provisions of this Agreement. Full-time, as used above, shall mean a forty (40) hour workweek, or such longer work week as the Board shall from time to time adopt. The foregoing shall notbe deemed to prevent Employee from participating in any charitable or not-for-profit organizationto a reasonable extent, provided however that Employee does not receive any salary or otherremuneration from such charity or not-for-profit organization. Employee will be subject to andshall comply with all codes of conduct, personnel policies and procedures applicable to seniorexecutives of the Company including, without limitation, policies regarding sexual harassment,conflicts of interest and insider trading, of which he shall have received in writing.     3. **Compensation**.     (a) **Salary**. During the term of this Agreement, the Company shall pay Employee an annualsalary of $495,000.00 (“Annual Salary”), payable in accordance with the Company’s regularpayroll procedures. For any period of Voluntary Retirement Extension (as defined in Section7(e)), the Company shall pay Employee an annual salary of $990,000, payable in accordancewith the Company’s regular payroll procedures.     (b) **Bonus**. In addition to his Annual Salary, Employee shall receive: (i) retentionbonuses equal to (A) $150,000, payable on the first regular pay period following July 1,2008, provided that Employee is employed on July 1, 2008 and (B) $300,000, payable on thefirst regular pay period following December 31, 2008, provided that Employee is employed onDecember 31, 2008; and (ii) a severance bonus equal to $225,000, payable on the firstregular pay period following December 31, 2008, provided that Employee is employed onDecember 31, 2008. Notwithstanding the foregoing, the bonus payments under (i) and (ii)shall be paid earlier (if applicable) on the first regular pay period following theeffective date of Employee’s Retirement, Involuntary Termination Without Cause or GoodReason Termination.     (c) **Restricted Stock Grant; Existing Awards.**Employee shall receive a grant ofrestricted stock under the terms of the Triad Guaranty Inc. 2006 Long-Term Stock IncentivePlan (as amended and restated on January 1, 2008) (the “Plan”) for 40,500 shares (the“Award”). The shares subject to the Award shall vest in a lump sum three (3) years from thedate of grant or two (2) years from the date of Retirement (as defined in Section 7(e)), ifearlier. The terms of the Award and the terms of all other options, restricted stockawards, phantom stock awards or other equity awards granted to Employee prior to andremaining outstanding on the date hereof shall be governed in all respects by the terms ofthe Plan and the respective award agreements under which they were originally granted.     4. **Benefits**. Employee shall be entitled to participate in all medical and other employeeplans of the Company, if any, on the same basis as other executives of the Company, subject in allcases to the respective terms of such plans.     5. **PTO**. Employee shall be entitled to paid time off (“PTO”) in accordance with the Company’sPTO policy in effect at the time the PTO is taken as if Employee had at least ten (10) years ofservice with the Company. In the event that the full PTO is not taken by Employee, no
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PTO time shall accrue for use in future years, except in accordance with the Company’sthen-existing policy for the carry forward of accrued PTO.     6. **Expenses**. Employee shall be entitled to prompt reimbursement for all reasonable expensesincurred by him in furtherance of the business of the Company in connection with his performance ofhis duties hereunder, in accordance with the policies and procedures established for executiveofficers of the Company, and provided Employee properly accounts for such expenses. In addition,Employee shall be entitled to prompt reimbursement for up to $5,000.00 of legal fees and expensesincurred by Employee in the negotiation of this Agreement. All reimbursements must be made nolater than the end of the calendar year following the calendar year in which the expense wasincurred. The expenses eligible for reimbursement under this Section 6 in any calendar year shallnot affect any expenses eligible for reimbursement or in-kind benefits to be provided to Employeein any other calendar year. Employee’s rights under this Section 6 shall not be subject toliquidation or exchange for any other benefit.     7. **Termination**.     (a) **Death**. This Agreement and Employee’s employment hereunder shall terminateimmediately upon Employee’s death. In such event, the Company shall be obligated to pay only(i) Employee’s salary to the end of the month in which he dies; and (ii) a lump sum deathbenefit to Employee’s estate equal to Employee’s Annual Salary at the time of his death.     (b) **Incapacity**. To the extent permitted by law, if Employee is absent from hisemployment for reasons of illness or other physical or mental incapacity which renders himunable to perform the essential functions of his position, with or without reasonableaccommodation, for more than an aggregate of ninety (90) days, whether or not consecutive,in any period of twelve (12) consecutive months, then upon at least sixty (60) days’ priorwritten notice to Employee, if such is consistent with applicable law, the Company mayterminate this Agreement and Employee’s employment hereunder, unless, within that noticeperiod, Employee shall have resumed performance of the essential functions of his positions,with or without reasonable accommodation. In the event of a termination of employment underthis Section 7(b), the Company shall be obligated to pay Employee his salary from the dateof such termination until the earlier of (i) the date on which coverage commences under thelong-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 such termination.     (c) **Termination by the Company**.     (i) The Company may terminate this Agreement and Employee’s employmenthereunder at any time for Cause. As used herein, “Cause” shall mean:     (A) a material breach by Employee of his duties and obligationshereunder, including but not limited to gross negligence in the performanceof his duties and responsibilities or the willful failure to
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follow the Board’s directions; provided, however, that Cause shall notexist unless the Company has provided Employee with written notice settingforth the existence of the non-performance, failure or breach and Employeeshall not have cured same within thirty (30) days after receiving suchnotice;     (B) willful misconduct by Employee which in the reasonabledetermination of the Board has caused or is likely to cause material injuryto the reputation or business of the Company;     (C) any act of fraud, material misappropriation or other dishonesty byEmployee; or     (D) Employee’s conviction of a felony.In the event of termination for Cause, the Company shall pay Employee hissalary up to the date that is thirty (30) days after the delivery to him ofthe notice of termination, which date shall be for all purposes of thisSection 7(c)(i) the date of termination of his employment, unless there hasbeen a cure under Section 7(c)(i)(A). In the event of termination for Cause,Employee shall not receive any previously unpaid bonus or bonuses except anyearned but unpaid bonus with respect to any bonus measurement period endedprior to the date of termination.     (ii) Notwithstanding anything contained herein to the contrary, the Companyalso may terminate this Agreement and Employee’s employment hereunder for any reasonwhatsoever, upon no less than sixty (60) days’ prior written notice to Employee. Inthe event that the Company terminates this Agreement pursuant to the provisions ofthis Section 7(c)(ii) (an “Involuntary Termination Without Cause”), then, forpurposes of Section 8, Employee shall be deemed to have terminated because ofRetirement pursuant to Section 7(e).     (d) **Termination by Employee**. Other than on account of a Good Reason Termination (asdefined in this Section 7(d)) or Retirement (as defined in Section 7(e)), Employee mayterminate this Agreement and his employment hereunder for any reason whatsoever, upon noless than sixty (60) days’ prior written notice to the Company. In the event that Employeeterminates this Agreement pursuant to the provisions of this Section 7(d) without “GoodReason” as hereinafter defined, Employee shall be entitled to receive his salary up to thedate of termination set forth in the notice of termination, and in such event, Employeeshall not receive any previously unpaid bonus or bonuses except any earned but unpaid bonuswith respect to bonus measurement period ended prior to the date of termination. Employeemay also resign for Good Reason (a “Good Reason Termination”). As used herein, “GoodReason” shall mean:     (i) a material breach by the Company of its obligations hereunder, includingbut not limited to a material and adverse change in the status or position ofEmployee as an executive officer of the Company including, without
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limitation, a material diminution in duties, responsibilities or authority,except in connection with the incapacity of Employee, or non-payment of AnnualSalary or other compensation due hereunder; or     (ii) the Company, without Employee’s consent (such consent not to beunreasonably withheld), transfers or relocates the office of Employee which wouldrequire Employee to be based more than fifty (50) miles distance from his initialoffice in Winston-Salem, North Carolina;provided, however, that Good Reason shall not exist unless Employee has provided theCompany with a written notice setting forth the reasons for the existence of GoodReason, and the Company has not cured the reasons for the existence of Good Reasonwithin thirty (30) days after receiving such notice.     (e) **Voluntary Retirement*****.***Employee may retire from the Company as of the close ofbusiness on December 31, 2008, or such earlier date as mutually agreed to by Employee andthe Company (“Retirement”). Notwithstanding the foregoing, the Company may, at its electionmade at any time by providing written notice to Employee prior to December 31, 2008, delaythe date of Employee’s Retirement from December 31, 2008 for a period not to extend beyondMarch 31, 2009 (“Voluntary Retirement Extension”). Employee’s failure to continue to performhis duties during any Voluntary Retirement Extension will be treated as a termination byEmployee under Section 7(d) without Good Reason and Employee will not be entitled to thebenefits provided under Section 8.     (f) **Subsidiary Offices and Positions; Company and Subsidiary Directorships.**Upontermination of Employee’s employment for any reason, his employment by any subsidiary of theCompany shall likewise then be terminated. In addition, upon such termination Employeeshall immediately resign as a member of the Board and the board of directors of anysubsidiary of the Company on which Employee is serving at the time of such termination, andhe shall evidence such resignation by promptly submitting his letter of resignation to thechairman of the Board and each such subsidiary board of directors.     8. **Benefits Upon Termination**     (a) **Involuntary Termination Without Cause, Good Reason Termination and Retirement**. IfEmployee’s employment is terminated as a result of an Involuntary Termination Without Cause,a Good Reason Termination, or Retirement (the day of such Involuntary Termination WithoutCause, Good Reason Termination or Retirement, the “Termination Date”), then Employee shallbe entitled to the following benefits (as applicable):     (i) **Retirement Payments**: $675,000 in total retirement payments, payable in 18equal monthly installments in advance over a period commencing as of the first dayof the seventh month following the Termination Date and ending on the first day ofthe 24th month following the Termination Date (such
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24-month period following the Termination Date being referred to herein as the“Post-Termination Period”).     (ii) **Continued Participation in Company Health Care Plan**: In addition to theother benefits provided in Section 8(a)(i), Employee shall be entitled to thefollowing benefits:     (A) Employee shall be entitled to participate (treating Employee as an“active employee” of the Company for this purpose) in any health care,dental, vision or prescription drug plan maintained by the Company(collectively, “Company health care plan”) during the Post-TerminationPeriod (the “Continuation Coverage”). The Company, consistent with soundbusiness practices, shall use its best efforts to provide Employee and hisdependents with the Continuation Coverage under the Company health careplan, including, if necessary, amending the applicable provisions of theCompany health care plan and negotiating the addition of any necessaryriders to any group insurance contract. During the Post-Termination Period,Employee shall pay the entire premium required for the Continuation Coverageunder the Company health care plan. During the first eighteen (18) monthsof the Post-Termination Period, the premium required for the ContinuationCoverage shall be equal to the premium required by the continuation ofcoverage requirements of Section 4980B of the Code and Part 6 of Title I ofthe Employee Retirement Income Security Act of 1974, as amended (“COBRA”)for such Continuation Coverage (the “COBRA Rate”). During the remainder ofthe Post-Termination Period, the premium required for the ContinuationCoverage shall be the greater of the COBRA Rate or the actuariallydetermined cost of the Continuation Coverage as determined by an actuaryselected by the Company.     (B) If at any time during the Post-Termination Period the Company isunable for whatever reason to provide Employee with the ContinuationCoverage under any Company health care plan, the Company, consistent withsound business practices, shall use its best efforts to provide Employeecoverage under an individual policy of health insurance providing coveragethat is substantially identical to the Continuation Coverage to be providedunder the Company health care plan. In such event, Employee shall pay theentire premium charged for coverage of Employee and his dependents under theindividual policy.     (C) The Continuation Coverage provided to Employee and his dependentspursuant to this Section 8(a)(ii) is intended to satisfy the continuation ofcoverage requirements of COBRA. In the event that the period ofContinuation Coverage expires prior to the end of the period of continuationcoverage to which Employee and his dependents would be entitled under COBRA(the “COBRA Period”), Employee and/or his dependents may elect continuationcoverage under COBRA (“COBRA
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Coverage”) for the remainder of the COBRA Period. Employee and/or hisdependents shall be responsible for paying the full amount of the premiumcharged for such COBRA Coverage under the Company health care plan at theCOBRA Rate. Notwithstanding the foregoing provisions of this Section8(a)(ii), in the event that the Continuation Coverage for whatever reasondoes not satisfy the continuation of coverage requirements of COBRA,Employee and/or his dependents shall be entitled to elect COBRA Coverage inlieu of the Continuation Coverage described in this Section 8(a)(ii). Insuch event, Employee and/or his dependents shall be responsible for payingthe full amount of the premium charged for such COBRA Coverage under theCompany health care plan at the COBRA Rate.     (D) During the Post-Termination Period, the Company shall pay toEmployee a monthly special benefit as determined pursuant to the provisionsof this sub-paragraph (D) (the “Special Benefit”). The amount of themonthly Special Benefit shall be equal to the amount of the monthly premiumactually paid by Employee for the Continuation Coverage for Employee and hisdependents required by this Section 8(a)(ii). The Special Benefit shall bepayable on the 20th day of each calendar month during thePost-Termination Period, or within ten (10) business days thereafter.     (iii) **Other Welfare Benefits.**In addition to participation in the Companyhealth care plan during the Post-Termination Period, and solely in the case ofRetirement (and not in the case of Involuntary Termination Without Cause or GoodReason Termination), Employee shall, as and to the extent permitted by (1) Section409A of the Internal Revenue Code of 1986, as amended (including all applicableregulations or other guidance promulgated pursuant thereto, “Code”), and (2) theterms and conditions of the Welfare Benefit Plans (as they exist on the datehereof), also be entitled to participate (treating Employee as an “active” employeeof the Company for this purpose) during the Post-Termination Period in all otherwelfare benefit plans and arrangements sponsored from time to time by the Companyfor the benefit of its employees, including, without limitation, life insurance,accident, disability policies or arrangements which are generally available to theactive employees of the Company (collectively, “Welfare Benefit Plans”) in which heparticipated immediately prior to his Termination Date and the benefits under suchother Welfare Benefit Plans shall be made available under the same terms andconditions available to active employees (*e.g.*, employee contributions are requiredfor certain benefits that are in effect for active employees who are similarlysituated). Notwithstanding the foregoing, Employee acknowledges and agrees thatupon his Retirement, he shall no longer be eligible to participate in, be providedor receive any reimbursement from Employer for or under: (1) the Company’s sickleave, vacation pay and similar programs, (2) any provision of a company car, (3)payment of country club dues, or (4) payment of other perquisites that werepreviously provided to Employee due to his position as President and Chief ExecutiveOfficer of the Company.
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Notwithstanding clause (4) of the preceding sentence, Employee shall continueto be entitled to reimbursement of his personal tax and accounting fees and expensesin an amount up to $7,000.00 per year. This right of reimbursement shall continuein effect during the term of this Agreement as set forth in Section 1 and for aperiod of twenty-four months following the date of his Retirement. Employeeacknowledges that such right of reimbursement shall terminate upon a termination ofEmployee’s employment for any reason other than Retirement.     (b) **Termination Other Than Involuntary Termination Without Cause, Good ReasonTermination and Retirement**. If Employee’s employment terminates for any reason other thanInvoluntary Termination Without Cause, a Good Reason Termination or Retirement, Employeeshall not be entitled to any of the benefits listed in Section 8(a).     (c) **Consultant Work and Compliance with Section 9 Restrictive Covenants as Condition toReceipt of Benefits**. As a continuing condition to the receipt of any benefits described inSection 8(a), Employee shall be reasonably available to perform services for the Company asan independent consultant on an as-needed basis during the Post-Termination Period;provided, however, that any such consulting work provided by Employee to the Company shallnot exceed (i) during the period beginning on the first day after the Retirement Date andending on the later of six (6) months from the Retirement Date or June 30, 2009, ten (10)days per calendar month; (ii) during the period beginning on the first day of the expirationof the period under clause (i) and ending on the later of six (6) months from that date orDecember 31, 2009, eight (8) days per calendar month; and (iii) thereafter five (5) days percalendar month. The services to be performed by Employee in his capacity as an independentconsultant shall be those as may be reasonably assigned him by the Board or its delegatefrom time to time. Employee shall be entitled to reimbursement for all reasonable expensesincurred by him during the Post-Termination Period, provided that any expense exceeding$1,000 shall be subject to the prior written approval of the Company. During thePost-Termination Period, Employee shall be treated as an independent contractor for federaland state income tax withholding, employment tax and tax reporting purposes. Employeeacknowledges and agrees that during the Post-Termination Period he will **not** be anemployee of the Company but will be an independent contractor. In addition, notwithstandinganything else in this Agreement to the contrary, (i) if for any reason any court determinesthat any of the restrictions contained in Section 9 hereof are not enforceable, (ii)Employee breaches or threatens to breach any of the restrictions in Section 9, or (iii)Employee challenges the enforceability of any of the restrictions in Section 9 (whetherthrough court proceedings, an administrative or arbitral proceeding, or in any other mannerwhatsoever), the Company shall have no obligation to pay the benefits provided in thisSection 8.     (d) **Reductions**. If the Company is obligated by law (including the WARN Act or anysimilar state or foreign law) to pay Employee severance pay, a termination indemnity, noticepay, or the like, then any post-termination payments provided in this Section 8 shall bereduced by the amount of any such other severance pay, termination indemnity, notice pay orthe like, as applicable.
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     (e) **Release**. Notwithstanding anything herein to the contrary, the payment of anypost-termination payments provided in this Section 8 to Employee shall be subject to theexecution by Employee (and failure to revoke) of a general release of the Company and itsaffiliates of any and all claims under this Agreement or related to or arising out ofEmployee’s employment hereunder, in a form and manner satisfactory to the Company.     9. **Restrictive Covenant**. During the term of this Agreement and for a period of two (2) yearsafter the termination of this Agreement by the Company or Employee, Employee shall not, either asan individual on his own account; as a partner, joint venturer, employee, agent, or salesman forany person; as an officer, director or stockholder (other than a beneficial holder of not more thanfive percent (5%) of the outstanding voting stock of a company having at least two hundred andfifty (250) holders of voting stock) of a corporation; or otherwise:     (a) enter into or engage in the private mortgage insurance business or any other creditenhancement business in which, as of the date of such termination, the Company is thenengaged or actively considering being engaged within:     (i) any area of the United States or any foreign country in which the Companyis then doing business;     (ii) in the event that any court determines that the area set forth in thepreceding subparagraph is too broad to be enforceable, each and every state of theUnited States or foreign country in which the Company had a market share, based onindustry data, of at least four percent (4%) of net new mortgage insurance writtenas of the end of the quarter next preceding the date of termination of thisAgreement; or     (iii) in the event that any court determines that the area set forth in thepreceding subparagraphs is too broad to be enforceable, each and every metropolitanstatistical area of the United States or any foreign country in which the Companyhad a market share, based on industry data, of at least four percent (4%) of net newmortgage insurance written as of the end of the quarter next preceding the date oftermination of this Agreement; or     (iv) in the event that any court determines that the area set forth in thepreceding 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 thepreceding subparagraphs is too broad to be enforceable, the State of North Carolina.     (b) solicit or attempt to solicit any of the Company’s customers or prospectivecustomers with whom Employee has had substantive business communications as an employee ofthe Company in the performance of his duties and responsibilities hereunder with the intentor purpose to perform for such customer the same or similar services or to sell to suchcustomer the same or similar products, including other credit enhancement
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products, which Employee performed for or sold to such customer during the term of hisemployment hereunder; or     (c) solicit or recruit any person who is an employee or agent of the Company, foremployment in the private mortgage insurance business or any other credit enhancementbusiness or for the purpose of soliciting or attempting to solicit any of the Company’scustomers or prospective customers as prohibited by Section 9(b) above.Employee and the Company agree and acknowledge that the Company does business on anationwide basis, with customers located throughout the United States, and may do businessworld wide with customers located throughout the world and that any breach by Employee ofthe restrictive covenant contained herein would immeasurably and irreparably damage theCompany. Employee and the Company agree and acknowledge that the duration, scope andgeographic areas applicable to the noncompetition covenants in this Section 9 are fair,reasonable and necessary to protect legitimate business interests of the Company, and thatadequate compensation has been received by Employee for such obligations.     10. **Confidential Information and Discoveries**. Employee acknowledges that he will, as a resultof his duties as an employee of the Company, have access to and be in a position to receiveconfidential information, including trade secrets, relating to the Company. Therefore, Employeeagrees that during his employment by the Company and thereafter he will not divulge to, or use forthe 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 developmentor executive monitor systems), or other confidential matters possessed, owned or used by theCompany that may be obtained or learned by Employee in the course of or as a result of hisemployment hereunder unless (i) such disclosure is authorized by the Company, (ii) suchconfidential information becomes generally available to and known by the public (other than as aresult of disclosure directly or indirectly by Employee) or (iii) such confidential informationbecomes available to Employee on a nonconfidential basis from a source other than the Company, orits employees or agents, provided that such source is not and was not bound by a confidentialityagreement with or other obligation of secrecy to the Company. The expiration or termination ofemployment shall not be deemed to release Employee from his duties hereunder not to convert to hisown use or the use of others the rights or properties of the Company as described herein.     11. **Enforcement**. Both parties recognize that the services to be rendered under this Agreementby Employee are special, unique and of extraordinary character and that in the event of the breachby Employee of any of the terms and conditions of Section 9 or 10 of this Agreement to be performedby him, then the Company shall be entitled, if it so elects, to institute and prosecute proceedingsin any court of competent jurisdiction, either in law or in equity, to obtain damages for anybreach hereof, or to enforce the specific performance hereof by Employee or to enjoin Employee fromperforming acts prohibited above during the period herein covered, but nothing herein containedshall be construed to prevent such other remedy in the courts as the Company may elect to invoke.
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     12. **Return of Documents**. Upon the termination of this Agreement for any reason, Employeeshall forthwith return and deliver to the Company and shall not retain any original or copies ofany books, papers, price lists or customer contracts, bids or customer lists, files, books ofaccount, notebooks and other documents and data relating to the performance by Employee of hisduties hereunder, all of which materials are hereby agreed to be the property of the Company.     13. **Tax and Other Restrictions**. Notwithstanding anything herein to the contrary:     (a) **Excess Parachute Payments**. In the event that payment of any amount under thisAgreement would cause Employee to be the recipient of an excess parachute payment within themeaning of Code Section 280G(b), the amount of the payments to be made to Employee pursuantto this Agreement shall be reduced to an amount equal to one dollar less than the amountthat would cause the payments hereunder to be excess parachute payments. The manner in whichsuch reduction occurs, including the items of payment and amounts thereof to be reduced,shall be agreed to by Employee and the Company.     (b) **Payments in Excess of $1 Million**. If any payment hereunder would not be deductibleby the Company for federal income tax purposes by reason of Code section 162(m), or anysimilar or successor statute (excluding Code Section 280G), such payment shall be deferredand the amount thereof shall be paid to Employee at the earliest time that such paymentshall be deductible by the Company.     (c) **Deferred Compensation Payments**. To the extent applicable, the parties heretointend that this Agreement comply with Code Section 409A. The parties agree that thisAgreement shall at all times be interpreted and construed in a manner to comply with CodeSection 409A and that should any provision be found not in compliance with Code Section409A, the parties are contractually obligated to execute any and all amendments to thisAgreement deemed necessary and required by the Company’s legal counsel to achieve compliancewith Code Section 409A. By execution and delivery of this Agreement, Employee irrevocablywaives any objections he may have to any amendments required by Code Section 409A. Theparties also agree that in no event shall any payment required to be made pursuant to thisAgreement that is considered nonqualified deferred compensation within the meaning of CodeSection 409A be made to Employee unless he has incurred a separation from service (asdefined in Code Section 409A). In the event amendments are required to make this Agreementcompliant with Code Section 409A, the Company shall use its best efforts to provide Employeewith substantially the same benefits and payments he would have been entitled to pursuant tothis Agreement had Code Section 409A not applied, but in a manner that is compliant withCode Section 409A. The manner in which the immediately preceding sentence shall beimplemented shall be the subject of good faith negotiations of the parties. The partiesalso agree that in no event shall any payment required to be made pursuant to this Agreementthat is considered nonqualified deferred compensation within the meaning of Code Section409A be accelerated in violation of Code Section 409A. The parties further agree that anypayments of deferred compensation that are made to a specified employee (as defined in CodeSection 409A) as a result of a separation from service cannot
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commence under Code Section 409A until the lapse of six (6) months after a separationfrom service (or death of the specified employee, if earlier).     14. **Miscellaneous**.     (a) **Notices**. Any notice required or permitted to be given under this Agreement shall besufficient if in writing and if sent by registered or certified mail to Employee or theCompany at the address set forth below their signatures at the end of this Agreement or tosuch other address as they shall notify each other in writing.     (b) **Assignment**. This Agreement shall be binding upon and inure to the benefit of theCompany and its successors and permitted assigns and Employee and his personalrepresentatives, heirs, legatees and beneficiaries. This Agreement may be assigned by theCompany with the consent of Employee to a fiscally responsible entity that assumes theobligations set forth herein, but shall not be assignable by Employee.     (c) **Applicable Law**. This Agreement shall be construed in accordance with the laws ofthe State of North Carolina in every respect, including, without limitation, validity,interpretation and performance. Any dispute between the parties hereto, arising under orrelating to this Agreement, or Employee’s employment with the Company, other than for anaction by the Company under Section 11 hereof for specific performance, injunction or otherequitable remedy to enforce Sections 9 and 10 hereof shall be settled by arbitration inWinston-Salem, North Carolina before a single arbitrator in accordance with thethen-applicable rules of the American Arbitration Association. Such arbitrator may award theprevailing party its reasonable attorneys’ fees and expenses, and judgment upon the awardrendered may be entered in any court having jurisdiction thereof.     (d) **Headings**. Section headings and numbers herein are included for convenience ofreference only and this Agreement is not to be construed with reference thereto. If there beany conflict between such numbers and headings and the text hereof, the text shall control.     (e) **Severability**. If for any reason any portion of this Agreement shall be heldinvalid or unenforceable, it is agreed that the same shall not affect the validity orenforceability of the remainder hereof. The portion of the Agreement which is not invalid orunenforceable shall be considered enforceable and binding on the parties and the invalid orunenforceable provision(s), clause(s) or sentence(s) shall be deemed excised, modified orrestricted to the extent necessary to render the same valid and enforceable and thisAgreement shall be construed as if such invalid or unenforceable provision(s), clause(s), orsentences(s) were omitted. The provisions of this Section 14(e), as well as Sections 9 and10 hereof, shall survive the termination of this Agreement.     (f) **Entire Agreement**. This Agreement contains the entire agreement of the parties withrespect to its subject matter and supersedes all previous agreements between the parties,including but not limited to the Prior Agreement, the Letter Agreement and the Amendment toLetter Agreement. No officer, employee, or representative of the Company has any authorityto make any representation or promise in connection with
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this Agreement or the subject matter thereof that is not contained herein, and Employeerepresents and warrants he has not executed this Agreement in reliance upon any suchrepresentation or promise. No modification of this Agreement shall be valid unless made inwriting and signed by the parties hereto.     (g) **Waiver of Breach**. The waiver by either party of a breach of any provision of thisAgreement by the other party shall not operate or be construed as a waiver of any subsequentbreach by the breaching party.     (h) **Counterparts**. This Agreement may be executed in one or more counterparts, each ofwhich shall be deemed to be an original, but all of which together shall constitute oneagreement.*[Signature Page Follows]*
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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its dulyauthorized officer and Employee has signed this Agreement all on the day and year first abovewritten.       **TRIAD GUARANTY INC.**a Delaware corporation         /s/ Earl F. Wall       Earl F. Wall    Senior Vice President, Secretary    and General Counsel  Address: 101 South Stratford Road    Winston-Salem, N.C. 27104       MARK K. TONNESEN         /s/ Mark K. Tonnesen     Address: 4620 Cherry Hill Lane    Winston-Salem, NC 27104
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