EXHIBIT 10.29
EMPLOYMENT AGREEMENT
     This Employment Agreement (the “Agreement”) is made as of the 19th day of
May, 2005, by and between Triad Guaranty Insurance Corporation, an Illinois
insurance corporation (the “Company”), and Eric B. Dana (“Employee”).
WITNESSETH:
     WHEREAS, the Company desires to employ Employee and Employee is willing to
accept such employment, all upon the terms and conditions hereinafter set forth.
     NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto agree as follows:

1.   Employment and Term. The Company hereby employs Employee and Employee
accepts employment with the Company as Senior Vice President and Chief Financial
Officer of the Company, on the terms and conditions herein set forth, for a
period commencing on May 19, 2005, and expiring on June 30, 2007, and thereafter
for successive six-month periods unless either party gives written notice of the
nonrenewal of this Agreement at least one year prior to the commencement of any
such additional six-month period. Employee’s duties and responsibilities in this
position shall be determined by the Company’s Board of Directors (the “Board”),
consistent with Employee’s qualifications and the best interests of the Company.
Employee shall also perform such other or additional duties on behalf of the
Company and its parent corporation, Triad Guaranty Inc., a Delaware corporation
(“TGI”), as may be assigned to him by the Board from time to time.   2.   Extent
of Services. During the term hereof, Employee shall devote his entire attention
and energy to the business and affairs of the Company and TGI on a full-time
basis and shall not be engaged in any other business activity, regardless of
whether such business activity is pursued for gain, profit or other pecuniary
advantage, unless the Company otherwise consents; but this shall not be
construed as preventing Employee from investing his assets in such form or
manner as will not require any services on the part of Employee in the operation
of the affairs of the companies in which such investments are made and will not
otherwise conflict with the provisions of this Agreement. Full-time, as used
above, shall mean a forty (40) hour work week, or such longer work week, as the
Board shall from time to time adopt. The foregoing shall not be deemed to
prevent Employee from participating in any charitable or not-for-profit
organization to a reasonable extent, provided however that Employee does not
receive any salary or other remuneration from such charity or not-for-profit
organization.

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3.   Compensation.

  (a)   Salary. During the term of this Agreement, the Company shall pay
Employee an annual salary of $175,000.00 (“Annual Salary”), payable in
accordance with the Company’s regular payroll procedures. During each year that
this Agreement is in effect, the Company will review possible increases in
Employee’s salary at least annually, with any such increases subject to the
determination of the Board.     (b)   Bonus. In addition to his Annual Salary,
Employee shall be eligible to receive an annual bonus in an amount as may be
determined by the Board, pursuant to a bonus plan which may then be in effect or
otherwise.

4.   Benefits. Employee shall be entitled to participate in all medical and
other employee plans of the Company and TGI, if any, on the same basis as other
executives of the Company, subject in all cases to the respective terms of such
plans.   5.   PTO. Employee shall be entitled to paid time off (“PTO”) in
accordance with the Company’s PTO policy in effect at the time the PTO is taken.
In the event that the full PTO is not taken by Employee, no PTO time shall
accrue for use in future years, except in accordance with the Company’s then
existing policy for the carry forward of accrued PTO.   6.   Expenses. Employee
shall be entitled to prompt reimbursement for all reasonable expenses incurred
by him in furtherance of the business of the Company and TGI in connection with
his performance of his duties hereunder, in accordance with the policies and
procedures established for executive officers of the Company and TGI, and
provided Employee properly accounts for such expenses.   7.   Termination.

  (a)   Death. This Agreement and Employee’s employment hereunder shall
terminate immediately upon Employee’s death. In such event, the Company shall be
obligated to pay Employee’s salary only to the end of the month in which he
dies.     (b)   Incapacity. If Employee is absent from his employment for
reasons of illness or other physical or mental incapacity which renders him
unable to perform the essential functions of his position, with or without
reasonable accommodation, for more than an aggregate number of days totaling
twelve (12) weeks, whether or not consecutive, in any period of twelve
(12) consecutive months, then upon at least sixty (60) days’ prior written
notice to Employee, if such is consistent with applicable law, the Company may
terminate this Agreement and Employee’s employment hereunder. In such event, the
Company shall be obligated to pay Employee his salary to the earlier of (i) the
date on which coverage commences under the long-term disability insurance policy
maintained by the Company for the benefit of Employee, if any, or (ii) the date
two (2) months after the date of termination.

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  (c)   Termination by the Company.

  (i)   The Company may terminate this Agreement and Employee’s employment
hereunder at any time for Cause. As used herein, “Cause” shall mean:

  (A)   a material breach by Employee of his duties and obligations hereunder,
including but not limited to gross negligence in the performance of his duties
and responsibilities or the failure to follow the Board’s directions; provided
he shall be entitled to reasonable notice of, and if feasible a reasonable
opportunity to cure, any such breach;     (B)   willful misconduct by Employee
which may be materially injurious to the reputation or business of the Company
or TGI;     (C)   any act of fraud, misappropriation or other dishonesty by
Employee; or     (D)   Employee’s conviction of a felony.

      In the event of termination for Cause, the Company shall pay Employee his
salary up to the date of the delivery of the notice of termination, which date
shall be for all purposes of this Section 7(c)(i) the date of termination of his
employment. In the event of termination for Cause, Employee shall not receive
any previously unpaid bonus or bonuses except any earned but unpaid bonus with
respect to any full calendar year preceding the date of termination.     (ii)  
Notwithstanding anything contained herein to the contrary, the Company also may
terminate this Agreement and Employee’s employment hereunder for any reason
whatsoever, upon no less than sixty (60) days’ prior written notice to Employee.
In the event that the Company terminates this Agreement pursuant to the
provisions of this Section 7(c)(ii), Employee shall be entitled to receive his
salary up to the date of termination set forth in the notice of termination and
a severance payment equal to 200% of the total annual salary paid to Employee by
the Company and/or TGI during the two (2) calendar years prior to the year of
termination (the “Severance Payment”). At the option of the Company, the
Severance Payment shall be payable either in a lump sum cash payment or in
twenty-four (24) monthly installments commencing on the first day of the month
following termination of this Agreement. If for any reason any court determines
that any of the restrictions contained in Section 8 hereof are not enforceable,
the Company shall have no obligation to pay the Severance Payment or any
remaining installment thereof to Employee.

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  (d)   Termination by Employee. Employee may terminate this Agreement and his
employment hereunder for any reason whatsoever, upon no less than sixty
(60) days’ prior written notice to the Company. In the event that Employee
terminates this Agreement pursuant to the provisions of this Section 7(d),
Employee shall be entitled to receive his salary up to the date of termination
set forth in the notice of termination. In such event, Employee shall not
receive any previously unpaid bonus or bonuses except any earned but unpaid
bonus with respect to any full calendar year preceding the date of termination.

8.   Restrictive Covenant. During the term of this Agreement and for a period of
two (2) years after the termination of this Agreement by the Company or
Employee, except pursuant to the provisions of Section 1 above, Employee shall
not, either as an individual on his own account; as a partner, joint venturer,
employee, agent, or salesman for any person; as an officer, director or
stockholder (other than a beneficial holder of not more than five percent (5%)
of the outstanding voting stock of a company having at least 250 holders of
voting stock) of a corporation; or otherwise, directly or indirectly:

  (a)   enter into or engage in the private mortgage insurance business within:

  (i)   any area of the United States in which the Company or TGI is then doing
business;     (ii)   in the event that any court determines that the area set
forth in the preceding subparagraph is too broad to be enforceable, each and
every state of the United States in which the Company had a market share, based
on industry data, of at least four percent (4%) of net new mortgage insurance
written as of the end of the quarter next preceding the date of termination of
this Agreement; or     (iii)   in the event that any court determines that the
area set forth in the preceding subparagraphs is too broad to be enforceable,
each and every metropolitan statistical area of the United States in which the
Company had a market share, based on industry data, of at least four percent
(4%) of net new mortgage insurance written as of the end of the quarter next
preceding the date of termination of this Agreement; or     (iv)   in the event
that any court determines that the area set forth in the preceding subparagraphs
is too broad to be enforceable, the States of Florida, Illinois and North
Carolina; or     (v)   in the event that any court determines that the area set
forth in the preceding subparagraphs is too broad to be enforceable, the State
of North Carolina.

  (b)   solicit or attempt to solicit any of the Company’s or TGI’s customers or
prospective customers with whom Employee has had contact as an employee of the
Company in the performance of his duties and responsibilities hereunder with

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      the intent or purpose to perform for such customer the same or similar
services or to sell to such customer the same or similar products which Employee
performed for or sold to such customer during the term of his employment
hereunder; or     (c)   solicit or recruit any person who is an employee or
agent of the Company or TGI, either now or during such period, for employment in
the private mortgage insurance business or for the purpose of soliciting or
attempting to solicit any of the Company’s or TGI’s customers or prospective
customers as prohibited by Section 8(b) above.

    Employee and the Company agree and acknowledge that the Company and TGI do
business on a nationwide basis, with customers located throughout the United
States, and that any breach by Employee of the restrictive covenant contained
herein would immeasurably and irreparably damage the Company and TGI. Employee
and the Company agree and acknowledge that the duration, scope and geographic
areas applicable to the noncompetition covenants in this Section 8 are fair,
reasonable and necessary to protect legitimate business interests of the Company
and TGI, and that adequate compensation has been received by Employee for such
obligations.   9.   Confidential Information and Discoveries. Employee
acknowledges that he will, as a result of his duties as an employee of the
Company, have access to and be in a position to receive confidential
information, including trade secrets, relating to the Company and TGI.
Therefore, Employee agrees that during his employment by the Company and
thereafter he will not divulge to, or use for the benefit of, himself or any
other person, any information concerning any inventions, discoveries,
improvements, processes, methods, trade secrets, research or secret data
(including, without limitation, customer or supplier lists, formulas, computer
programs, software development or executive monitor systems), or other
confidential matters possessed, owned or used by the Company or TGI that may be
obtained or learned by Employee in the course of or as a result of his
employment hereunder unless (i) such disclosure is authorized by the Company,
(ii) such confidential information becomes generally available to and known by
the public (other than as a result of disclosure directly or indirectly by the
Employee) or (iii) such confidential information becomes available to Employee
on a nonconfidential basis from a source other than the Company, TGI or their
employees or agents, provided that such source is not and was not bound by a
confidentiality agreement with or other obligation of secrecy to the Company or
TGI. The expiration or termination of employment shall not be deemed to release
Employee from his duties hereunder not to convert to his own use or the use of
others the rights or properties of the Company or TGI as described herein.   10.
  Change in Control.

  (a)   Change in Control Severance Compensation. Within two years following a
Change in Control (as defined below), in the event of (i) a material and adverse
change in the status or position of Employee as an executive officer of the
Company including, without limitation, a material diminution in duties or
responsibilities, except in connection with the incapacity of Employee, (ii) the
transfer or relocation by the Company of the office of Employee which would

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      require Employee to be based more than fifty (50) miles distant from the
location of his office immediately prior to such transfer or relocation, or
(iii) the discontinuance of any bonus or incentive compensation plan for which
the Company or TGI has determined Employee to be eligible and which represents a
material portion of the Employee’s annual compensation, Employee shall be
entitled to terminate this Agreement and his employment hereunder and receive
from the Company a payment equal to 200% the total annual salary paid to
Employee by the Company and/or TGI during the two (2) calendar years prior to
the year of termination (the “Change in Control Compensation”). At the option of
the Company, the Change in Control Compensation shall be payable either in a
lump sum cash payment or in twenty-four (24) monthly installments commencing on
the first day of the month following termination of this Agreement. If for any
reason any court determines that any of the restrictions contained in Section 8
hereof are not enforceable, the Company shall have no obligation to pay the
Change in Control Compensation or any remaining installment thereof to Employee.
    (b)   Change in Control. For purposes of this Agreement, “Change in Control”
shall mean the occurrence of any of the following events:

  (i)   any person or persons acting as a group, other than a person which as of
the date of this Agreement is the beneficial owner of voting securities of TGI
and its affiliates, or any employee benefit plan of the Company or TGI or
Employee or a group including Employee, shall become the beneficial owner of
securities of TGI representing the greater of (i) at least twenty-five percent
(25%) of the combined voting power of TGI’s then outstanding securities, or
(ii) at least the combined voting power of TGI’s outstanding securities then
held by Collateral Investment Corp., a Delaware corporation, and Collateral
Mortgage, Ltd., an Alabama limited partnership, and any of their affiliates; or
    (ii)   individuals who constitute the board of directors of TGI upon
completion of the initial public offering of TGI’s common stock (the “Incumbent
Board”) cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election
or nomination for election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of TGI in which such person is named as a
nominee for director, without objection to such nomination) shall be, for
purposes of this clause (ii) considered as though such person were a member of
the Incumbent Board; or     (iii)   any consolidation or merger to which TGI is
a party, if following such consolidation or merger, stockholders of TGI
immediately prior to such consolidation or merger shall not beneficially own
securities representing at least fifty-one percent (51%) of the combined voting
power of the outstanding voting securities of the surviving or continuing
corporation; or

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  (iv)   any sale, lease, exchange or other transfer (in one transaction or in a
series of related transactions) of all, or substantially all, of the assets of
TGI, other than to an entity (or entities) of which TGI or the stockholders of
TGI immediately prior to such transaction beneficially own securities
representing at least fifty-one percent (51%) of the combined voting power of
the outstanding voting securities.

11.   Enforcement. Both parties recognize that the services to be rendered under
this Agreement by Employee are special, unique and of extraordinary character
and that in the event of the breach by Employee of any of the terms and
conditions of this Agreement to be performed by him, then the Company shall be
entitled, if it so elects, to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain damages for any
breach hereof, or to enforce the specific performance hereof by Employee or to
enjoin Employee from performing acts prohibited above during the period herein
covered, but nothing herein contained shall be construed to prevent such other
remedy in the courts as the Company may elect to invoke.   12.   Return of
Documents. Upon the termination of this Agreement for any reason, Employee shall
forthwith return and deliver to the Company and shall not retain any original or
copies of any books, papers, price lists or customer contracts, bids or customer
lists, files, books of account, notebooks and other documents and data relating
to the performance by Employee of his duties hereunder, all of which materials
are hereby agreed to be the property of the Company.   13.   Miscellaneous.

  (a)   Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail to Employee or the Company at the address set forth below their
signatures at the end of this Agreement or to such other address as they shall
notify each other in writing.     (b)   Assignment. This Agreement shall be
binding upon and inure to the benefit of the Company and its successors and
assigns and Employee and his personal representatives, heirs, legatees and
beneficiaries, but shall not be assignable by Employee.     (c)   Applicable
Law. This Agreement shall be construed in accordance with the laws of the State
of North Carolina in every respect, including, without limitation, validity,
interpretation and performance.     (d)   Headings. Section headings and numbers
herein are included for convenience of reference only and this Agreement is not
to be construed with reference thereto. If there be any conflict between such
numbers and headings and the text hereof, the text shall control.

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  (e)   Severability. If for any reason any portion of this Agreement shall be
held invalid or unenforceable, it is agreed that the same shall not affect the
validity or enforceability of the remainder hereof. The portion of the Agreement
which is not invalid or unenforceable shall be considered enforceable and
binding on the parties and the invalid or unenforceable provision(s), clause(s)
or sentence(s) shall be deemed excised, modified or restricted to the extent
necessary to render the same valid and enforceable and this Agreement shall be
construed as if such invalid or unenforceable provision(s), clause(s), or
sentences(s) were omitted. The provisions of this Section 13(e) shall survive
the termination of this Agreement for any reason.     (f)   Entire Agreement.
This Agreement contains the entire agreement of the parties with respect to its
subject matter and supersedes all previous agreements between the parties. No
officer, employee, or representative of the Company has any authority to make
any representation or promise in connection with this Agreement or the subject
matter hereof that is not contained herein, and Employee represents and warrants
he has not executed this Agreement in reliance upon any such representation or
promise. No modification of this Agreement shall be valid unless made in writing
and signed by the parties hereto.     (g)   Waiver of Breach. The waiver of the
Company of a breach of any provision of this Agreement by Employee shall not
operate or be construed as a waiver of any subsequent breach by Employee.    
(h)   Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one agreement.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and Employee has signed this Agreement all on the
day and year first above written.

                  TRIAD GUARANTY INSURANCE
CORPORATION, an Illinois corporation
 
                By:         /s/ Darryl W. Thompson          
 
          Darryl W. Thompson
 
          Chief Executive Officer     Address:   101 South Stratford Road
 
          Winston-Salem, N. C. 27104

                  EMPLOYEE:
 
                    /s/ Eric B. Dana               Eric B. Dana     Address:  
219 Hobbs Street
 
          Davidson, NC 28036

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