Exhibit 10.9

FORM OF

RAM HOLDINGS LTD.

AMENDED AND RESTATED 2006 EQUITY PLAN

NOTICE OF SHARE OPTION GRANT AND

SHARE OPTION AWARD AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

NOTICE OF SHARE OPTION GRANT

     RAM Holdings Ltd., a Bermuda exempted company (“RAM”), grants to the
Optionee named below an option (the “Option”) to purchase, in accordance with
the terms of the RAM Holdings Ltd. Amended and Restated 2006 Equity Plan (the
“Plan”) and this nonqualified share option agreement (the “Award Agreement”),
the number of Common Shares of RAM (the “Shares”) at the exercise price per
share (the “Exercise Price”) set forth as follows:

OPTIONEE               OPTIONS GRANTED               EXERCISE PRICE PER SHARE  
            DATE OF GRANT               EXPIRATION DATE     Seven years from the
Date of Grant.         VESTING SCHEDULE     The Options will vest in four equal
installments on each of the first four anniversaries of the Date of Grant.

 

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SHARE OPTION AWARD AGREEMENT

1.    Incorporation of Plan Terms.

     This Award Agreement and the Options granted hereby shall be subject to the
Plan, the terms of which are incorporated herein by reference, and in the event
of any conflict or inconsistency between the Plan and this Award Agreement, the
Plan shall govern. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Plan, a copy of which has been furnished to
the Optionee.

2.    Grant of Option.

     Subject to the conditions contained herein and in the Plan, RAM grants to
the Optionee, as of the Date of Grant, the Option to purchase the number of
Shares specified above at the Exercise Price. The Shares issuable upon exercise
of the Option are from time to time referred to herein as the “Option Shares.”
The grant of an Option shall impose no obligation on the part of the Optionee to
exercise the Option. The Option shall vest as specified above in the Notice of
Share Option Grant and be exercisable as hereinafter provided.

3.    Terms and Conditions of the Option.

The Option is granted subject to the following terms and conditions:

     (a) Vesting; Exercisability. The Option shall vest and become exercisable
in accordance with the vesting schedule set forth above in the Notice of Share
Option Grant, unless the Option has earlier vested or been forfeited in
accordance with the terms hereof.

     (b) Term of the Option. The Option shall terminate and no longer be
exercisable on the earlier of (i) the seventh anniversary of the Date of Grant
or (ii) the date specified for termination of the Option in Sections 4(a), 4(b)
and 4(c) below; provided, however, if the termination date falls on a date which
the Optionee is prohibited by RAM’s policy in effect on such date from engaging
in transactions in RAM’s securities, such termination date shall be extended to
ten business days following the first date that the Optionee has been advised
that the Optionee is permitted to engage in transactions in RAM’s securities
under such RAM policy.

     (c) Notice of Exercise. Subject to Sections 3(d) and 3(f) and 4 hereof, the
Optionee may exercise all or any portion of the Option (to the extent vested) by
giving notice of exercise to RAM or RAM’s agent, provided, however, that no less
than 10 Option Shares may be purchased upon any exercise of the Option unless
the number of Option Shares purchased at such time is the total number of Option
Shares in respect of which the Option is then exercisable, and provided,
further, that in no event shall the Option be exercisable for a fractional
share. The date of exercise of an Option shall be the later of (i) the date on
which RAM or RAM’s agent receives such notice or (ii) the date on which the
conditions provided in Sections 3(d) and 3(f) are satisfied. Notwithstanding any
other provision of this Award Agreement, the Optionee may not exercise the
Option, whether in whole or in part, and no Option Shares will be issued by RAM
in respect of any such attempted exercise, at any time when such exercise is
prohibited by RAM policy then in effect concerning transactions by the Optionee
in RAM’s securities.

     (d) Payment. Prior to the issuance of a certificate pursuant to Section
3(g) hereof evidencing the Option Shares in respect of which all or a portion of
the Option shall have been exercised, the Optionee shall have paid to RAM the
Exercise Price for all Option Shares

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purchased pursuant to the exercise of such Option. Payment may be made by
personal check, bank draft or postal or express money order (such modes of
payment are collectively referred to as “cash”) payable to the order of RAM in
U.S. dollars. Payment may also be made in Common Shares owned by the Optionee,
or in any combination of cash or such shares as the Committee in its sole
discretion may approve. Such shares shall be valued at their Fair Market Value
as of the date of exercise. Payment of the Exercise Price in Common Shares owned
by the Optionee shall be made by delivering to RAM the share certificate(s)
representing the required number of shares, with the Optionee signing his or her
name on the back, or by attaching executed share powers/share transfer forms
(with the signature of the Optionee authenticated in either case); payment of
the Exercise Price in Common Shares owned by the Optionee may also be made
through constructive surrender, by submission of an attestation of ownership in
the form approved by RAM and with such signatures or other guarantees as may be
required by RAM. In the discretion of the Committee, and in accordance with
rules and procedures established by the Committee (or by any person to whom
authority to establish such rules and procedures shall have been delegated by
the Committee), the Optionee shall be permitted to make a “cashless” exercise of
all or a portion of the Option. Common Shares issued pursuant to the exercise of
a Share Option shall, subject to the terms hereof, be purchased for
consideration, paid for at such times, by such methods, and in such forms,
including cash, share repurchase, option cancellation, Optionee services or
other consideration, as the Committee shall determine.

     (e) Shareholder Rights. The Optionee shall have no rights as a shareholder
with respect to any Shares issuable upon exercise of the Option until the
Optionee shall become the holder of record thereof, and no adjustment shall be
made for dividends or distributions or other rights in respect of any share for
which the record date is prior to the date upon which the Optionee shall become
the holder of record thereof.

     (f) Limitation on Exercise. The Option shall not be exercisable unless the
offer and sale of Common Shares pursuant thereto has been registered under the
Securities Act of 1933, as amended (the “1933 Act”), and qualified under
applicable state “blue sky” laws or RAM has determined that an exemption from
registration under the 1933 Act and from qualification under such state “blue
sky” laws is available.

     (g) Issuance of Shares. Subject to the foregoing conditions, as soon as is
reasonably practicable after its receipt of a proper notice of exercise and
payment of the Exercise Price for the number of Shares with respect to which the
Option is exercised, RAM either (i) shall deliver or cause to be delivered to
the Optionee (or to such person to whom the Option has been transferred pursuant
to Section 5 hereof; or following the Optionee’s death, to such other person
entitled to exercise the Option), at the principal office of RAM or at such
other location as may be acceptable to RAM and the Optionee (or such other
person), one or more share certificates in the name of the Optionee (or of the
person or persons to whom such option was transferred by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order)
for the appropriate number of Shares issued in connection with such exercise or
(ii) shall transfer the appropriate number of Shares issued in connection with
such exercise to the brokerage account designated by the Optionee to RAM in
writing prior to exercise. Such Shares shall be fully paid and nonassessable.

     (h) Non-qualified Status of the Option. The Option granted hereby is not
intended to qualify, and shall not be treated, as an “incentive stock option”
within the meaning of Code Section 422.

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4.    Termination of Service.

     (a) General. Subject to Section 4(c) hereof, if the Optionee’s service as a
director of the Board or the board of directors of any Subsidiary (“Service”)
terminates for any reason other than death prior to the satisfaction of any
vesting period requirement under Section 3(a) hereof, the unvested portion of
the Option shall be forfeited to RAM, and the Optionee shall have no further
right or interest therein, unless the Committee in its sole discretion shall
determine otherwise.

     (b) Exercise Following Termination of Service. If the Optionee’s Service
terminates for any reason other than death after the Option has vested in
accordance with Sections 3(a) and 4(a) hereof with respect to all or a portion
of the Shares subject to the Option, the Optionee shall have the right, subject
to the terms and conditions hereof and of the Plan, to exercise the Option, to
the extent it has vested as of the date of such termination of Service, at any
time within three months after the date of such Service, subject to the earlier
expiration of the Option and except as otherwise provided in Section 3(b).

     (c) Exercise Following Termination of Service Due to Death. If the
Optionee’s Service terminates due to death and prior to the satisfaction of any
vesting period requirement under Section 3(a) hereof, the Option shall be deemed
to have vested in full as of the date of death and may be exercised by the
Optionee, or the Optionee’s Permitted Transferee, estate, personal
representative or beneficiary, as the case may be, within three years after the
date of death, subject to the earlier expiration of the Option as provided in
Section 3(b).

     (d) Exercise Following Termination of Service Subject to RAM Policies on
Insider Trading. Any exercise of the Option pursuant to Section 4(b) above
following termination of the Optionee’s Service for any reason other than death
shall be subject to, and shall be permitted only to the extent such exercise
complies with, the policies of RAM concerning insider trading.

5.    Transfer; Option Exercisable Only by Optionee and Permitted Transferees.

     The Option may not be transferred, pledged, assigned, or otherwise disposed
of, except (i) by will or the laws of descent and distribution, (ii) pursuant to
a qualified domestic relations order, or (iii) for no consideration, subject to
such rules and conditions as may be established by the Committee, to a member or
members of the Optionee’s immediate family (as defined below) or to one or more
trusts or partnerships established in whole or in part for the benefit of one or
more of such immediate family members (the parties identified in clauses (i),
(ii), and (iii) being referred to collectively as “Permitted Transferees”). If
the Option is transferred to a Permitted Transferee, it shall be further
transferable only by will or the laws of descent and distribution or, for no
consideration, to another Permitted Transferee of the Optionee.

     The Optionee shall promptly notify RAM of any proposed transfer to a
Permitted Transferee in advance in writing and shall upon request provide RAM
with information concerning the Permitted Transferee’s financial condition and
investment experience. No assignment or transfer of the Option, or of the rights
represented thereby, whether voluntary or involuntary, by operation of law or
otherwise, except as permitted by this Section 5, shall vest in the assignee or
transferee any interest or right in the Option, but immediately upon any attempt
to assign or transfer the Option the same shall terminate and be of no force or
effect. For purposes of this Option Agreement, the Optionee’s “immediate family”
means any child, stepchild, grandchild, spouse, son-in-law or daughter-in-law
and shall include adoptive relationships.

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6.    Tax Withholding.

     RAM shall have the right, prior to the issuance of the Shares as set forth
in Section 3(g) hereof, to require the Optionee to remit to RAM any amount
sufficient to satisfy the minimum required Federal, state or local tax
withholding requirements. To the extent permitted by applicable law, RAM may
permit the Optionee to satisfy, in whole or in part, such obligation to remit
the minimum statutory withholding amount of taxes, by directing RAM to withhold
the Shares that would otherwise be received by the Optionee, pursuant to such
rules as the Committee may establish from time to time. RAM shall also have the
right to deduct from all cash payments made pursuant to or in connection with
the Option the minimum required Federal, state or local taxes required to be
withheld with respect to such payments or, if the Optionee so elects, up to the
maximum Federal, state or local income taxes or such lesser amount as determined
by RAM in order to assure that it complies with applicable accounting standards.

7.    No Restriction on Right to Effect Corporate Changes; No Right to Service.

     Neither the Plan, this Award Agreement nor the existence of the Option
shall affect in any way the right or power of RAM or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in RAM’s capital structure or its business, or any merger or
consolidation of RAM, or any issue of bonds, debentures, preferred or prior
preference shares ahead of or convertible into, or otherwise affecting the
Common Shares or the rights thereof, or the dissolution or liquidation of RAM,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

     In addition, neither this Award Agreement, the grant of the Option nor any
action taken hereunder shall be deemed to limit or restrict the right of RAM to
terminate the Optionee’s Service at any time, for any reason.

8.    Adjustment of and Changes in Shares.

     In the event of any merger, amalgamation, consolidation, recapitalization,
reclassification, share dividend, bonus issue, special cash dividend, or other
change in corporate structure affecting the Common Shares, the Committee shall,
as necessary, make such equitable adjustments, if any, as it reasonably deems
appropriate in the number and class of shares subject to, and the Exercise Price
of, the Option. The foregoing adjustments shall be made as reasonably determined
by the Committee in its sole discretion with a view to preserving the benefits
or potential benefits intended to be made available to the Optionee.

9.    Change in Control.

     (a) Committee Discretion to Take Certain Actions. The Committee, in its
sole discretion, may at any time prior to, coincident with or after the time of
a Change in Control (as defined herein):

     (i) provide for the acceleration of any vesting conditions relating to the
exercise of the Option or that the Option may be exercised in full on or before
a date fixed by the Committee;

     (ii) provide for the purchase of the Option, upon the Optionee’s request,
for an amount of cash equal to the amount, as determined by the Committee in its
sole discretion, which could have been realized upon the exercise of the Option
had the Option been currently exercisable;

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     (iii) make such adjustments to the Option as the Committee deems
appropriate to reflect such Change in Control; or

     (iv) cause the Option then to be assumed, or new rights substituted
therefor, by the surviving corporation in such Change in Control.

     Any such actions shall be authorized by the Committee, whose determination
as to what actions shall be taken and the extent thereof, shall be final.

     (b) Definitions. For purposes hereof, a “Change in Control” shall be deemed
to occur on the date on which one of the following events occurs:

     (i) the acquisition by any person, entity or “group” (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) of 50%, other than by
The PMI Group, Inc., or more of the combined voting power of the then
outstanding voting securities of RAM;

     (ii) the merger, amalgamation, reorganization, or consolidation of, or
share exchange involving RAM, as a result of which the shareholders of RAM
immediately before such transaction do not, immediately thereafter, own,
directly or indirectly, more than 50% of the combined voting power entitled to
vote generally in the election of directors of the merged or consolidated
company;

     (iii) a sale of all or substantially all of RAM’s assets; and

     (iv) approval by RAM of the liquidation or dissolution of RAM.

10.    Preemption of Applicable Laws and Regulations.

     Anything herein to the contrary notwithstanding, if, at any time specified
herein for the issuance of Shares to the Optionee, any law, regulation or
requirement of any governmental authority having jurisdiction shall require
either RAM or the Optionee to take any action in connection with the Shares then
to be issued, the issuance of such Shares shall be deferred until such action
shall have been taken.

11.    Committee Decisions Final.

     Any dispute or disagreement which shall arise under, or as a result of, or
pursuant to, or in connection with, this Award Agreement or the Option shall be
determined by the Committee, and any such determination or any other
determination by the Committee under or pursuant to this Award Agreement and any
interpretation by the Committee of the terms of the Option shall be final and
binding on all persons affected thereby.

12.    Amendments.

     The Committee shall have the power to alter or amend the terms of the
Option as set forth herein from time to time, in any manner consistent with the
provisions of Section 16 of the Plan, provided, however, that no amendment will
be made that is inconsistent with Code Section 409A. Any alteration or amendment
of the terms of the Option by the Committee shall, upon adoption, with written
consent to the extent required consistent herewith, become and be binding on all
persons affected thereby without requirement for consent or other action with
respect thereto by any such person. The Committee shall give written notice to
the Optionee of any such alteration or amendment as promptly as practicable
after

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the adoption thereof. The foregoing shall not restrict the ability of the
Optionee and RAM by mutual consent to alter or amend the terms of the Option in
any manner which is consistent with the Plan and approved by the Committee.
Notwithstanding anything in the Plan to the contrary, the Committee may amend
this Award Agreement, without the consent of any Optionee, to the extent it
deems necessary or desirable to comply with Code Section 409A.

13.    Notice Requirements.

     Any notice which either party hereto may be required or permitted to give
to the other shall be in writing. Such notice may be delivered to RAM personally
or by mail, postage prepaid and shall be addressed to RAM in care of its
Secretary at the principal executive office of RAM and to the Optionee at the
address appearing in RAM’s records of RAM for the Optionee or to either party at
such other address as either party hereto may hereafter designate in writing to
the other. Any such notice shall be deemed effective upon receipt thereof by the
addressee.

14.    Governing Law.

     The terms and conditions stated herein are to be governed by, and construed
in accordance with, the laws of New York.

15.    Entire Agreement; Headings.

     This Award Agreement and the other related documents expressly referred to
herein set forth the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings relating to the
subject matter hereof. In the event of a discrepancy or inconsistency in the
number of Shares covered by the Option, the Date of Grant, the vesting schedule,
the Exercise Price or any other term in this Award Agreement and the resolutions
of the Committee authorizing the grant of the Option covered hereby, such
resolutions shall control and RAM shall have the right, in its sole discretion,
to replace the Award Agreement or any portion thereof with a correct version.
The headings of Sections and subsections herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of this Award Agreement.

  RAM HOLDINGS LTD.     By:         Name:       Title:                          
    OPTIONEE:                               Print Name:  

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