EXHIBIT 10.31
SECOND AMENDMENT
to
EMPLOYMENT AGREEMENT (“AGREEMENT”)
between
TRIAD GUARANTY INSURANCE CORPORATION (“COMPANY”)
and
KEN N. LARD (“EMPLOYEE”)
dated
AUGUST 3, 2005
     WHEREAS, Company and Employee are currently parties to the Agreement; and
     WHEREAS, the parties desire to address changes in the treatment of bonus or
incentive compensation under the Agreement in view of the significant change in
the duties of Employee; and
     WHEREAS, the parties desire to memorialize their understandings with
respect to these changes by amending the Agreement.
     NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto agree as follows:
     1. Section 7(c)(ii) of the Amendment to the Employment Agreement dated
January 1, 1997 is deleted in its entirety and the following is substituted
therefore:
     “(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

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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.
     2. Section 10(a) of the Agreement is deleted in its entirety and the
following is substituted therefor:
     “(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
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% 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 “Change of 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.”
     3. Except as expressly provided in this Amendment or as necessary to
effectuate its terms, the terms of the Agreement remain unchanged.
     IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized officer and Employee has signed this Amendment to be
effective immediately upon execution by each of the parties.

     
COMPANY:
  EMPLOYEE:
TRIAD GUARANTY INSURANCE
   
     CORPORATION
     
By: /s/ Ron D. Kessinger
       /s/ Ken N. Lard
Name (Printed): Ron D. Kessinger
 
 
      Ken N. Lard
Title: Senior Executive Vice-President & COO
  Date: August 4, 2005
Date: August 4, 2005
   

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