it or they may engage or
be interested in any financial or other transaction
with the Company and may act on, or as depositary,
trustee or agent for, any committee or body of holders
of Warrant Securities or other obligations of the
Company as freely as if it were not the Warrant Agent
hereunder. Nothing in this Warrant Agreement shall be
deemed to prevent the Warrant Agent from acting as
Trustee under the Indenture.

(f) No Liability for Interest. The Warrant Agent
shall have no liability for interest on any monies at
any time received by it pursuant to any of the
provisions of this Agreement or of the Warrant
Certificates.

(g) No Liability for Invalidity. The Warrant
Agent shall not be under any responsibility with
respect to the validity or sufficiency of this
Agreement or the execution and delivery hereof (except
the due authorization to execute this Agreement and the
due execution and delivery hereof by the Warrant Agent)
or with respect to the validity or execution of any
Warrant Certificates (except its countersignature
thereof).

(h) No Liability for Recitals. The recitals
contained herein shall be taken as the statements of
the Company and the Warrant Agent assumes no liability
for the correctness of the same.

(i) No Implied Obligations. The Warrant Agent
shall be obligated to perform only such duties as are
herein and in the Warrant Certificates specifically set
forth and no implied duties or obligations shall be
read into this Agreement or the Warrant Certificates
against the Warrant Agent. The Warrant Agent shall not
be under any obligation to take any action hereunder
which may tend to involve it in any expense or
liability, the payment of which within a reasonable
time is not, in its reasonable opinion, assured to it.
The Warrant Agent shall not be accountable or under any
duty or responsibility for the use by the Company of
any of the Warrant Certificates countersigned by the
Warrant Agent and delivered by it to the Company
pursuant to this Agreement or for the application by
the Company of the proceeds of the Warrant
Certificates. The Warrant Agent shall have no duty or
responsibility in case of any default by the Company in
the performance of its covenants or agreements
contained herein or in the Warrant Certificates or in
the case of the receipt of any written demand from a
Holder of a Warrant Certificate with respect to such
default, including, without limiting the generality of
the foregoing, any duty or responsibility to initiate
or attempt to initiate any proceedings at law or
otherwise or, except as provided in Section 6.02, to
make any demand upon the Company.

SECTION 5.03. Resignation and Appointment of
Successor. (a) The Company agrees, for the benefit of the
Holders from time to time of the Warrant Certificates, that
there shall at all times be a Warrant Agent hereunder until
all the Warrants have been exercised or are no longer
exercisable.

(b) The Warrant Agent may at any time resign as
such by giving written notice of its resignation to the
Company, specifying the desired date on which its
resignation shall become effective; provided, however, that
such date shall be not less than 90 days after the date on
which such notice is given unless the Company agrees to
accept shorter notice. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor
Warrant Agent (which shall be a bank or trust company in
good standing, authorized under the laws of the jurisdiction
of its organization to exercise corporate trust powers) by
written instrument in duplicate signed on behalf of the
Company, one copy of which shall be delivered to the
resigning Warrant Agent and one copy to the successor
Warrant Agent. The Company may, at any time and for any
reason, remove the Warrant Agent and appoint a successor
Warrant Agent (qualified as aforesaid) by written instrument
in duplicate signed on behalf of the Company and specifying
such removal and the date when it is intended to become
effective, one copy of which shall be delivered to the
Warrant Agent being removed and one copy to the successor
Warrant Agent. Any resignation or removal of the Warrant
Agent and any appointment of a successor Warrant Agent shall
become effective upon acceptance of appointment by the
successor Warrant Agent as provided in this subsection (b).
In the event a successor Warrant Agent has not been
appointed and accepted its duties within 90 days of the
Warrant Agent's notice of resignation, the Warrant Agent may
apply to any court of competent jurisdiction for the
designation of a successor Warrant Agent. Upon its
resignation or removal, the Warrant Agent shall be entitled
to the payment by the Company of the compensation and to the
reimbursement of all reasonable out-of-pocket expenses
(including reasonable attorneys' fees) incurred by it
hereunder as agreed to in Section 5.02(a).

(c) The Company shall remove the Warrant Agent
and appoint a successor Warrant Agent if the Warrant Agent
(i) shall become incapable of acting, (ii) shall be adjudged
bankrupt or insolvent, (iii) shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or
other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, (iv) shall consent to, or
shall have had entered against it a court order for, any
such relief or to the appointment of or taking possession by
any such official in any involuntary case or other
proceedings commenced against it, (v) shall make a general
assignment for the benefit of creditors or (vi) shall fail
generally to pay its debts as they become due. Upon the
appointment as aforesaid of a successor Warrant Agent and
acceptance by it of such appointment, the predecessor
Warrant Agent shall, if not previously disqualified by
operation of law, cease to be Warrant Agent hereunder.

(d) Any successor Warrant Agent appointed
hereunder shall execute, acknowledge and deliver to its
predecessor and the Company an instrument accepting such
appointment hereunder, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall
become vested with all the authority, rights, powers,
immunities, duties and obligations of such predecessor with
like effect as if originally named as Warrant Agent
hereunder, and such predecessor shall thereupon become
obligated to transfer, deliver and pay over, and such
successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or
held by such predecessor as Warrant Agent hereunder.

(e) Any corporation into which the Warrant Agent
hereunder may be merged or converted or any corporation with
which the Warrant Agent may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party,
or any corporation to which the Warrant Agent shall sell or
otherwise transfer all or substantially all the assets and
business of the Warrant Agent, provided that it shall be
qualified as aforesaid, shall be the successor Warrant Agent
under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto.

ARTICLE VI

MISCELLANEOUS

SECTION 6.01. Amendment. This Agreement and the
terms of the Warrants and the Warrant Certificates may be
amended by the parties hereto, without the consent of the
Holder of any Warrant Certificate or the beneficial owner of
any Warrant, for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective or
inconsistent provision contained herein or in the Warrant
Certificates, or making any other provisions with respect to
matters or questions arising under this Agreement as the
Company and the Warrant Agent may deem necessary or
desirable, provided that such action shall not affect
adversely the interests of the Holders of the Warrant
Certificates or the beneficial owners of Warrants in any
material respect.

SECTION 6.02. Notices and Demands to the Company
and Warrant Agent. If the Warrant Agent shall receive any
notice or demand addressed to the Company by the Holder of a
Warrant Certificate pursuant to the provisions of the
Warrant Certificates, the Warrant Agent shall promptly
forward such notice or demand to the Company.

SECTION 6.03. Addresses. Any communication from
the Company to the Warrant Agent with respect to this
Agreement shall be addressed to , Attention:
, and any communication from the Warrant Agent to the
Company with respect to this Agreement shall be addressed to
USF&G Corporation, 100 Light Street, Baltimore, Maryland
21202, Attention: Secretary (or such other address as shall
be specified in writing by the Warrant Agent or by the
Company).

SECTION 6.04. Applicable Law. The validity,
interpretation and performance of this Agreement and each
Warrant Certificate issued hereunder and of the respective
terms and provisions hereof and thereof shall be governed
by, and construed in accordance with, the laws of the State
of New York.

SECTION 6.05. Delivery of Prospectus. The
Company will furnish to the Warrant Agent sufficient copies
of a prospectus relating to the Warrant Securities
deliverable upon exercise of Warrants (the "Prospectus"),
and the Warrant Agent agrees that upon the exercise of any
Warrant, the Warrant Agent will deliver to the Holder of the
Warrant Certificate evidencing such Warrant, prior to or
concurrently with the delivery of the Warrant Securities
issued upon such exercise, a Prospectus. The Warrant Agent
shall not, by reason of any such delivery, assume any
responsibility for the accuracy or adequacy of such
Prospectus.

SECTION 6.06. Obtaining of Governmental Approval.
The Company will from time to time take all action which may
be necessary to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and
authorities and securities acts filings under United States
federal and state laws (including without limitation a
registration statement in respect of the Warrants and
Warrant Securities under the Securities Act of 1933), which
may be or become requisite in connection with the issuance,
sale, transfer and delivery of the Warrant Certificates, the
exercise of the Warrants, the issuance, sale, transfer and
delivery of the Warrant Securities issued upon exercise of
the Warrants or upon the expiration of the period during
which the Warrants are exercisable.

SECTION 6.07. Persons Having Rights Under Warrant
Agreement. (Except as otherwise provided in Section 3.03,
nothing) (Nothing) in this Agreement shall give to any
person other than the Company, the Warrant Agent and the
Holders of the Warrant Certificates any right, remedy or
claim under or by reason of this Agreement.

SECTION 6.08. Headings. The descriptive headings
of the several Articles and Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions
hereof.

SECTION 6.09. Counterparts. This Agreement may
be executed in any number of counterparts, each of which as
so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same
instrument.

SECTION 6.10. Inspection of Agreement. A copy of
this Agreement shall be available at all reasonable times at
the principal corporate trust office of the Warrant Agent
for inspection by the Holder of any Warrant Certificate.
The Warrant Agent may require such Holder to submit his
Warrant Certificate for inspection by it.

SECTION 6.11. Notices to Holders of Warrants.
Any notice to Holders of Warrants evidenced by Warrant
Certificates (in registered form) which by any provisions of
this Warrant Agreement is required or permitted to be given
shall be given by first class mail prepaid at such Holder's
address as it appears on the books of the Warrant Agent.
(Any notice to beneficial owners of Warrants evidenced by
the Global Warrant Certificate which by any provisions of
this Warrant Agreement is required or permitted to be given
shall be given in the manner provided with respect to
Warrant Securities in bearer form in Section ____ of the
Indenture).

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

USF&G CORPORATION

By________________________
(SEAL) Name:
Title:

Attest:

_______________________
Name:
Title:

(WARRANT AGENT)

By________________________
(SEAL) Name:
Title:

Attest:

_______________________
Name:
Title:

Exhibit A
---------

FORM OF WARRANT CERTIFICATE (IN REGISTERED FORM)
(Face of Warrant Certificate)

((1: This) (2: Prior to this) Warrant
Certificate cannot be transferred unless attached
to a (Title of Offered Securities).)

EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN

USF&G CORPORATION
WARRANTS TO PURCHASE
(Title of Warrant Securities)

VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON , 19

No. __________ __________ Warrants

This certifies that or
registered assigns (the "Registered Holder") is the
registered owner of the above indicated number of Warrants,
each Warrant entitling such owner to purchase, at any time
(after 5:00 P.M., New York City time, on , 19 ,
and) on or before 5:00 P.M., New York City time, on ,
19 , principal amount of (Title of Warrant
Securities) (the "Warrant Securities") of USF&G Corporation
(the "Company") issued and to be issued under the Indenture
(as hereinafter defined), on the following basis: (on
, 19 the exercise price of each Warrant will be
; during the period from , 19 through
and including , 19 , the exercise price of each
Warrant will be plus (accrued amortization of the
original issue discount) (accrued interest) from ,
19 (; in each case, the original issue discount will be
amortized at a annual rate, computed on an annual basis
using the "interest" method and using a 360-day year consist-
ing of twelve 30-day months) (the "Warrant Price"). (The
original issue discount for each principal amount of Warrant
Securities is .) the Registered Holder may exercise
the Warrants evidenced hereby by providing certain informa-
tion set forth on the back hereof and by paying in full, (in
lawful money of the United States of America) (in applicable
currency) (in cash) (by certified check or official bank
check or by bank wire transfer, in each case,) (by bank wire
transfer) (in immediately available funds,) the Warrant Price
for each Warrant exercised (plus accrued interest, if any, on
the Warrant Securities to be issued upon exercise of such
Warrant from and including the Interest Payment Date (as
defined in the Indenture), if any, in respect of such Warrant
Securities immediately preceding the Exercise Date to and
including the Exercise Date (unless the Exercise Date is
after the Regular Record Date (as defined in the Indenture),
if any, for such Interest Payment Date, but on or before the
immediately succeeding Interest Payment Date for such Warrant
Securities, in which event no such accrued interest shall be
payable)) to the Warrant Agent (as hereinafter defined) and
by surrendering this Warrant Certificate, with the form of
election to purchase on the reverse hereof completed and duly
executed, at the corporate trust office of (name of Warrant
Agent), or its successor, as warrant agent (the "Warrant
Agent"), (or ) currently at the address specified on the
reverse hereof, and upon compliance with and subject to the
conditions set forth herein and in the Warrant Agreement (as
hereinafter defined).

Any whole number of Warrants evidenced by this
Warrant Certificate may be exercised to purchase Warrant
Securities in fully registered form in denominations of
and any integral multiples thereof. Upon any exercise
of fewer than all of the Warrants evidenced by this Warrant
Certificate, there shall be issued to the Registered Holder
hereof a new Warrant Certificate in registered form evidenc-
ing the number of Warrants remaining unexercised.

This Warrant Certificate is issued under and in
accordance with the Warrant Agreement dated as of ,
19 (the "Warrant Agreement") between the Company and the
Warrant Agent and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and
provisions the Registered Holder consents by acceptance
hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent (and at ).

The Warrant Securities to be issued and delivered
upon the exercise of the Warrants evidenced by this Warrant
Certificate will be issued under and in accordance with an
Indenture dated as of , 19 (the "Indenture")
-------- --
between the Company and , as Trustee (the
----------------
"Trustee"), and will be subject to the terms and provisions
contained in the Indenture. Copies of the Indenture and the
form of the Warrant Securities are on file at the corporate
trust office of the Trustee (and at ).

(1: This) (2: Prior to , 19 this)
Warrant Certificate may be transferred (2: only together with
the (Title of Offered Securities) (the "Offered Securities")
to which this Warrant Certificate was initially attached, and
only for the purpose of effecting, or in conjunction with, a
transfer of such Offered Securities,) at the corporate trust
office of the Warrant Agent (or ) by the Registered
Holder or its assigns, in person or by an attorney duly
authorized in writing, in the manner and subject to the
limitations provided in the Warrant Agreement.

(1: After) (2: Except as otherwise provided in
the immediately preceding paragraph, after) countersignature
by the Warrant Agent and prior to the expiration of this
Warrant Certificate, this Warrant Certificate may be
exchanged at the corporate trust office of the Warrant Agent
(or ) for Warrant Certificates in registered form repre-
senting the same aggregate number of Warrants.

This Warrant Certificate shall not entitle the
Registered Holder hereof to any of the rights of a holder of
the Warrant Securities, including, without limitation, the
right to receive payments of principal of (premium, if any)
or interest, if any, on the Warrant Securities or to enforce
any of the covenants of the Indenture.

This Warrant Certificate shall not be valid or
obligatory for any purpose until countersigned by the Warrant
Agent.

Dated as of , 19 .

USF&G CORPORATION
(SEAL)

By
-----------------------------

Attest:

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

Countersigned:

- ----------------------------
As Warrant Agent

By
--------------------------
Authorized Signature

(Reverse of Warrant Certificate)
Instructions for Exercise of Warrant

To exercise the Warrants evidenced hereby, the
Registered Holder must pay in full (in lawful money of the
United States of America) (in applicable currency) (in cash)
(by certified check or official bank check or by bank wire
transfer, in each case,) (by bank wire transfer) (in
immediately available funds,) the Warrant Price for Warrants
exercised (plus any accrued interest as specified in this
Warrant Certificate) to (insert name of Warrant Agent) (cor-
porate trust department) (insert address of Warrant Agent),
Attn: (or ), which (payment) (wire transfer)
must specify the name of the Registered Holder and the number
of Warrants exercised by such Registered Holder. In addi-
tion, the Registered Holder must complete the information
required below and present this Warrant Certificate in person
or by mail (certified or registered mail is recommended) to
the Warrant Agent at the appropriate address set forth below.
This Warrant Certificate, completed and duly executed, must
be received by the Warrant Agent within five business days of
the (payment) (wire transfer).

To be Executed Upon Exercise of Warrant

The undersigned hereby irrevocably elects to exer-
cise Warrants, evidenced by this Warrant Certificate,
-----
to purchase principal amount of the (Title of Warrant
-----
Securities) (the "Warrant Securities") of USF&G Corporation
and represents that he has tendered payment for such Warrant
Securities (in lawful money of the United States of America)
(in applicable currency) (in cash) (by certified check or
official bank check or by bank wire transfer, in each case,)
(by bank wire transfer) (in immediately available funds) to
the order of USF&G Corporation, c/o (insert name and address
of Warrant Agent), in the amount of in accordance
-------
with the terms hereof. The undersigned requests that said
principal amount of Warrant Securities be in registered form
in the authorized denominations, registered in such names and
delivered all as specified in accordance with the instruc-
tions set forth below.

If the number of Warrants exercised is fewer than
all of the Warrants evidenced hereby, the undersigned
requests that a new Warrant Certificate representing the
remaining Warrants evidenced hereby be issued in registered
form and delivered either to the undersigned or as otherwise
specified in the instructions below.

Dated Name
------------ --------------------------
(Please Print)

Address
- ------------------ -----------------------
(Insert Social Security
or Other Identifying
-----------------------
Number of Holder)
Signature
---------------------

The Warrants evidenced hereby may be exercised at
the following addresses:

By hand at
---------------------------------

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

By mail at
---------------------------------

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

(Instructions as to delivery of Warrant Securities
and, if applicable, Warrant Certificates evidencing unexer-
cised Warrants - complete as appropriate.)

Assignment

(Form of Assignment to be Executed if Holder Desires
to Transfer Warrants Evidenced Hereby)

FOR VALUE RECEIVED hereby sells, assigns
and transfers unto

Please insert social security
or other identifying number
-----------------------------

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

- ------------------------------------------------------------
(Please print name and address including zip code)

- ------------------------------------------------------------
the Warrants represented by the within Warrant Certificate
and does hereby irrevocably constitute and appoint
Attorney, to transfer said Warrant Certifi-
- ---------------
cate on the books of the Warrant Agent with full power of
substitution in the premises.

Dated:
-------------------------------
Signature
(Signature must conform in all
respects to name of Registered
Holder as specified on the face
of this Warrant Certificate and
must bear a signature guarantee
by a bank, trust company or
member broker of the New York,
Midwest or Pacific Stock
Exchange).

Signature Guaranteed

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

Exhibit B
---------

(DELETE THIS EXHIBIT IF WARRANT CERTIFICATES
IN ONLY REGISTERED FORM ARE TO BE ISSUED)

(FORM OF GLOBAL WARRANT CERTIFICATE IN BEARER FORM)
(Face of Global Warrant Certificate)

((1: The) (2: Prior to , the) beneficial
ownership of any Warrants evidenced by this
Global Warrant Certificate may be transferred
only together with the beneficial ownership
of the Temporary Global Security referred to herein
to which this Global Warrant Certificate was
initially attached.)

EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN

USF&G CORPORATION

GLOBAL WARRANT CERTIFICATE REPRESENTING
----------
WARRANTS TO PURCHASE OF UP TO
----------
PRINCIPAL AMOUNT OF (Title of Warrant Securities)

VOID AFTER (TIME), ON , 19 .

This Global Warrant Certificate evidences warrants
(the "Warrants") representing the right to purchase, subject
to the terms and conditions hereof and of the Debt Warrant
Agreement referred to below, at any time (after (time) on
, 19 , and) on or before the (time) in (location)
on , 19 , up to aggregate principal amount of
(Title of Warrant Securities) (the "Warrant Securities") of
USF&G Corporation (the "Company") issued and to be issued
under the Indenture (as hereinafter defined), on the follow-
ing basis: on , 19 the exercise price of each
Warrant will be ; during the period from , 19
through and including , 19 , the exercise
price of each Warrant will be plus (accrued amortization
of the original issue discount) (accrued interest) from
, 19 ; on , 19 the exercise price of
each Warrant will be ; during the period from
, 19 through and including , 19 ,
the exercise price of each Warrant will be plus
(accrued amortization of the original issue discount)
(accrued interest) from , 19 (; in each case,
the original issue discount will be amortized at a % annual
rate, computed on an annual basis using the "interest" method
and using a 360-day year consisting of twelve 30-day months)
(the "Warrant Price"). (The original issue discount of each
principal amount of Warrant Securities is .)
Beneficial owners of Warrants represented by this Global
Warrant Certificate may cause such Warrants to be exercised
only by transmitting by tested telex or by delivering or
causing to be delivered to Morgan Guaranty Trust Company of
New York, Brussels office (or any successor), as operator of
the Euro-clear System (the "Euro-clear Operator"), in Brus-
sels, Belgium, or to Centrale de Livraison de Valeurs
Mobilieres S.A. ("CEDEL") in Luxembourg, a warrant exercise
notice, substantially in the form attached as Exhibit D to
the Debt Warrant Agreement referred to below (the "Warrant
Exercise Notice"), copies of which will be available from the
Euro-clear Operator or CEDEL or from (name or Warrant Agent),
or its successor as warrant agent (the "Warrant Agent") under
the Debt Warrant Agreement (the "Debt Warrant Agreement")
dated as of , 19 between the Company and the
Warrant Agent. The Warrant Exercise Notice shall specify,
among other things, the aggregate principal amount of Warrant
Securities to be purchased on exercise of the Warrants, the
account number or numbers on the records of the Euro-clear
Operator or CEDEL to which the Warrants being exercised (2:
and, if prior to , 19 , the Offered Securities
(as defined below)) to which such Warrants are attached are
credited, the account number to be debited for the Warrant
Price of each Warrant being exercised (plus accrued interest,
if any, on the Warrant Securities to be issued upon exercise
of such Warrant from and including the Interest Payment Date
(as defined in the Indenture), if any, in respect of such
Warrant Securities immediately preceding the Exercise Date to
and including the Exercise Date (unless the Exercise Date is
after the Regular Record Date (as defined in the Indenture),
if any, for such Interest Payment Date, but on or before the
immediately succeeding Interest Payment Date for such Warrant
Securities, in which event no such accrued interest shall be
payable in respect of Warrant Securities to be issued in
registered form)), the account number to which the Warrant
Securities issued on exercise of the Warrants are to be
credited and the form in which Warrant Securities are to be
issued. A Warrant Exercise Notice must be received by the
Euro-clear Operator or CEDEL prior to (time) (Brussels or
Luxembourg time, as the case may be) on the business day next
preceding the Exercise Date (as defined in such Warrant
Exercise Notice). The delivery to the Euro-clear Operator or
CEDEL, as the case may be, of a Warrant Exercise Notice shall
constitute an irrevocable election to purchase the aggregate
principal amount of Warrant Securities specified therein.

Any whole number of Warrants evidenced by this
Global Warrant Certificate may be exercised to purchase
Warrant Securities in bearer or registered form in denomina-
tions of ( or ), in the case of Warrant Securities
in bearer form, and of and any integral multiple
thereof, in the case of Warrant Securities in registered
form; provided, however, that no Warrant Security in bearer
form shall be mailed or otherwise delivered to any location
in the United States of America, its territories or posses-
sions or areas subject to its jurisdiction or the Common-
wealth of Puerto Rico (the "United States").

The Warrants evidenced by this Global Warrant
Certificate, this Global Warrant Certificate and the rights
evidenced hereby may be cancelled in the manner and under the
circumstances described in the Debt Warrant Agreement.
Notice of cancellation of the Warrants evidenced by this
Global Warrant Certificate, this Global Warrant Certificate
and the rights evidenced hereby shall be given by publication
in the manner described in the Debt Warrant Agreement.

This Global Warrant Certificate is issued under and
in accordance with the Debt Warrant Agreement between the
Company and the Warrant Agent and is subject to the terms and
provisions contained in the Debt Warrant Agreement, to all of
which terms and provisions the holder hereof consents by
acceptance hereof. Copies of the Debt Warrant Agreement are
on file at the above-mentioned office of the Warrant Agent
(and at ).

The Warrant Securities to be issued and delivered
upon the exercise of the Warrants evidenced by this Global
Warrant Certificate will be issued under and in accordance
with an Indenture dated as of ___________ 19__ (the "Inden-
ture") between the Company and __________________, as Trustee
(the "Trustee"), and will be subject to the terms and provi-
sions contained in the Indenture. Copies of the Indenture
and the form of the Warrant Securities are on file at the
corporate trust office of the Trustee (and at ).

(1: The) (2: Prior to , 19 the)
beneficial ownership of any Warrants evidenced by this Global
Warrant Certificate may be transferred only together with the
beneficial ownership of the Temporary Global Security (as
defined in the Debt Warrant Agreement) evidencing the (Title
of Offered Securities) (the "Offered Securities") to which
this Global Warrant Certificate was initially attached, and
only for the purpose of effecting, or in conjunction with, a
transfer of such Temporary Global Security. After such date,
the Global Warrant Certificate, and all rights hereunder, may
be transferred by delivery, and the Company and the Warrant
Agent may treat the holder hereof as the owner for all pur-
poses.

This Global Warrant Certificate shall not entitle
the Holder hereof to any of the rights of a holder of the
Warrant Securities, including, without limitation, the right
to receive payments of principal of, premium, if any, or
interest, if any, on the Warrant Securities or to enforce any
of the covenants of the Indenture.

This Global Warrant Certificate shall not be valid
or obligatory for any purpose until countersigned by the
Warrant Agent.

Dated as of , 19 .

USF&G CORPORATION

By_____________________________

Attest:

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

Countersigned:

- ----------------------------
As Warrant Agent

By
--------------------------
Authorized Signature

Schedule A
----------

(additional continuation sheets may be attached
if required)

Exercises of Warrants

The following exercises of a portion of this Global Warrant
Certificate or Warrant Securities have been made:

Number of Warrants Remaining Number of
Date of Exercised for Warrants Following Notation
Exercise Warrant Securities such Exercise Made By:
- -------- ------------------ ------------------- --------

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

Exhibit C
---------

(DELETE THIS EXHIBIT IF WARRANT CERTIFICATES
IN ONLY REGISTERED FORM ARE TO BE ISSUED)

(FORM OF CERTIFICATE TO BE DELIVERED TO WARRANT AGENT
BY THE EURO-CLEAR OPERATOR OR CEDEL)

USF&G CORPORATION
Warrants (the "Warrants") to Purchase
(Title of Warrant Securities)

(Name of Warrant Agent)
(Address)

Dear Sirs:

The undersigned hereby irrevocably elects to exer-
cise __________ Warrants to purchase as of ,
(the "Exercise Date") _____ principal amount of the (title of
Warrant Securities) (the "Warrant Securities") of USF&G
Corporation and represents that it has tendered payment for
such Warrant Securities (in lawful money of the United States
of America) (in applicable currency) (in cash) (by certified
check or official bank check or by bank wire transfer, in
each case,) (by bank wire transfer) (in immediately available
funds) to the order of USF&G Corporation, c/o (insert name
and address of Warrant Agent), in the amount of _____ in
accordance with the terms hereof and the Debt Warrant Agree-
ment dated as of , 19 between USF&G Corporation
and you (the "Debt Warrant Agreement").

In connection with the Undersigned's request that
you deliver to us any Warrant Securities in bearer form, the
undersigned hereby certifies that as of the date hereof the
Warrant Securities in bearer form which are to be delivered
to the Common Depositary referred to below for our account
are not being acquired, directly or indirectly, by or on
behalf of a United States person (as defined below) or for
offer to resell or for resale to a United States person or
any person inside the United States (as defined below) or, if
a beneficial interest in any such Warrant Securities is being
acquired by or on behalf of a United States person, that such
United States person is either a financial institution within
the meaning of Section 1.165-12(c)(1)(v) of the United States
Treasury regulations or is acquiring through such a financial
institution and that such Warrant Securities are held by a
financial institution that has agreed to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, as amended, and the regula-
tions thereunder and that is not purchasing for offer to
resell or for resale inside the United States.

As a clearing organization within the meaning of
Section 1.163-5(c)(2)(i)(B)(4) of the regulations promulgated
under the Internal Revenue Code of 1986, as amended, the
undersigned further certifies that (a) the above certifica-
tion is based solely on statements received from member
organizations appearing in our records (our "Account
Holders") in certificates in the form set forth in Exhibit D
to the Debt Warrant Agreement and (b) as of the date hereof
we have not received any notification from any of our Account
Holders to the effect that the statements made by such
Account Holders in such certificates are no longer true.

"United States person" means any citizen, national
or resident of the United States, any corporation, partner-
ship or other entity created or organized in or under the
laws of the United States or any political subdivision
thereof, or any estate or trust the income of which is sub-
ject to United States federal income taxation regardless of
its source. "United States" means the United States of
America, its territories and possessions and areas subject to
its jurisdiction and the Commonwealth of Puerto Rico.

We hereby undertake to notify you immediately by
telex if any of the statements of our Account Holders
referred to above is not correct at any time on or before the
Warrant Securities in bearer form are delivered. We further
agree to cause a confirmation substantially in the form of
Exhibit E to the Debt Warrant Agreement and a copy of the
prospectus relating to the Warrant Securities delivered to us
as contemplated by Section 6.05 of the Debt Warrant Agreement
to be delivered to our Account Holders entitled to such
Warrant Securities prior to or contemporaneously with our
transfer of such Warrant Securities to or to the account of
such Account Holders.

We understand that this certificate is required in
connection with United States laws, tax laws and regulations.
We irrevocably authorize you to produce this Certificate or a
copy hereof to any interested party in any administrative or
legal proceedings with respect to the matters covered by this
Certificate.

The undersigned requests that said principal amount
of Warrant Securities be (in registered form in the
authorized denominations, registered in such names and
delivered all as specified in accordance with the instruc-
tions set forth below) (bearer form in the authorized
denominations and delivered to , as Common
Depositary under the Debt Warrant Agreement, to be held for
our account)* (Instructions as to delivery of Warrant
Securities to be issued in registered form).

Dated: , 19
-------------- --

Very truly yours,

(MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, Brussels Office,
as operator of the Euro-clear
System)*

By_____________________________
Title:

(CENTRALE DE LIVRAISONS
DE VALEURS MOBILIERES S.A.)*

By_____________________________
Title:

- ---------
* Delete inapplicable reference.

Exhibit D
---------

(DELETE THIS EXHIBIT IF WARRANT CERTIFICATES
IN ONLY REGISTERED FORM ARE TO BE ISSUED)

(FORM OF WARRANT EXERCISE NOTICE)

Morgan Guaranty Trust Company
of New York, Brussels Office,
as operator of the Euro-clear
System (the "Euro-clear Operator")*(Address)

Centrale de Livraison de Valeurs
Mobilieres S.A.*
(Address)

USF&G CORPORATION

WARRANTS (THE "WARRANTS") TO PURCHASE
(Title of Warrant Securities)
(the "Warrant Securities")

Dear Sirs:

We hereby irrevocably elect to exercise __________
Warrants to purchase _________ (being _______________ or an
integral multiple thereof) aggregate principal amount of
Warrant Securities of USF&G Corporation (the "Company") on
____________, 19___ (the "Exercise Date"). The account
number(s) on your books in which the Warrants being exercised
(and the (Title of Offered Securities) to which such Warrants
are attached)** are held is (are) ________________________.
The Warrant Securities to be issued to us on exercise of the
Warrants are to be credited to such account, unless otherwise
indicated below and shall be in (registered) (bearer)* form
in the following authorized denominations:
_______________________.

- ---------
* Delete inapplicable reference.

** Delete if dated on or after , 19 .

We hereby request that you complete a certification
in the form required by the Debt Warrant Agreement
hereinafter referred to and make payment directly to
( ), as Warrant Agent (the "Warrant Agent", which
term shall include its successors as such Warrant Agent),
under the Debt Warrant Agreement dated as of (
) between the Company and the Warrant Agent (the "Debt Warrant
Agreement") at or prior to (time) on the Exercise Date, or if
the Exercise Date is the last day on which Warrants may be
exercised under the Debt Warrant Agreement, prior to (time)
in (location) on the Exercise Date, (in lawful money of the
United States of America) (in applicable currency) (in cash)
(by certified check or official bank check or by bank wire
transfer, in each case,)(by bank wire transfer) (in
immediately available funds) of ____________, such amount
being the Warrant Price (as defined in the Global Warrant
Certificate representing the Warrants, as provided in Section
1.02 of the Debt Warrant Agreement) for Warrants exercised
(plus any accrued interest as specified in such Global War-
rant Certificate) on the Exercise Date, and debit account
number ___________ for said amount.

The undersigned hereby certifies that as of the
date hereof, the Warrant Securities which are to be delivered
in bearer form are not being acquired, directly or
indirectly, by or on behalf of a United States person or for
offer to resell or for resale to a United States person or
any person inside the United States (as defined below) or, if
a beneficial interest in such Warrant Securities is being
acquired by or on behalf of a United States person, that such
United States person is either a financial institution within
the meaning of Section 1.165-12(c)(1)(v) of the United States
Treasury regulations or is acquiring such beneficial interest
through such financial institution and that such beneficial
interest is held by a financial institution which agrees to
comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder and which is not purchasing for offer
to resell or for resale inside the United States. If the
undersigned is a dealer, the undersigned agrees to obtain a
similar certificate from each person entitled to delivery of
any Warrant Securities in bearer form purchased from it;
provided, however, that if the undersigned has actual
knowledge that the information contained in such a certifi-
cate is false, the undersigned will not deliver a Warrant
Security in temporary or definitive bearer form to the person
who signed such certificate notwithstanding the delivery of
such certificate to the undersigned. The undersigned will be
deemed to have actual knowledge if, inter alia, the under-
signed has a United States address for the beneficial owner
of such Warrant Security (other than a financial institution
as defined in Section 1.165-12(c)(1)(v) that represents that
it will comply with the requirements of Section 165(j)(3)(A),
(B) or (C) of the Internal Revenue Code of 1986, as amended,
and the regulations thereunder), unless the undersigned has
documentary evidence (as described in A-5 of Section
35a.9999-4T of the regulations promulgated under the Internal
Revenue Code of 1986, as amended) that the beneficial owner
of such Warrant Security is not a United States person. If
this certificate is being provided by a clearing organiza-
tion, it is based on statements provided to it by its member
organizations. As used herein, a "clearing organization" is
an entity which is in the business of holding obligations for
member organizations and transferring obligations among such
members by credit or debit to the account of a member without
the necessity of physical delivery of the obligation.

We undertake to advise you immediately by telex if
the foregoing statement as to beneficial ownership is not
correct on or before the date of delivery of such Warrant
Securities as to the entire principal amount of the Warrant
Securities to be issuable upon exercise (then appearing on
your books as being held for our account).

We understand that this certificate is required in
connection with certain tax regulations in the United States.
If administrative or legal proceedings are commenced or
threatened in connection with which this certificate is or
would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in
such proceedings. "United States person" means any citizen,
national or resident of the United States or any political
subdivision thereof, any corporation, partnership or other
entity created or organized in or under laws of the United
States, or any estate or trust the income of which is subject
to United States federal income taxation regardless of its
source. "United States" means the United States of America,
its territories and possessions and areas subject to its
jurisdiction and the Commonwealth of Puerto Rico.

Dated: ____________, 19__

Very truly yours,

(Name and, if appropriate, title)
As the beneficial owner(s) of
the interest in the Warrants to
which this Warrant Exercise Notice
relates.

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

Exhibit E
---------

(DELETE THIS EXHIBIT IF WARRANT CERTIFICATES
IN ONLY REGISTERED FORM ARE TO BE ISSUED)

(FORM OF CONFIRMATION TO BE DELIVERED
TO PURCHASERS OF WARRANT SECURITIES
IN BEARER FORM)

USF&G CORPORATION
(Title of Warrant Securities)
(the "Warrant Securities")

By your purchase of Warrant Securities in bearer
form you represent that you are not a United States person
or, if you are a United States person, that you are a finan-
cial institution as defined in Section 1.165-12(c)(1)(v) of
the Treasury Department regulations, purchasing for your own
account or for the account of a customer and that you will
comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the Internal Revenue Code of 1986, as amended from
time to time, and the regulations thereunder. Furthermore,
if you are a dealer, you agree that you will deliver a con-
firmation containing this entire paragraph to purchasers of
such Securities from you. For purposes of this statement,
"United States person" means any citizen, national or resi-
dent of the United States, any corporation, partnership or
other entity created or organized in or under the laws of the
United States or any political subdivision thereof or any
estate or trust the income of which is subject to United
States federal income taxation regardless of its source, and
"United States" means the United States of America, its
territories and possessions and areas subject to its juris-
diction and the Commonwealth of Puerto Rico.

USF&G CORPORATION,

( ), As Depositary

AND

THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN

DEPOSIT AGREEMENT

Dated as of ( )

TABLE OF CONTENTS

Page

ARTICLE I

Definitions .............................................1

ARTICLE II

Form of Receipts, Deposit of Stock,
Execution and Delivery, Transfer
Surrender and Redemption of Receipts

SECTION 2.01. Form and Transfer of Receipts............2
SECTION 2.02. Deposit of Stock; Execution and
Delivery of Receipts in Respect
Thereof................................4
SECTION 2.03. Registration of Transfer of Receipts.....5
SECTION 2.04. Split-ups and Combinations of Receipts;
Surrender of Receipts and Withdrawal
of Stock...............................5
SECTION 2.05. Limitations on Execution and Delivery,
Transfer, Surrender and Exchange
of Receipts............................6
SECTION 2.06. Lost Receipts, etc.......................7
SECTION 2.07. Cancellation and Destruction of
Surrendered Receipts...................7
SECTION 2.08. Redemption of Stock......................7

ARTICLE III

Certain Obligations of
Holders of Receipts and the Company

SECTION 3.01. Filing Proofs, Certificates and
Other Information......................9
SECTION 3.02. Payment of Taxes or Other Governmental
Charges................................9
SECTION 3.03. Warranty as to Stock.....................10

ARTICLE IV

The Deposited Securities; Notices

SECTION 4.01. Cash Distributions.......................10
SECTION 4.02. Distributions Other than Cash, Rights,
Preferences or Privileges..............10

Page

SECTION 4.03. Subscription Rights, Preferences or
Privileges.............................11
SECTION 4.04. Notice of Dividends, etc.; Fixing Record
Date for Holders of Receipts...........12
SECTION 4.05. Voting Rights............................12
SECTION 4.06. Changes Affecting Deposited
Securities and Reclassifications,
Recapitalizations, etc.................13
SECTION 4.07. Delivery of Reports......................14
SECTION 4.08. Lists of Receipt Holders.................14

ARTICLE V

The Depositary, the Depositary's
Agents, the Registrar and the Company

SECTION 5.01. Maintenance of Offices, Agencies and
Transfer Books by the Depositary;
Registrar..............................14
SECTION 5.02. Prevention of or Delay in Performance
by the Depositary, the Depositary's
Agents, the Registrar or the Company...15
SECTION 5.03. Obligation of the Depositary, the
Depositary's Agents, the Registrar
and the Company........................16
SECTION 5.04. Resignation and Removal of the
Depositary; Appointment of Successor
Depositary.............................18
SECTION 5.05. Corporate Notices and Reports............19
SECTION 5.06. Indemnification by the Company...........19
SECTION 5.07. Charges and Expenses.....................19
SECTION 5.08. Tax Compliance...........................20

ARTICLE VI

Amendment and Termination

SECTION 6.01. Amendment................................20
SECTION 6.02. Termination..............................21

ARTICLE VII

Miscellaneous

SECTION 7.01. Counterparts.............................22
SECTION 7.02. Exclusive Benefit of Parties.............22
SECTION 7.03. Invalidity of Provisions.................22
SECTION 7.04. Notices..................................22
SECTION 7.05. Appointment of Registrar.................23
SECTION 7.06. Holders of Receipts are Parties..........23
SECTION 7.07. Governing Law............................23

SECTION 7.08. Inspection of Deposit Agreement..........23
SECTION 7.09. Headings.................................24

Form of Depositary Shares

Form of Face of Receipt..................................A-1
Form of Reverse of Receipt...............................A-3

DEPOSIT AGREEMENT, dated as of ( ) among
USF&G CORPORATION, a Maryland corporation, (the "Company"), (

), a ( ) (the

"Depositary"), and the holders from time to time of the
Receipts described herein.

WHEREAS, it is desired to provide, as hereinafter set
forth in this Deposit Agreement, for the deposit of shares of (

% Preferred Stock) of the Company with the Depositary
for the purposes set forth in this Deposit Agreement and for
the issuance hereunder of Receipts evidencing Depositary Shares
in respect of the Stock so deposited; and

WHEREAS, the Receipts are to be substantially in the
form of Exhibit A annexed hereto, with appropriate insertions,
modifications and omissions, as hereinafter provided in this
Deposit Agreement;

NOW, THEREFORE, in consideration of the promises
contained herein, the parties hereto agree as follows:

ARTICLE I

Definitions

The following definitions shall, for all purposes,
unless otherwise indicated, apply to the respective terms used
in this Deposit Agreement:

"Articles" shall mean the Articles Supplementary of the Company
filed with the Maryland Department of Assessments and Taxation establishing
the Stock as a series of preferred stock of the Company.

"Deposit Agreement" shall mean this Deposit Agreement,
as amended or supplemented from time to time.

"Depositary" shall mean (
)
, and any successor as Depositary hereunder.

"Depositary Shares" shall mean Depositary Shares, each
representing ( ) of a share of Stock and evidenced by a
Receipt.

"Depositary's Agent" shall mean an agent appointed by
the Depositary pursuant to Section 5.01 and shall include the
Registrar if such Registrar is not the Depositary.

"Depositary's Office" shall mean the principal office
of the Depositary, at which at any particular time its
depositary receipt business shall be administered.

"Receipt" shall mean one of the Depositary Receipts,
substantially in the form set forth as Exhibit A hereto, issued
hereunder, whether in definitive or temporary form and
evidencing the number of Depositary Shares held of record by
the record holder of such Depositary Shares.

"Record holder" or "holder" as applied to a Receipt
shall mean the person in whose name a Receipt is registered on
the books of the Depositary maintained for such purpose.

"Registrar" shall mean the Depositary or such other
bank or trust company which shall be appointed to register
ownership and transfers of Receipts as herein provided.

"Securities Act" shall mean the Securities Act of
1933, as amended.

"Stock" shall mean shares of the Company's ( %
Preferred Stock, $50.00 par value per share).

ARTICLE II

Form of Receipts, Deposit of Stock,
Execution and Delivery, Transfer,
Surrender and Redemption of Receipts

SECTION 2.01. Form and Transfer of Receipts.
Definitive Receipts shall be engraved or printed or
lithographed on steel-engraved borders, with appropriate
insertions, modifications and omissions, as hereinafter
provided, if required by any securities exchange on which the
Receipts are listed. Pending the preparation of definitive
Receipts or if definitive Receipts are not required by any
securities exchange on which the Receipts are listed, the
Depositary, upon the written order of the Company or any holder
of Stock, as the case may be, delivered in compliance with
Section 2.02, shall execute and deliver temporary Receipts
which are printed, lithographed, typewritten, mimeographed or
otherwise substantially of the tenor of the definitive Receipts
in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as
the persons executing such Receipts may determine, as evidenced
by their execution of such Receipts. If temporary Receipts are
issued, the Company and the Depositary will cause definitive
Receipts to be prepared without unreasonable delay. After the
preparation of definitive Receipts, the temporary Receipts
shall be exchangeable for definitive Receipts upon surrender of
the temporary Receipts at the Depositary's Office or at such
other place or places as the Depositary shall determine,
without charge to the holder. Upon surrender for cancellation
of any one or more temporary Receipts, the Depositary shall
execute and deliver in exchange therefor definitive Receipts
representing the same number of Depositary Shares as
represented by the surrendered temporary Receipt or Receipts.
Such exchange shall be made at the Company's expense and
without any charge to the holder therefor. Until so exchanged,
the temporary Receipts shall in all respects be entitled to the
same benefits under this Agreement, and with respect to the
Stock, as definitive Receipts.

Receipts shall be executed by the Depositary by the
manual signature of a duly authorized officer of the
Depositary; provided, that such signature may be a facsimile if
a Registrar for the Receipts (other than the Depositary) shall
have been appointed and such Receipts are countersigned by a
manual signature of a duly authorized officer of the Registrar.

No Receipt shall be entitled to any benefits under this
Deposit Agreement or be valid or obligatory for any purpose
unless it shall have been executed manually by a duly
authorized officer of the Depositary or, if a Registrar for the

Receipts (other than the Depositary) shall have been appointed,
by manual or facsimile signature of a duly authorized officer
of the Depositary and countersigned, manually, by a duly
authorized officer of such Registrar. The Depositary shall
record on its books each Receipt so signed and delivered as
hereinafter provided.

Receipts shall be in denominations of any number of
whole Depositary Shares. The Company shall deliver to the
Depositary from time to time such quantities of Receipts as the
Depositary may request to enable the Depositary to perform its
obligations under this Deposit Agreement.

Receipts may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Deposit Agreement as
may be required by the Depositary or required to comply with
any applicable law or any regulation thereunder or with the
rules and regulations of any securities exchange upon which the
Stock, the Depositary Shares or the Receipts may be listed or
to conform with any usage with respect thereto, or to indicate
any special limitations or restrictions to which any particular
Receipts are subject.

Title to Depositary Shares evidenced by a Receipt,
which is properly endorsed or accompanied by a properly
executed instrument of transfer, shall be transferable by
delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt
shall be registered on the books of the Depositary as provided
in Section 2.03, the Depositary may, notwithstanding any notice
to the contrary, treat the record holder thereof at such time
as the absolute owner thereof for the purpose of determining
the person entitled to distributions of dividends or other
distributions or to any notice provided for in this Deposit
Agreement and for all other purposes.

SECTION 2.02. Deposit of Stock; Execution and
Delivery of Receipts in Respect Thereof. Subject to the terms
and conditions of this Deposit Agreement, the Company or any
holder of Stock may from time to time deposit shares of the
Stock under this Deposit Agreement by delivery to the
Depositary of a certificate or certificates for the Stock to be
deposited, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or
endorsement, in form satisfactory to the Depositary, together
with all such certifications as may be required by the
Depositary in accordance with the provisions of this Deposit
Agreement, and together with a written order of the Company or
such holder, as the case may be, directing the Depositary to
execute and deliver to, or upon the written order to, the
person or persons stated in such order a Receipt or Receipts
for the number of Depositary Shares representing such deposited

Stock.

Deposited Stock shall be held by the Depositary at the
Depositary's Office or at such other place or places as the
Depositary shall determine.

Upon receipt by the Depositary of a certificate or
certificates for Stock deposited in accordance with the
provisions of this Section, together with the other documents
required as above specified, and upon recordation of the Stock
on the books of the Company in the name of the Depositary or
its nominee, the Depositary, subject to the terms and
conditions of this Deposit Agreement, shall execute and
deliver, to or upon the order of the person or persons named in
the written order delivered to the Depositary referred to in
the first paragraph of this Section, a Receipt or Receipts for
the whole number of Depositary Shares representing the Stock so
deposited and registered in such name or names as may be
requested by such person or persons. The Depositary shall
execute and deliver such Receipt or Receipts at the
Depositary's Office or such other offices, if any, as the
Depositary may designate. Delivery at other offices shall be
at the risk and expense of the person requesting such delivery.

SECTION 2.03. Registration of Transfer of Receipts.
Subject to the terms and conditions of this Deposit Agreement,
the Depositary shall register on its books from time to time
transfers of Receipts upon any surrender thereof by the holder
in person or by duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer.
Thereupon, the Depositary shall execute a new Receipt or
Receipts evidencing the same aggregate number of Depositary
Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or upon
the order of the person entitled thereto.

SECTION 2.04. Split-ups and Combinations of Receipts;
Surrender of Receipts and Withdrawal of Stock. Upon surrender
of a Receipt or Receipts at the Depositary's Office or at such
other offices as it may designate for the purpose of effecting
a split-up or combination of such Receipt or Receipts, and
subject to the terms and conditions of this Deposit Agreement,
the Depositary shall execute and deliver a new Receipt or
Receipts in the authorized denomination or denominations
requested, evidencing the aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered, provided,
however, that the Depositary shall not issue any Receipt
evidencing a fractional Depositary Share.

Any holder of a Receipt or Receipts representing any
number of whole shares of Stock may (unless the related
Depositary Shares have previously been called for redemption)
withdraw the Stock and all money and other property, if any,
represented thereby by surrendering such Receipt or Receipts,
at the Depositary's Office or at such other offices as the
Depositary may designate for such withdrawals. Thereafter,
without unreasonable delay, the Depositary shall deliver to
such holder or to the person or persons designated by such
holder as hereinafter provided, the number of whole shares of
Stock and all money and other property, if any, represented by
the Receipt or Receipts so surrendered for withdrawal, but
holders of such whole shares of Stock will not thereafter be
entitled to deposit such Stock hereunder or to receive
Depositary Shares therefor. If a Receipt delivered by the
holder to the Depositary in connection with such withdrawal
shall evidence a number of Depositary Shares representing the
number of whole shares of Stock to be so withdrawn, the
Depositary shall at the same time, in addition to such number
of whole shares of Stock and such money and other property, if
any, to be so withdrawn, deliver to such holder, or upon his
order, a new Receipt evidencing such excess number of
Depositary Shares, provided, however, that the Depositary shall
not issue any Receipt evidencing a fractional Depositary Share.

Delivery of the Stock and money and other property being
withdrawn may be made by the delivery of such certificates,
documents of title and other instruments as the Depositary may
deem appropriate which, if required by the Depositary shall be
properly endorsed or accompanied by proper instruments of
transfer.

If the Stock and the money and other property being
withdrawn are to be delivered to a person or persons other than
the record holder of the Receipt or Receipts being surrendered
for withdrawal of Stock, such holders shall execute and deliver

to the Depositary a written order so directing the Depositary
and the Depositary may require that the Receipt or Receipts
surrendered by such holder for withdrawal of such shares of
Stock be properly endorsed in blank or accompanied by a
properly executed instrument of transfer in blank.

Delivery of the Stock and the money and other
property, if any, represented by Receipts surrendered for
withdrawal shall be made by the Depositary at the Depositary's
Office, except that, at the request, risk and expense of the
holder surrendering such Receipt or Receipts and for the
account of the holder thereof, such delivery may be made at
such other place as may be designated by such holder.

SECTION 2.05. Limitations on Execution and Delivery,
Transfer, Surrender and Exchange of Receipts. As a condition
precedent to the execution and delivery, registration of
transfer, split-up, combination, surrender or exchange of any
Receipt, the Depositary, any of the Depositary's Agents or the
Company may require payment to it of a sum sufficient for the
payment (or, in the event that the Depositary or the Company
shall have made such payment, the reimbursement to it) of any
charges or expenses payable by the holder of a Receipt pursuant
to Sections 3.02 and 5.07, may require the production of
evidence satisfactory to it as to the identity and genuineness
of any signature and may also require compliance with such
regulations, if any, as the Depositary or the Company may
establish consistent with the provisions of this Deposit
Agreement.

The deposit of Stock may be refused, the delivery of
Receipts against Stock may be suspended, the registration of
transfer of Receipts may be refused and the registration of
transfer, surrender or exchange of outstanding Receipts may be
suspended (i) during any period when the register of
stockholders of the Company is closed, (ii) if any such action
is deemed necessary or advisable by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to
time because of any requirement of law or of any government or
governmental body or commission or under any provision of this
Deposit Agreement or (iii) with the approval of the Company,
for any other reason.

SECTION 2.06. Lost Receipts, etc. In case any
Receipt shall be mutilated, destroyed, lost or stolen, the
Depositary in its discretion may execute and deliver a Receipt
of like form and tenor in exchange and substitution for such
mutilated Receipt, or in lieu of and in substitution for such
destroyed, lost or stolen Receipt, upon (i) the filing by the
holder thereof with the Depositary of evidence satisfactory to
the Depositary of such destruction or loss or theft of such
Receipt, of the authenticity thereof and of his or her
ownership thereof, (ii) the furnishing of the Depositary with
reasonable indemnification satisfactory to it and (iii) the
payment of any expense (including fees, charges and expenses of
the Depositary) in connection with such execution and delivery.

SECTION 2.07. Cancellation and Destruction of
Surrendered Receipts. All Receipts surrendered to the
Depositary or any Depositary's Agent shall be cancelled by the
Depositary. Except as prohibited by applicable law or
regulation, the Company is authorized to destroy all Receipts
so cancelled.

SECTION 2.08. Redemption of Stock. Whenever the
Company shall be permitted and shall elect to redeem shares of
Stock in accordance with the provisions of the Articles, it
shall (unless otherwise agreed to in writing with the
Depositary) give or cause to be given to the Depositary not
less than 3O days' and not more than 60 days' notice of the
date of such proposed redemption of Stock and of
the number of such shares held by the Depositary to be so
redeemed and the applicable redemption price, as set forth in
the Articles, which notice shall be accompanied by Articles
from the Company stating that such redemption of Stock is in
accordance with the provisions of the Articles. On the date of
such redemption, provided that the Company shall then have paid
or caused to be paid in full to the Depositary the redemption
price of the Stock to be redeemed, plus an amount equal to any
accrued and unpaid dividends thereon to the date fixed for
redemption, in accordance with the provisions of the Articles,
the Depositary shall redeem the number of Depositary Shares
representing such Stock. The Depositary shall mail notice of
the Company's redemption of Stock and the proposed simultaneous
redemption of the number of Depositary Shares representing the
Stock to be redeemed by first class mail, postage prepaid, not

less than 2O and not more than 50 days prior to the date fixed
for redemption of such Stock and Depositary Shares (the
"Redemption Date") to the record holders of the Receipts
evidencing the Depositary Shares to be so redeemed, at the
address of such holders as they appear on the records of the
Depositary; but neither failure to mail any such notice of
redemption of Depositary Shares to one or more such holders nor
any defect in any notice of redemption of Depositary Shares to
one or more such holders shall affect the sufficiency of the
proceedings for redemption as to the other holders. The
Company will provide the Depositary with the information
necessary for the Depositary to prepare such notice and each
such notice shall state: (i) the Redemption Date; (ii) the
number of Depositary Shares to be redeemed and, if less than
all the Depositary Shares held by any such holder are to be
redeemed, the number of such Depositary Shares held by such
holder to be so redeemed; (iii) the redemption price; (iv) the
place or places where Receipts evidencing Depositary Shares are
to be surrendered for payment of the redemption price; and (v)
that dividends in respect of the Stock represented by the
Depositary Shares to be redeemed will cease to accrue on such
Redemption Date. In case less than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to
be so redeemed shall be selected by the Depositary by lot or
pro rata (as nearly as may be) or by any other method, in each
case, as determined by the Depositary in its sole discretion to
be equitable.

Notice having been mailed by the Depositary as
aforesaid, from and after the Redemption Date (unless the
Company shall have failed to provide the funds necessary to
redeem the Stock evidenced by the Depositary Shares called for
redemption) (i) dividends on the shares of Stock so called for
redemption shall cease to accrue from and after such date, (ii)
the Depositary Shares being redeemed from such proceeds shall
be deemed no longer to be outstanding, (iii) all rights of the
holders of Receipts evidencing such Depositary shares (except
the right to receive the redemption price) shall, to the extent
of such Depositary Shares, cease and terminate, and (iv) upon
surrender in accordance with such redemption notice of the
Receipts evidencing any such Depositary Shares called for
redemption (properly endorsed or assigned for transfer, if the
Depositary or applicable law shall so require), such Depositary
Shares shall be redeemed by the Depositary at a redemption
price per Depositary Share equal to one-( ) of the
redemption price per share paid with respect to the shares of
Stock plus all money and other property, if any, represented by
such Depositary Shares, including all amounts paid by the
Company in respect of dividends which on the Redemption Date
have accumulated on the shares of Stock to be so redeemed and
have not theretofore been paid.

If fewer than all of the Depositary Shares evidenced
by a Receipt are called for redemption, the Depositary will
deliver to the holder of such Receipt upon its surrender to the
Depositary, together with the redemption payment, a new Receipt
evidencing the Depositary Shares evidenced by such prior
Receipt and not called for redemption.

ARTICLE III

Certain Obligations of
Holders of Receipts and the Company

SECTION 3.01. Filing Proofs, Certificates and Other
Information. Any holder of a Receipt may be required from time
to time to file such proof of residence, or other matters or
other information, to execute such certificates and to make
such representations and warranties as the Depositary or the
Company may reasonably deem necessary or proper. The
Depositary or the Company may withhold the delivery, or delay
the registration of transfer, redemption or exchange, of any
Receipt or the withdrawal or conversion of the Stock
represented by the Depositary Shares evidenced by any Receipt
or the distribution of any dividend or other distribution or
the sale of any rights or of the proceeds thereof until such
proof or other information is filed or such certificates are
executed or such representations and warranties are made.

SECTION 3.02. Payment of Taxes or Other Governmental
Charges. Holders of Receipts shall be obligated to make
payments to the Depositary of certain charges and expenses, as
provided in Section 5.07. Registration of transfer of any
Receipt or any withdrawal of Stock and all money or other
property, if any, represented by the Depositary Shares
evidenced by such Receipt may be refused until any such payment
due is made, and any dividends, interest payments or other
distributions may be withheld or any part of or all the Stock
or other property represented by the Depositary Shares
evidenced by such Receipt and not theretofore sold may be sold
for the account of the holder thereof (after attempting by
reasonable means to notify such holder prior to such sale), and
such dividends, interest payments or other distributions or the
proceeds of any such sale may be applied to any payment of such
charges or expenses, the holder of such Receipt remaining
liable for any deficiency.

SECTION 3.03. Warranty as to Stock. The Company
hereby represents and warrants that the Stock, when issued,
will be duly authorized, validly issued, fully paid and
nonassessable. Such representation and warranty shall survive
the deposit of the Stock and the issuance of Receipts.

ARTICLE IV

The Deposited Securities; Notices

SECTION 4.01. Cash Distributions. Whenever the
Depositary shall receive any cash dividend or other cash
distribution on Stock, the Depositary shall, subject to Section
3.01 and 3.02, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.04 such amounts of such
dividend or distribution as are, as nearly as practicable, in
proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders; provided,
however, that in case the Company or the Depositary shall be
required to withhold and shall withhold from any cash dividend
or other cash distribution in respect of the Stock an amount on
account of taxes or as otherwise required by law, regulation or
court process, the amount made available for distribution or
distributed in respect of Depositary Shares shall be reduced
accordingly. In the event that the calculation of any such
cash dividend or other cash distribution to be paid to any
record holder on the aggregate number of Depositary Receipts
held by such holder results in an amount which is a fraction of
a cent, the amount the Depositary shall distribute to such
record holder shall be rounded to the next highest whole cent;
and upon request of the Depositary, the Company shall pay the
additional amount to the Depositary for distribution.

SECTION 4.02. Distributions Other than Cash, Rights,
Preferences or Privileges. Whenever the Depositary shall
receive any distribution other than cash, rights, preferences
or privileges upon Stock, the Depositary shall, subject to
Sections 3.01 and 3.02, distribute to record holders of
Receipts on the record date fixed pursuant to Section 4.04 such
amounts of the securities or property received by it as are, as
nearly as practicable, in proportion to the respective numbers
of Depositary Shares evidenced by the Receipts held by such
holders, in any manner that the Depositary may deem equitable
and practicable for accomplishing such distribution. If in the
opinion of the Depositary such distribution cannot be made
proportionately among such record holders, or if for any other
reason (including any requirement that the Company or the
Depositary withhold an amount on account of taxes) the
Depositary deems such distribution not to be feasible, the
Depositary may adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution,
including the sale (at public or private sale) of the
securities or property thus received, or any part thereof, at
such place or places and upon such terms as it may deem proper.

The net proceeds of any such sale shall, subject to Sections
3.01 and 3.02, be distributed or made available for
distribution, as the case may be, by the Depositary to record
holders of Receipts as provided by Section 4.01 in the case of
a distribution received in cash.

SECTION 4.03. Subscription Rights, Preferences or
Privileges. If the Company shall at any time offer or cause to
be offered to the persons in whose names Stock is recorded on
the books of the Company any rights, preferences or privileges
to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights,
preferences or privileges shall in each such instance be made
available by the Depositary to the record holders of Receipts
in such manner as the Depositary may determine, either by the
issue to such record holders of warrants representing such
rights, preferences or privileges or by such other method as
may be approved by the Depositary in its discretion with the
approval of the Company; provided, however, that (i) if at the
time of issue or offer of any such rights, preferences or
privileges the Depositary determines that it is not lawful or
(after consultation with the Company) not feasible to make such
rights, preferences or privileges available to holders of
Receipts by the issue of warrants or otherwise, or (ii) if and
to the extent so instructed by holders of Receipts who do not
desire to exercise such rights, preferences or privileges, then
the Depositary, in its discretion (with approval of the
Company, in any case where the Depositary has determined that
it is not feasible to make such rights, preferences or
privileges available), may, if applicable laws or the terms of
such rights, preferences or privileges permit such transfer,
sell such rights, preferences or privileges at public or
private sale, at such place or places and upon such terms as it
may deem proper. The net proceeds of any such sale shall,
subject to Sections 3.01 and 3.02, be distributed by the
Depositary to the record holders of Receipts entitled thereto
as provided by Section 4.01 in the case of a distribution
received in cash.

If registration under the Securities Act of the
securities to which any rights, preferences or privileges
relate is required in order for holders of Receipts to be
offered or sold the securities to which such rights,
preferences or privileges relate, the Company will file
promptly a registration statement pursuant to such Act with
respect to such rights, preferences or privileges and
securities and use its best efforts and take all steps
available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such
rights, preferences or privileges to enable such holders to
exercise such rights, preferences or privileges. In no event
shall the Depositary make available to the holders of Receipts
any right, preference or privilege to subscribe for or to
purchase any securities unless and until it has received
written notice from the Company that such registration
statement shall have become effective, or that the offering and
sale of such securities to such holders are exempt from
registration under the provisions of the Securities Act and the
Company shall have provided to the Depositary an opinion of
counsel to such effect.

If any other action under the laws of any jurisdiction
or any governmental or administrative authorization, consent or
permit is required in order for such rights, preferences or
privileges to be made available to holders of Receipts, the
Company will use its reasonable best efforts to take such
action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise
such rights, preferences or privileges.

SECTION 4.04. Notice of Dividends, etc.; Fixing
Record Date for Holders of Receipts. Whenever any cash
dividend or other cash distribution shall become payable or any
distribution other than cash shall be made, or if rights,
preferences or privileges shall at any time be offered, with
respect to Stock, or whenever the Depositary shall receive
notice of any meeting at which holders of Stock are entitled to
vote or of which holders of Stock are entitled to notice, or
whenever the Depositary and the Company shall decide it is
appropriate, the Depositary shall in each such instance fix a
record date (which shall be the same date as the record date
fixed by the Company with respect to or otherwise in accordance
with the terms of the Stock) for the determination of the
holders of Receipts who shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or
the net proceeds of the sale thereof, or to give instructions
for the exercise of voting rights at any such meeting, or who
shall be entitled to notice of such meeting or for any other
appropriate reasons.

SECTION 4.05. Voting Rights. Upon receipt of notice
of any meeting at which the holders of Stock are entitled to
vote, the Depositary shall, as soon as practicable thereafter,
mail to the record holders of Receipts a notice which shall
contain (i) such information as is contained in such notice of
meeting and (ii) a statement that the holders may, subject to
any applicable restrictions, instruct the Depositary as to the
exercise of the voting rights pertaining to the amount of Stock
represented by their respective Depositary Shares (including an
express indication that instructions may be given to the
Depositary to give a discretionary proxy to a person designated
by the Company) and a brief statement as to the manner in which
such instructions may be given. Upon the written request of
the holders of Receipts on the relevant record date, the
Depositary shall endeavor insofar as practicable to vote or
cause to be voted, in accordance with the instructions set
forth in such requests, the maximum number of whole shares of
Stock represented by the Depositary Shares evidenced by all
Receipts as to which any particular voting instructions are
received. The Company hereby agrees to take all reasonable
action which may be deemed necessary by the Depositary in order
to enable the Depositary to vote such Stock or cause such Stock
to be voted. In the absence of specific instructions from the
holder of a Receipt, the Depositary will not vote (but, at its
discretion, may appear at any meeting with respect to such
Stock unless directed to the contrary by the holders of all the
Receipts) to the extent of the Stock represented by the
Depositary Shares evidenced by such Receipt.

SECTION 4.06. Changes Affecting Deposited Securities
and Reclassifications, Recapitalizations, etc. Upon any change
in par or stated value or liquidation preference, split-up,
combination or any other reclassification of the Stock, or upon
any recapitalization, reorganization, merger, statutory share exchange or
consolidation affecting the Company or to which it is a party, the
Depositary may in its discretion with the approval of, and shall upon the
instructions of, the Company,
and (in either case) in such manner as the Depositary may deem
equitable, (i) make such adjustments as are certified by the
Company in the fraction of an interest represented by one
Depositary Share in one share of Stock as may be necessary
fully to reflect the effects of such change in par or stated
value or liquidation preference, split-up, combination or other
reclassification of Stock, or of such recapitalization,
reorganization, merger, share exchange or consolidation and
(ii) treat any securities which shall be received by the
Depositary in exchange for or upon conversion of or in respect
of the Stock as new deposited securities so received in
exchange for or upon conversion or in respect of such Stock.
In any such case the Depositary may in its discretion, with the
approval of the Company, execute and deliver additional
Receipts or may call for the surrender of all outstanding
Receipts to be exchanged for new Receipts specifically
describing such new deposited securities. Anything to the
contrary herein notwithstanding, holders of Receipts shall have
the right from and after the effective date of any such change
in par or stated value or liquidation preference, split-up,
combination or other reclassification of the Stock or any such
recapitalization, reorganization, merger, share exchange or consolidation
to surrender such Receipts to the Depositary with instructions to convert,
exchange or surrender the Stock represented thereby only into or for, as
the case may be, the kind and amount of shares of stock and other
securities and property and cash into which the Stock represented by such
Receipts might have been converted or for which such Stock
might have been exchanged or surrendered immediately prior to
the effective date of such transaction.

SECTION 4.07. Delivery of Reports. The Depositary
shall furnish to holders of Receipts any reports and
communications received from the Company which are received by
the Depositary as the holder of Stock.

SECTION 4.08. List of Receipt Holders. Promptly upon
request from time to time by the Company, the Depositary shall
furnish to it a list, as of the most recent practicable date,
of the names, addresses and holdings of Depositary Shares of
all record holders of Receipts. The Company shall be entitled
to receive such list twice annually without charge.

ARTICLE V

The Depositary, the Depositary's
Agents, the Registrar and the Company

SECTION 5.01. Maintenance of Offices, Agencies and
Transfer Books by the Depositary; Registrar. Upon execution of
this Deposit Agreement, the Depositary shall maintain at the
Depositary's Office, facilities for the execution and delivery,
registration and registration of transfer, surrender and
exchange of Receipts, and at the offices of the Depositary's
Agents, if any, facilities for the delivery, registration of
transfer, surrender and exchange of Receipts, all in accordance
with the provisions of this Deposit Agreement.

The Depositary shall keep books at the Depositary's
Office for the registration and registration of transfer of
Receipts, which books during normal business hours shall be
open for inspection by the record holders of Receipts; provided
that any such holder requesting to exercise such right shall
certify to the Depositary that such inspection shall be for a
proper purpose reasonably related to such person's interest as
an owner of Depositary Shares evidenced by the Receipts.

The Depositary may close such books, at any time or
from time to time, when deemed expedient by it in connection
with the performance of its duties hereunder.

The Depositary may, with the approval of the Company,
appoint a Registrar for registration of the Receipts or the
Depositary Shares evidenced thereby. If the Receipts or the
Depositary Shares evidenced thereby or the Stock represented by
such Depositary Shares shall be listed on one or more national
stock exchanges, the Depositary will appoint a Registrar
(acceptable to the Company) for registration of such Receipts
or Depositary Shares in accordance with any requirements of
such exchange. Such Registrar (which may be the Depositary if
so permitted by the requirements of any such exchange) may be
removed and a substitute registrar appointed by the Depositary
upon the request or with the approval of the Company. If the
Receipts, such Depositary Shares or such Stock are listed on
one or more other stock exchanges, the Depositary will, at the
request and at the expense of the Company, arrange such
facilities for the delivery, registration, registration of
transfer, surrender and exchange of such Receipts, such
Depositary Shares or such Stock as may be required by law or
applicable stock exchange regulation.

The Depositary may from time to time appoint
Depositary's Agents to act in any respect for the Depositary
for the purposes of this Deposit Agreement and may at any time
appoint additional Depositary's Agents and vary or terminate
the appointment of such Depositary's Agents. The Depositary
will notify the Company of any such action.

SECTION 5.02. Prevention of or Delay in Performance
by the Depositary, the Depositary's Agents, the Registrar or
the Company. Neither the Depositary nor any Depositary's Agent
nor the Registrar nor the Company shall incur any liability to
any holder of any Receipt if by reason of any provision of any
present or future law, or regulation thereunder, of the United
States of America or of any other governmental authority or, in
the case of the Depositary, the Depositary's Agent or the
Registrar, by reason of any provision, present or future, of
the Company's Articles of Incorporation or by reason of any act
of God or war or other circumstance beyond the reasonable
control of the relevant party, the Depositary, the Depositary's
Agent, the Registrar or the Company shall be prevented, delayed
or forbidden from, or subjected to any penalty on account of,
doing or performing any act or thing which the terms of this
Deposit Agreement provide shall be done or performed, nor shall
the Depositary, any Depositary's Agent, the Registrar or the
Company incur liability to any holder of a Receipt (i) by
reason of any nonperformance or delay, caused as aforesaid, in

the performance of any act or thing which the terms of this
Deposit Agreement shall provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to
exercise, any discretion provided for in this Deposit Agreement
except, in the case of any such exercise or failure to exercise
discretion not caused as aforesaid, if caused by the negligence or willful
misconduct of the party charged with such
exercise or failure to exercise.

SECTION 5.03. Obligation of the Depositary, the
Depositary's Agents, the Registrar and the Company. Neither
the Depositary nor any Depositary's Agent nor the Registrar nor
the Company assumes any obligation or shall be subject to any
liability under this Deposit Agreement or any Receipt to
holders of Receipts other than for its negligence,
willful misconduct or bad faith.

Neither the Depositary nor any Depositary's Agent nor
the Registrar nor the Company shall be under any obligation to
appear in, prosecute or defend any action, suit or other
proceeding in respect of the Stock, the Depositary Shares or
the Receipts which in its opinion may involve it in expense or
liability unless indemnity satisfactory to it against all
expense and liability be furnished as often as may be required.

Neither the Depositary nor any Depositary's Agent nor
the Registrar nor the Company shall be liable for any action or
any failure to act by it in reliance upon the written advice of
legal counsel or accountants, or information from any person
presenting Stock for deposit, any holder of a Receipt or any
other person believed by it in good faith to be competent to
give such information. The Depositary, any Depositary's Agent,
the Registrar and the Company may each rely and shall each be
protected in acting upon any written notice, request, direction
or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties.

The Depositary shall not be responsible for any
failure to carry out any instruction to vote any of the shares
of Stock or for the manner or effect of any such vote made, as
long as any such action or non-action is in good faith. The
Depositary undertakes, and any Registrar shall be required to
undertake, to perform such duties and only such duties as are
specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement
against the Depositary or any Registrar. The Depositary will
indemnify the Company and hold it harmless from any loss,
liability or expense (including the reasonable costs and
expenses of defending itself) which may arise out of acts
performed or omitted by the Depositary, including when such
Depositary acts as Registrar, or the Depositary's Agents in
connection with this Agreement due to its or their negligence,
willful misconduct or bad faith. The indemnification
obligations of the Depositary set forth in this Section 5.03
shall survive any termination of this Agreement and any
succession of any Depositary.

The Depositary, its parent, affiliates or
subsidiaries, the Depositary's Agents, and the Registrar may
own, buy, sell and deal in any class of securities of the
Company and its affiliates and in Receipts or Depositary Shares
or become pecuniarily interested in any transaction in which
the Company or its affiliates may be interested or contract
with or lend money to or otherwise act as fully or as freely as
if it were not the Depositary, parent, affiliate or subsidiary
or Depositary's Agent or Registrar hereunder. The Depositary
may also act as trustee, transfer agent or registrar of any of
the securities of the Company and its affiliates.

It is intended that neither the Depositary nor any
Depositary's Agent nor the Registrar, acting as the Depositary
Agent or Registrar, as the case may be, shall be deemed to be
an "issuer" of the securities under the federal securities laws

or applicable state securities laws, it being expressly
understood and agreed that the Depositary, any Depositary's
Agent and the Registrar are acting only in a ministerial
capacity as Depositary or Registrar for the Stock.

Neither the Depositary (or its officers, directors,
employees or agents) nor any Depositary's Agent nor the
Registrar makes any representation or has any responsibility as
to the validity of the registration statement pursuant to which
the Depositary Shares are registered under the Securities Act,
the Stock, the Depositary Shares or the Receipts (except for
its counter-signatures thereon) or any instruments referred to
therein or herein, or as to the correctness of any statement
made therein or herein.

The Depositary assumes no responsibility for the
correctness of the description that appears in the Receipts,
which can be taken as a statement of the Company summarizing
certain provisions of this Deposit Agreement. Notwithstanding
any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity,
genuineness or sufficiency of any Stock at any time deposited
with the Depositary hereunder or of the Depositary Shares, as
to the validity or sufficiency of this Deposit Agreement, as to
the value of the Depositary Shares or as to any right, title or
interest of the record holders of Receipts in and to the

Depositary Shares. The Depositary shall not be accountable for
the use or application by the Company of the Depositary Shares
or the Receipts or the proceeds thereof.

SECTION 5.04. Resignation and Removal of the
Depositary; Appointment of Successor Depositary. The
Depositary may at any time resign as Depositary hereunder by
delivering notice of its election to do so to the Company, such
resignation to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment as
hereinafter provided.

The Depositary may at any time be removed by the
Company by notice of such removal delivered to the Depositary,
such removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment as
hereinafter provided.

In case at any time the Depositary acting hereunder
shall resign or be removed, the Company shall, within 60 days
after the delivery of the notice of resignation or removal, as
the case may be, appoint a successor Depositary, which shall be
a bank or trust company having its principal office in the
United States of America and having a combined capital and
surplus of at least $50,000,000. If no successor Depositary
shall have been so appointed and have accepted appointment
within 60 days after delivery of such notice, the resigning or
removed Depositary may petition any court of competent
jurisdiction for the appointment of a successor Depositary.
Every successor Depositary shall execute and deliver to its
predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such
successor Depositary, without any further act or deed, shall
become fully vested with all the rights, powers, duties and
obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such
predecessor, upon payment of all sums due it and on the written
request of the Company, shall execute and deliver an instrument
transferring to such successor all rights and powers of such
predecessor hereunder, shall duly assign, transfer and deliver
all right, title and interest in the Stock and any moneys or
property held hereunder to such successor, and shall deliver to
such successor a list of the record holders of all outstanding
Receipts and such records, books and other information in its
possession relating thereto. Any successor Depositary shall
promptly mail notice of its appointment to the record holders
of Receipts.

Any corporation into or with which the Depositary may
be merged, consolidated or converted shall be the successor of
such Depositary without the execution or filing of any document
or any further act, and notice thereof shall not be required
hereunder. Such successor Depositary may authenticate the
Receipts in the name of the predecessor Depositary or in the
name of the successor Depositary.

SECTION 5.05 Corporate Notices and Reports. The
Company agrees that it will deliver to the Depositary, and the
Depositary will, promptly after receipt thereof transmit to the
record holders of Receipts, in each case at the addresses
recorded in the Depositary's books, copies of all notices and
reports (including without limitation financial statements)
required by law or by the rules of any national securities
exchange upon which the Stock, the Depositary Shares or the
Receipts are listed, to be furnished to the record holders of
Receipts or otherwise determine to furnish. Such transmission
will be at the Company's expense and the Company will provide
the Depositary with such number of copies of such documents as
the Depositary may reasonably request.

SECTION 5.06. Indemnification by the Company. The
Company shall indemnify the Depositary, any Depositary's Agent
and the Registrar against, and hold each of them harmless from,
any loss, liability or expense (including the reasonable costs
and expenses of defending itself) which may arise out of acts
performed or omitted in connection with this Agreement and the
Receipts by the Depositary, any Registrar or any of their
respective agents (including any Depositary's Agent), except
for any liability arising out of negligence, willful misconduct
or bad faith on the respective parts of any such person or
persons. The obligations of the Company set forth in this
Section 5.06 shall survive any succession of any Depositary or
Depositary's Agent.

SECTION 5.07. Charges and Expenses. The Company
shall pay all transfer and other taxes and governmental charges

arising solely from the existence of the depositary
arrangements. The Company shall pay all charges of the
Depositary in connection with the initial deposit of the Stock
and the initial issuance of the Depositary Shares, all
withdrawals of shares of the Stock by owners of Depositary
Shares, and any redemption or exchange of the Stock at the
option of the Company. All other transfer and other taxes and
governmental charges shall be at the expense of holders of
Depositary Shares. If, at the request of a holder of Receipts,
the Depositary incurs charges or expenses for which it is not
otherwise liable hereunder, such holder will be liable for such
charges and expenses. All other charges and expenses of the
Depositary and any Depositary's Agent hereunder (including, in
each case, reasonable fees and expenses of counsel) incident to
the performance of their respective obligations hereunder will
be paid upon consultation and agreement between the Depositary
and the Company as to the amount and nature of such charges and
expenses. The Depositary shall present its statement for
charges and expenses to the Company at such intervals as the
Company and the Depositary may agree.

SECTION 5.08. Tax Compliance. The Depositary, on its
own behalf and on behalf of the Company will comply with all
applicable certification, information reporting and withholding
(including "backup" withholding) requirements imposed by
applicable tax laws, regulations or administrative practice
with respect to (i) any payments made with respect to the
Depositary Shares or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Receipts
or the Depositary Shares. Such compliance shall include,
without limitation, the preparation and timely filing of
required returns and the timely payment of all amounts required
to be withheld to the appropriate taxing authority or its
designated agent.

The Depositary shall comply with any direction
received from the Company with respect to the application of
such requirements to particular payments or holders or in other
particular circumstances, and may for purposes of this
Agreement rely on any such direction in accordance with the
provisions of Section 5.03 hereof.

The Depositary shall maintain all appropriate records
documenting compliance with such requirements, and shall make
such records available on request to the Company or to its
authorized representatives.

ARTICLE VI

Amendment and Termination

SECTION 6.01. Amendment. The form of the Receipts
and any provisions of this Deposit Agreement may at any time
and from time to time be amended by agreement between the
Company and the Depositary in any respect which they may deem
necessary or desirable; provided, however, that no such
amendment (other than any change in the fees of any Depositary
or Registrar, which shall go into effect not sooner than three
months after notice thereof to the holders of the Receipts)
which shall materially and adversely alter the rights of the
holders of Receipts shall be effective unless such amendment
shall have been approved by the holders of at least a majority
of the Depositary Shares then outstanding. Every holder of an
outstanding Receipt at the time any such amendment becomes
effective shall be deemed, by continuing to hold such Receipt,
to consent and agree to such amendment and to be bound by the
Deposit Agreement as amended thereby.

SECTION 6.02. Termination. This Agreement may be
terminated by the Company or the Depositary only after (i) all
outstanding Depositary Shares have been redeemed pursuant to
Section 2.08 or (ii) there shall have been made a final
distribution in respect of the Stock in connection with any
liquidation, dissolution or winding up of the Company and such
distribution shall have been distributed to the holders of
Depositary Receipts pursuant to Sections 4.01 or 4.02, as
applicable.

If any Receipts shall remain outstanding after the
date of termination of this Deposit Agreement, the Depositary
thereafter shall discontinue the transfer of Receipts, shall
suspend the distribution of dividends to the holders thereof
and shall not give any further notices (other than notice of
such termination) or perform any further acts under this
Deposit Agreement, except that the Depositary shall continue to
collect dividends and other distributions pertaining to Stock,
shall sell rights, preferences or privileges as provided in
this Deposit Agreement and shall continue to deliver the Stock
and any money and other property represented by Receipts upon
surrender thereof by the holders thereof. At any time after
the expiration of two years from the date of termination, the
Depositary may sell Stock then held hereunder at public or
private sale, at such places and upon such terms as it deems
proper and may thereafter hold the net proceeds of any such
sale, together with any money and other property held by it
hereunder, without liability for interest, for the benefit, pro
rata in accordance with their holdings, of the holders of
Receipts that have not theretofore been surrendered. After
making such sale, the Depositary shall be discharged from all
obligations under this Deposit Agreement except to account for
such net proceeds and money and other property.

Upon the termination of this Deposit Agreement, the
Company shall be discharged from all obligations under this
Deposit Agreement except for its obligations to the Depositary,

the Registrar and any Depositary's Agent under Sections 5.06
and 5.07.

ARTICLE VII

Miscellaneous

SECTION 7.01. Counterparts. This Deposit Agreement
may be executed in any number of counterparts, and by each of
the parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed
an original, but all such counterparts taken together shall
constitute one and the same instrument.

SECTION 7.02. Exclusive Benefit of Parties. This
Deposit Agreement is for the exclusive benefit of the parties
hereto, and their respective successors hereunder, and shall
not be deemed to give any legal or equitable right, remedy or
claim to any other person whatsoever.

SECTION 7.03. Invalidity of Provisions. In case any
one or more of the provisions contained in this Deposit
Agreement or in the Receipts should be or become invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
or therein shall in no way be affected, prejudiced or disturbed
thereby.

SECTION 7.04. Notices. Any and all notices to be
given to the Company hereunder or under the Receipts shall be
in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to the
Company at

USF&G Corporation
100 Light Street Baltimore, Maryland 21202
Attention: ( )
Facsimile No.: (410) ( )

or at any other address of which the Company shall have
notified the Depositary in writing.

Any and all notices to be given to the Depositary
hereunder or under the Receipts shall be in writing and shall
be deemed to have been duly given if personally delivered or
sent by mail, or by telegram or facsimile transmission
confirmed by letter, addressed to the Depositary at the
Depositary's Office, at:

( )
Attention: ( )

Facsimile No.: ( )

or at any other address of which the Depositary shall have
notified the Company in writing.

Any and all notices to be given to any record holder
of a Receipt hereunder or under the Receipts shall be in
writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to such
record holder at the address of such record holder as it
appears on the books of the Depositary, or if such holder shall
have filed with the Depositary a written request that notices
intended for such holder be mailed to some other address, at
the address designated in such request.

Delivery of a notice sent by mail or by telegram or
facsimile transmission shall be deemed to be effected at the
time when a duly addressed letter containing the same (or a
confirmation thereof in the case of a telegram or facsimile
transmission) is deposited, postage prepaid, in a post office
letter box. The Depositary or the Company may, however, act
upon any telegram or facsimile transmission received by it from
the other or from any holder of a Receipt, notwithstanding that
such telegram or facsimile transmission shall not subsequently
be confirmed by letter or as aforesaid.

SECTION 7.05. Appointment of Registrar. The Company
hereby also appoints the Depositary as Registrar in respect of
the Receipts and the Depositary hereby accepts such
appointments.

SECTION 7.06. Holders of Receipts Are Parties. The
holders of Receipts from time to time shall be parties to this
Deposit Agreement and shall be bound by all of the terms and
conditions hereof and of the Receipts by acceptance of delivery
thereof.

SECTION 7.07. GOVERNING LAW. THIS DEPOSIT AGREEMENT
AND THE RECEIPTS AND ALL RIGHTS HEREUNDER AND THEREUNDER AND
PROVISIONS HEREOF AND THEREOF SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

SECTION 7.08. Inspection of Deposit Agreement.
Copies of this Deposit Agreement shall be filed with the
Depositary and the Depositary's Agent and shall be open to
inspection during business hours at the Depositary's Office or
respective offices of the Depositary's Agent, if any, by any
holder of a Receipt.

SECTION 7.09. Headings. The headings of articles and
sections in this Deposit Agreement and in the form of the
Receipt set forth in Exhibit A hereto have been inserted for
convenience only and are not to be regarded as a part of this
Deposit Agreement or the Receipts or to have any bearing upon
the meaning or interpretation of any provision contained herein
or in the Receipts.

IN WITNESS WHEREOF, the Company and the Depositary
have duly executed this Agreement as of the day and year first
above set forth, and all holders of Receipts shall become
parties hereto by and upon acceptance by them of delivery of
Receipts issued in accordance with the terms hereof.

USF&G CORPORATION
Attested by

_________________________ By _________________________
[SEAL]

Attested by
( )

_________________________ By _________________________
[SEAL]

ANNEX A

TEMPORARY RECEIPT EXCHANGEABLE FOR CERTIFICATE FOR
DEFINITIVE ENGRAVED RECEIPT WHEN READY ( )
FOR DELIVERY
DEPOSITORY SHARES
THE DEPOSITARY SHARES REPRESENTED BY THIS TRANSFERABLE
RECEIPT ARE NOT SAVINGS ACCOUNTS, DEPOSITS DEPOSITARY RECEIPT
OR OTHER OBLIGATIONS OF , THE This Certificate is
DEPOSITARY HEREUNDER, OR OF ANY BANK OR transferable in
NON-BANK DEPOSITARY OF USF&G CORPORATION New York, New York
AND ARE NOT INSURED BY THE SAVINGS
ASSOCIATION INSURANCE FUND
OR THE BANK INSURANCE FUND OF THE FEDERAL CUSIP ( )
DEPOSIT INSURANCE CORPORATION, OR ANY SEE REVERSE FOR
OTHER GOVERNMENT AGENCY CERTAIN DEFINITIONS

DEPOSITARY RECEIPT FOR DEPOSITARY SHARES,
EACH DEPOSITARY SHARE REPRESENTING A
( ) INTEREST IN ONE SHARE OF
( % PREFERRED STOCK)

USF&G CORPORATION

A CORPORATION INCORPORATED
UNDER THE LAWS OF THE STATE OF
MARYLAND

( ), as Depositary (the "Depositary"),
hereby certifies that

is the registered owner of DEPOSITARY SHARES

("Depositary Shares"), each Depositary Share representing a ( )
interest in one share of ( % Preferred Stock), $50.00 par value per
share, (the "Stock"), of USF&G Corporation, a Maryland corporation
(the "Corporation"), on deposit with the Depositary, subject to the
terms and entitled to the benefits of the Deposit Agreement dated as
of ( ) (the "Deposit Agreement"), between the Corporation and the
Depositary. By accepting this Depositary Receipt, the holder
hereof becomes a party to and agrees to be bound by all the terms and
conditions of the Deposit Agreement. This Depositary Receipt shall
not be valid or obligatory for any purpose or be

<PAGE>A-1

entitled to any benefits under the Deposit Agreement unless it
shall have been executed by the Depositary by the manual
signature of a duly authorized officer or, if executed in
facsimile by the Depositary, countersigned by a Registrar in
respect of the Depositary Receipts by a duly authorized officer

thereof.

Dated:

Countersigned

( )
Depositary and Registrar

Authorized Officer

<PAGE>A-2

USF&G CORPORATION

USF&G CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH
RECEIPT-HOLDER WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT
AND A STATEMENT OR SUMMARY OF THE ARTICLES SUPPLEMENTARY
ESTABLISHING THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIFIED RIGHTS OF
THE ( )% PREFERRED STOCK AND EACH OTHER CLASS OF
PREFERRED STOCK OR SERIES THEREOF WHICH THE CORPORATION IS
AUTHORIZED TO ISSUE AND OF THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCE AND/OR RIGHTS. ANY SUCH
REQUEST SHOULD BE ADDRESSED TO USF&G CORPORATION ( ),

100 LIGHT STREET, BALTIMORE, MARYLAND 21202.

The following abbreviations, when used in the inscription
on the face of this Depositary Receipt, shall be construed as
though they were written out in full according to applicable
laws or regulations:

TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common

UNIF GIFT MIN ACT - ______ Custodian ______
(Cust) (Minor)

under Uniform Gifts to
Minors Act___________
(State)

UNIF TRAN MIN ACT - _______ Custodian (until age )
(Cust)
under Uniform Transfers
(Minor)
to Minors Act________________
(State)

Additional abbreviations may also be
used though not in the above list.

<PAGE>A-3

For value received, _____________________ hereby sell(s), assign(s)
and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE

Depositary Shares represented by the
within Depositary Receipt, and do(es) hereby irrevocably
constitute and appoint Attorney to
transfer the said Depositary Shares on the books of the within
named Depositary with full power of substitution in the premises.

Dated__________________________ Signature:

NOTICE: The signature to this
assignment must correspond with
the name as written upon the
face of this Depositary Receipt
in every particular, without
alteration or enlargement or any
change whatever.

SIGNATURE GUARANTEE

<PAGE>A-4

USF&G Corporation
January 24, 1994
Page

EXHIBIT 5

January 24, 1994

USF&G Corporation
100 Light Street
Baltimore, Maryland 21202

Ladies and Gentlemen:

We have acted as counsel to USF&G Corporation, a Maryland
corporation (the "Company"), in connection with the preparation
of the Registration Statements on Form S-3 (the "Registration
Statements") filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the contemplated
issuance by the Company from time to time of up to $600,000,000
aggregate public offering price or the equivalent thereof in
one or more foreign currencies or composite currencies of (i)
senior or subordinated debt securities (the "Debt Securities"),
which may be issued pursuant to a Senior Debt Securities
Indenture between the Company and Signet Trust Company, as
Trustee (as amended or supplemented, the "Senior Indenture"),
or a Subordinated Debt Securities Indenture between the Company
and Chemical Bank, as Trustee (as amended or supplemented, the
"Subordinated Indenture" and, together with the Senior
Indenture, the "Indentures"); (ii) shares of preferred stock,
$50.00 par value per share (the "Preferred Stock"), which may
be issued in the form of depositary shares (the "Depositary
Shares") evidenced by depositary receipts (the "Receipts");
(iii) shares of common stock of the Company, $2.50 par value
per share (the "Common Stock"); and (iv) warrants of the
Company (the "Warrants").

We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments as we have deemed necessary for the purpose of
rendering this opinion.

On the basis of the foregoing, we are of the opinion that:

1. When (i) the Registration Statements and any
required post-effective amendments thereto have become
effective under the Securities Act; (ii) the
Indentures have been duly executed and delivered;
(iii) the terms of the Debt Securities and of their
issuance and sale have been duly established in
conformity with the Indentures relating to the Debt
Securities so as not to violate any applicable law or
result in a default under or breach of any agreement
or instrument binding upon the Company and so as to
comply with any requirement or restriction imposed by
any court or governmental or regulatory body having
jurisdiction over the Company; and (iv) the Debt
Securities have been duly executed and authenticated
in accordance with the Indentures relating to the Debt
Securities, and duly issued and sold as contemplated
by the Registration Statements and any prospectus
supplement relating thereto, the Debt Securities
(including any Debt Securities duly issued (x) upon
the exchange of any shares of Preferred Stock that are
exchangeable into Debt Securities or (y) upon exercise
of any Warrants exercisable for Debt Securities) will
constitute valid and legally binding obligations of
the Company enforceable in accordance with their
terms, subject to (a) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and
other similar laws now or hereafter in effect relating
to or affecting creditors rights generally, and (b)
general principles of equity (regardless of whether
considered in a proceeding at law or in equity).

2. When (i) the Registration Statements and any
required post-effective amendments thereto have become
effective under the Securities Act; (ii) the Deposit
Agreement relating to the Depositary Shares has been
duly executed and delivered; (iii) the terms of the
Depositary Shares and of their issuance and sale have
been duly established in conformity with the Deposit
Agreement relating to such Depositary Shares so as not
to violate any applicable law or result in a default
under or breach of any agreement or instrument binding
upon the Company and so as to comply with any

requirement or restriction imposed by any court or
governmental or regulatory body having jurisdiction
over the Company; (iv) the terms of the Preferred
Stock have been duly and properly authorized for
issuance and Articles Supplementary to the Charter of
the Company classifying the Preferred Stock and
setting forth the terms thereof have been filed; (v)
such shares of Preferred Stock have been duly issued
and paid for in the manner contemplated in the
Registration Statements and any prospectus supplement
relating thereto; and (vi) the Receipts evidencing the
Depositary Shares are duly issued against the deposit
of the Preferred Stock in accordance with the Deposit
Agreement, such Receipts will be validly issued and
will entitle the holders thereof to the rights
specified therein and in the Deposit Agreement.

3. When (i) the Registration Statements and any
required post-effective amendments thereto have become
effective under the Securities Act; (ii) the Warrant
Agreement relating to the Warrants (the "Warrant
Agreement") has been duly executed and delivered;
(iii) the terms of the Warrants and of their issuance
and sale have been duly established in conformity with
the Warrant Agreement relating to such Warrants so as
not to violate any applicable law or result in a
default under or breach of any agreement or instrument
binding upon the Company and so as to comply with any
requirement or restriction imposed by any court or
governmental or regulatory body having jurisdiction
over the Company; and (iv) the Warrants have been duly
executed and countersigned in accordance with the
Warrant Agreement relating to such Warrants, and
issued and sold in the form and in the manner
contemplated in the Registration Statements and any
prospectus supplement relating thereto, such Warrants
will constitute valid and legally binding obligations
of the Company enforceable in accordance with their
terms, subject to (a) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and
other similar laws now or hereafter in effect relating
to or affecting creditors' rights generally, and (b)
general principles of equity (regardless of whether
considered in a proceeding at law or in equity).

4. When (i) the Registration Statements and any
required post-effective amendments thereto have become
effective under the Securities Act; (ii) the terms of
the Preferred Stock have been duly and properly
authorized for issuance and Articles Supplementary to
the Charter of the Company classifying the Preferred
Stock and setting forth the terms thereof have been
filed; and (iii) such shares of Preferred Stock have
been duly issued and paid for in the manner
contemplated in the Registration Statements and any
prospectus supplement relating thereto, such shares of
Preferred Stock will be validly issued, fully paid and
nonassessable.

5. When (i) the Registration Statements and any
required post-effective amendment thereto have become
effective under the Securities Act; (ii) the shares of
Common Stock have been duly and properly authorized
for issuance; and (iii) the shares of Common Stock
have been duly issued, sold and delivered as
contemplated in the Registration Statements and any
prospectus supplement relating thereto, the shares of
Common Stock (including any Common Stock duly issued
(x) upon the exchange of any shares of Preferred Stock
that are exchangeable into Common Stock, (y) upon the
exercise of any Warrants exercisable for Common Stock
or (z) upon the conversion of any Debt Securities that
are convertible or exchangeable into Common Stock),
will be validly issued, fully paid and nonassessable.

We are members of the Bar of the States of Maryland and New
York and the foregoing opinion is limited to the laws of the
States of Maryland and New York and the federal laws of the
United States of America.

We hereby consent to the use of this opinion as an exhibit
to the Registration Statement and to the reference to our name
under the heading "Validity of the Securities." In giving such
consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the
Securities Act.

Very truly yours,

PIPER & MARBURY

EXHIBIT 15

USF&G Corporation

We are aware of the incorporation by reference in the Registration
Statement (Form S-3) of USF&G Corporation for the registration of $600
million of its debt securities, preferred stock, common stock and
warrants of our reports dated May 13, 1993, August 12, 1993 and
November 12, 1993 relating to the unaudited condensed consolidated
interim financial statements of USF&G Corporation that are included in
its Forms 10-Q for the quarters ended March 31, 1993, June 30, 1993 and
September 30, 1993.

Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are
not a part of the registration statement prepared or certified by
accountants within the meaning of Section 7 or 11 of the Securities Act
of 1933.

/s/ ERNST & YOUNG

Baltimore, Maryland
January 20, 1994

EXHIBIT 24.1

We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of USF&G
Corporation for the registration of $600 million of its debt
securities, preferred stock, common stock and warrants, and to the
incorporation by reference therein of our report dated February 22,
1993 with respect to the consolidated financial statements of USF&G
Corporation incorporated by reference in its Annual Report (10-K) for
the year ended December 31, 1992, and the related financial statement
schedules included therein, filed with the Securities and Exchange
Commission.

/s/ ERNST & YOUNG

Baltimore, Maryland
January 20, 1994

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________

FORM T-1

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________________

CHEMICAL BANK
(Exact name of trustee as specified in its charter)

New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)

270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)

William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________

USF&G CORPORATION
(Exact name of obligor as specified in its charter)

Maryland 52-1220567
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.

100 Light Street
Baltimore, Maryland 21202
(Address of principal executive offices) (Zip Code)

____________________________________________

Subordinated Debt Securities
(Title of the indenture securities)
____________________________________________

<PAGE> -1-

GENERAL

Item 1. General Information.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising
authority to which it is subject.
New York State Banking Department, State House, Albany,
New York 12110.

Board of Governors of the Federal Reserve System, Washington,
D.C., 20551 and Federal Reserve Bank of New York, District No. 2,
33 Liberty Street, New York, N.Y.

Federal Deposit Insurance Corporation, Washington, D.C., 20429.

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

Item 2. Affiliations with the Obligor.

If the obligor is an affiliate of the trustee, describe each such
affiliation.

None.

<PAGE>- 2 -

16. List of Exhibits

List below all exhibits filed as a part of this Statement of
Eligibility.

1. A copy of the Articles of Association of the Trustee as now
in effect, including the Organization Certificate and the
Certificates of Amendment dated February 17, 1969, August 31, 1977,
December 31, 1980, September 9, 1982, February 28, 1985 and
December 2, 1991 (see Exhibit 1 to Form T-1 filed in connection
with Registration Statement No. 33-50010, which is incorporated
by reference).

2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in
connection with Registration Statement No. 33-50010, which is
incorporated by reference).

3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.

4. A copy of the existing By-Laws of the Trustee (see Exhibit 4
to Form T-1 filed in connection with Registration Statement
No. 33-46892, which is incorporated by reference).

6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by
reference).

7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising
or examining authority.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939
the Trustee, Chemical Bank, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the
11th day of January, 1994.

CHEMICAL BANK

By
John Generale
Vice President

<PAGE>- 3 -

Exhibit 7 to Form T-1

Bank Call Notice

RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF

Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,

at the close of business September 30, 1993, published in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.

<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions

<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................. $ 5,291
Interest-bearing balances ......................... 4,658
Securities ............................................ 20,620
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ................................ 1,706
Securities purchased under agreements to resell ... 434
Loans and lease financing receivables:
Loans and leases, net of unearned income $63,249
Less: Allowance for loan and lease losses 2,197
Less: Allocated transfer risk reserve ... 181
Loans and leases, net of unearned income,
allowance, and reserve ............................ 60,871
Assets held in trading accounts ....................... 6,747
Premises and fixed assets (including capitalized
leases)............................................ 1,132
Other real estate owned ............................... 786
Investments in unconsolidated subsidiaries and
associated companies............................... 116
Customer's liability to this bank on acceptance
outstanding ....................................... 1,231
Intangible assets ..................................... 504
Other assets .......................................... 6,894
TOTAL ASSETS .......................................... $110,990
=========

<PAGE> -4-

LIABILITIES

Deposits
In domestic offices ................................ $50,535
Noninterest-bearing .........................$17,241
Interest-bearing ............................ 33,294
In foreign offices, Edge and Agreement subsidiaries,
and IBF's .......................................... 23,545
Noninterest-bearing .........................$ 136
Interest-bearing ............................ 23,409

Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ............................ 9,006
Securities sold under agreements to repurchase ..... 685
Demand notes issued to the U.S. Treasury .............. 1,502
Other Borrowed money .................................. 8,152
Mortgage indebtedness and obligations under capitalized
leases ............................................. 18
Bank's liability on acceptances executed and outstanding 1,249
Subordinated notes and debentures ..................... 3,350
Other liabilities ..................................... 5,267

TOTAL LIABILITIES ..................................... 103,309

EQUITY CAPITAL

Common stock .......................................... 620
Surplus ............................................... 4,501
Undivided profits and capital reserves ................ 2,565
Cumulative foreign currency translation adjustments ... (5)

TOTAL EQUITY CAPITAL .................................. 7,681

TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .......................... $110,990
==========
</TABLE>

I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition is true and correct to the best of my knowledge
and belief.

JOSEPH L. SCLAFANI

We, the undersigned directors, attest to the correctness
of this statement of resources and liabilities. We
declare that it has been examined by us, and to the best
of our knowledge and belief has been prepared in confor-
mance with the instructions and is true and correct.

JOHN F. McGILLICUDDY )
WALTER V. SHIPLEY )DIRECTORS
EDWARD D. MILLER )

<PAGE> -5-

33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)

SIGNET TRUST COMPANY
(Exact name of trustee as specified in its charter)

Virginia
(Jurisdiction of incorporation
or organization if not a U.S.
national bank)

54-0974225
(I.R.S. Employer
Identification No.)

7 North 8th Street, Richmond, Virginia 23219
(Address of principal executive office) (Zip Code)

Andrew T. Moore, Esquire
7 North 8th Street
Richmond, Virginia 23219
(804) 747-2000
(Name, address and telephone number of agent for service)

USF&G CORPORATION
(Exact name of obligor as specified in its charter)

Maryland
(State or other jurisdiction of
incorporation or organization)

52-1220567
(I.R.S. Employer
Identification No.)

100 Light Street, Baltimore, Maryland 21202
(Address of principal executive offices) (Zip Code)

SENIOR DEBT SECURITIES
(Title of the indenture securities)

<PAGE>

Item 1. General Information.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising
authority to which it is subject.

Commissioner of Financial Institutions, State
Corporation Commission of Virginia. Richmond,
Virginia

Board of Governors of the Federal Reserve
System. Washington, D.C.

(b) Whether it is authorized to exercise corporate trust
powers.

Yes.

Item 2. Affiliations with Obligor.

If the obligor is an affiliate of the trustee, describe
each such affiliation.

None.

Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 have been
omitted pursuant to General Instruction B.

Item 16. List of Exhibits.

List below all exhibits filed as part of this statement of
eligibility.

1. Articles of association of the trustee as now in
effect, incorporated herein by reference to
Exhibit 1 on Form T-1, filed with respect to
Registration Statement on Form S-3, Registration
No. 33-54458.

2. Certificate of authority of the trustee to
commence business, incorporated herein by
reference to Exhibit 2 on Form T-1, filed with
respect to Registration Statement on Form S-3,
Registration No. 33-54458.

3. Authorization of the trustee to exercise
corporate trust powers, incorporated herein by
reference to Exhibit 3 on Form T-1, filed with
respect to Registration Statement on Form S-3,
Registration No. 33-54458.

<PAGE>

4. Existing bylaws of the trustee, incorporated
herein by reference to Exhibit 4 on Form T-1,
filed with respect to Registration Statement on
Form S-3, Registration No. 33-54458.

5. Not Applicable.

6. Consent of the trustee required by Section 321(b)
of the Trust Indenture Act of 1939.

7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, Signet Trust Company, a banking association
incorporated and existing under the laws of the Commonwealth of
Virginia, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned,
thereunto duly authorized all in the City of Baltimore, and
State of Maryland on the 13th day of January, 1994.

SIGNET TRUST COMPANY

By: DIANE E. TENHOOPEN
------------------
Name: Diane E. TenHoopen
Title: Vice President

<PAGE>

EXHIBIT 6
CONSENT OF TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust
Indenture Act of 1939 in connection with the SENIOR DEBT
SECURITIES of USF&G CORPORATION, we hereby consent that reports
of examinations of federal, state, territorial or district
authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.

SIGNET TRUST COMPANY

By: DIANE E. TENHOOPEN
------------------
Name: Diane E. TenHoopen
Title: Vice President

Dated: January 13, 1994

4099/BLUSEC

<PAGE>

EXHIBIT 7

4099/BLUSEC

<PAGE>

|------ ------|
| Affix the address label in this space. |
SIGNET TRUST COMPANY
------------------------------------------------------------
Legal Title of Bank

RICHMOND
-----------------------------------------------------------
City

VIRGINIA 23219
-----------------------------------------------------------
| State Zip Code |
| |
|----- ------|

FDIC Certificate Number |---|---|---|---|---|

CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 1993

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.

SCHEDULE RC -- BALANCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
|----------|
C100
Dollar Amounts in Thousands |------------------|
| Mil Thou
| |----|-----|
ASSETS |------------------|
1. Cash and balances due from depository institutions: RCON
a. Noninterest-bearing balances and currency and coin 1,2 ............. 0081 | 5 | 778 1.a.
RCON | |
b. Interest-bearing balances 3 ........................................ 0071 | NO | NE 1.b.
RCON | |
2. Securities (from Schedule RC-B) ....................................... 0390 | | 45 2.
------------------
3. Federal funds sold and securities purchased under agreements to resell:
| RCON | | |
a. Federal funds sold 4 ...............................................| 0276 | NO | NE | 3.a.
RCON
b. Securities purchased under agreements to resell 5 .................. 0277 NO NE 3.b.

4. Loans and lease financing receivables: |------------------|
a. Loans and leases, net of unearned income | RCON | | |
(from Schedule RC-C) ......................... | 2122 | NO | NE | 4.a.
| RCON | | |
b. LESS: Allowance for loan and lease losses ..... | 3123 | NO | NE | 4.b.
| RCON | | |
c. LESS: Allocated transfer risk reserve ......... | 3128 | NO | NE | 4.c.
-------------------
d. Loans and leases, net of unearned income, allowance, and reserve | RCON | | |
(item 4.a minus 4.b and 4.c) ..................................... 2125 NO NE 4.d.
RCON
5. Assets held in trading accounts ....................................... 2146 NO NE 5.
RCON
6. Premises and fixed assets (including capitalized leases) .............. 2145 2 249 6.
RCON
7. Other real estate owned (from Schedule RC-M) .......................... 2150 NO NE 7.

8. Investments in unconsolidated subsidiaries and associated companies RCON
(from Schedule RC-M) ................................................ 2130 NO NE 8.
RCON
9. Customers' liability to this bank on acceptances outstanding .......... 2155 NO NE 9.
RCON
10. Intangible assets (from Schedule RC-M) ................................ 2143 NO NE 10.
RCON
11. Other assets (from Schedule RC-F) ..................................... 2160 3 335 11.
|------------------|
<PAGE> |-------|
| 10 |
Schedule RC -- Continued |-------|

Dollar Amounts in Thousands |------------------|
| |Mil | Thou|
| |----------|
12. a. Total assets (sum of items 1 through 11) ........................... RCON
2170 11 407 12.a.
|-------|----|-----|
b. Losses deferred pursuant to 12 U.S.C. 1823(j) (from Schedule RC-M) . RCON
0306 NO NE 12.b.
|-------|----|-------
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823(j) RCON
(sum of items 12.a and 12.b) ..................................... 0307 11 407 12.c.
|-------|----|-----|
LIABILITIES
13. Deposits: |-------|----|-----|
a. In domestic offices (sum of totals of columns A and C from RCON
Schedule RC-E) |------------------| 2200 NO NE 13.a.
(1) Noninterest-bearing1 ....................... | RCON | | | 13.a.(1)
| 6631 | NO | NE |
(2) Interest-bearing ........................... | RCON | | | 13.a.(2)
| 6636 | NO | NE |
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs ......
(1) Noninterest-bearing ............................................
(2) Interest-bearing ...............................................
14. Federal funds purchased and securities sold under agreements to
repurchase: |-------|-----|----|
a. Federal funds purchased2 ........................................... | RCON | | |
0278 NO NE 14.a.
|-------|-----|----|
b. Securities sold under agreements to repurchase3 .................... RCON | | |
0279 | NO | NE |14.b.
|-------|-----|----|
15. Demand notes issued to the U.S. Treasury .............................. RCON
2840 NO NE 15.
|-------|-----|----|
16. Other borrowed money .................................................. RCON
2850 NO NE 16.
|-------|-----|----|
17. Mortgage indebtedness and obligations under capitalized leases ........ RCON
2910 NO NE 17.
|-------|-----|----|
18. Bank's liability on acceptances executed and outstanding .............. RCON
2920 NO NE 18.
|-------|-----|----|
19. Subordinated notes and debentures ..................................... RCON
3200 NO NE 19.
|-------|-----|----|
20. Other liabilities (from Schedule RC-G) ................................ RCON
2930 1 750 20.
|-------|-----|----|
21. Total liabilities (sum of items 13 through 20) ........................ RCON
2948 1 750 21.
|-------|-----|----|
|-------|-----|----|
22. Limited-life preferred stock and related surplus ...................... RCON
3282 NO NE 22.

EQUITY CAPITAL |-------|-----|----|
23. Perpetual preferred stock and related surplus ......................... RCON
3838 NO NE 23.
|------|-----|-----|
24. Common stock .......................................................... RCON
3230 1 200 24.
|-------|-----|----|
25. Surplus (exclude all surplus related to preferred stock) .............. RCON
3839 300 25.

<PAGE>
FFIEC
RC-2
|-------|
11
Schedule RC -- Continued |-------|

Dollar Amounts in Thousands |-------|-----|----|
26. a. Undivided profits and capital reserves ............................. RCON
3632 8 157 26.a.
|-------|-----|----|
RCON
b. LESS: Net unrealized loss on marketable equity securities ......... 0297 NO NE 26.b.
|-------|-----|----|
27. Cumulative foreign currency translation adjustments ...................
------------------
28. a. Total equity capital (sum of items 23 through 27) .................. RCON
3210 9 657 28.a.
-------------------
b. Losses deferred pursuant to 12 U.S.C. 1823(j) (from Schedule RC-M) . RCON
0306 NO NE 28.b.
--------------------
c. Total equity capital and losses deferred pursuant to 12 U.S.C. RCON
1823(j) (sum of items 28.a and 28.b) ............................. 3559 9 657 28.c.
--------------------
29. Total liabilities, limited-life preferred stock, equity capital, and --------------------
losses deferred pursuant to 12 U.S.C. 1823(j) (sum of items 21, 22, RCON
and 28.c) ........................................................... 2257 11 407 29.
|-------|-----|----|
</TABLE>

1 Includes cash items in process of collection and unposted debits. Report
deposit accounts "due from" depository institutions that are overdrawn in
Schedule RC, item 16, "Other borrowed money."
2 The amount reported in this item must be greater than or equal to the sum
of Schedule RC-M, items 2 and 3.
3 Includes time certificates of deposit not held in trading accounts.
4 Report "term federal funds sold" in Schedule RC, item 4.a, "Loans and
leases, net of unearned income," and in Schedule RC-C, part 1.
5 Report securities purchased under agreements to resell that involve the
receipt of immediately available funds and mature in one business day or
roll over under a continuing contract in Schedule RC, item 3.a, "Federal
funds sold."

Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed
for the bank by independent external auditors as of any date during 1992
Number
|-----|----|---
.... RCON N/A M.1.
6724
|-----|----|---
1=Independent audit of the bank conducted in
accordance with generally accepted auditing
standards by a certified public accounting
firm which submits a report on the bank
2=Independent audit of the bank's parent
holding company conducted in accordance
with generally accepted auditing standards
by a certified public accounting firm which
submits a report on the consolidated holding
company (but not on the bank separately)
3=Directors' examination of the bank conducted
in accordance with generally accepted
auditing standards by a certified public
accounting firm (may be required by state
chartering authority)
4=Directors' examination of the bank performed
by other external auditors (may be required
by state chartering authority)
5=Review of the bank's financial statements by
external auditors
6=Compilation of the bank's financial statements
by external auditors
7=Other audit procedures (excluding tax
preparation work)
8=No external audit work

1 Includes total demand deposits and noninterest-bearing time and savings
deposits.
2 Report "term federal funds purchased" in Schedule RC, item 16, "Other
borrowed money."
3 Report securities sold under agreements to repurchase that involve the
receipt of immediately available funds and mature in one business day or
roll over under a continuing contract in Schedule RC, item 14.a., "Federal
funds purchased."

3933/BLUSEC

<PAGE>