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Exhibit
10.9
EMPLOYMENT
AGREEMENT
This Employment Agreement
(“ Agreement ”) is made and entered into as of
December 17, 2007, by and between NovaStar Financial, Inc.
(the “ Company ”) and Todd M. Phillips (the
“ Employee ”).
1. EMPLOYMENT BY THE
COMPANY
1.1 Employment . The
Company hereby employs Employee, and Employee hereby accepts
employment with the Company, upon the terms and conditions set
forth in this Agreement.
1.2 Duties . Employee
initially shall be employed by the Company in the position of Vice
President - Controller. Employee shall perform for and on behalf of
the Company such duties as the chief executive officer or Board of
Directors of the Company shall assign from time to time, and shall
perform such duties in accordance with the Company’s policies
and practices, including, but not limited to, its employment
policies and practices.
1.3 Efforts . Employee
hereby agrees that he will devote all of his working time and
attention and give his diligent effort and skill exclusively to the
business and interests of Company, and that he will perform such
services as may from time to time be assigned to Employee, and
shall do his utmost to further enhance and develop the best
interests and welfare of the Company in all respects. Employee
agrees that he will give full attention and fully comply with the
rules and procedures as may from time to time be promulgated by
Company in its sole discretion.
1.4 Conflicts .
Employee shall not, without prior written consent of the Company,
at any time during his employment with the Company: (a) accept
employment with, or render services of a business, professional or
commercial nature to any person other than the Company;
(b) engage in, own or provide financial or other assistance to
any person, venture or activity which the Company may in good faith
consider to be competitive with or adverse to the Company, whether
directly or indirectly, alone or with any other person as a
principle, agent, shareholder, participant, partner, promoter,
director, officer, manager, employee, consultant, sales
representative or otherwise; or (c) engage in any venture or
activity that the Company may in good faith consider to interfere
with Employee’s performance of his duties.
1.5 Authority .
Employee represents that he has not entered into any agreement that
is effective at the time of the execution of this Agreement which
would prevent Employee from performing his duties to the Company.
Employee is not authorized by the Company to take, use, disclose or
otherwise misappropriate any confidential, business proprietary,
trade secret and/or other any other business information from any
of Employee’s former employers to perform his job duties with
the Company, and Employee hereby covenants and agrees that Employee
shall not use or disclose any such information to the Company in
performing his job duties for the Company or otherwise.
2.
COMPENSATION
2.1 Base Salary . The
Company agrees to pay Employee an annual base salary (“
Base Salary ”) of $145,000.00, payable in accordance
with the Company’s regular payroll schedule and subject to
applicable deductions and withholdings. The Company may increase or
decrease Employee’s Base Salary at any time in its sole
discretion, subject to the rights of Employee under Section 5
of this Agreement.
2.2 2007 Performance
Bonus . Employee shall be paid a Performance Bonus of $68,400
on the first regularly scheduled pay day in 2008. The foregoing is
hereby deemed to be fully earned and shall not be subject to
modification by the Company without the written consent of
Employee.
2.3 Future Performance
Bonuses . Employee shall be eligible to receive incentive
compensation (“ Incentive Pay ”) based upon
goals established by the Company from time to time. The Incentive
Pay target is 50% of Base Salary, with a maximum of 100%. The
Company may prospectively increase or decrease Employee’s
Incentive Pay and any Incentive Pay target amount thereof, and may
prospectively modify any Incentive Pay program or structure, at any
time in its sole discretion, subject to the rights of Employee
under Section 5 of this Agreement; provided, however, that the
Company shall not have the right to decrease or alter the terms of
any Incentive Pay to the extent the amount or terms thereof are set
forth in a written agreement between Employee and the Company,
other than modifications made in accordance with the terms of such
agreement. Incentive Pay for any calendar year or portion thereof
shall be deemed earned only at the end of such calendar year,
except to the extent otherwise provided in this Agreement or any
other written agreement between Employee and the Company. Should
Employee no longer be employed by the Company on the date on which
any Incentive Pay is deemed pursuant to the foregoing to be earned,
Employee shall not be eligible or entitled to such Incentive Pay or
to any pro-rata portion thereof, except to the extent otherwise
provided in this Agreement or any other written agreement between
Employee and the Company.
2.4 Benefits .
Employee shall be entitled to participate in any employee benefits
plans, perquisites and fringe benefits that the Company extends
generally from time to time to employees of the Company at the
level of Employee. Separate written descriptions of available
benefits will be provided or made available from time to time, and
the Company reserves, in its sole and absolute discretion, the
right to modify these benefits in whole or in part at any
time.
2.5 Vacation .
Employee shall be entitled to 3 weeks of paid vacation per calendar
year, with such vacation to be accrued and taken in accordance with
the Company’s standard vacation policies.
2.6 Business Expenses
. The Company shall reimburse Employee for any and all necessary,
customary and usual expenses, properly receipted in accordance with
the Company’s policies and procedures, incurred by Employee
on behalf of the Company.
2.7 Equity Awards .
Equity or equity-based compensation awards including, without
limitation, stock options and/or restricted stock (“
Equity Awards ”) may be offered to certain employees
of the Company from time to time, at the sole discretion of the
Company. Such Equity Awards, if any, shall be governed solely by
one or more separate agreements and the provisions of any plan
governing such awards.
3. AT WILL
EMPLOYMENT
Employee and the Company
acknowledge that there is no agreement, express or implied, between
them for any specified term or period of employment, nor for
continuing or long-term employment. The employment relationship
between Employee and the Company is completely and, in all
respects, at-will. Each of Employee and the Company has the
separate and absolute right to terminate the employment
relationship, at any time, with or without cause, for any reason or
no reason and no reason need be given. The fact that other sections
of this Agreement provide differential post-termination benefits to
Employee on the basis of whether Employee is terminated with Cause
or without Cause, as defined below, and the fact that the other
rights and obligations set forth in this Agreement remain in effect
for a specified period of time, do not undermine the at-will nature
of the employment relationship. This is the entire agreement
between Employee and the Company regarding the matters set forth in
this paragraph.
4. TERMINATION OF
EMPLOYMENT BY THE COMPANY
4.1 Termination For
Cause . Employee’s employment may be terminated by the
Company for Cause at any time. For purposes of this Agreement,
“ Cause ” shall mean the existence of or a good
faith belief by the Company in the existence of facts which
constitute a basis for termination of Employee’s employment
in view of relevant factors and circumstances, which may include,
but are not limited to, Employee’s duties, responsibilities,
conduct on the job or otherwise, job performance, and employment
record. Acts or omissions that constitute Cause include, but are
not limited to:
(a) Breach of any of the
terms of this Agreement;
(b) Failure to perform
material duties in accordance with the standards from time to time
established by the Company;
(c) Neglect in performance of
or failure to attend to the performance of material
duties;
(d) Insubordination or
willful breach of policies and procedures of the
Company;
(e) Breach of fiduciary
duties; or
(f) Conduct that the Company
determines in good faith may impair or tend to impair the integrity
of the Company, including but not limited to commission of a
felony, theft, misappropriation, embezzlement, dishonesty, or
criminal misconduct.
4.2 Termination For Death
or Disability . Employee’s employment shall be terminated
by the Company upon the death of Employee, and may be terminated by
the Company upon the disability of Employee, consistent with any
rights or obligations of the Company and the Employee under the
Americans with Disabilities Act, or any other applicable
constitutional provision or statute. Termination for death or
disability is separate and distinct from termination with Cause or
Good Reason and from termination without Cause or Good Reason, and
will give rise only to the rights and obligations expressly
provided in Section 6.3 hereof.
4.3 Termination Without
Cause . Employee’s employment may be terminated by the
Company without Cause at any time and at its sole
discretion.
5. TERMINATION OF
EMPLOYMENT BY EMPLOYEE
5.1 Termination for Good
Reason . Employee’s employment may be terminated by
Employee at any time for Good Reason. For purposes of this
Agreement, “ Good Reason ” shall mean the
occurrence, without the Employee’s consent, of any one or
more of the following events:
(a) Except in connection with
the Company’s termination of Employee’s employment for
Cause pursuant to Section 4.1 or as a result of
Employee’s death or disability: (i) a material reduction
in Employee’s Base Salary or Incentive Pay target; or
(ii) a decrease in the responsibilities of Employee to a level
that, on the whole, is materially inconsistent with the position
for which Employee is then employed by the Company; or
(b) The Company requires that
Employee relocate more than fifty (50) miles from the location
at which Employee is employed by the Company on the date hereof,
and the Employee objects to such relocation in writing prior to
Employee’s actual relocation.
(c) The Company’s
material breach of any of the provisions of this Agreement or of
any other agreement between the Company and Employee concerning
Incentive Pay or Equity Awards. Error! No bookmark name
given.
5.2 Notice and Cure .
Notwithstanding the foregoing, a termination of employment by
Employee shall not be considered as having occurred for Good Reason
unless Employee provides written notice of his objection to the
event constituting Good Reason within thirty (30) days
following the occurrence thereof, specifying that Employee believes
such event to constitute Good Reason, and the Company has been
afforded a period of at least thirty (30) days following
delivery of such notice to remedy the event constituting Good
Reason and has not done so.
5.3 Termination Without
Good Reason . Employee’s employment may be terminated by
Employee without Good Reason at any time.
6. TREATMENT OF
COMPENSATION AND BENEFITS UPON TERMINATION
6.1 For Cause or Without
Good Reason . If Employee is terminated by the Company for
Cause or if Employee terminates his employment without Good
Reason:
(a) Employee shall not be
entitled to any continuation of Base Salary, other than Base Salary
accrued but unpaid at the date of termination of Employee’s
employment;
(b) Employee shall not be
entitled to Incentive Pay not earned prior to the date of
termination of Employee’s employment;
(c) Employee shall be
entitled to receive reimbursement for business expenses incurred
prior to the date of termination of Employee’s employment to
the extent provided in Section 2.5 hereof;
(d) Employee shall not be
entitled to continue to receive any benefits from the Company after
the date of termination of Employee’s employment, except as
otherwise required by the applicable benefit plan or applicable
law.
6.2 Other than for Cause;
for Good Reason . If Employee’s employment is terminated
by the Company other than for Cause, or by the Employee for Good
Reason:
(a) Employee shall receive
compensation at the same rate as Employee’s Base Salary in
effect on the date of termination of Employee’s employment,
for the period commencing on the date of termination and continuing
until the date that is nine (9) months following the date of
termination of Employee’s employment, pursuant to a
“Consultancy Agreement” between Employee and the
Company, the terms and conditions of which are outlined in
Section 8.4 of this Agreement;
(b) Employee shall be
entitled to payment, within ten (10) days following
termination, of (i) all Incentive Pay fully earned prior to or
upon the date of termination of Employee’s employment
(including, without limitation, the full amount of the 2007
Performance Bonus); and (ii) to the extent and only to the
extent determined by the Company in its sole and absolute
discretion, or required by any other written agreement between
Employee and the Company, Incentive Pay not otherwise fully earned
prior to the
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