**EXHIBIT 10.29****EMPLOYMENT AGREEMENT**     This Employment Agreement (the “Agreement”) is made as of the 19th day of May, 2005, by andbetween 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 suchemployment, all upon the terms and conditions hereinafter set forth.     **NOW, THEREFORE,**in consideration of the mutual covenants and obligations hereinafter setforth, the parties hereto agree as follows:1. **Employment and Term.**The Company hereby employs Employee and Employee accepts employmentwith the Company as Senior Vice President and Chief Financial Officer of the Company, on theterms and conditions herein set forth, for a period commencing on May 19, 2005, and expiringon June 30, 2007, and thereafter for successive six-month periods unless either party giveswritten notice of the nonrenewal of this Agreement at least one year prior to the commencementof any such additional six-month period. Employee’s duties and responsibilities in thisposition shall be determined by the Company’s Board of Directors (the “Board”), consistentwith Employee’s qualifications and the best interests of the Company. Employee shall alsoperform 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 Boardfrom time to time. 2. **Extent of Services.**During the term hereof, Employee shall devote his entire attention andenergy to the business and affairs of the Company and TGI on a full-time basis and shall notbe engaged in any other business activity, regardless of whether such business activity ispursued 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 formor manner as will not require any services on the part of Employee in the operation of theaffairs of the companies in which such investments are made and will not otherwise conflictwith the provisions of this Agreement. Full-time, as used above, shall mean a forty (40) hourwork week, or such longer work week, as the Board shall from time to time adopt. Theforegoing shall not be deemed to prevent Employee from participating in any charitable ornot-for-profit organization to a reasonable extent, provided however that Employee does notreceive 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 anannual salary of $175,000.00 (“Annual Salary”), payable in accordance with theCompany’s regular payroll procedures. During each year that this Agreement is ineffect, the Company will review possible increases in Employee’s salary at leastannually, with any such increases subject to the determination of the Board.  (b) **Bonus.**In addition to his Annual Salary, Employee shall be eligible to receivean annual bonus in an amount as may be determined by the Board, pursuant to a bonusplan which may then be in effect or otherwise.4. **Benefits.**Employee shall be entitled to participate in all medical and other employee plansof the Company and TGI, if any, on the same basis as other executives of the Company, subjectin 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’sPTO policy in effect at the time the PTO is taken. In the event that the full PTO is nottaken by Employee, no PTO time shall accrue for use in future years, except in accordance withthe Company’s then 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 and TGI in connection with hisperformance of his duties hereunder, in accordance with the policies and proceduresestablished for executive officers of the Company and TGI, and provided Employee properlyaccounts for such expenses. 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 topay 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 illnessor other physical or mental incapacity which renders him unable to perform theessential functions of his position, with or without reasonable accommodation, for morethan an aggregate number of days totaling twelve (12) weeks, whether or notconsecutive, 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 suchevent, 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 policymaintained by the Company forthe benefit of Employee, if any, or (ii) the date two (2) months after the date oftermination.
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 (c) **Termination by the Company.** (i) The Company may terminate this Agreement and Employee’semployment hereunder at any time for Cause. As used herein, “Cause” shallmean: (A) a material breach by Employee of his duties andobligations hereunder, including but not limited to gross negligence inthe performance of his duties and responsibilities or the failure tofollow the Board’s directions; provided he shall be entitled toreasonable notice of, and if feasible a reasonable opportunity to cure,any such breach;  (B) willful misconduct by Employee which may bematerially injurious to the reputation or business of the Company orTGI;  (C) any act of fraud, misappropriation or otherdishonesty by Employee; 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 of the delivery of the notice of termination, whichdate shall be for all purposes of this Section 7(c)(i) the date oftermination of his employment. 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 full calendar year preceding thedate of termination.  (ii) Notwithstanding anything contained herein to the contrary, theCompany also may terminate this Agreement and Employee’s employment hereunderfor any reason whatsoever, upon no less than sixty (60) days’ prior writtennotice to Employee. In the event that the Company terminates this Agreementpursuant to the provisions of this Section 7(c)(ii), Employee shall be entitledto receive his salary up to the date of termination set forth in the notice oftermination and a severance payment equal to 200% of the total annual salarypaid to Employee by the Company and/or TGI during the two (2) calendar yearsprior to the year of termination (the “Severance Payment”). At the option ofthe Company, the Severance Payment shall be payable either in a lump sum cashpayment or in twenty-four (24) monthly installments commencing on the first dayof the month following termination of this Agreement. If for any reason anycourt determines that any of the restrictions contained in Section 8 hereof arenot enforceable, the Company shall have noobligation to pay the Severance Payment or any remaining installment thereofto Employee.
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 (d) **Termination by Employee.**Employee may terminate this Agreement and hisemployment hereunder for any reason whatsoever, upon no less than sixty (60) days’prior written notice to the Company. In the event that Employee terminates thisAgreement pursuant to the provisions of this Section 7(d), Employee shall be entitledto receive his salary up to the date of termination set forth in the notice oftermination. In such event, Employee shall not receive any previously unpaid bonus orbonuses except any earned but unpaid bonus with respect to any full calendar yearpreceding the date of termination.8. **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, except pursuant to theprovisions 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%) ofthe outstanding voting stock of a company having at least 250 holders of voting stock) of acorporation; 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 isthen doing business;  (ii) in the event that any court determines that the area set forthin the preceding subparagraph is too broad to be enforceable, each and everystate of the United States in which the Company had a market share, based onindustry data, of at least four percent (4%) of net new mortgage insurancewritten as of the end of the quarter next preceding the date of termination ofthis Agreement; or  (iii) in the event that any court determines that the area set forthin the preceding subparagraphs is too broad to be enforceable, each and everymetropolitan statistical area of the United States in which the Company had amarket 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 dateof termination of this Agreement; or  (iv) in the event that any court determines that the area set forthin the preceding subparagraphs is too broad to be enforceable, the States ofFlorida, Illinois and North Carolina; or  (v) in the event that any court determines that the area set forthin the preceding subparagraphs is too broad to be enforceable, the State ofNorth Carolina. (b) solicit or attempt to solicit any of the Company’s or TGI’s customers orprospective customers with whom Employee has had contact as an employee of the Companyin the performance of his duties and responsibilities hereunder with
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   the intent orpurpose to perform for such customer the same or similar services or to sell to suchcustomer the same or similar products which Employee performed for or sold to suchcustomer during the term of his employment hereunder; or  (c) solicit or recruit any person who is an employee or agent of the Company orTGI, either now or during such period, for employment in the private mortgage insurancebusiness or for the purpose of soliciting or attempting to solicit any of the Company’sor 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 anationwide basis, with customers located throughout the United States, and that any breachby Employee of the restrictive covenant contained herein would immeasurably and irreparablydamage the Company and TGI. Employee and the Company agree and acknowledge that theduration, scope and geographic areas applicable to the noncompetition covenants in thisSection 8 are fair, reasonable and necessary to protect legitimate business interests of theCompany and TGI, and that adequate compensation has been received by Employee for suchobligations. 9. **Confidential Information and Discoveries.**Employee acknowledges that he will, as a result ofhis 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 and TGI.Therefore, Employee agrees that during his employment by the Company and thereafter he willnot divulge to, or use for the benefit of, himself or any other person, any informationconcerning 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 confidentialmatters possessed, owned or used by the Company or TGI that may be obtained or learned byEmployee in the course of or as a result of his employment hereunder unless (i) suchdisclosure is authorized by the Company, (ii) such confidential information becomes generallyavailable to and known by the public (other than as a result of disclosure directly orindirectly by the Employee) or (iii) such confidential information becomes available toEmployee on a nonconfidential basis from a source other than the Company, TGI or theiremployees or agents, provided that such source is not and was not bound by a confidentialityagreement with or other obligation of secrecy to the Company or TGI. The expiration ortermination of employment shall not be deemed to release Employee from his duties hereundernot to convert to his own use or the use of others the rights or properties of the Company orTGI as described herein. 10. **Change in Control.** (a) **Change in Control Severance Compensation.**Within two years following a Changein Control (as defined below), in the event of (i) a material and adverse change in thestatus or position of Employee as an executive officer of the Company including,without limitation, a material diminution in duties or responsibilities, except inconnection with the incapacity of Employee, (ii) the transfer or relocation by theCompany of the office of Employee which would
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   require Employee to be based more thanfifty (50) miles distant from the location of his office immediately prior to suchtransfer or relocation, or (iii) the discontinuance of any bonus or incentivecompensation plan for which the Company or TGI has determined Employee to be eligibleand which represents a material portion of the Employee’s annual compensation, Employeeshall be entitled to terminate this Agreement and his employment hereunder and receivefrom the Company a payment equal to 200% the total annual salary paid to Employee bythe Company and/or TGI during the two (2) calendar years prior to the year oftermination (the “Change in Control Compensation”). At the option of the Company, theChange in Control Compensation shall be payable either in a lump sum cash payment or intwenty-four (24) monthly installments commencing on the first day of the monthfollowing termination of this Agreement. If for any reason any court determines thatany of the restrictions contained in Section 8 hereof are not enforceable, the Companyshall have no obligation to pay the Change in Control Compensation or any remaininginstallment thereof to Employee.  (b) **Change in Control.**For purposes of this Agreement, “Change in Control” shallmean the occurrence of any of the following events: (i) any person or persons acting as a group, other than a personwhich as of the date of this Agreement is the beneficial owner of votingsecurities of TGI and its affiliates, or any employee benefit plan of theCompany or TGI or Employee or a group including Employee, shall become thebeneficial owner of securities of TGI representing the greater of (i) at leasttwenty-five percent (25%) of the combined voting power of TGI’s thenoutstanding securities, or (ii) at least the combined voting power of TGI’soutstanding securities then held by Collateral Investment Corp., a Delawarecorporation, and Collateral Mortgage, Ltd., an Alabama limited partnership, andany of their affiliates; or  (ii) individuals who constitute the board of directors of TGI uponcompletion of the initial public offering of TGI’s common stock (the “IncumbentBoard”) cease for any reason to constitute at least a majority thereof,provided that any person becoming a director subsequent to the date hereofwhose election or nomination for election was approved by a vote of at leastthree-quarters of the directors comprising the Incumbent Board (either by aspecific vote or by approval of the proxy statement of TGI in which such personis named as a nominee for director, without objectionto such nomination) shall be, for purposes of this clause (ii) considered asthough such person were a member of the Incumbent Board; or  (iii) any consolidation or merger to which TGI is a party, iffollowing such consolidation or merger, stockholders of TGI immediately priorto such consolidation or merger shall not beneficially own securitiesrepresenting at least fifty-one percent (51%) of the combined voting power ofthe outstanding voting securities of the surviving or continuing corporation;or
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 (iv) any sale, lease, exchange or other transfer (in one transactionor in a series of related transactions) of all, or substantially all, of theassets of TGI, other than to an entity (or entities) of which TGI or thestockholders of TGI immediately prior to such transaction beneficially ownsecurities representing at least fifty-one percent (51%) of the combined votingpower of the outstanding voting securities.11. **Enforcement.**Both parties recognize that the services to be rendered under this Agreement byEmployee are special, unique and of extraordinary character and that in the event of thebreach by Employee of any of the terms and conditions of this Agreement to be performed byhim, then the Company shall be entitled, if it so elects, to institute and prosecuteproceedings in any court of competent jurisdiction, either in law or in equity, to obtaindamages for any breach hereof, or to enforce the specific performance hereof by Employee or toenjoin Employee from performing acts prohibited above during the period herein covered, butnothing herein contained shall be construed to prevent such other remedy in the courts as theCompany may elect to invoke. 12. **Return of Documents.**Upon the termination of this Agreement for any reason, Employee shallforthwith return and deliver to the Company and shall not retain any original or copies of anybooks, 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. **Miscellaneous.** (a) **Notices.**Any notice required or permitted to be given under this Agreementshall be sufficient if in writing and if sent by registered or certified mail toEmployee or the Company at the address set forth below their signatures at the end ofthis 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 ofthe Company and its successors and assigns and Employee and his personalrepresentatives, heirs, legatees and beneficiaries, but shall not be assignable byEmployee.  (c) **Applicable Law.**This Agreement shall be construed in accordance with the lawsof 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 ofreference only and this Agreement is not to be construed with reference thereto. Ifthere be any conflict between such numbers and headings and the text hereof, the textshall control.
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 (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 notinvalid or unenforceable shall be considered enforceable and binding on the parties andthe invalid or unenforceable provision(s), clause(s) or sentence(s) shall be deemedexcised, modified or restricted to the extent necessary to render the same valid andenforceable and this Agreement shall be construed as if such invalid or unenforceableprovision(s), clause(s), or sentences(s) were omitted. The provisions of this Section13(e) shall survive the termination of this Agreement for any reason.  (f) **Entire Agreement.**This Agreement contains the entire agreement of the partieswith respect to its subject matter and supersedes all previous agreements between theparties. No officer, employee, or representative of the Company has any authority tomake any representation or promise in connection with this Agreement or the subjectmatter hereof that is not contained herein, and Employee represents and warrants he hasnot executed this Agreement in reliance upon any such representation or promise. Nomodification of this Agreement shall be valid unless made in writing and signed by theparties hereto.  (g) **Waiver of Breach.**The waiver of the Company of a breach of any provision ofthis Agreement by Employee shall not operate or be construed as a waiver of anysubsequent breach by Employee.  (h) **Counterparts.**This Agreement may be executed in one or more counterparts, eachof which shall be deemed to be an original, but all of which together shall constituteone agreement.     **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 INSURANCE**