Exhibit 10.1
SEPARATION AND CONSULTING AGREEMENT
This Separation and Consulting Agreement (the "Agreement") is
entered into
as of the 16th day of October, 2007 (the "Effective Date") by
and between
NovaStar Mortgage, Inc., on behalf of itself, NovaStar Financial,
Inc. and all
direct and indirect subsidiaries thereof (all of the foregoing,
collectively,
the "Company") and Dave Pazgan ("Consultant").
WHEREAS, the Company and Consultant are parties to an
Employment Agreement
dated July 15, 2004, as amended December 21, 2006 (the "Employment
Agreement"),
which provides for certain benefits and obligations upon an
involuntary
termination by the Company of Consultant's employment with the
Company;
WHEREAS, Consultant's employment by the Company is being
terminated by the
Company, without "cause" (as described in the Employment
Agreement), as of the
Effective Date pursuant to this Agreement, and the Company
desires to ensure a
smooth and orderly transition of business by reserving the
right to obtain
Consultant's services for a limited period of time as provided
herein.
NOW, THEREFORE, in consideration of the mutual covenants
and agreements
contained herein, the Company and Consultant agree as follows:
1.
Termination of Employment
.
1.1
Termination
. Consultant's employment by the Company is hereby
terminated by the Company, without "cause" (as described in
the Employment
Agreement), as of the Effective Date.
1.2
Accrued Wages and Vacation
. Consultant shall be entitled to payment, in
accordance with the Company's normal payroll schedule following
the Effective
Date, of amounts payable in respect of (a) wages accrued from
the end of the
period covered by Consultant's most recent paycheck to the
Effective Date, and
(b) vacation time accrued by Consultant and unused as of the
Effective Date.
1.3
Other Rights and Benefits
. Section 9 of the Employment Agreement shall
govern Consultant's entitlement to continue health benefits and
Consultant's
stock options and restricted stock outstanding as of the
Effective Date. The
rights, benefits and obligations set forth in Section 2 of this
Agreement are in
full satisfaction all additional rights, benefits and obligations
specified in
Section 9 of the Employment Agreement and, to the extent of any
inconsistency,
the provisions of Section 9 of the Employment Agreement are hereby
modified and
superseded by the provisions of Section 2 of this Agreement.
Vesting and payment
of benefits accrued under any benefit plan of the Company that is
not addressed
by the Employment Agreement shall be governed by the terms of such
plan, subject
to Section 6.2 hereof.
2.
Consulting Services
.
2.1.
Consulting
. During the period commencing on the Effective Date and
ending upon the earlier of (a) April 16, 2009 or (b) the death
or permanent
disability of Consultant (the "Consulting Period"), Consultant
agrees to make
himself available to the Company for up to ten (10) hours per
week, whether by
telephone, e-mail, or in person, on an as-needed basis to consult
with respect
to matters that were within Consultant's job description during
the course of
Consultant's employment with the Company. Consultant agrees to
respond promptly,
reasonably and cooperatively to the Company's requests for
assistance. Barring
special circumstances, the consulting hours shall not be
cumulative;
accordingly, hours not used within a given week will be waived by
the Company,
but Consultant will
1
receive his full consulting compensation for such week under
Section 2.2 below.
However, the Company reserves the right to require Consultant to
provide more
than ten (10) hours of service per week in the event that special
circumstances
arise in which Consultant's unique assistance is required by
the Company.
(Examples of special circumstances include, but are not limited
to, assistance
in litigation or responding to government inquiries.) In order
to protect the
Company's confidential and trade secret information from use or
disclosure to a
party other than Company, and to enable Company to be able to
obtain the
benefits of Consultant's consulting obligations hereunder,
Consultant agrees
that so long as he or she is accepting consulting fees
pursuant to this
Agreement, Consultant (a) will not accept employment or
consulting work in any
capacity with any competitor of Company, and (b) will abide by the
provisions of
Sections 3 and 4 below.
2.2.
Consulting Fees
. In consideration of the services provided by
Consultant during the Consulting Period, Company agrees to pay
Consultant a
consulting fee equal to $34,533.33 per month. The consulting fee
shall be paid
by the Company in accordance with a normal payment schedule
determined by the
Company, but no less frequently than monthly.
2.3.
Consultant's Status; Taxes
. Consultant's status under this Agreement
shall be that of an independent contractor to the Company, and
not that of an
agent or employee of the Company. Unless the Company
otherwise agrees in
writing, Consultant shall be solely responsible for all expenses he
may incur to
accomplish the work to be performed under this Agreement and for
supplying his
own equipment, tools, materials and/or supplies. The Company
shall not carry
worker's compensation insurance, health insurance, pay
social security,
unemployment insurance, retirement benefits, or withhold federal
or state taxes
for Consultant or Consultant's employees, if any.
Consultant is solely
responsible for and agrees to report and pay all taxes,
social security,
unemployment insurance, and workman's compensation on any income
received under
this Agreement and Consultant is responsible for any and all
insurance covering
Consultant. Consultant agrees to indemnify and to hold harmless the
Company from
and against any and all taxes and/or penalties with which it is
assessed, if
any, as a result of Consultant's non-payment of taxes on any
amounts received
under this Agreement.
2.4.
No Authority to Bind the Company
. The Consultant shall have no
authority to enter into contracts or agreements on behalf of the
Company or to
otherwise legally bind the Company, and shall not represent to
any person that
he has any such authority.
3.
Non-Solicitation
.
Consultant agrees that, during the Consulting Period: (a)
he shall not
either directly or directly interfere with the business of the
Company; and (b)
he shall not directly or indirectly solicit any of the Company's
employees to
leave the Company and/or to work for another employer or
business, whether or
not the solicited employee would commit any breach of his or her
own employment
terms by leaving the service of the Company. In furtherance of
the foregoing,
Consultant agrees that he will not either directly or indirectly
initiate any
communications or direct others to initiate any communications
with any of the
Company's employees regarding the possibility of employment
elsewhere during the
Consulting Period.
4.
Confid
|
