Document:

Exhibit 4.1

                       FORM OF FLOATING RATE SENIOR NOTE

REGISTERED                                                               U.S.$
No. FLR-1                                                                CUSIP:

     Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.

<PAGE>

                                MORGAN STANLEY
                   SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES F
                                (Floating Rate)

                   CAPITAL PROTECTED NOTE DUE APRIL 20, 2010
                BASED ON THE VALUE OF A BASKET OF THREE INDICES

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
<S>                           <C>                                    <C>
BASE RATE: None               ORIGINAL ISSUE DATE:                   MATURITY DATE:
                                                                        See "Maturity Date" below.
------------------------------------------------------------------------------------------------------------
INDEX MATURITY: N/A           INTEREST ACCRUAL DATE: N/A             INTEREST PAYMENT DATE(S): N/A
------------------------------------------------------------------------------------------------------------
SPREAD (PLUS OR MINUS): N/A   INITIAL INTEREST RATE: N/A             INTEREST PAYMENT PERIOD: N/A
------------------------------------------------------------------------------------------------------------
SPREAD MULTIPLIER: N/A        INITIAL INTEREST RESET DATE: N/A       INTEREST RESET PERIOD: N/A
------------------------------------------------------------------------------------------------------------
REPORTING SERVICE: N/A        MAXIMUM INTEREST RATE: N/A             INTEREST RESET DATE(S): N/A
------------------------------------------------------------------------------------------------------------
INDEX CURRENCY: N/A           MINIMUM INTEREST RATE: N/A             CALCULATION AGENT: See "Calculation
                                                                        Agent" below.
------------------------------------------------------------------------------------------------------------
EXCHANGE RATE AGENT: N/A      INITIAL REDEMPTION DATE: N/A           SPECIFIED CURRENCY:
                                                                        U.S. dollars
------------------------------------------------------------------------------------------------------------
                              INITIAL REDEMPTION PERCENTAGE: N/A     IF SPECIFIED CURRENCY OTHER THAN U.S.
                                                                        DOLLARS, OPTION TO ELECT PAYMENT
                                                                        IN U.S. DOLLARS: N/A
------------------------------------------------------------------------------------------------------------
                              ANNUAL REDEMPTION PERCENTAGE           DESIGNATED CMT TELERATE PAGE: N/A
                                 REDUCTION: N/A
------------------------------------------------------------------------------------------------------------
                              OPTIONAL REPAYMENT DATE(S): N/A        DESIGNATED CMT MATURITY INDEX: N/A
------------------------------------------------------------------------------------------------------------
                              REDEMPTION NOTICE PERIOD: N/A
------------------------------------------------------------------------------------------------------------
                              TAX REDEMPTION AND PAYMENT OF
                                 ADDITIONAL AMOUNTS: NO
------------------------------------------------------------------------------------------------------------
                              IF YES, STATE INITIAL OFFERING DATE:   OTHER PROVISIONS: See below.
                                 N/A
------------------------------------------------------------------------------------------------------------
</TABLE>

Denominations.....................  $

Stated Principal Amount...........  $

Pricing Date......................

Basket Setting Date...............  With respect to the S&P 500 Index, the
                                    Pricing Date. With respect to the Dow Jones
                                    EURO STOXX 50

                                       2
<PAGE>

                                    Index and the Nikkei 225 Index, the Index
                                    Business Day immediately following the
                                    Pricing Date.

Maturity Date.....................  April 20, 2010, subject to extension in
                                    accordance with the following paragraph in
                                    the event of a Market Disruption Event on
                                    the Determination Date.

                                    If, due to a Market Disruption Event or
                                    otherwise, the Determination Date with
                                    respect to any Underlying Index is
                                    postponed so that it falls less than two
                                    scheduled Trading Days prior to the
                                    scheduled Maturity Date, the Maturity Date
                                    shall be the second scheduled Trading Day
                                    following the Determination Date with
                                    respect to any Underlying Index so
                                    postponed. See "Determination Date" below.

                                    In the event that the Determination Date
                                    with respect to any Underlying Index is
                                    postponed due to a Market Disruption Event
                                    or otherwise, the Issuer shall give notice
                                    of such postponement as promptly as
                                    possible, and in no case later than one
                                    Business Day following the scheduled
                                    Determination Date, (i) to the holder of
                                    this Note by mailing notice of such
                                    postponement by first class mail, postage
                                    prepaid, to the holder's last address as it
                                    shall appear upon the registry books, (ii)
                                    to the Trustee by telephone or facsimile
                                    confirmed by mailing such notice to the
                                    Trustee by first class mail, postage
                                    prepaid, at its New York office and (iii)
                                    to The Depository Trust Company (the
                                    "Depositary") by telephone or facsimile
                                    confirmed by mailing such notice to the
                                    Depositary by first class mail, postage
                                    prepaid. Any notice that is mailed in the
                                    manner herein provided shall be
                                    conclusively presumed to have been duly
                                    given, whether or not the holder of this
                                    Note receives the notice.

Underlying Indices................  The Underlying Indices and their respective
                                    Percentage Weightings, Initial Index
                                    Closing Values and Multipliers are set
                                    forth in the table below.

                                          Percentage  Initial Index  Multiplier
          Basket Indices                   Weighting  Closing Value
          ------------------------------  ----------  -------------  ----------
          Dow Jones EURO STOXX 50 Index:    33.33%
          S&P 500 Index:                    33.33%
          Nikkei 225 Index:                 33.33%

                                    References to Underlying Indices shall
                                    include any Successor Indices (as defined
                                    under "Discontinuance

                                       3
<PAGE>

                                    of any Underlying Index; Alteration of
                                    Method of Calculation" below), unless the
                                    context requires otherwise.

Payment at Maturity...............  At maturity, upon delivery of this Note to
                                    the Trustee, the Issuer shall pay with
                                    respect to each Stated Principal Amount of
                                    this Note an amount in cash equal to the
                                    Stated Principal Amount of this Note plus
                                    the Supplemental Redemption Amount, if any.

                                    The Issuer shall, or shall cause the
                                    Calculation Agent to, (i) provide written
                                    notice to the Trustee at its New York
                                    office, on which notice the Trustee may
                                    conclusively rely, and to the Depositary of
                                    the Payment at Maturity on or prior to
                                    10:30 a.m. on the Trading Day preceding the
                                    Maturity Date (but if such Trading Day is
                                    not a Business Day, prior to the close of
                                    business on the Business Day preceding the
                                    Maturity Date) and (ii) deliver the
                                    aggregate cash amount due with respect to
                                    this Note to the Trustee for delivery to
                                    the holder of this Note on the Maturity
                                    Date.

Supplemental Redemption
  Amount..........................  The Supplemental Redemption Amount shall be
                                    equal to (i) the Stated Principal Amount
                                    times (ii) the Participation Rate times
                                    (iii) the Index Percent Change; provided
                                    that the Supplemental Redemption Amount
                                    shall not be less than zero. The
                                    Calculation Agent shall calculate the
                                    Supplemental Redemption Amount on the
                                    Determination Date.

Index Percent Change..............  The Index Percent Change is a fraction, the
                                    numerator of which shall be the Final Index
                                    Value minus the Initial Index Value and the
                                    denominator of which shall be the Initial
                                    Index Value. The Index Percent Change is
                                    described by the following formula:

                                      Final Index Value - Initial Index Value
                                      ---------------------------------------
                                                Initial Index Value

Participation Rate................      %

Basket Closing Value..............  The Basket Closing Value on the
                                    Determination Date shall equal the sum of
                                    the products of the Index Closing Value of
                                    each Underlying Index on the Determination
                                    Date and the relevant Multiplier. In

                                       4
<PAGE>

                                    certain circumstances, the Basket Closing
                                    Value shall be based on the alternate
                                    calculation of the Underlying Indices
                                    described under "Discontinuance of any
                                    Underlying Index; Alteration of Method of
                                    Calculation."

Initial Index Value...............

Final Index Value.................  The Basket Closing Value on the
                                    Determination Date.

Index Closing Value...............  The Index Closing Value of any Underlying
                                    Index on any Index Business Day shall equal
                                    the closing value of such Underlying Index
                                    or any Successor Index (as defined under
                                    "Discontinuance of any Underlying Index;
                                    Alteration of Method of Calculation" below)
                                    as displayed on the applicable Bloomberg
                                    Page at the regular weekday close of
                                    trading on that Index Business Day. In
                                    certain circumstances, the Index Closing
                                    Value of the Underlying Index shall be
                                    based on the alternate calculation of the
                                    Underlying Index described under
                                    "Discontinuance of any Underlying Index;
                                    Alteration of Method of Calculation."

                                    In this Note, references to an Underlying
                                    Index shall include any Successor Index of
                                    such Underlying Index, unless the context
                                    requires otherwise.

Bloomberg Page....................  The display page so designated by Bloomberg
                                    Financial Markets ("Bloomberg") or any
                                    other display page that may replace that
                                    display page on Bloomberg and any successor
                                    service thereto. If Bloomberg or any
                                    successor service no longer displays the
                                    Index Closing Value of any of the
                                    Underlying Indices, then the Calculation
                                    Agent shall designate an alternate source
                                    of such Index Closing Value, which shall be
                                    the publisher of such index, unless the
                                    Calculation Agent, in its sole discretion,
                                    determines that an alternate service has
                                    become the market standard for transactions
                                    related to such index.

Determination Date................  The Determination Date shall be April 15,
                                    2010, subject to adjustment for non-Index
                                    Business Days or Market Disruption Events
                                    with respect to an Underlying Index as
                                    described in the following paragraph.

                                       5
<PAGE>

                                    If a Market Disruption Event with respect
                                    to an Underlying Index occurs on the
                                    scheduled Determination Date or if such
                                    Determination Date is not an Index Business
                                    Day, the Index Closing Value or Basket
                                    Closing Value for such Determination Date
                                    will be determined on the immediately
                                    succeeding Index Business Day on which no
                                    Market Disruption Event shall have
                                    occurred; provided that a Market Disruption
                                    Event with respect to any particular
                                    Underlying Index will not be a Market
                                    Disruption Event with respect to any other
                                    Underlying Index.

Trading Day.......................  A day, as determined by the Calculation
                                    Agent, on which trading is generally
                                    conducted on the Relevant Exchange(s).

Index Business Day................  Any Trading Day other than a Saturday or
                                    Sunday on which the Underlying Indices (or
                                    Successor Indices) are calculated.

Market Disruption Event...........  Market Disruption Event means, with respect
                                    to any Underlying Index, the occurrence or
                                    existence of any of the following events,
                                    as determined by the Calculation Agent in
                                    its sole discretion:

                                    (i) a suspension, absence or material
                                    limitation of trading of stocks then
                                    constituting 20 percent or more of the
                                    level of any Underlying Index (or the
                                    relevant successor index) on the Relevant
                                    Exchange(s) for such securities for more
                                    than two hours of trading or during the
                                    one-half hour period preceding the close of
                                    the principal trading session on such
                                    Relevant Exchange(s);

                                    (ii) a breakdown or failure in the price
                                    and trade reporting systems of any Relevant
                                    Exchange as a result of which the reported
                                    trading prices for stocks then constituting
                                    20 percent or more of the level of any
                                    Underlying Index (or the relevant successor
                                    index) during the last one-half hour
                                    preceding the close of the principal
                                    trading session on such Relevant
                                    Exchange(s) are materially inaccurate; and

                                    (iii) the suspension, material limitation
                                    or absence of trading on any major
                                    securities market for trading in futures or
                                    options contracts or exchange traded funds
                                    related to an Underlying Index (or the
                                    relevant

                                       6
<PAGE>

                                    successor index) for more than two hours of
                                    trading or during the one-half hour period
                                    preceding the close of the principal
                                    trading session on such market.

                                    For the purpose of determining whether a
                                    Market Disruption Event exists at any time,
                                    if trading in a security included in an
                                    Underlying Index is materially suspended or
                                    materially limited at that time, then the
                                    relevant percentage contribution of that
                                    security to the value of such Underlying
                                    Index shall be based on a comparison of (x)
                                    the portion of the value of such Underlying
                                    Index attributable to that security
                                    relative to (y) the overall value of such
                                    Underlying Index, in each case immediately
                                    before that suspension or limitation.

                                    For purposes of determining whether a
                                    Market Disruption Event has occurred: (1) a
                                    limitation on the hours or number of days
                                    of trading will not constitute a Market
                                    Disruption Event if it results from an
                                    announced change in the regular business
                                    hours of the Relevant Exchange or market,
                                    (2) a decision to permanently discontinue
                                    trading in the relevant futures or options
                                    contract or exchange traded fund will not
                                    constitute a Market Disruption Event, (3)
                                    limitations pursuant to the rules of any
                                    Relevant Exchange similar to NYSE Rule 80A
                                    (or any applicable rule or regulation
                                    enacted or promulgated by any other
                                    self-regulatory organization or any
                                    government agency of scope similar to NYSE
                                    Rule 80A as determined by the Calculation
                                    Agent) on trading during significant market
                                    fluctuations will constitute a suspension,
                                    absence or material limitation of trading,
                                    (4) a suspension of trading in futures or
                                    options contracts or exchange traded funds
                                    on an Underlying Index by the primary
                                    securities market trading in such contracts
                                    or funds by reason of (a) a price change
                                    exceeding limits set by such exchange or
                                    market, (b) an imbalance of orders relating
                                    to such contracts or funds, or (c) a
                                    disparity in bid and ask quotes relating to
                                    such contracts or funds will constitute a
                                    suspension, absence or material limitation
                                    of trading in futures or options contracts
                                    or exchange traded funds related to an
                                    Underlying Index and (5) a "suspension,
                                    absence or material limitation of trading"
                                    on any Relevant Exchange or on the primary
                                    market on which futures

                                       7
<PAGE>

                                    or options contracts or exchange traded
                                    funds related to an Underlying Index are
                                    traded will not include any time when such
                                    market is itself closed for trading under
                                    ordinary circumstances.

Relevant Exchange.................  Relevant Exchange means the primary
                                    exchange(s) or market(s) of trading for (i)
                                    any security then included in any
                                    Underlying Index, or any Successor Index,
                                    and (ii) any futures or options contracts
                                    related to such Underlying Index or to any
                                    security then included in any Underlying
                                    Index.

Alternate Exchange Calculation
  in Case of an Event
  of Default....................... If an event of default with respect to this
                                    Note shall have occurred and be continuing,
                                    the Calculation Agent will determine the
                                    amount declared due and payable for each
                                    Stated Principal Amount of this Note upon
                                    any acceleration of this Note (the
                                    "Acceleration Amount"), which shall be
                                    equal to such Stated Principal Amount (the
                                    "Acceleration Amount"), plus the
                                    Supplemental Redemption Amount, if any,
                                    determined as though the Basket Closing
                                    Value for any Determination Date scheduled
                                    to occur on or after the date of such
                                    acceleration were the Basket Closing Value
                                    on the date of acceleration.

                                    If the maturity of this Note is accelerated
                                    because of an event of default as described
                                    above, the Issuer shall, or shall cause the
                                    Calculation Agent to, provide written
                                    notice to the Trustee at its New York
                                    office, on which notice the Trustee may
                                    conclusively rely, and to the Depositary of
                                    the Acceleration Amount and the aggregate
                                    cash amount due with respect to this Note
                                    as promptly as possible and in no event
                                    later than two Business Days after the date
                                    of acceleration.

Calculation Agent.................  Morgan Stanley & Co. Incorporated and its
                                    successors ("MS & Co.")

                                    All determinations made by the Calculation
                                    Agent shall be at the sole discretion of
                                    the Calculation Agent and shall, in the
                                    absence of manifest error, be conclusive
                                    for all purposes and binding on the holder
                                    of this Note, the Trustee and the Issuer.

                                    All calculations with respect to the Basket
                                    Closing Value on the Determination Date,
                                    the Final Index

                                       8
<PAGE>

                                    Value and the Supplemental Redemption
                                    Amount, if any, shall be made by the
                                    Calculation Agent and shall be rounded to
                                    the nearest one hundred-thousandth, with
                                    five one-millionths rounded upward (e.g.,
                                    .876545 would be rounded to .87655); all
                                    dollar amounts related to determination of
                                    the amount of cash payable per Note shall
                                    be rounded to the nearest ten-thousandth,
                                    with five one hundred-thousandths rounded
                                    upward (e.g., .76545 would be rounded up to
                                    .7655); and all dollar amounts paid on the
                                    aggregate principal amount of this Note
                                    shall be rounded to the nearest cent, with
                                    one-half cent rounded upward.

Discontinuance of any Underlying
  Index; Alteration of Method of
  Calculation.....................  If the publication of any Underlying Index
                                    is discontinued and a successor or
                                    substitute index that MS & Co., as the
                                    Calculation Agent, determines, in its sole
                                    discretion, to be comparable to the
                                    discontinued Underlying Index (such index
                                    being referred to herein as a "Successor
                                    Index") is published, then any subsequent
                                    Index Closing Value shall be determined by
                                    reference to the value of such Successor
                                    Index at the regular official weekday close
                                    of the principal trading session of the
                                    Relevant Exchange or market for the
                                    Successor Index on the date that any Index
                                    Closing Value is to be determined.

                                    Upon any selection by the Calculation Agent
                                    of a Successor Index, the Calculation Agent
                                    shall cause written notice thereof to be
                                    furnished to the Trustee, to the Issuer and
                                    to the Depositary, as holder of this Note,
                                    within three Trading Days of such
                                    selection.

                                    If the publication of an Underlying Index
                                    is discontinued prior to, and such
                                    discontinuance is continuing on, the date
                                    that any Index Closing Value is to be
                                    determined and MS & Co., as the Calculation
                                    Agent, determines, in its sole discretion,
                                    that no Successor Index is available at
                                    such time, then the Calculation Agent shall
                                    determine the relevant Index Closing Value
                                    for such date in accordance with the
                                    formula for calculating such Underlying
                                    Index last in effect prior to such
                                    discontinuance, without rebalancing or
                                    substitution, using the closing price (or,
                                    if trading in the relevant securities has
                                    been materially

                                       9
<PAGE>

                                    suspended or materially limited, its good
                                    faith estimate of the closing price that
                                    would have prevailed but for such
                                    suspension or limitation) at the close of
                                    the principal trading session of the
                                    Relevant Exchange on such date of each
                                    security most recently comprising such
                                    Underlying Index on the Relevant Exchange.

                                    If at any time the method of calculating an
                                    Underlying Index or a Successor Index, or
                                    the value thereof, is changed in a material
                                    respect, or if an Underlying Index or a
                                    Successor Index is in any other way
                                    modified so that such index does not, in
                                    the opinion of MS & Co., as the Calculation
                                    Agent, fairly represent the value of such
                                    Underlying Index or such Successor Index
                                    had such changes or modifications not been
                                    made, then, from and after such time, the
                                    Calculation Agent shall, at the close of
                                    business in New York City on each date on
                                    which the Index Closing Value for such
                                    Underlying Index is to be determined, make
                                    such calculations and adjustments as, in
                                    the good faith judgment of the Calculation
                                    Agent, may be necessary in order to arrive
                                    at a value of a stock index comparable to
                                    such Underlying Index or such Successor
                                    Index, as the case may be, as if such
                                    changes or modifications had not been made,
                                    and the Calculation Agent shall determine
                                    the Final Index Value with reference to
                                    such Underlying Index or such Successor
                                    Index, as adjusted. Accordingly, if the
                                    method of calculating such Underlying Index
                                    or a Successor Index is modified so that
                                    the value of such index is a fraction of
                                    what it would have been if it had not been
                                    modified (e.g., due to a split in the
                                    index), then the Calculation Agent shall
                                    adjust such index in order to arrive at a
                                    value of such Underlying Index or such
                                    Successor Index as if it had not been
                                    modified (i.e., as if such split had not
                                    occurred).

                                      10
<PAGE>

     Morgan Stanley, a Delaware corporation (together with its successors and
assigns, the "Issuer"), for value received, hereby promises to pay to CEDE &
CO., or registered assignees, the amount of cash, as determined in accordance
with the provisions set forth under "Payment at Maturity" above, due with
respect to the principal sum of U.S.$             (UNITED STATES DOLLARS
                ) on the Maturity Date specified above (except to the extent
redeemed or repaid prior to the maturity) and to pay interest thereon from and
including the Interest Accrual Date specified above at a rate per annum equal
to the Initial Interest Rate specified above or determined in accordance with
the provisions specified on the reverse hereof until the Initial Interest Reset
Date specified above, and thereafter at a rate per annum determined in
accordance with the provisions specified on the reverse hereof until the
principal hereof is paid or duly made available for payment. Unless such rate
is otherwise specified on the face hereof, the Calculation Agent shall
determine the Initial Interest Rate for this Note in accordance with the
provisions specified on the reverse hereof. The Issuer will pay interest in
arrears weekly, monthly, quarterly, semiannually or annually as specified above
as the Interest Payment Period on each Interest Payment Date (as specified
above), commencing with the first Interest Payment Date next succeeding the
Interest Accrual Date specified above, and on the Maturity Date (or any
redemption or repayment date); provided, however, that if the Interest Accrual
Date occurs between a Record Date, as defined below, and the next succeeding
Interest Payment Date, interest payments will commence on the second Interest
Payment Date succeeding the Interest Accrual Date to the registered holder of
this Note on the Record Date with respect to such second Interest Payment Date;
and provided, further, that if an Interest Payment Date (other than the
Maturity Date or redemption or repayment date) would fall on a day that is not
a Business Day, as defined on the reverse hereof, such Interest Payment Date
shall be the following day that is a Business Day, except that if the Base Rate
specified above is LIBOR or EURIBOR and such next Business Day falls in the
next calendar month, such Interest Payment Date shall be the immediately
preceding day that is a Business Day; and provided, further, that if the
Maturity Date or redemption or repayment date would fall on a day that is not a
Business Day, such payment shall be made on the following day that is a
Business Day and no interest shall accrue for the period from and after such
Maturity Date or redemption or repayment date.

     Interest on this Note will accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day) (each such date, a "Record Date"); provided, however, that interest
payable at maturity (or any redemption or repayment date) will be payable to
the person to whom the principal hereof shall be payable.

     Payment of the principal of and premium, if any, and interest on this Note
due at maturity (or any redemption or repayment date), unless this Note is
denominated in a Specified Currency other than U.S. dollars and is to be paid
in whole or in part in such Specified Currency, will be made in immediately
available funds upon surrender of this Note at the office or agency of the

                                      11
<PAGE>

Paying Agent, as defined on the reverse hereof, maintained for that purpose in
the Borough of Manhattan, The City of New York, or at such other paying agency
as the Issuer may determine, in U.S. dollars. U.S. dollar payments of interest,
other than interest due at maturity or any date of redemption or repayment,
will be made by U.S. dollar check mailed to the address of the person entitled
thereto as such address shall appear in the Note register. A holder of U.S.
$10,000,000 (or the equivalent in a Specified Currency) or more in aggregate
principal amount of Notes having the same Interest Payment Date, the interest
on which is payable in U.S. dollars, shall be entitled to receive payments of
interest, other than interest due at maturity or on any date of redemption or
repayment, by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received by the Paying Agent in writing not
less than 15 calendar days prior to the applicable Interest Payment Date.

     If this Note is denominated in a Specified Currency other than U.S.
dollars, and the holder does not elect (in whole or in part) to receive payment
in U.S. dollars pursuant to the next succeeding paragraph, payments of
principal, premium, if any, and interest with regard to this Note will be made
by wire transfer of immediately available funds to an account maintained by the
holder hereof with a bank located outside the United States if appropriate wire
transfer instructions have been received by the Paying Agent in writing, with
respect to payments of interest, on or prior to the fifth Business Day after
the applicable Record Date and, with respect to payments of principal or any
premium, at least ten Business Days prior to the Maturity Date or any
redemption or repayment date, as the case may be; provided that, if payment of
interest, principal or any premium with regard to this Note is payable in euro,
the account must be a euro account in a country for which the euro is the
lawful currency, provided, further, that if such wire transfer instructions are
not received, such payments will be made by check payable in such Specified
Currency mailed to the address of the person entitled thereto as such address
shall appear in the Note register; and provided, further, that payment of the
principal of this Note, any premium and the interest due at maturity (or on any
redemption or repayment date) will be made upon surrender of this Note at the
office or agency referred to in the preceding paragraph.

     If so indicated on the face hereof, the holder of this Note, if
denominated in a Specified Currency other than U.S. dollars, may elect to
receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the fifth
Business Day after such Record Date or at least ten Business Days prior to the
Maturity Date or any redemption or repayment date, as the case may be. Such
election shall remain in effect unless such request is revoked by written
notice to the Paying Agent as to all or a portion of payments on this Note at
least five Business Days prior to such Record Date, for payments of interest,
or at least ten calendar days prior to the Maturity Date or any redemption or
repayment date, for payments of principal, as the case may be.

     If the holder elects to receive all or a portion of payments of principal
of, premium, if any, and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest bid quotation in The City of New York received by such Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment

                                      12
<PAGE>

date from three recognized foreign exchange dealers (one of which may be the
Exchange Rate Agent unless such Exchange Rate Agent is an affiliate of the
Issuer) for the purchase by the quoting dealer of the Specified Currency for
U.S. dollars for settlement on such payment date in the amount of the Specified
Currency payable in the absence of such an election to such holder and at which
the applicable dealer commits to execute a contract. If such bid quotations are
not available, such payment will be made in the Specified Currency. All
currency exchange costs will be borne by the holder of this Note by deductions
from such payments.

     Reference is hereby made to the further provisions of this Note 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 Note shall
not be entitled to any benefit under the Senior Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.

                                      13
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

DATED:                               MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A., as Trustee

By:
    --------------------------------------------
    Authorized Officer

                                      14
<PAGE>

                          FORM OF REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series F, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under a Senior Indenture,
dated as of November 1, 2004, between the Issuer and JPMorgan Chase Bank, N.A.
(formerly known as JPMorgan Chase Bank), as Trustee (the "Trustee," which term
includes any successor trustee under the Senior Indenture) (as may be amended
or supplemented from time to time, the "Senior Indenture"), to which Senior
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities of the Issuer, the Trustee and holders of the Notes and the terms
upon which the Notes are, and are to be, authenticated and delivered. The
Issuer has appointed JPMorgan Chase Bank, N.A., at its corporate trust office
in The City of New York as the paying agent (the "Paying Agent," which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby
incorporated by reference herein.

     Unless otherwise indicated on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof
in accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face hereof, this Note may be redeemed in whole or
in part at the option of the Issuer on or after the Initial Redemption Date
specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register not less than 30 nor
more than 60 calendar days prior to the date fixed for redemption or within the
Redemption Notice Period specified on the face hereof, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption
of this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.

     If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments
of $1,000 or, if this Note is denominated in a Specified Currency other than
U.S. dollars, in increments of 1,000 units of such Specified Currency (provided
that any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of the holder hereof at a price
equal to 100% of the principal amount to be repaid, together with interest
accrued and unpaid hereon to the date of repayment. For this Note to be

                                       15
<PAGE>

repaid at the option of the holder hereof, the Paying Agent must receive at its
corporate trust office in the Borough of Manhattan, The City of New York, at
least 15 but not more than 30 calendar days prior to the date of repayment, (i)
this Note with the form entitled "Option to Elect Repayment" below duly
completed or (ii) a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or a trust company in the United
States setting forth the name of the holder of this Note, the principal amount
hereof, the certificate number of this Note or a description of this Note's
tenor and terms, the principal amount hereof to be repaid, a statement that the
option to elect repayment is being exercised thereby and a guarantee that this
Note, together with the form entitled "Option to Elect Repayment" duly
completed, will be received by the Paying Agent not later than the fifth
Business Day after the date of such telegram, telex, facsimile transmission or
letter; provided, that such telegram, telex, facsimile transmission or letter
shall only be effective if this Note and form duly completed are received by
the Paying Agent by such fifth Business Day. Exercise of such repayment option
by the holder hereof shall be irrevocable. In the event of repayment of this
Note in part only, a new Note or Notes for the amount of the unpaid portion
hereof shall be issued in the name of the holder hereof upon the cancellation
hereof.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption, if the Issuer determines that, as a result of any change in or
amendment to the laws (including a holding, judgment or as ordered by a court
of competent jurisdiction), or any regulations or rulings promulgated
thereunder, of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in official
position regarding the application or interpretation of such laws, regulations
or rulings, which change or amendment occurs, becomes effective or, in the case
of a change in official position, is announced on or after the Initial Offering
Date hereof, the Issuer has or will become obligated to pay Additional Amounts,
as defined below, with respect to this Note as described below. Prior to the
giving of any notice of redemption pursuant to this paragraph, the Issuer shall
deliver to the Trustee (i) a certificate stating that the Issuer is entitled to
effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer to so redeem have occurred, and
(ii) an opinion of independent legal counsel satisfactory to the Trustee to
such effect based on such statement of facts; provided that no such notice of
redemption shall be given earlier than 60 calendar days prior to the earliest
date on which the Issuer would be obligated to pay such Additional Amounts if a
payment in respect of this Note were then due.

     Notice of redemption will be given not less than 30 nor more than 60
calendar days prior to the date fixed for redemption or within the Redemption
Notice Period specified on the face hereof, which date and the applicable
redemption price will be specified in the notice.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a U.S. Alien as may be
necessary in order that every net payment of the principal of and

                                      16
<PAGE>

interest on this Note and any other amounts payable on this Note, after
withholding or deduction for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment
by the United States, or any political subdivision or taxing authority thereof
or therein, will not be less than the amount provided for in this Note to be
then due and payable. The Issuer will not, however, make any payment of
Additional Amounts to any such holder who is a U.S. Alien for or on account of:

     (a) any present or future tax, assessment or other governmental charge
that would not have been so imposed but for (i) the existence of any present or
former connection between such holder, or between a fiduciary, settlor,
beneficiary, member or shareholder of such holder, if such holder is an estate,
a trust, a partnership or a corporation for U.S. federal income tax purposes,
and the United States, including, without limitation, such holder (, or such
fiduciary, settlor, beneficiary, member or shareholder) being or having been a
citizen or resident thereof or being or having been engaged in a trade or
business or present therein or having, or having had, a permanent establishment
therein or (ii) the presentation by or on behalf of the holder of this Note for
payment on a date more than 15 calendar days after the date on which such
payment became due and payable or the date on which payment thereof is duly
provided for, whichever occurs later;

     (b) any estate, inheritance, gift, sales, transfer, excise or personal
property tax or any similar tax, assessment or governmental charge;

     (c) any tax, assessment or other governmental charge imposed by reason of
such holder's past or present status as a controlled foreign corporation or
passive foreign investment company with respect to the United States or as a
corporation which accumulates earnings to avoid U.S. federal income tax or as a
private foundation or other tax-exempt organization or a bank receiving
interest under Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended;

     (d) any tax, assessment or other governmental charge that is payable
otherwise than by withholding or deduction from payments on or in respect of
this Note;

     (e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal of, or interest on,
this Note, if such payment can be made without such withholding by any other
Paying Agent in a city in Western Europe;

     (f) any tax, assessment or other governmental charge that would not have
been imposed but for the failure to comply with certification, information or
other reporting requirements concerning the nationality, residence or identity
of the holder or beneficial owner of this Note, if such compliance is required
by statute or by regulation of the United States or of any political
subdivision or taxing authority thereof or therein as a precondition to relief
or exemption from such tax, assessment or other governmental charge;

     (g) any tax, assessment or other governmental charge imposed by reason of
such holder's past or present status as the actual or constructive owner of 10%
or more of the total combined voting power of all classes of stock entitled to
vote of the Issuer or as a direct or indirect subsidiary of the Issuer; or

     (h) any combination of items (a), (b), (c), (d), (e), (f) or (g).

                                      17
<PAGE>

     In addition, the Issuer shall not be required to make any payment of
Additional Amounts (i) to any such holder where such withholding or deduction
is imposed on a payment to an individual and is required to be made pursuant to
any law implementing or complying with, or introduced in order to conform to,
any European Union Directive on the taxation of savings; or (ii) by or on
behalf of a holder who would have been able to avoid such withholding or
deduction by presenting this Note or the relevant coupon to another Paying
Agent in a member state of the European Union. Nor shall the Issuer pay
Additional Amounts with respect to any payment on this Note to a U.S. Alien who
is a fiduciary or partnership or other than the sole beneficial owner of such
payment to the extent such payment would be required by the laws of the United
States (or any political subdivision thereof) to be included in the income, for
tax purposes, of a beneficiary or settlor with respect to such fiduciary or a
member of such partnership or a beneficial owner who would not have been
entitled to the Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the holder of this Note.

     This Note will bear interest at the rate determined in accordance with the
applicable provisions below by reference to the Base Rate shown on the face
hereof based on the Index Maturity, if any, shown on the face hereof (i) plus
or minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier,
if any, specified on the face hereof. Commencing with the Initial Interest
Reset Date specified on the face hereof, the rate at which interest on this
Note is payable shall be reset as of each Interest Reset Date specified on the
face hereof (as used herein, the term "Interest Reset Date" shall include the
Initial Interest Reset Date). For the purpose of determining the Initial
Interest Rate, references in this paragraph, the next succeeding paragraph and,
if applicable, clauses (i) and (ii) under "Determination of EURIBOR" below to
Interest Reset Date shall be deemed to mean the Original Issue Date. The
determination of the rate of interest at which this Note will be reset on any
Interest Reset Date shall be made on the Interest Determination Date (as
defined below) pertaining to such Interest Reset Dates. The Interest Reset
Dates will be the Interest Reset Dates specified on the face hereof; provided,
however, that (a) the interest rate in effect for the period from the Interest
Accrual Date to the Initial Interest Reset Date will be the Initial Interest
Rate and (b) unless otherwise specified on the face hereof, the interest rate
in effect for the ten calendar days immediately prior to maturity, redemption
or repayment will be that in effect on the tenth calendar day preceding such
maturity, redemption or repayment date. If any Interest Reset Date would
otherwise be a day that is not a Business Day, such Interest Reset Date shall
be postponed to the next succeeding day that is a Business Day, except that if
the Base Rate specified on the face hereof is LIBOR or EURIBOR and such
Business Day is in the next succeeding calendar month, such Interest Reset Date
shall be the immediately preceding Business Day. As used herein, "Business Day"
means any day, other than a Saturday or Sunday, (a) that is neither a legal
holiday nor a day on which banking institutions are authorized or required by
law or regulation to close (x) in The City of New York or (y) if this Note is
denominated in a Specified Currency other than U.S. dollars, euro or Australian
dollars, in the principal financial center of the country of the Specified
Currency, or (z) if this Note is denominated in Australian dollars, in Sydney
and (b) if this Note is denominated in euro, that is also a day on which the
Trans-European Automated Real-time Gross Settlement Express Transfer System
("TARGET") is operating (a "TARGET Settlement Day").

     The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to the Federal Funds Rate,
Federal Funds (Open) Rate and Prime

                                      18
<PAGE>

Rate shall be on the Business Day prior to the Interest Reset Date. The
Interest Determination Date pertaining to an Interest Reset Date for Notes
bearing interest calculated by reference to the CD Rate, Commercial Paper Rate
and CMT Rate will be the second Business Day prior to such Interest Reset Date.
The Interest Determination Date pertaining to an Interest Reset Date for Notes
bearing interest calculated by reference to EURIBOR (or to LIBOR when the Index
Currency is euros) shall be the second TARGET Settlement Day prior such
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for Notes bearing interest calculated by reference to LIBOR (other
than for LIBOR Notes for which the Index Currency is euros) shall be the second
London Banking Day prior such Interest Reset Date, except that the Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note for
which the Index Currency is pounds sterling will be such Interest Reset Date.
As used herein, "London Banking Day" means any day on which dealings in
deposits in the Index Currency (as defined herein) are transacted in the London
interbank market. The Interest Determination Date pertaining to an Interest
Reset Date for Notes bearing interest calculated by reference to the Treasury
Rate shall be the day of the week in which such Interest Reset Date falls on
which Treasury bills normally would be auctioned. Treasury Bills are normally
sold at auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is normally held on the following Tuesday, except that
the auction may be held on the preceding Friday; provided, however, that if an
auction is held on the Friday of the week preceding such Interest Reset Date,
the Interest Determination Date shall be such preceding Friday; and provided,
further, that if an auction shall fall on any Interest Reset Date, then the
Interest Reset Date shall instead be the first Business Day following the date
of such auction. The Interest Determination Date pertaining to an Interest
Reset Date for Notes bearing interest calculated by reference to two or more
base rates will be the latest Business Day that is at least two Business Days
before the Interest Reset Date for the applicable Note on which each base rate
is determinable.

     Unless otherwise specified on the face hereof, the "Calculation Date"
pertaining to an Interest Determination Date, including the Interest
Determination Date as of which the Initial Interest Rate is determined, will be
the earlier of (i) the tenth calendar day after such Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business Day,
or (ii) the Business Day immediately preceding the applicable Interest Payment
Date or Maturity Date (or, with respect to any principal amount to be redeemed
or repaid, any redemption or repayment date), as the case may be.

     Determination of CD Rate. If the Base Rate specified on the face hereof is
the "CD Rate," for any Interest Determination Date, the CD Rate with respect to
this Note shall be the rate on that date for negotiable U.S. dollar
certificates of deposit having the Index Maturity specified on the face hereof
as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)."

     The following procedures shall be followed if the CD Rate cannot be
determined as described above:

     (i) If the above rate is not published in H.15(519) by 3:00 p.m., New York
City time, on the Calculation Date, the CD Rate shall be the rate on that
Interest Determination Date set forth in

                                      19
<PAGE>

the daily update of H.15(519), available through the world wide website of the
Board of Governors of the Federal Reserve System at
http://www.federalreserve.gov/releases/h15/update, or any successor site or
publication ("H.15 Daily Update") for the Interest Determination Date for
certificates of deposit having the Index Maturity specified on the face hereof,
under the caption "CDs (Secondary Market)."

     (ii) If the above rate is not yet published in either H.15(519) or the H.15
Daily Update by 3:00 p.m., New York City time, on the Calculation Date, the
Calculation Agent shall determine the CD Rate to be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York City time, on that
Interest Determination Date of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York, which may include the
initial dealer and its affiliates, selected by the Calculation Agent (after
consultation with the Issuer), for negotiable U.S. dollar certificates of
deposit of major U.S. money center banks of the highest credit standing in the
market for negotiable certificates of deposit with a remaining maturity closest
to the Index Maturity specified on the face hereof in an amount that is
representative for a single transaction in that market at that time.

     "Initial dealer" with respect to this Note means either Morgan Stanley &
Co. Incorporated or Morgan Stanley DW Inc., as applicable.

     (iii) If the dealers selected by the Calculation Agent are not quoting as
set forth above, the CD Rate for that Interest Determination Date shall remain
the CD Rate for the immediately preceding Interest Reset Period, or, if there
was no Interest Reset Period, the rate of interest payable shall be the Initial
Interest Rate.

     Determination of Commercial Paper Rate. If the Base Rate specified on the
face hereof is the "Commercial Paper Rate," for any Interest Determination
Date, the Commercial Paper Rate with respect to this Note shall be the Money
Market Yield (as defined herein), calculated as described below, of the rate on
that date for U.S. dollar commercial paper having the Index Maturity specified
on the face hereof, as that rate is published in H.15(519), under the heading
"Commercial Paper -- Nonfinancial."

     The following procedures shall be followed if the Commercial Paper Rate
cannot be determined as described above:

     (i) If the above rate is not published by 3:00 p.m., New York City time,
on the Calculation Date, then the Commercial Paper Rate shall be the Money
Market Yield of the rate on that Interest Determination Date for commercial
paper of the Index Maturity specified on the face hereof as published in the
H.15 Daily Update, or other recognized electronic source used for the purpose
of displaying the applicable rate, under the heading "Commercial Paper
--Nonfinancial."

     (ii) If by 3:00 p.m., New York City time, on that Calculation Date the
rate is not yet published in either H.15(519) or the H.15 Daily Update, or
other recognized electronic source used for the purpose of displaying the
applicable rate, then the Calculation Agent shall determine the Commercial
Paper Rate to be the Money Market Yield of the arithmetic mean of the offered
rates as of 11:00 a.m., New York City time, on that Interest Determination Date
of three leading dealers of U.S. dollar commercial paper in The City of New
York, which may include the initial

                                      20
<PAGE>

dealer and its affiliates, selected by the Calculation Agent (after
consultation with the Issuer), for commercial paper of the Index Maturity
specified on the face hereof, placed for an industrial issuer whose bond rating
is "Aa," or the equivalent, from a nationally recognized statistical rating
agency.

     (iii) If the dealers selected by the Calculation Agent are not quoting as
set forth in (ii) above, the Commercial Paper Rate for that Interest
Determination Date shall remain the Commercial Paper Rate for the immediately
preceding Interest Reset Period, or, if there was no Interest Reset Period, the
rate of interest payable shall be the Initial Interest Rate.

     The "Money Market Yield" shall be a yield calculated in accordance with
the following formula:

                                               D x 360
                    Money Market Yield =   ---------------  x 100
                                            360 - (D x M)

where "D" refers to the applicable per year rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.

     Determination of EURIBOR. If the Base Rate specified on the face hereof is
"EURIBOR," for any Interest Determination Date, EURIBOR with respect to this
Note shall be the rate for deposits in euros as sponsored, calculated and
published jointly by the European Banking Federation and ACI - The Financial
Market Association, or any company established by the joint sponsors for
purposes of compiling and publishing those rates, for the Index Maturity
specified on the face hereof as that rate appears on the display on Moneyline
Telerate, or any successor service, on page 248 or any other page as may
replace page 248 on that service ("Telerate Page 248") as of 11:00 a.m.,
Brussels time.

     The following procedures shall be followed if the rate cannot be
determined as described above:

     (i) If the above rate does not appear, the Calculation Agent shall request
the principal Euro-zone office of each of four major banks in the Euro-zone
interbank market, as selected by the Calculation Agent (after consultation with
the Issuer), to provide the Calculation Agent with its offered rate for
deposits in euros, at approximately 11:00 a.m., Brussels time, on the Interest
Determination Date, to prime banks in the Euro-zone interbank market for the
Index Maturity specified on the face hereof commencing on the applicable
Interest Reset Date, and in a principal amount not less than the equivalent of
U.S.$1 million in euro that is representative of a single transaction in euro,
in that market at that time. If at least two quotations are provided, EURIBOR
shall be the arithmetic mean of those quotations.

     (ii) If fewer than two quotations are provided, EURIBOR shall be the
arithmetic mean of the rates quoted by four major banks in the Euro-zone
interbank market, as selected by the Calculation Agent (after consultation with
the Issuer), at approximately 11:00 a.m., Brussels time, on the applicable
Interest Reset Date for loans in euro to leading European banks for a

                                      21
<PAGE>

period of time equivalent to the Index Maturity specified on the face hereof
commencing on that Interest Reset Date in a principal amount not less than the
equivalent of U.S.$1 million in euro.

     (iii) If the banks so selected by the Calculation Agent are not quoting as
set forth above, the EURIBOR rate for that Interest Determination Date shall
remain the EURIBOR for the immediately preceding Interest Reset Period, or, if
there was no Interest Reset Period, the rate of interest payable shall be the
Initial Interest Rate.

     "Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the relevant treaty of
the European Union, as amended.

     Determination of the Federal Funds Rate. If the Base Rate specified on the
face hereof is the "Federal Funds Rate," for any Interest Determination Date,
the Federal Funds Rate with respect to this Note shall be the rate on that date
for U.S. dollar federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)" as displayed on Moneyline Telerate, or any
successor service, on page 120 or any other page as may replace page 120 on
that service ("Telerate Page 120").

     The following procedures shall be followed if the Federal Funds Rate
cannot be determined as described above:

     (i) If the above rate is not published by 3:00 p.m., New York City time,
on the Calculation Date, the Federal Funds Rate shall be the rate on that
Interest Determination Date as published in the H.15 Daily Update, or other
recognized electronic source used for the purpose of displaying the applicable
rate, under the heading "Federal Funds (Effective)."

     (ii) If the above rate is not yet published in either H.15(519) or the H.15
Daily Update, or other recognized electronic source used for the purpose of
displaying the applicable rate, by 3:00 p.m., New York City time, on the
Calculation Date, the Calculation Agent shall determine the Federal Funds Rate
to be the arithmetic mean of the rates for the last transaction in overnight
U.S. dollar federal funds prior to 9:00 a.m., New York City time, on that
Interest Determination Date, by each of three leading brokers of U.S. dollar
federal funds transactions in The City of New York, which may include the
initial dealer and its affiliates, selected by the Calculation Agent (after
consultation with the Issuer).

     (iii) If the brokers selected by the Calculation Agent are not quoting as
set forth in (ii) above, the Federal Funds Rate for that Interest Determination
Date shall remain the Federal Funds Rate for the immediately preceding Interest
Reset Period, or, if there was no Interest Reset Period, the rate of interest
payable shall be the Initial Interest Rate.

     Determination of Federal Funds (Open) Rate. If the Base Rate specified on
the face hereof is the "Federal Funds (Open) Rate", for any Interest
Determination Date, the Federal Funds (Open) Rate with respect to this Note
shall be the rate on that date for U.S. dollar federal funds as published in
H.15(519) under the heading "Federal Funds (Open)" as displayed on Moneyline
Telerate, or any successor service, on page 5 or any other page as may replace
page 5 on that service, ("Telerate Page 5").

                                      22
<PAGE>

     The following procedures shall be followed if the Federal Funds (Open)
Rate cannot be determined as described above:

    o   If the above rate is not published by 3:00 p.m., New York City time, on
        the Calculation Date, the Federal Funds (Open) Rate will be the rate on
        that Interest Determination Date as published in the H.15 Daily Update,
        or other recognized electronic source used for the purpose of
        displaying the applicable rate, under the heading "Federal Funds
        (Open)."

    o   If the above rate is not yet published in either H.15(519) or the H.15
        Daily Update, or other recognized electronic source used for the
        purpose of displaying the applicable rate, by 3:00 p.m., New York City
        time, on the Calculation Date, the Calculation Agent will determine the
        Federal Funds (Open) Rate to be the arithmetic mean of the rates for
        the last transaction in overnight U.S. dollar federal funds (based on
        the Federal Funds (Open) Rate) prior to 9:00 a.m., New York City time,
        on that Interest Determination Date, by each of three leading brokers
        of U.S. dollar federal funds transactions in the City of New York,
        which may include the agent and its affiliates, selected by the
        Calculation Agent, after consultation with the Issuer.

    o   If the brokers selected by the Calculation Agent are not quoting as set
        forth above, the Federal Funds (Open) Rate for that Interest
        Determination Date shall remain the Federal Funds (Open) Rate for the
        immediately preceding Interest Reset Period, or, if there was no
        Interest Reset Period, the rate of interest payable will be the Initial
        Interest Rate.

     Determination of LIBOR. If the Base Rate specified on the face hereof is
"LIBOR," LIBOR with respect to this Note shall be based on London Interbank
Offered Rate. The Calculation Agent shall determine LIBOR for each Interest
Determination Date as follows:

     (i) As of the Interest Determination Date, LIBOR shall be either (a) if
"LIBOR Reuters" is specified as the Reporting Service on the face hereof, the
arithmetic mean of the offered rates for deposits in the Index Currency having
the Index Maturity designated on the face hereof, commencing on the second
London Banking Day immediately following that Interest Determination Date, that
appear on the Designated LIBOR Page, as defined below, as of 11:00 a.m., London
time, on that Interest Determination Date, if at least two offered rates appear
on the Designated LIBOR Page; except that if the specified Designated LIBOR
Page, by its terms provides only for a single rate, that single rate shall be
used; or (b) if "LIBOR Telerate" is specified as the Reporting Service on the
face hereof, the rate for deposits in the Index Currency having the Index
Maturity designated on the face hereof, commencing on the second London Banking
Day immediately following that Interest Determination Date or, if pounds
sterling is the Index Currency, commencing on that Interest Determination Date,
that appears on the Designated LIBOR Page at approximately 11:00 a.m., London
time, on that Interest Determination Date.

     (ii) If (a) fewer than two offered rates appear and LIBOR Reuters is
specified on the face hereof, or (b) no rate appears and the face hereof
specifies either (x) LIBOR Telerate or (y) LIBOR Reuters and the Designated
LIBOR Page by its terms provides only for a single rate, then the Calculation
Agent shall request the principal London offices of each of four major

                                      23
<PAGE>

reference banks in the London interbank market, as selected by the Calculation
Agent (after consultation with the Issuer), to provide the Calculation Agent
with its offered quotation for deposits in the Index Currency for the period of
the Index Maturity specified on the face hereof commencing on the second London
Banking Day immediately following the Interest Determination Date or, if pounds
sterling is the Index Currency, commencing on that Interest Determination Date,
to prime banks in the London interbank market at approximately 11:00 a.m.,
London time, on that Interest Determination Date and in a principal amount that
is representative of a single transaction in that Index Currency in that market
at that time.

     (iii) If at least two quotations are provided, LIBOR determined on that
Interest Determination Date shall be the arithmetic mean of those quotations.
If fewer than two quotations are provided, LIBOR shall be determined for the
applicable Interest Reset Date as the arithmetic mean of the rates quoted at
approximately 11:00 a.m., London time, or some other time specified on the face
hereof, in the applicable principal financial center for the country of the
Index Currency on that Interest Reset Date, by three major banks in that
principal financial center selected by the Calculation Agent (after
consultation with the Issuer) for loans in the Index Currency to leading
European banks, having the Index Maturity specified on the face hereof and in a
principal amount that is representative of a single transaction in that Index
Currency in that market at that time.

     (iv) If the banks so selected by the Calculation Agent are not quoting as
set forth above, the LIBOR rate for that Interest Determination Date shall
remain the LIBOR for the immediately preceding Interest Reset Period, or, if
there was no Interest Reset Period, the rate of interest payable shall be the
Initial Interest Rate.

     The "Index Currency" means the currency specified on the face hereof as
the currency for which LIBOR shall be calculated, or, if the euro is
substituted for that currency, the Index Currency shall be the euro. If that
currency is not specified on the face hereof, the Index Currency shall be U.S.
dollars.

     "Designated LIBOR Page" means either: (a) if LIBOR Reuters is designated
as the Reporting Service on the face hereof, the display on the Reuters Money
3000 Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency or its designated successor, or (b) if
LIBOR Telerate is designated as the Reporting Service on the face hereof, the
display on Moneyline Telerate, or any successor service, on the page specified
on the face hereof, or any other page as may replace that page on that service,
for the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency.

     If neither LIBOR Reuters nor LIBOR Telerate is specified on the face
hereof, LIBOR for the applicable Index Currency shall be determined as if LIBOR
Telerate were specified, and, if the U.S. dollar is the Index Currency, as if
Page 3750 had been specified.

     Determination of Prime Rate. If the Base Rate specified on the face hereof
is "Prime Rate," for any Interest Determination Date, the Prime Rate with
respect to this Note shall be the rate on that date as published in H.15(519)
under the heading "Bank Prime Loan."

                                      24
<PAGE>

     The following procedures shall be followed if the Prime Rate cannot be
determined as described above:

     (i) If the above rate is not published prior to 3:00 p.m., New York City
time, on the Calculation Date, then the Prime Rate shall be the rate on that
Interest Determination Date as published in the H.15 Daily Update under the
heading "Bank Prime Loan."

     (ii)If the above rate is not published in either H.15(519) or the H.15
Daily Update by 3:00 p.m., New York City time, on the Calculation Date, then
the Calculation Agent shall determine the Prime Rate to be the arithmetic mean
of the rates of interest publicly announced by each bank that appears on the
Reuters Screen USPRIME 1 Page, as defined below, as that bank's Prime Rate or
base lending rate as in effect for that Interest Determination Date.

     (iii) If fewer than four rates for that Interest Determination Date appear
on the Reuters Screen USPRIME 1 Page by 3:00 p.m., New York City time, on the
Calculation Date, the Calculation Agent shall determine the Prime Rate to be
the arithmetic mean of the Prime Rates quoted on the basis of the actual number
of days in the year divided by 360 as of the close of business on that Interest
Determination Date by at least three major banks in The City of New York, which
may include affiliates of the initial dealer, selected by the Calculation Agent
(after consultation with the Issuer).

     (iv) If the banks selected by the Calculation Agent are not quoting as set
forth above, the Prime Rate for that Interest Determination Date shall remain
the Prime Rate for the immediately preceding Interest Reset Period, or, if
there was no Interest Reset Period, the rate of interest payable shall be the
Initial Interest Rate.

     "Reuters Screen USPRIME 1 Page" means the display designated as page
"USPRIME 1" on the Reuters Money 3000 Service, or any successor service, or any
other page as may replace the USPRIME 1 Page on that service for the purpose of
displaying prime rates or base lending rates of major U.S. banks.

     Determination of Treasury Rate. If the Base Rate specified on the face
hereof is "Treasury Rate," the Treasury Rate with respect to this Note shall be

     (i) the rate from the Auction held on the applicable Interest
Determination Date (the "Auction") of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified on the face hereof as
that rate appears under the caption "INVESTMENT RATE" on the display on
Moneyline Telerate, or any successor service, on page 56 or any other page as
may replace page 56 on that service ("Telerate Page 56") or page 57 or any
other page as may replace page 57 on that service ("Telerate Page 57"); or

     (ii) if the rate described in (i) above is not published by 3:00 p.m., New
York City time, on the Calculation Date, the Bond Equivalent Yield of the rate
for the applicable Treasury Bills as published in the H.15 Daily Update, or
other recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "U.S. Government Securities/Treasury
Bills/Auction High"; or

                                      25
<PAGE>

     (iii) if the rate described in (ii) above is not published by 3:00 p.m.,
New York City time, on the related Calculation Date, the Bond Equivalent Yield
of the Auction rate of the applicable Treasury Bills, announced by the United
States Department of the Treasury; or

     (iv) if the rate described in (iii) above is not announced by the United
States Department of the Treasury, or if the Auction is not held, the Bond
Equivalent Yield of the rate on the applicable Interest Determination Date of
Treasury Bills having the Index Maturity specified on the face hereof published
in H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market"; or

     (v) if the rate described in (iv) above is not so published by 3:00 p.m.,
New York City time, on the related Calculation Date, the rate on the applicable
Interest Determination Date of the applicable Treasury Bills as published in
the H.15 Daily Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market"; or

     (vi) if the rate described in (v) above is not so published by 3:00 p.m.,
New York City time, on the related Calculation Date, the rate on the applicable
Interest Determination Date calculated by the Calculation Agent as the Bond
Equivalent Yield of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 p.m., New York City time, on the applicable Interest
Determination Date, of three primary U.S. government securities dealers, which
may include the initial dealer and its affiliates, selected by the Calculation
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index Maturity specified on the face hereof; or

     (vii) if the dealers selected by the Calculation Agent are not quoting as
described in (vi), the Treasury Rate for the immediately preceding Interest
Reset Period, or, if there was no Interest Reset Period, the rate of interest
payable shall be the Initial Interest Rate.

     The "Bond Equivalent Yield" means a yield calculated in accordance with
the following formula and expressed as a percentage:

                                                D x N
                  Bond Equivalent Yield =   --------------  x 100
                                            360 - (D x M)

where "D" refers to the applicable per annum rate for Treasury Bills quoted on
a bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest period for which interest
is being calculated.

     Determination of CMT Rate. If the Base Rate specified on the face hereof
is the "CMT Rate," for any Interest Determination Date, the CMT Rate with
respect to this Note shall be the rate displayed on the Designated CMT Telerate
Page (as defined below) under the caption "... Treasury Constant Maturities ...
Federal Reserve Board Release H.15... Mondays Approximately 3:45 p.m.," under
the column for the Designated CMT Maturity Index, as defined below, for:

     (1) the rate on that Interest Determination Date, if the Designated CMT
Telerate Page is 7051; and

                                      26
<PAGE>

     (2) the week or the month, as applicable, ended immediately preceding the
week in which the related Interest Determination Date occurs, if the Designated
CMT Telerate Page is 7052.

     The following procedures shall be followed if the CMT Rate cannot be
determined as described above:

     (i) If the above rate is no longer displayed on the relevant page, or if
not displayed by 3:00 p.m., New York City time, on the related Calculation
Date, then the CMT Rate shall be the Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519).

     (ii) If the above rate is no longer published, or if not published by 3:00
p.m., New York City time, on the related Calculation Date, then the CMT Rate
shall be the Treasury Constant Maturity Rate for the Designated CMT Maturity
Index or other U.S. Treasury rate for the Designated CMT Maturity Index on the
Interest Determination Date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519).

     (iii) If the information set forth above is not provided by 3:00 p.m., New
York City time, on the related Calculation Date, then the Calculation Agent
shall determine the CMT Rate to be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately 3:30
p.m., New York City time, on the Interest Determination Date, reported,
according to their written records, by three leading primary U.S. government
securities dealers ("Reference Dealers") in The City of New York, which may
include the initial dealer or its affiliates, selected by the Calculation Agent
as described in the following sentence. The Calculation Agent shall select five
reference dealers (after consultation with the Issuer) and shall eliminate the
highest quotation or, in the event of equality, one of the highest, and the
lowest quotation or, in the event of equality, one of the lowest, for the most
recently issued direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately the Designated
CMT Maturity Index, a remaining term to maturity of no more than 1 year shorter
than that Designated CMT Maturity Index and in a principal amount that is
representative for a single transaction in the securities in that market at
that time. If two Treasury Notes with an original maturity as described above
have remaining terms to maturity equally close to the Designated CMT Maturity
Index, the quotes for the Treasury Note with the shorter remaining term to
maturity shall be used.

     (iv) If the Calculation Agent cannot obtain three Treasury Notes
quotations as described in (iii) above, the Calculation Agent shall determine
the CMT Rate to be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date of three reference dealers in The City
of New York, selected using the same method described in (iii) above, for
Treasury Notes with an original maturity equal to the number of years closest
to but not less than the Designated CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in a principal amount
that is representative for a single transaction in the securities in that
market at that time.

                                      27
<PAGE>

     (v) If three or four, and not five, of the reference dealers are quoting
as described in (iv) above, then the CMT Rate for that Interest Determination
Date shall be based on the arithmetic mean of the offer prices obtained and
neither the highest nor the lowest of those quotes shall be eliminated.

     (vi) If fewer than three reference dealers selected by the Calculation
Agent are quoting as described in (iv) above, the CMT Rate for that Interest
Determination Date shall remain the CMT Rate for the immediately preceding
Interest Reset Period, or, if there was no Interest Reset Period, the rate of
interest payable shall be the Initial Interest Rate.

     "Designated CMT Telerate Page" means the display on Moneyline Telerate, or
any successor service, on the page designated on the face hereof or any other
page as may replace that page on that service for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519). If no page is specified
on the face hereof, the Designated CMT Telerate Page shall be 7052, for the
most recent week.

     "Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities, which is either 1, 2, 3, 5, 7, 10, 20 or 30
years, as specified in the applicable pricing supplement for which the CMT Rate
shall be calculated. If no maturity is specified on the face hereof, the
Designated CMT Maturity Index shall be two years.

     Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The Calculation Agent
shall calculate the interest rate hereon in accordance with the foregoing on or
before each Calculation Date. The interest rate on this Note will in no event
be higher than the maximum rate permitted by New York law, as the same may be
modified by United States Federal law of general application.

     At the request of the holder hereof, the Calculation Agent will provide to
the holder hereof the interest rate hereon then in effect and, if determined,
the interest rate that will become effective as of the next Interest Reset
Date.

     Unless otherwise indicated on the face hereof, interest payments on this
Note shall be the amount of interest accrued from and including the Interest
Accrual Date or from and including the last date to which interest has been
paid or duly provided for to but excluding the Interest Payment Dates or the
Maturity Date (or any earlier redemption or repayment date), as the case may
be. Accrued interest hereon shall be an amount calculated by multiplying the
face amount hereof by an accrued interest factor. Such accrued interest factor
shall be computed by adding the interest factor calculated for each day in the
period for which interest is being paid. The interest factor for each such date
shall be computed by dividing the interest rate applicable to such day (i) by
360 if the Base Rate is CD Rate, Commercial Paper Rate, EURIBOR, Federal Funds
Rate, Federal Funds (Open) Rate, Prime Rate or LIBOR (except if the Index
Currency is pounds sterling); (ii) by 365 if the Base Rate is LIBOR and the
Index Currency is pounds sterling; or (iii) by the actual number of days in the
year if the Base Rate is the Treasury Rate or the CMT Rate. All percentages
resulting from any calculation of the rate of interest on this Note will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point with (.000005% being rounded up to .00001%) and all U.S. dollar amounts
used in or resulting from such calculation on this Note will be rounded to the
nearest cent, with one-half cent rounded

                                      28
<PAGE>

upward. All Japanese Yen amounts used in or resulting from such calculations
will be rounded downwards to the next lower whole Japanese Yen amount. All
amounts denominated in any other currency used in or resulting from such
calculations will be rounded to the nearest two decimal places in such
currency, with .005 being rounded up to .01. The interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such date. The
interest rate applicable to any other day is the interest rate from the
immediately preceding Interest Reset Date (or, if none, the Initial Interest
Rate).

     This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured
and unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable
law, it is issuable only in denominations of the equivalent of U.S. $1,000
(rounded to an integral multiple of 1,000 units of such Specified Currency), or
any amount in excess thereof which is an integral multiple of 1,000 units of
such Specified Currency, as determined by reference to the noon dollar buying
rate in The City of New York for cable transfers of such Specified Currency
published by the Federal Reserve Bank of New York (the "Market Exchange Rate")
on the Business Day immediately preceding the date of issuance.

     The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon
the Trustee shall issue in the name of the transferee or transferees, in
exchange herefor, a new Note or Notes having identical terms and provisions and
having a like aggregate principal amount in authorized denominations, subject
to the terms and conditions set forth herein; provided, however, that the
Trustee will not be required (i) to register the transfer of or exchange any
Note that has been called for redemption in whole or in part, except the
unredeemed portion of Notes being redeemed in part, (ii) to register the
transfer of or exchange any Note if the holder thereof has exercised his right,
if any, to require the Issuer to repurchase such Note in whole or in part,
except the portion of such Note not required to be repurchased, or (iii) to
register the transfer of or exchange Notes to the extent and during the period
so provided in the Senior Indenture with respect to the redemption of Notes.
Notes are exchangeable at said office for other Notes of other authorized
denominations of equal aggregate principal amount having identical terms and
provisions. All such exchanges and transfers of Notes will be free of charge,
but the Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge in connection therewith. All Notes surrendered for
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee and executed by the registered
holder in person or by the holder's attorney duly authorized in writing. The
date of registration of any Note delivered upon any exchange or

                                      29
<PAGE>

transfer of Notes shall be such that no gain or loss of interest results from
such exchange or transfer.

     In case this Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, the Issuer in its discretion may execute a new Note
of like tenor in exchange for this Note, but, if this Note is destroyed, lost
or stolen, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that this Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.

     The Senior Indenture provides that (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of or
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Notes of which this Note forms a
part, or due to the default in the performance or breach of any other covenant
or warranty of the Issuer applicable to the debt securities of such series but
not applicable to all outstanding debt securities issued under the Senior
Indenture, shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the outstanding
debt securities of each affected series, voting as one class, by notice in
writing to the Issuer and to the Trustee, if given by the securityholders, may
then declare the principal of all debt securities of all such series and
interest accrued thereon to be due and payable immediately and (b) if an Event
of Default due to a default in the performance of any other of the covenants or
agreements in the Senior Indenture applicable to all outstanding debt
securities issued thereunder, including this Note, or due to certain events of
bankruptcy, insolvency or reorganization of the Issuer, shall have occurred and
be continuing, either the Trustee or the holders of not less than 25% in
aggregate principal amount of all outstanding debt securities issued under the
Senior Indenture, voting as one class, by notice in writing to the Issuer and
to the Trustee, if given by the securityholders, may declare the principal of
all such debt securities and interest accrued thereon to be due and payable
immediately, but upon certain conditions such declarations may be annulled and
past defaults may be waived (except a continuing default in payment of
principal or premium, if any, or interest on such debt securities) by the
holders of a majority in aggregate principal amount of the debt securities of
all affected series then outstanding.

     The Senior Indenture permits the Issuer and the Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee
may not, without the consent of the holder of each outstanding debt security
affected thereby, (i) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption
thereof, or change the currency of payment thereof, or modify or amend the
provisions for conversion of any currency into any other currency, or modify or
amend the provisions for

                                      30
<PAGE>

conversion or exchange of the debt security for securities of the Issuer or
other entities or for other property or the cash value of the property (other
than as provided in the antidilution provisions or other similar adjustment
provisions of the debt securities or otherwise in accordance with the terms
thereof), or impair or affect the rights of any holder to institute suit for
the payment thereof or (ii) reduce the aforesaid percentage in principal amount
of debt securities the consent of the holders of which is required for any such
supplemental indenture.

     Except as set forth below, if the principal of, premium, if any, or
interest on, this Note is payable in a Specified Currency other than U.S.
dollars and such Specified Currency is not available to the Issuer for making
payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if the euro has been substituted for such Specified Currency, the
Issuer may at its option (or shall, if so required by applicable law) without
the consent of the holder of this Note effect the payment of principal of or
premium, if any, or interest on any Note denominated in such Specified Currency
in euro in lieu of such Specified Currency in conformity with legally
applicable measures taken pursuant to, or by virtue of, the Treaty establishing
the European Community, as amended. Any payment made under such circumstances
in U.S. dollars or euro where the required payment is in an unavailable
Specified Currency will not constitute an Event of Default. If such Market
Exchange Rate is not then available to the Issuer or is not published for a
particular Specified Currency, the Market Exchange Rate will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the date of such payment from three recognized foreign exchange
dealers (the "Exchange Dealers") for the purchase by the quoting Exchange
Dealer of the Specified Currency for U.S. dollars for settlement on the payment
date, in the aggregate amount of the Specified Currency payable to those
holders or beneficial owners of Notes and at which the applicable Exchange
Dealer commits to execute a contract. One of the Exchange Dealers providing
quotations may be the Exchange Rate Agent unless the Exchange Rate Agent is an
affiliate of the Issuer. If those bid quotations are not available, the
Exchange Rate Agent shall determine the market exchange rate at its sole
discretion.

     The "Exchange Rate Agent" shall be Morgan Stanley & Co. Incorporated,
unless otherwise indicated on the face hereof.

     All determinations referred to above made by, or on behalf of, the Issuer
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Notes.

     So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the
Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest

                                      31
<PAGE>

at such place or places (subject to applicable laws and regulations) as the
Issuer may decide. So long as there shall be such an agency, the Issuer shall
keep the Trustee advised of the names and locations of such agencies, if any
are so designated. If any European Union Directive on the taxation of savings
comes into force, the Issuer will, to the extent possible as a matter of law,
maintain a Paying Agent in a member state of the European Union that will not
be obligated to withhold or deduct tax pursuant to any such Directive or any
law implementing or complying with, or introduced in order to conform to, such
Directive.

     With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting
in any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.

     No provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise
agreed between the Issuer and the registered holder of this Note.

     Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal of or premium,
if any, or the interest on this Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer or 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.

     This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

     As used herein, the term "U.S. Alien" means any person who is, for U.S.
federal income tax purposes, (i) a non-resident alien individual, (ii) a
foreign corporation, (iii) a non-resident alien fiduciary or a foreign estate
or trust or (iv) a foreign partnership one or more members of which is, for
U.S. federal income tax purposes, a non-resident alien individual, a foreign
corporation or a non-resident alien fiduciary of a foreign estate or trust.

                                      32
<PAGE>

     All terms used in this Note which are defined in the Senior Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.

                                      33
<PAGE>

                                 ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, 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 ______________________
                               (Minor)                        (Cust)

     Under Uniform Gifts to Minors Act ______________________________
                                                  (State)

     Additional abbreviations may also be used though not in the above list.

                            _______________________

                                      34
<PAGE>

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

_______________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
     IDENTIFYING NUMBER OF ASSIGNEE]

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
   [PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.

Dated:_______________________

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without alteration
or enlargement or any change whatsoever.

                                      35
<PAGE>

                           OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________
        (Please print or typewrite name and address of the undersigned)

     If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
_________________; and specify the denomination or denominations (which shall
not be less than the minimum authorized denomination) of the Notes to be issued
to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid): __________________.

Dated:________________________         _________________________________________
                                       NOTICE: The signature on this Option to
                                       Elect Repayment must correspond with the
                                       name as written upon the face of the
                                       within instrument in every particular
                                       without alteration or enlargement.

                                      36<PAGE>

                                                                    Exhibit 10.3

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

          EMPLOYMENT AGREEMENT (hereinafter the "Agreement") amended and
restated effective ______________, 2006 by and among RAM Holdings Ltd., a
Bermuda exempted company ("Holdings"), RAM Holdings II Ltd., a Bermuda company
("Holdings II" and, together with Holdings, "Holding"), RAM Reinsurance Company
Ltd., a Bermuda company (the "Company"), and Vernon M. Endo (the "Executive").

          WHEREAS, Holdings, Holdings II and the Executive previously entered
into an Employment Agreement dated as of November 1, 2003 ("Prior Agreement");
and

          WHEREAS, Holding, the Company and the Executive (collectively referred
to as the "Parties") entered into the First Amendment to the Employment
Agreement, effective August 10, 2005 (the "First Amendment"); and

          WHEREAS, Holding and the Company each desire to secure the services of
the Executive for an additional term and to enter into this Amended and Restated
Employment Agreement embodying the terms of such employment (the "Agreement");
and

          WHEREAS, the Executive desires to accept such employment and enter
into such Agreement; and

          WHEREAS, the Parties agree that, except as otherwise specified herein,
the terms of the Agreement contained herein shall supersede and replace in its
entirety the terms of the Prior Agreement and the First Amendment; and

          WHEREAS, the Executive and the Company each hereby acknowledge that a
valid work permit for the Executive has been obtained from the Bermuda
Department of Immigration permitting him to perform his obligations herein;

          NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are mutually acknowledged, Holding, the Company and the
Executive agree as follows:

     1. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

          (a) "Base Salary" means the salary provided for in Section 4 or any
increased salary granted to the Executive pursuant to Section 4.

          (b) "Boards" means the Boards of Directors of Holding and the Company.

          (c) "Cause" means: (i) the Executive's commission of any felony; (ii)
the Executive's gross negligence, willful malfeasance or gross misconduct in
connection with his employment hereunder; (iii) a substantial and continual
refusal by the Executive in breach of this Agreement to perform the duties,
responsibilities or obligations assigned to the Executive

<PAGE>

pursuant to the terms hereof; (iv) the Executive's failure to fully cooperate
with a regulatory investigation involving Holding, the Company or any of its
Subsidiaries or affiliates; or (v) any one or more acts by the Executive of
dishonesty, theft, larceny, embezzlement or fraud from or with respect to
Holding, the Company or any Subsidiary. By way of example, termination from
employment necessitated by the Executive's inability to maintain a valid work
permit from the applicable Bermuda governmental authorities after the Executive
has used his best efforts to maintain such permit or in connection with a Change
in Control does not constitute termination for Cause. Notwithstanding the
foregoing, a termination shall not be treated as a termination for Cause unless
Holding or the Company shall have delivered a written notice to the Executive
within thirty (30) days of the actual knowledge of a majority of the members of
the Holdings Board of the occurrence of one or more of such events that may give
rise to a termination of employment for Cause and, for an event described in
item (iii) above, if capable of being cured, shall not have been cured by the
Executive within thirty (30) days of the receipt of such notice and, for an
event described in item (iv) above, shall not have been cured by the Executive
immediately after receipt of such notice. If Holding or the Company has provided
the notice described in the preceding sentence to the Executive on at least two
separate occasions which involved substantially similar behavior, Holding or the
Company may immediately terminate the Executive's employment for Cause upon the
occurrence of a third similar event without regard to the notice and cure period
described in the preceding sentence.

          (d) "Change in Control" means: (i) the acquisition by any person,
entity or "group" (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended), other than by The PMI Group, Inc., of fifty percent (50%) or
more of the combined voting power of the then outstanding voting securities of
Holding or the Company; (ii) the merger, amalgamation, reorganization, or
consolidation of, or share exchange involving Holding or the Company, as a
result of which the shareholders of Holding or the Company immediately before
such transaction do not, immediately thereafter, own, directly or indirectly,
more than fifty percent (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 Holding's or the Company's assets;
and (iv) approval by Holding or the Company of the liquidation or dissolution of
Holding or the Company, other than a liquidation of the Company into Holding.

          (e) "Code" means the Internal Revenue Code of 1986, as amended.

          (f) "Cost of Living Allowance" means the amount paid to the Executive
under Section 7(e).

          (g) "Disability" means the Executive's inability to substantially
fulfill the positions, duties, responsibilities and obligations set forth in
this Agreement because of physical, mental or emotional incapacity that entitles
the Executive to long-term disability benefits under the Company's disability
plan or policy.

          (h) "Effective Date" means the date of this Agreement.

          (i) "Good Reason" means a termination of the Executive's employment by
the Executive for one or more of the following reasons: (i) a reduction in the
Executive's Base Salary, Cost of Living Allowance or the target bonus
opportunity described in Section 5, (ii)

                                       2

<PAGE>

Holding's or the Company's removal of the Executive from his position as the
President and Chief Executive Officer of Holding and the Company, (iii) a
material breach of this Agreement by Holding or the Company, (iv) a material
diminution in the Executive's duties or the assignment to the Executive of
duties that are not materially consistent with those customarily assigned to the
President and Chief Executive Officer of a company of the size and nature of
Holding or the Company or which do, or would be reasonably expected to,
materially impair his ability to function as the President and Chief Executive
Officer of Holding and the Company, (v) a relocation of the corporate
headquarters away from Bermuda, (vi) the refusal of a purchaser of all or
substantially all of the assets of Holding or the Company to continue the
Executive's employment with substantially the same position, title and
responsibilities and at least the same compensation as described herein, or
(vii) the Executive's inability to maintain a valid work permit from the
applicable Bermuda governmental authorities after the Executive has used his
best efforts to maintain such permit. Notwithstanding the foregoing, a
termination shall not be treated as a termination for Good Reason (i) if the
Executive shall have consented in writing to the occurrence of the event giving
rise to the claim of termination for Good Reason, or (ii) unless the Executive
shall have delivered a written notice to the Holdings Board within ninety (90)
days of his having actual knowledge of the occurrence of one or more of such
events stating that he intends to terminate his employment for Good Reason and
specifying the factual basis for such termination, and such event, if capable of
being cured, shall not have been cured by Holding or the Company within thirty
(30) days of the receipt of such notice.

          (j) "Holdings Board" means the Board of Directors of Holdings.

          (k) "Party" or "Parties" means Holding, the Company and/or the
Executive.

          (l) "Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, estate, board, committee, agency, body,
employee benefit plan or other person or entity.

          (m) "Proceeding" means any threatened or actual action, suit or
proceeding, whether civil, criminal, administrative, investigative, appellate or
other.

          (n) "Standard Benefit" means any amounts earned, accrued or owing to
the Executive but not yet paid, and receipt of other benefits, if any, in
accordance with applicable plans and programs of Holding, the Company or a
Subsidiary, provided, however, that in no event shall the Standard Benefit be
deemed to include any bonus payments.

          (o) "Share Option Plan" means the RAM Reinsurance Company Ltd. Stock
Option Plan for Management Employees as Amended and Restated Effective August
10, 2005, as may be amended from time to time, or any successor plan, including
but not limited to the RAM Holdings Ltd. 2006 Equity Plan.

          (p) "Subsidiary" means, with respect to Holdings and Holdings II, any
corporation, partnership, limited liability company or other entity of which (a)
if a corporation, fifty percent (50%) or more of the total voting power of
shares of stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors thereof is at the time owned or controlled,
directly or indirectly, by Holdings and/or Holdings II, or one or more of the

                                       3

<PAGE>

other Subsidiaries of Holdings and/or Holdings II, or a combination thereof, or
(b) if a partnership, limited liability company or other entity, fifty percent
(50%) or more of the partnership, membership or other similar equity ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
Holdings and/or Holdings II, or one or more of the other Subsidiaries of
Holdings and/or Holdings II, or a combination thereof. For purposes hereof,
Holdings, Holdings II and their Subsidiaries will be deemed to have fifty
percent (50%) or more ownership interest in a partnership, limited liability
company or business entity if Holdings, Holdings II and/or a Subsidiary is/are
allocated fifty percent (50%) or more of partnership, limited liability company
or other entity gains or losses or control(s) the general partner, managing
member or similar managing body of such partnership, limited liability company
or other entity.

          (q) "Term of Employment" means the period specified in Section 2.

     2. Term of Employment.

          (a) Holding and the Company agree to continue to employ the Executive
under this Agreement, and the Executive accepts such employment, for the period
commencing on the Effective Date and ending on March 31, 2009 (the "Expiration
Date"). Notwithstanding the foregoing, the Term of Employment shall be earlier
terminated upon the termination of the Executive's employment, but only in
strict accordance with the provisions of Section 9.

          (b) The Term of Employment shall be extended automatically for one
additional year beginning on the Expiration Date (the "Extension Date") and on
each anniversary of the Extension Date thereafter unless and until, not later
than six (6) months prior to the Extension Date or any anniversary of the
Extension Date, either Holding or the Company, on the one hand, or the
Executive, on the other hand, gives written notice to the other Party that the
Term of Employment shall not be so extended. A termination of the Executive's
employment that results from the expiration of the Term of Employment shall not
be treated as a termination of employment for any purposes under this Agreement
except as specifically noted herein.

     3. Positions; Duties; Responsibilities; and Place of Employment.

          (a) During the Term of Employment, the Executive shall be employed as
the President and Chief Executive Officer of Holding and the Company and shall
be employed in such other position or positions with Holding and the Company as
the Holdings Board shall from time to time specify. The Executive, in carrying
out his executive duties under this Agreement, shall report to the Holdings
Board. The Executive, during the Term of Employment, shall be nominated for
reelection to the Boards at all elections to the Boards. The Executive shall
receive no compensation for his service on the Boards. The Executive agrees to
resign from the Boards upon termination of employment with Holding and the
Company. While employed by Holding and the Company hereunder, the Executive
shall perform his duties at the Company's offices in Bermuda; provided, however,
that the Executive shall be required to travel as reasonably necessary in
carrying out his duties and obligations hereunder. The Executive is required to
work the hours and days necessary to fulfill his executive duties under this
Agreement.

                                       4

<PAGE>

          (b) Notwithstanding anything herein to the contrary, nothing shall
preclude the Executive from (i) serving on the boards of directors of a
reasonable number of other corporations, subject to prior approval by the
Holdings Board (which shall not be unreasonably withheld), or the boards of a
reasonable number of trade associations and/or charitable organizations, (ii)
engaging in charitable activities and community affairs, including political
activities, and (iii) managing his personal investments and affairs, provided
that such activities do not materially interfere with the proper performance of
his duties and responsibilities as the President and Chief Executive Officer or
violate Section 13 of this Agreement.

     4. Base Salary. Commencing as of the Effective Date, the Company shall pay
the Executive an annualized Base Salary of $400,000 during the Term of
Employment. Such Base Salary shall be payable at intervals in accordance with
the regular payroll practices of the Company applicable to executives, but no
less frequently than monthly. The Holdings Board shall review the Base Salary no
less frequently than annually during the Term of Employment; provided, however,
that the Base Salary shall not be decreased during the Term of Employment below
the amount set forth above without the Executive's consent (including, without
limitation, for the purpose of determining benefits due under Section 9). The
Executive is a professional or managerial employee whose Base Salary has been
calculated to reflect the fact that his regular duties are likely to require him
to work on occasion more than forty (40) hours a week. Accordingly, no overtime
shall be payable.

     5. Annual Incentive Awards. The Executive shall be eligible for a combined
annual incentive bonus award from Holding and the Company in respect of each
calendar year during the Term of Employment. The Executive's target annual
incentive bonus amount for each such year shall be an amount equal to 125% of
his annualized Base Salary for such year. The Executive's actual annual
incentive bonus amount for each such year may be less than or greater than the
target amount depending upon the degree of attainment of criteria, which shall
be established by the Boards (or committees of the Boards) in advance of each
such year. The Boards (or committees of the Boards) shall determine following
the end of each such year whether the criteria for such year have been attained.
The Company shall pay the Executive his annual incentive award payment in
respect of any year at the same time as bonuses are paid to other executive
officers of the Company, but in no event later than fifteen (15) days after
receipt by the Boards of the audited consolidated financial statements of
Holding and the Company and, if applicable, their Subsidiaries, for the fiscal
year for which the bonus is payable and in no event later than the last day of
the calendar year following the calendar year for which the bonus is payable.

     6. Long Term Incentive Plan; Share Option Award. During the Term of
Employment, the Executive shall participate in the Share Option Plan. Subject to
the terms of the Share Option Plan and any applicable share option agreement,
the number of shares subject to the option and the exercise price per share may
be adjusted in the event of a stock split, reverse stock split, reorganization,
recapitalization, or other similar event described in the Share Option Plan
and/or any applicable share option agreement. The Executive shall be eligible
for other or additional long-term incentives in the discretion of the Holdings
Board (or a committee of the Holdings Board). Such other or additional incentive
award(s) shall be on a level, and on terms and conditions, that are commensurate
with his positions and responsibilities at Holding and the Company and are
appropriate in light of corresponding incentive awards to other

                                       5

<PAGE>

executives of Holding and the Company. Notwithstanding anything herein to the
contrary, the option grant provided for in Section 6 of the Prior Agreement
shall be subject to the terms and conditions of Section 6 of the Prior
Agreement.

     7. Other Benefits.

          (a) Employee Benefits. During the Term of Employment, the Executive
shall be eligible to participate in all employee benefit plans, programs and
arrangements made available generally to Holding's and the Company's executives
in accordance with the terms and subject to the conditions of such plans,
programs and arrangements, including, without limitation, share option,
profit-sharing, savings (qualified and non-qualified) and other defined
contribution retirement plans or programs, medical, dental, hospitalization,
vision, short-term and long-term disability and life insurance plans or
programs, accidental death and dismemberment protection, travel accident
insurance and any other employee welfare benefit plans or programs that may,
from time to time, be sponsored by Holding, the Company or by a Subsidiary for
the benefit of the Holding's or the Company's employees, including any plans or
programs that supplement the above-listed types of plans or programs, whether
funded or unfunded; provided, however, that nothing in this Agreement shall be
construed to require Holding, the Company or a Subsidiary to establish or
maintain any such plans, programs or arrangements, or to prevent Holding, the
Company or a Subsidiary from terminating any such plan, program or arrangement
in accordance with its terms, except as required by Bermuda law.

          (b) Perquisites. During the Term of Employment, the Executive shall
participate in all fringe benefits and perquisites available to executives of
Holding and the Company at levels and on terms and conditions that are
commensurate with his position and responsibilities at Holding and the Company.
The Executive shall also receive such additional fringe benefits and perquisites
as Holding and the Company may, in their discretion, from time to time elect to
provide.

          (c) Vacation, Holidays, and Leave. During the Term of Employment, the
Executive shall be entitled to vacation, holidays, and leave in accordance with
the reasonable practices of Holding and the Company and as required by Bermuda
law.

          (d) Annual Travel. Each year during the Term of Employment, the
Executive shall be provided four (4) round-trip tickets between Bermuda and the
east coast of the U.S., such tickets to be paid for by the Company and used by
the Executive and three other passengers of the Executive's choice.

          (e) Cost of Living Allowance. During the Term of Employment, the
Company shall pay the Executive a monthly cost of living allowance of $18,000.

          (f) Tax Treatment. In the event that, during the Term of Employment,
there is an amendment to the Code governing the taxation of income earned by,
and/or cost of living/housing allowances paid to, a United States citizen
resident in Bermuda that results in both the inclusion in the Executive's income
subject to U.S. taxation of amounts paid by the Company and not previously
subject to such taxation and a decrease in the combined net after-tax Base
Salary and Cost of Living Allowance of the Executive, the Company shall increase
the amount

                                       6
<PAGE>

payable hereunder to the Executive as Base Salary and/or Cost of Living
Allowance, as applicable, by an amount such that, with such increase, the
combined net after-tax Base Salary and Cost of Living Allowance payable
hereunder equals the Executive's combined net after-tax Base Salary and Cost of
Living Allowance payable hereunder immediately prior to the effective date of
any such amendment to the Code.

     8. Reimbursement of Business and Other Expenses.

          (a) The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse the Executive for all such expenses, subject to
documentation in accordance with reasonable policies of Holding and the Company.

          (b) Upon presentation of appropriate vouchers or other expense
statements, during the Term of Employment, the Company shall pay for personal
tax advice and/or tax return preparation for the Executive (up to a maximum of
$7,500 per year).

          (c) The Company shall be responsible for 100% of any Bermuda payroll
taxes applicable to the compensation payable by the Company to the Executive.
The Company shall be entitled to make deductions from any payments provided for
herein in respect of other amounts that may be required to be withheld from time
to time under any applicable income or employment tax laws or similar statutes
or other provisions of law then in effect, and, with respect to any non-cash
compensation or benefits with respect to which a tax withholding obligation will
arise, may require as a condition to receipt of such compensation or benefit
that the Executive make arrangements with the Company for the satisfaction of
such tax withholding obligation.

          (d) Upon presentation of appropriate vouchers or other expense
statements, the Company shall directly pay or reimburse the Executive (or the
Executive's family, in the case of the Executive's death) for the ordinary and
necessary moving expenses (up to a maximum of $50,000) incurred in relocating to
the U.S., provided such relocation occurs within six (6) months following a
termination of employment due to the expiration of the Term of Employment or a
termination of employment with Holding and the Company in accordance with the
provisions of Section 9(a), 9(b) or 9(d) hereof.

          (e) In addition to the Company's payment of amounts pursuant to
Section 8(d), the Company shall pay to the Executive tax gross up payments so
that the net amount retained or benefit received by the Executive after payment
of U.S. Federal, state and local income and employment taxes and Bermuda payroll
taxes (assuming for purposes of calculating such taxes that the Executive is in
the respective highest tax brackets) is equal to the agreed amount to be
reimbursed; provided, however, that a gross up payment shall not be made with
respect to any reimbursement to the extent the related expense is deductible or
is otherwise excludible from the Executive's taxable income. The dollar
limitation set forth in Section 8(d) shall not apply to gross up payments made
pursuant to this Section 8(e). In addition to the Company's payment of amounts
pursuant to Section 7(e), to the extent that such payments are used by the
Executive for housing expenses ("Housing Expenses") which are deductible or
otherwise excludible from the Executive's taxable income under U.S. tax law as
in effect on the

                                       7

<PAGE>

Effective Date, and such law changes subsequent to the Effective Date, the
Company shall pay to the Executive tax gross up payments so that the net amount
retained or benefit received by the Executive for Housing Expenses after payment
of U.S. Federal, state and local income and employment taxes (assuming for
purposes of calculating such taxes that the Executive is in the respective
highest tax brackets) is equal to the agreed amount to be paid; provided,
however, that a gross up payment shall not be made with respect to any payment
to the extent the Housing Expenses are deductible or are otherwise excludible
from the Executive's taxable income. The dollar limitation set forth in Section
7(e) shall not apply to gross up payments made pursuant to this Section 8(e).

     9. Termination of Employment.

          (a) Termination Due to Death. If the Executive's employment hereunder
is terminated due to his death, his estate or his beneficiaries (as the case may
be) shall be entitled to the following:

               (i) payment of Base Salary, in accordance with the Company's
regular payroll practices (based on the Executive's rate of annual Base Salary
at the time of his death), through the date of his death and for an additional
ninety (90) days thereafter;

               (ii) if earned by the Executive but not yet paid at the time of
his death, an annual incentive award for the year prior to the year in which the
Executive's death occurred, payable in accordance with Section 5;

               (iii) an annual incentive award for the year in which the
Executive's death occurs, prorated based on the target annual bonus and the
number of days worked in such year, and payable by the Company in a lump sum
promptly after his death;

               (iv) immediate vesting of all share options, with such options
remaining exercisable for the remainder of their stated terms;

               (v) payment of the Standard Benefit;

               (vi) continued participation for three (3) months for each of the
Executive's dependents in all medical, dental, hospitalization and other
employee welfare benefit plans, programs and arrangements in which such
dependent was participating as of the date of the Executive's death, on terms
and conditions no less favorable than those applying on such date, and monthly
payments for nine (9) months thereafter of an amount equal to the monthly
premiums paid by the Company for such coverage at the time of the Executive's
termination of employment; and

               (vii) payment of the Cost of Living Allowance for three (3)
months following the Executive's death.

          (b) Termination Due to Disability. If the Executive's employment
hereunder is terminated due to Disability, the Executive shall be entitled to
the following:

                                       8

<PAGE>

               (i) payment of Base Salary, in accordance with the Company's
regular payroll practices (based on the Executive's rate of annual Base Salary
at the time of the Executive's termination of employment), until commencement of
long-term disability payments, but in no event for more than one year following
the last day of his employment;

               (ii) if earned by the Executive but not yet paid at the time of
his termination of employment, an annual incentive award for the year prior to
the year in which the Executive's employment terminates due to Disability,
payable in accordance with Section 5;

               (iii) an annual incentive award for the year in which the
Executive's employment terminates, prorated based on the target annual bonus and
the number of days worked in such year, and payable by the Company in a lump sum
promptly following the last day of the Executive's employment;

               (iv) immediate vesting of all share options, with such options
remaining exercisable for the remainder of their stated terms;

               (v) payment of the Standard Benefit;

               (vi) continued participation for three (3) months for the
Executive and each of his covered dependents in all medical, dental,
hospitalization and life insurance coverages and in all other employee welfare
benefit plans, programs and arrangements in which the Executive and such
dependents were participating at the time of the Executive's termination of
employment, and monthly payments for nine (9) months thereafter of an amount
equal to the monthly premiums paid by the Company for such coverage at the time
of the Executive's termination of employment; and

               (vii) payment of the Cost of Living Allowance for three (3)
months following the last day of the Executive's employment.

          (c) Termination by Holding or the Company for Cause. Holding or the
Company may terminate the Executive's employment for Cause at any time during
the Term of Employment. If the Executive's employment hereunder is terminated by
Holding or the Company for Cause, the Executive shall be entitled to the
following:

               (i) payment of Base Salary and Cost of Living Allowance through
the last day of his employment; and

               (ii) payment of the Standard Benefit.

For the avoidance of doubt, no annual incentive awards shall be payable to the
Executive upon a termination of the Executive's employment under this Section
9(c).

          (d) Termination Without Cause; Termination by the Executive for Good
Reason. Holding or the Company may terminate the Executive's employment without
Cause and the Executive may terminate his employment for Good Reason at any time
during the Term of Employment. If the Executive's employment hereunder is
terminated without Cause (and other

                                       9

<PAGE>

than due to death or Disability in accordance with Sections 9(a) or (b)), or for
Good Reason, subject to Section 9(h), the Executive shall be entitled to:

               (i) payment of Base Salary, in accordance with the Company's
regular payroll practices (based on the Executive's rate of annual Base Salary
at the time of the Executive's termination of employment), for two (2) years
following the last day of the Executive's employment, provided that the
Executive shall have a duty to mitigate or reduce the amounts due him under this
paragraph (i) during the last twelve (12) months (the "Mitigation Period") of
such two-year period by seeking other employment;

               (ii) if earned by the Executive but not yet paid at the time of
his termination of employment, an annual incentive award for the year prior to
the year in which the Executive's termination of employment occurs, payable in
accordance with Section 5;

               (iii) an annual incentive award for the year in which the
Executive was terminated, based on the target annual bonus for that year and
payable in accordance with Section 5;

               (iv) continued participation for the Executive and each of his
dependents in all medical, dental, hospitalization and life insurance coverages
and all other welfare benefit plans, programs and arrangements in which the
Executive and such dependents were participating at the time of the Executive's
termination of employment for three (3) months from the last day of the
Executive's employment, and monthly payments for twenty-one (21) months
thereafter of an amount equal to the monthly premiums paid by the Company for
such coverage at the time of the Executive's termination of employment, provided
that the Executive shall have a duty to mitigate or reduce the amounts due him
under this paragraph y(iv) during the Mitigation Period by seeking other
employment;

               (v) payment of the Cost of Living Allowance for three (3) months
following the last day of the Executive's employment; and

               (vi) payment of the Standard Benefit.

If the Executive becomes employed at any point during the Mitigation Period, the
Executive shall be required to notify Holding and the Company of the name and
address of such employer within ten (10) days of his date of hire and shall
provide information to Holding and the Company concerning the Executive's base
salary and eligibility for coverage under such employer's welfare benefit plans.
Should the Executive obtain other employment, Holding and the Company shall be
entitled to offset against any payments or coverage that would otherwise be made
or provided under Sections 9(d)(i) and 9(d)(iv) hereof during the Mitigation
Period the amount of any comparable payments to which the Executive is entitled
from his other employer in connection with the provision of services to such
employer during the Mitigation Period. If the Executive fails to seek other
employment in good faith, or fails to notify Holding and the Company of his new
employment and/or provide the information required in this subsection, Holding's
and the Company's obligation to provide severance benefits under Section 9(d)(i)
and 9(d)(iv) shall cease.

                                       10

<PAGE>

          (e) Voluntary Termination Without Good Reason. The Executive may
terminate his employment without Good Reason at any time during the Term of
Employment, provided he gives at least thirty (30) days' advance written notice.
If the Executive terminates his employment with Holding or the Company without
Good Reason (and not because of his death or due to Disability), the Executive
shall have the same entitlements hereunder as provided in Section 9(c) in the
case of a termination by Holding or the Company for Cause.

          (f) Termination of Employment Due to the Expiration of the Term of
Employment. If the Executive's employment terminates as a result of the
expiration of the Term of Employment, the Executive shall be entitled to the
following:

               (i) payment of Base Salary and Cost of Living Allowance through
the last day of his employment;

               (ii) payment of the Standard Benefit;

               (iii) if earned by the Executive but not yet paid at the time of
his termination of employment due to the expiration of the Term of Employment,
an annual incentive award for the year prior to the year in which the
Executive's employment terminates, payable in accordance with Section 5; and

               (iv) an annual incentive award with respect to the year in which
the Executive's employment terminates as a result of the expiration of the Term
of Employment, prorated based on the target annual bonus and the number of days
worked in such year and payable in accordance with Section 5.

          (g) Benefit Plans. If the Executive, or any of his dependents, is
precluded from continuing participation in any employee welfare benefit plan,
program or arrangement for the period following termination of the Executive's
employment, as provided in Sections 9(a)(vi), 9(b)(vi) or 9(d)(iv), the
Executive shall be provided with the after-tax economic equivalent of any
benefit or coverage foregone. For this purpose, the economic equivalent of any
benefit or coverage foregone shall be deemed to be the total cost to the
Executive or any of his dependents of obtaining such benefit or coverage by
himself on an individual basis. Payment of such after-tax economic equivalent
shall be made quarterly in advance, without discount.

          (h) Mutual Release. Notwithstanding any provision herein to the
contrary, Holding or the Company may require that, prior to payment of any
amount or provision of any benefit pursuant to Section 9(d)(i), (d)(ii),
(d)(iii), (d)(iv) or (d)(v), the Executive, on the one hand, and Holding and the
Company, on the other hand, shall have executed a valid mutual release, pursuant
to which the Executive, on the one hand, and Holding and the Company, on the
other hand, shall each mutually release each other and all related parties, to
the maximum extent permitted by law, from any and all claims either Party may
have against the other as of the date of termination that relate to or arise out
of the Executive's employment or termination of employment, except such claims
arising under this Agreement, and any waiting periods contained in such mutual
release shall have expired.

                                       11

<PAGE>

     10. Indemnification and Officers' & Directors' Insurance.

          (a) Holding and the Company shall indemnify the Executive (and his
legal representatives or other successors and heirs), except in relation to any
fraud or dishonesty of which he may be guilty in relation to Holding or the
Company, to the fullest extent permitted by the laws of Bermuda, as in effect at
the time of the subject act or omission, or the Certificate of Incorporation and
Bye-Laws of Holding or the Company as in effect at such time or on the date of
this Agreement, whichever affords or afforded greater protection to the
Executive; and the Executive shall be entitled to the protection of any
insurance policies which Holding, the Company or a Subsidiary elects to maintain
generally for the benefit of Holding, the Company and their Subsidiaries'
directors and officers, against all costs, charges and expenses whatsoever
incurred or sustained by the Executive or his legal representatives in
connection with any Proceeding to which he (or his legal representative or other
successors and heirs) may be made a party by reason of his being or having been
a director, officer or employee of Holding, the Company or any of their
Subsidiaries. If any Proceeding is brought or threatened against the Executive
in respect of which indemnity may be sought against Holding or the Company
pursuant to the foregoing, the Executive shall notify Holding or the Company
promptly in writing of the institution of such Proceeding and Holding and the
Company shall assume the defense thereof and the employment of counsel and
payment of all fees and expenses; provided, however, that if a conflict of
interest exists between Holding and the Company and the Executive such that it
is not legally practicable for Holding or the Company to assume the Executive's
defense, the Executive shall be entitled to retain separate counsel reasonably
acceptable to Holding or the Company and the payment of all fees and expenses of
such separate counsel shall be assumed by Holding or the Company.

          (b) In the event that Holding or the Company's common shares are
publicly traded, at all times while the Executive is employed by Holding and the
Company (and following such employment for such period of time as is customary
for companies in the same industry as Holding and the Company and of comparable
size), the Executive shall be covered under an officers' and directors'
liability insurance policy maintained by Holdings and the Company. Such coverage
shall be in an amount that is customary for companies in the same industry as
Holding and the Company and of comparable size.

     11. Assignability; Binding Nature.

          (a) This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs (in the case of the
Executive) and assigns.

          (b) Holding's and the Company's rights or obligations under this
Agreement may be assigned or transferred by Holding or the Company only pursuant
to a merger, consolidation or similar transaction in which Holding or the
Company are not the continuing entities, or a sale or liquidation of all or
substantially all of the assets and business of the Company; provided that the
Executive's written consent shall be required prior to the assignment or
transfer of Holding's or the Company's rights or obligations hereunder, and
provided further that the assignee or transferee is the successor to all or
substantially all of the assets and business of Holding or the Company and such
assignee or transferee assumes the liabilities, obligations and duties of
Holding or the Company, as contained in this Agreement, either contractually or
as

                                       12

<PAGE>

a matter of law. In the event of any sale of assets and business or liquidation
as described in the preceding sentence, Holding or the Company shall use their
best efforts to cause such assignee or transferee to expressly assume the
liabilities, obligations and duties of Holding or the Company hereunder and
shall cause such assignee or transferee to deliver a legal, valid and
enforceable written instrument in form and substance satisfactory to the
Executive and his counsel to such effect.

          (c) No rights or obligations of the Executive under this Agreement may
be assigned or transferred by the Executive other than his rights to
compensation and benefits, which may be transferred only by will or operation of
law, or as provided in Section 16(e).

     12. Representations. Holding and the Company represent and warrant that (a)
they are fully authorized by action of the Boards (and of any other Person whose
action is required) to enter into this Agreement and to perform their
obligations hereunder, and (b) upon the execution and delivery of this Agreement
by the Parties, this Agreement shall be the valid and binding obligation of
Holding and the Company, enforceable against Holding and the Company in
accordance with its terms.

     13. Covenant Not to Compete; Confidentiality.

          (a) Covenant Not to Compete.

               (i) The Executive agrees that for so long as the Executive is
employed by Holding and the Company and for a period of one year following the
termination of the Executive's employment for any reason (other than a
termination of the Executive's employment resulting from the expiration of the
Term of Employment), the Executive shall not directly or indirectly:

                    (A) enter into or attempt to enter into a Restricted
Business (as defined below) in the United States or other jurisdictions in which
Holding, the Company or their Subsidiaries conduct business or are planning to
conduct business within one year thereafter as a principal, partner, employee,
consultant, agent, broker, intermediary, shareholder, investor, officer or
director (other than as a holder of not in excess of 1% of the outstanding
voting shares of any publicly traded company);

                    (B) induce or attempt to persuade any former or then-current
employee, agent, manager, consultant or director of Holding, the Company or a
Subsidiary to terminate such employment or other relationship in order to enter
into any business relationship or business combination with the Executive in
competition with Holding's, the Company's or a Subsidiary's business;

                    (C) use contracts, proprietary information, trade secrets,
confidential information, customer lists, mailing lists, goodwill, or other
intangible property used or useful in connection with the business of Holding,
the Company or a Subsidiary; or

                    (D) solicit or otherwise attempt to establish for the
Executive or any other Person any business relationship with any Person which
is, or during the one year

                                       13

<PAGE>

period preceding the Executive's date of termination of employment was, a
customer, client or distributor of Holding, the Company or a Subsidiary.

               (ii) For the purposes of this Section 13, a "Restricted Business"
shall mean a financial guaranty reinsurance business, whether existing or to be
formed, without regard to its claims-paying ability.

               (iii) The covenants of the Executive set forth in this Section 13
shall be null and void and without any force or effect upon the effective date
of any liquidation or dissolution of Holding or the Company. For purposes of
clarity, an amalgamation or similar combination of Holdings and Holdings II
shall not constitute a liquidation or dissolution of Holding.

               (iv) It is the desire and intent of the Parties that the
provisions of this Section 13 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular portion of this
Section 13 shall be adjudicated to be invalid or unenforceable, this Section 13
shall be deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to the
operation of this Section 13 in the particular jurisdiction in which such
adjudication is made. The Executive acknowledges that he has received good and
valuable consideration for the restrictive covenants contained in this Section
13.

          (b) Confidentiality. The Executive acknowledges that he will develop
and be exposed to information that is or will be proprietary to Holding, the
Company and their Subsidiaries, including, but not limited to, customer lists,
marketing plans, pricing data, product development plans and other intangible
information. Such information shall be deemed confidential to the extent such
information is not generally known to the public or in Holding's or the
Company's industry. The Executive agrees to use such information only in
connection with the performance of his duties hereunder and to maintain such
information in confidence; provided, however, that the Executive may disclose
such information when required to by law or by a court, government agency,
legislative body or other Person with apparent jurisdiction to order him to
divulge, disclose or make accessible such information. Further information
regarding the Executive's duties with respect to confidential information and
other matters is contained in the Company's Code of Conduct which the Executive
is required to acknowledge as a condition to employment with the Company.

          (c) Company Property. Promptly following any termination of the
Executive's employment with Holding or the Company, the Executive shall return
to Holding or the Company all property of Holding, the Company and their
Subsidiaries, and all copies thereof in the Executive's possession or under his
control.

          (d) Non-Disparagement. During the Term of Employment and thereafter
following any termination of the Executive's employment with Holding or the
Company, (i) neither the Executive, on the one hand, nor Holding or the Company,
on the other hand, shall engage in conduct that could be disruptive in any way
to the business or operations of the other or that could wrongfully interfere
therewith, and (ii) neither the Executive, on the one hand, nor

                                       14

<PAGE>

Holding or the Company, on the other hand, shall make at any time in the future
any derogatory comments concerning the other or the business or operations of
the other; provided, however, that nothing in this Section 13(d) shall be deemed
to prevent either Party from enforcing the other terms of this Agreement.

     14. Governing Law and Arbitration; Waiver of Jury Trial. This Agreement
shall be governed by the laws of the State of New York, without reference to
principles of conflicts or choice of law under which the law of any other
jurisdiction would apply. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration in New York, New York, before a sole arbitrator, in accordance with
the laws of the state of New York. The arbitration shall be administered by
Judicial Arbitration & Mediation Services, Inc., or a successor thereto,
("JAMS") in accordance with any streamlined or expedited (rather than
comprehensive) JAMS procedures then in effect. If Holding, the Company and the
Executive do not agree on an arbitrator within thirty (30) days of the date any
claim for arbitration hereunder is asserted, Holding and the Company, on the one
hand, and the Executive, on the other hand, each shall appoint one arbitrator,
who shall appoint a third arbitrator to settle the dispute or controversy. If
JAMS does not exist at the time of the dispute or controversy, the American
Arbitration Association shall be substituted for JAMS for purposes of this
Section 14. Holding or the Company, on the one hand, and the Executive, on the
other hand, shall each pay one-half of all arbitration fees and expenses arising
in connection with a dispute or controversy governed by this Section 14 and each
Party shall be responsible for payment of its own attorney's fees. Judgment may
be entered on the arbitrator's award in any court having jurisdiction.

     15. Notices. Any notice required or desired to be delivered under this
Agreement shall be in writing and shall be delivered personally, by courier
service, by registered mail, return receipt requested, or by telecopy and shall
be effective upon actual receipt by the Party to which such notice shall be
directed, and shall be addressed as follows (or to such other address as the
Party entitled to notice shall hereafter designate in accordance with the terms
hereof):

                                       15

<PAGE>

          If to Holding or the Company:

               Courier Address:
               RAM Re House
               46 Reid Street
               Hamilton, HM 12, Bermuda
               Attention: Chairman of the Board
               (with a copy to the General Counsel)
               Telecopy No.: (441) 296-6509

               Regular Mail:
               RAM Re House
               P.O. Box HM 3302
               Hamilton, HM PX, Bermuda
               Attention: Chairman of the Board
               (with a copy to the General Counsel)
               Telecopy No.: (441) 296-6509

          If to the Executive, to him at his address as filed with the Company's
          personnel records, with a copy to:

               [insert address]

     16. Miscellaneous.

          (a) Entire Agreement. This Agreement contains the entire understanding
and agreement between the Parties concerning the subject matter hereof and, as
of the Effective Date, supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the
Parties with respect thereto. This Agreement shall serve as a written statement
of employment for purposes of Section 6 of the Bermuda Employment Act of 2000.
There is no applicable collective agreement.

          (b) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law so as to achieve the purposes of this Agreement.

          (c) Amendment or Waiver. No provision in this Agreement may be amended
unless such amendment is set forth in writing and signed by the Parties. No
waiver by either Party of any breach of any condition or provision contained in
this Agreement shall be deemed a waiver of any similar or dissimilar condition
or provision at the same or any prior or subsequent time. To be effective, any
waiver must be set forth in writing and signed by the waiving Party.

          (d) Headings. The headings of the sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.

                                       16

<PAGE>

          (e) Beneficiaries/References. The Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit hereunder following the
Executive's death by giving Holding or the Company written notice thereof. In
the event of the Executive's death or a judicial determination of his
incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.

          (f) Survivorship. Notwithstanding anything contained herein to the
contrary, if the Executive's employment with Holding or the Company terminates
during the Term of Employment, Sections 9, 10, 11, 13, 14, 15, and 16 of this
Agreement, and the Parties' respective rights and obligations under such
provisions, shall survive until all of the Parties' obligations under such
provisions are satisfied.

          (g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.

          (h) Code Section 409A. To the extent applicable, it is intended that
this Agreement and any payment made hereunder shall comply with the requirements
of Section 409A of the Code, and any related regulations or other guidance
promulgated with respect to such Section by the U.S. Department of the Treasury
or the Internal Revenue Service ("Code Section 409A"). Any provision that would
cause the Agreement or any payment hereof to fail to satisfy Code Section 409A
shall have no force or effect until amended to comply with Code Section 409A,
which amendment may be retroactive to the extent permitted by Code Section 409A.

                                       17

<PAGE>

          IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.

                                        RAM HOLDINGS LTD.

                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------

                                        RAM HOLDINGS II LTD.

                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------

                                        RAM REINSURANCE COMPANY LTD.

                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------

                                        EXECUTIVE

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

                                       18

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