TRIAD GUARANTY INC
EX-10.41
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<TYPE>EX-10.41
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<FILENAME>g04895exv10w41.htm
<DESCRIPTION>EX-10.41
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.41</B>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXHIBIT A</B>
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<DIV align="center" style="font-size: 10pt; margin-top: 9pt"><B>TRIAD GUARANTY INC.<BR>
EXECUTIVE/KEY EMPLOYEE PHANTOM STOCK AWARD AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Phantom Stock Agreement (the &#147;Agreement&#148;), dated December&nbsp;26, 2006 is entered into
between Triad Guaranty Inc., a Delaware corporation (the &#147;Company&#148;), and Mark K. Tonnesen (the
&#147;Participant&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company, pursuant to its 2006 Long-Term Stock Incentive Plan (the &#147;Plan&#148;),
desires to grant Phantom Stock rights (as defined in the Plan) to the Participant, and the
Participant desires to accept such Phantom Stock rights, on the terms and conditions set forth
herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, the parties
hereto agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<B>Grant of Phantom Stock Rights. </B>The Company hereby grants to the Participant, on the terms
and conditions set forth herein, Phantom Stock rights with respect to 36,075 shares of Common Stock
of the Company (the &#147;Phantom Stock Rights&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<B>Vesting. </B>The Phantom Stock Rights granted hereunder will vest according to the following
schedule:
</DIV>
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<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="55%">
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    <TD width="1%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD><!-- VRule -->
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    <TD width="46%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
              <TD align="center" valign="top" style="border-top: 1px solid #000000"><U>Date</U>
</TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><U>Vested Percentage</U></TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
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<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">September&nbsp;13, 2007
</TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">50%</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
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<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">September&nbsp;13, 2008
</TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">100%</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
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<TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="6" style="border-top: 1px solid #000000">&nbsp;</TD>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notwithstanding the vesting schedule set forth above, in the event that Participant&#146;s employment
with the Company should be terminated prior to September&nbsp;13, 2007, without cause by the Company or
by Participant for Good Reason or on account of a Change in Control, all as defined in the
Employment Agreement between Participant and Company dated as of September&nbsp;9, 2005, Participant
will, on the effective date of such termination, vest in one-third of the Phantom Stock Rights
granted hereunder. Except as provided in the preceding sentence, upon termination of Participant&#146;s
employment with the Company for any reason, any Phantom Stock Rights granted hereunder that are not
vested at the time of termination shall be forfeited.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">3. <B>Payment.</B>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Upon vesting under Section&nbsp;2 hereof of any Phantom Stock Rights, the Company shall pay
Participant (or Participant&#146;s beneficiary, if applicable) the number of shares of Common Stock
corresponding to the number of vested Phantom Stock Rights subject to the following:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;if the vesting of any Phantom Stock Rights granted hereunder shall be on account of
the Participant&#146;s separation from service with the Company and the Participant is a
&#147;specified employee&#148; within the meaning of section 409A of the Internal Revenue Code of
1986 (the &#147;Code&#148;), then the payment shall be delayed until the expiration of six months
following the separation from service (or, if earlier, the date of the Participant&#146;s death);
and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if the Company reasonably anticipates that the Company&#146;s federal income tax
deduction with respect to a payment for such Phantom Stock Rights would be limited or
eliminated by application of section 162(m) of the Code, then the payment shall be delayed
until the earlier of:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the next January&nbsp;15 or December&nbsp;30 (or, if not a business day, the next
preceding business day) of a calendar year during which the Company reasonably
anticipates that the Company&#146;s federal income tax deduction with respect to such
payment will not be limited or eliminated by application of section 162(m) of the
Code taking into account the estimated amount deductible by the Company for that
calendar year for other compensation paid to Participant; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the date of the Participant&#146;s termination of employment with the Company if the
Company reasonably anticipates that the deduction of such payment will not be
limited or eliminated by application of section 162(m) of the Code for the calendar
year during which such termination occurs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Any payment by the Company hereunder for Phantom Stock Rights shall be in Shares.
Following such payment with respect to any Phantom Stock Rights, such Phantom Stock Rights shall
cease to exist and shall provide no further benefits to Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<B>Dividend Equivalents. </B>In the event of a cash dividend paid on Common Stock after the date
of this Agreement, the Participant shall be entitled to receive a cash payment equal to the
dividend per share multiplied by the number of shares of Common Stock corresponding to the Phantom
Stock Rights granted hereunder. The payment of any dividend equivalents hereunder with respect to
any Phantom Stock Rights shall be paid at the same time as the payment under Section&nbsp;3 hereof with
respect to the underlying Phantom Stock Rights. If any Phantom Stock Rights are forfeited, then
the dividend equivalents on such Phantom Stock Rights shall also be forfeited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<B>Other Terms of Phantom Stock Rights.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B>No Stockholder Rights; Unfunded Award</B>. Participant shall have no rights of a stockholder
of the Company with respect to Phantom Stock Rights. Any provision for
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">distribution in settlement of Phantom Stock Rights hereunder shall be by means of bookkeeping
entries on the books of the Company and shall not create in Participant or any beneficiary any
right to, or claim against, any specific assets of the Company, nor result in the creation of any
trust or escrow account for Participant. With respect to any entitlement of Participant or any
beneficiary to any distribution hereunder, Participant or such beneficiary shall be a general
creditor of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B>Company Policies Related to Stock Ownership</B>. To the extent the Company adopts any policy
or requirement applicable to Participant which requires Participant to achieve and hold a targeted
level of the stock of the Company, sixty-five percent (65%) of the Phantom Stock Rights hereunder
shall count toward any such required stock ownership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<B>Consideration for Grant of Phantom Stock Rights</B>. Participant shall not be required to pay
any cash or other consideration for the grant of the Phantom Stock Rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<B>Income Taxes and Withholding. </B>Participant is solely responsible and liable for the
satisfaction of all taxes and penalties that may arise in connection with the Phantom Stock Rights
awarded pursuant to this Agreement (including any taxes arising under section 409A of the Code).
The Committee shall have the discretion to unilaterally modify Participant&#146;s award pursuant to this
Agreement in a manner that conforms with the requirements of section 409A of the Code. The Company
shall have the right to deduct from any distribution with respect to any Phantom Stock Rights an
amount equal to the federal, state and local income taxes and other amounts as be required by law
to be withheld with respect to the Phantom Stock Right and any distributions thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<B>Determinations. </B>All determinations, interpretations, or other actions made or taken by the
Committee (as defined in the Plan) pursuant to the provisions of the Plan shall be final, binding,
and conclusive for all purposes and upon all persons.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<B>Controlling Documents. </B>The Phantom Stock Rights granted hereby are subject to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;All terms and conditions of the Plan (which is hereby incorporated by reference with the
same effect as if fully recited herein) as now or hereafter in effect; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;All the terms and conditions of this Agreement as now in effect or as hereafter modified
at the discretion of the Committee to conform with the Plan as amended from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Participant acknowledges receipt of a copy of the Plan, represents and warrants that he
has read the Plan and agrees that this Agreement shall be subject to all of the terms and
conditions of the Plan. Any capitalized terms used herein that are not otherwise defined herein
shall have the meanings set forth in the Plan unless the context shall clearly require to the
contrary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<B>No Guarantee of Employment. </B>This Agreement shall not interfere with or limit in any way
the right of the Company to terminate the Participant&#146;s employment at any time, or confer upon the
Participant any right to continue in the employment of the Company.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<B>Assignment. </B>This Agreement shall bind and inure to the benefit of the successors and
assigns of the Company. The Phantom Stock Rights granted under this Agreement shall not be
transferable other than to the Participant&#146;s executors, administrators, legatees and heirs to the
extent permitted by the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<B>Governing Law. </B>This Agreement shall be governed by the law of the State of Delaware and
construed in accordance therewith.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the parties have executed and delivered this Agreement as of the day and
year first above written.
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>PARTICIPANT:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>COMPANY:</B></TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><U>/s/ Mark K. Tonnesen</U>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>TRIAD GUARANTY INC.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mark K. Tonnesen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BY: <U>/s/ William T. Ratliff, III</U><BR>
Name: William T. Ratliff, III<BR>
Title: Chairman of the Board</TD>
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