8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

March 9, 2012

Date of Report (Date of earliest event reported)

NOVASTAR FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Maryland	001-13533	74-2830661
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

2114 Central Street, Suite 600, Kansas City, MO 64108

(Address of principal executive offices) (Zip Code)

(816) 237-7000

(Registrant's telephone number, including area code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

NovaStar Financial, Inc. (the “Company”) today announced that on March 8, 2012, the Board of Directors of the Company (the “Board of Directors”) appointed Steve Haslam as Chief Operating Officer of the Company, and on March 1, 2012, the Board of Directors appointed Matthew Lautz as Vice President and Chief Information Officer of the Company and Brett Monger as Vice President and Chief Accounting Officer of the Company (collectively, the “Appointed Officers”).

There is no arrangement or understanding between any Appointed Officer and any other person pursuant to which an Appointed Officer was appointed as an executive officer of the Company. There are no transactions in which any Appointed Officer has an interest requiring disclosure under Item 404(a) of Regulation S-K. Each Appointed Officer will participate in the usual compensation and benefit programs available to an executive officer of the Company and has executed an employment agreement with the Company as discussed below.

Steve Haslam, Chief Operating Officer

Mr. Haslam, age 56, has been the Chief Executive Officer of StreetLinks since its inception in August of 2008. Mr. Haslam will continue to serve as the Chief Executive Officer of StreetLinks in addition to his new role as Chief Operating Officer of the Company. Prior to his employment with StreetLinks, Mr. Haslam served as Senior Vice President of the Company's Retail Lending Division since joining the Company in December 2002. 

Though Mr. Haslam continues to serve as the Chief Executive Officer of StreetLinks, in anticipation of Mr. Haslam entering an employment agreement with the Company, Mr. Haslam and StreetLinks entered into a Separation and Release Agreement on March 8, 2012, pursuant to which Mr. Haslam's employment with StreetLinks was terminated. Under this agreement, Mr. Haslam waived his rights to severance compensation and other claims under his employment agreement with StreetLinks to which Mr. Haslam may have otherwise have been entitled.

Mr. Haslam's termination by StreetLinks triggered the Company's right of first refusal to purchase Mr. Haslam's membership units of StreetLinks under the operating agreement of StreetLinks. Mr. Haslam held 1,927 membership units of StreetLinks which represents approximately 4.89% of the outstanding StreetLinks membership units. Pursuant to a Membership Interest Purchase Agreement, dated March 8, 2012, by and between Mr. Haslam and the Company (the “Purchase Agreement”), Mr. Haslam sold all of his 1,927 membership units of StreetLinks to the Company. The total purchase price under the Purchase Agreement is $6,112,500 (the “Purchase Price”), which is payable to Mr. Haslam as follows: $500,000 on March 8, 2012, $500,000 on June 30, 2012, $250,000 on the last day of each quarter thereafter until March 8, 2016, on which date the unpaid principal balance of $1,612,500 is to be paid, plus interest at the rate of four percent per annum, compounded quarterly, on the unpaid balance shall accrue and be paid with regard to all payments other than the initial payment. Mr. Haslam's sole remedy for non-payment by the Company under the Purchase Agreement is an equitable right to return of the amount of StreetLinks membership units attributable to the pro-rata portion of the Purchase Price then owed but not paid.

On March 8, 2012, Mr. Haslam and the Company entered into an employment agreement (the “Haslam Employment Agreement”). Under the terms of the Haslam Employment Agreement, Mr. Haslam's employment with the Company shall continue for a period of three years, unless sooner terminated, and the Haslam Employment Agreement shall renew for successive one-year periods unless the Company or Mr. Haslam has given written notice of termination to the other party within 60 days of any annual renewal date. Mr. Haslam receives an annual base salary of $400,000, subject to annual increases, but such amount shall be reduced by any base salary paid to Mr. Haslam by any other member of the “Company Group” (as defined in the Haslam Employment Agreement). He also receives Incentive Pay (as defined in the Haslam Employment Agreement) of one percent of “Cash Earnings” (as defined in the Haslam Employment Agreement) prorated based on the number of days Mr. Haslam was employed by the Company in such year, with the maximum amount of such Incentive Pay paid in any one year equal to three times Mr. Haslam's base salary then in effect.

In the event that Mr. Haslam's employment is terminated by the Company without “cause,” by Mr. Haslam for “good reason” or following a “Change in Control” (as such terms are defined in the Haslam Employment Agreement), Mr. Haslam will receive, in addition to payment for accrued but unpaid or unused salary, vacation time and business expenses, a severance amount equal to twelve months of Mr. Haslam's annual base salary in effect at the time of termination in equal installments over twelve months. Mr. Haslam is bound by certain non-competition, non-solicitation, confidentiality and similar obligations under, and as more particularly described in, the Haslam Employment Agreement.

On March 8, 2012, the Board of Directors granted Mr. Haslam an option (the “Haslam Option”) to purchase 1,500,000 shares (the “Haslam Option Shares”) of Common Stock at a price of $0.63 per share, which was the closing price of the Common Stock as quoted by Pink OTC Markets' inter-dealer quotation service on March 8, 2012, pursuant to a Stock Option Agreement between Mr. Haslam and the Company (the “Haslam Option Agreement”). The Haslam Option vests and becomes exercisable

in four equal installments–on March 8 of 2013, 2014, 2015 and 2016–and terminates on March 8, 2022. The Haslam Option was granted under the Amended 2004 Plan.

Upon Mr. Haslam's death or Disability (as defined in the Amended 2004 Plan), the Haslam Option may be exercised, to the extent the Haslam Option Shares are then vested, for a period of twelve months after death or Disability or until the expiration of the Haslam Option term, whichever period is shorter. Upon Mr. Haslam's termination from employment with the Company for any other reason, the Haslam Option may be exercised, to the extent it has become exercisable, for a period of three months from the date of such termination or until the expiration of the Haslam Option term, whichever is shorter; provided, however, if Mr. Haslam dies during the aforementioned three-month period, the Haslam Option may be exercised, to the extent it has become exercisable, for a period of three months from the date of death or until the expiration of the Haslam Option term, whichever is shorter.

The foregoing descriptions of the Membership Interest Purchase Agreement, Haslam Employment Agreement and the Haslam Option Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and incorporated herein by reference.

Matthew Lautz, Vice President and Chief Information Officer

Mr. Lautz, age 29, served as the Chief Technology Officer of StreetLinks LLC, a majority-owned subsidiary of the Company (“StreetLinks”), since November 2010. He is responsible for corporate technology initiatives, including overseeing software development for multiple product lines and management of technology infrastructures. From October 2009 to November 2010, Mr. Lautz was President of Corvisa, LLC, a majority-owned subsidiary of StreetLinks. Previously, Mr. Lautz held the title of Chief Executive Officer at Brevient Communications, a voiceover intellectual property and software development firm in Milwaukee, Wisconsin.

On March 2, 2012, Mr. Lautz and the Company entered into an employment agreement (the “Lautz Employment Agreement”). Under the terms of the Lautz Employment Agreement, Mr. Lautz's employment with the Company shall continue for a period of three years, unless sooner terminated, and the Lautz Employment Agreement shall renew for successive one-year periods unless the Company or Mr. Lautz has given written notice of termination to the other party within 60 days of any annual renewal date. Mr. Lautz receives an annual base salary of $200,000, subject to annual increases, but such amount shall be reduced by any base salary paid to Mr. Lautz by any other member of the “Company Group” (as defined in the Lautz Employment Agreement). He also receives Incentive Pay (as defined in the Lautz Employment Agreement) of up to $150,000 for any year based on goals established by the Company from time to time, but such amount shall be reduced by any Incentive Pay paid to Mr. Lautz by any other member of the Company Group.

In the event that Mr. Lautz's employment is terminated by the Company without “cause,” by Mr. Lautz for “good reason” or following a “Change in Control” (as such terms are defined in the Lautz Employment Agreement), Mr. Lautz will receive, in addition to payment for accrued but unpaid or unused salary, vacation time and business expenses, a severance amount equal to twelve months of Mr. Lautz's annual base salary in effect at the time of termination in equal installments over twelve months. Mr. Lautz is bound by certain non-competition, non-solicitation, confidentiality and similar obligations under, and as more particularly described in, the Lautz Employment Agreement.

The foregoing description of the Lautz Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, which is attached hereto as Exhibit 10.4 and incorporated herein by reference.

Brett Monger, Vice President and Chief Accounting Officer

Mr. Monger, age 33, joined the Company in September 2006 as an Accounting Manager responsible for corporate accounting matters. In 2008, he became the Financial Reporting Manager responsible for the Company's Securities and Exchange Commission filings, technical accounting issues and other financial reporting matters. In 2011, he became the Corporate Controller responsible for the Company's accounting and reporting functions, and Mr. Monger will continue to act as Corporate Controller after his new appointment by the Board of Directors. From July 2001 to September 2006, Mr. Monger was employed by McGladrey & Pullen LLP in Kansas City, Missouri, where he worked in the audit function, most recently as an audit supervisor. He worked primarily with clients in the financial institution, wholesale-retail and manufacturing industries. 

Effective March 1, 2012, Mr. Monger and the Company entered into an employment agreement (the “Monger Employment Agreement”). Under the terms of the Monger Employment Agreement, Mr. Monger's employment with the Company shall continue for a period of three years, unless sooner terminated, and the Monger Employment Agreement shall renew for successive one-year periods unless the Company or Mr. Monger has given written notice of termination to the other party within 60 days of any annual renewal date. Mr. Monger receives an annual base salary of $100,000, subject to annual increases, but such amount shall be reduced by any base salary paid to Mr. Monger by any other member of the “Company Group” (as defined in the Monger Employment Agreement). He also receives Incentive Pay (as defined in the Monger

Employment Agreement)based on goals established by the Company from time to time, but such amount shall be reduced by any Incentive Pay paid to Mr. Monger by any other member of the Company Group.

In the event that Mr. Monger's employment is terminated by the Company without “cause,” by Mr. Monger for “good reason” or following a “Change in Control” (as such terms are defined in the Monger Employment Agreement), Mr. Monger will receive, in addition to payment for accrued but unpaid or unused salary, vacation time and business expenses, a severance amount equal six months of Mr. Monger's annual base salary in effect at the time of termination in equal installments over six months. Mr. Monger is bound by certain non-competition, non-solicitation, confidentiality and similar obligations under, and as more particularly described in, the Monger Employment Agreement.

On March 8, 2012, the Board of Directors granted Mr. Monger an option (the “Monger Option”) to purchase 50,000 shares (the “Monger Option Shares”) of Common Stock at a price of $0.63 per share, which was the closing price of the Common Stock as quoted by Pink OTC Markets' inter-dealer quotation service on March 8, 2012, pursuant to a Stock Option Agreement between Mr. Monger and the Company (the “Monger Option Agreement”). The Monger Option vests and becomes exercisable in four equal installments–on March 8 of 2013, 2014, 2015 and 2016–and terminates on March 8, 2022. The Monger Option was granted under the Amended and Restated NovaStar Financial, Inc. 2004 Incentive Stock Plan (the “Amended 2004 Plan”).

Upon Mr. Monger's death or Disability (as defined in the Amended 2004 Plan), the Monger Option may be exercised, to the extent the Monger Option Shares are then vested, for a period of twelve months after death or Disability or until the expiration of the Monger Option term, whichever period is shorter. Upon Mr. Monger's termination from employment with the Company for any other reason, the Monger Option may be exercised, to the extent it has become exercisable, for a period of three months from the date of such termination or until the expiration of the Monger Option term, whichever is shorter; provided, however, if Mr. Monger dies during the aforementioned three-month period, the Monger Option may be exercised, to the extent it has become exercisable, for a period of three months from the date of death or until the expiration of the Monger Option term, whichever is shorter.

The foregoing descriptions of the Monger Employment Agreement and the Monger Option Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are attached hereto as Exhibits 10.5 and 10.6, respectively, and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

The following exhibit is filed with this report as required by Item 601 of Regulation S-K:

10.1	Membership Interest Purchase Agreement, dated March 8, 2012, by and between NovaStar Financial, Inc. and Steve Haslam
10.2	Employment Agreement, dated as of March 8, 2012, by and between NovaStar Financial, Inc. and Steve Haslam
10.3	Stock Option Agreement, dated March 8, 2012, by and between NovaStar Financial, Inc. and Steve Haslam
10.4	Employment Agreement, dated as of March 2, 2012, by and between NovaStar Financial, Inc. and Matthew Lautz
10.5	Employment Agreement, dated as of March 1, 2012, by and between NovaStar Financial, Inc. and Brett Monger
10.6	Stock Option Agreement, dated March 8, 2012, by and between NovaStar Financial, Inc. and Brett Monger
99.1	Press Release, dated March 9, 2012, Announcing Officer Appointments

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NOVASTAR FINANCIAL, INC.
DATE: March 9, 2012	/s/ Rodney E. Schwatken Rodney E. Schwatken Chief Financial Officer

EX-10.1

Exhibit 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) dated March 8, 2012 (the “Effective Date”), is by and between NOVASTAR FINANCIAL, INC., a Maryland corporation (“Buyer”), and STEVE HASLAM, an individual (“Seller”).

RECITALS

WHEREAS, Seller owns 1,927 membership units (the “Membership Interest”) in StreetLinks LLC (the “Company”) pursuant to that certain Amended and Restated Operating Agreement of the Company dated August 1, 2008, as amended (the “Operating Agreement”);

WHEREAS, the Membership Interest represents 4.89% of the outstanding membership interests in the Company;

WHEREAS, Seller is an employee of the Company and his employment is being terminated by the Company without cause, giving Seller the right to put his Membership Interest to the Company, pursuant to the terms of the employment agreement between Seller and the Company (the “Termination Put”);

WHEREAS, under the terms of the Operating Agreement, Buyer has a right of first refusal with respect to the Termination Put, and is hereby exercising such right;

WHEREAS, pursuant to the terms of that certain Separation and Release Agreement of even date herewith by and between the Company and Seller (“Separation Agreement”), the Company and Seller have made certain agreements and have certain rights and obligations, and Buyer's willingness to enter into this agreement is conditioned upon the executing and delivery of the Separation Agreement, which has been obtained; and

WHEREAS, the Buyer and Seller have reached agreement on a $125 million valuation of the Company for purposes of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the promises and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, the parties hereby agree as follows:

1.Purchase and Sale

(a)Transfer of Membership Interest. Subject to the terms and conditions of this Agreement, Seller hereby sells, assigns, transfers, grants, bargains, conveys and delivers to Buyer all of Seller's right, title and interest in and to the Membership Interest, free and clear of all liens, claims, options to sell or purchase, security interests, mortgages, pledges, restrictions or encumbrances of any kind.

(b)Purchase Price. The purchase price for the Membership Interest shall be Six Million One Hundred Twelve Thousand Five Hundred ($6,112,500) (the “Purchase Price”) payable in Seller

by wire transfer of immediately available funds to an account designated by Seller, as follows:

(i)$500,000 on the execution and delivery of this Agreement;

(ii)$500,000 on June 30, 2012;

(iii)$250,000 on September 30, 2012 and at the end of every calendar quarter thereafter through December 31, 2015;

(iv)The remaining unpaid principal balance ($1,612,500) on March 8, 2016; and

(v)Interest at the rate of four percent (4%) per annum, compounded quarterly, on the unpaid balance existing at the time of any payment referenced in clauses (ii)-(iv) above.

In the event that a payment is due on a date that is a Saturday, Sunday or holiday, then payment is deemed due on the next succeeding business day.

2. REMEDIES UPON NONPAYMENT.

(a)In the event that Buyer (directly, or through a successor or assignee) does not make any payment owed to Seller pursuant to Section 2 hereof within three business days after it is due, then Seller's sole remedy and relief shall be the equitable right to return of that amount of Membership Interests attributable to the pro-rata portion of the Purchase Price then owed but not paid. To exercise such right, Seller shall provide written notice of nonpayment to Buyer, asserting such exercise.

(b)For purposes of example only, if Buyer fails to make a payment of $250,000 to Seller when due on June 30, 2013, then Seller shall have equitable right in the return to Seller of 250,000/6,112,500, or approximately 78.8 units from (or 4% of) the Membership Units.

(c)If the operating agreement or a similar agreement among the members of the Company does not allow such a transfer without consent of such members, then Buyer shall convey to Seller an equitable right of payment (including the applicable portion of distributions) allocable to the amount of Membership Interest at issue (the “Returned Portion”), and shall promptly pay to Seller the amount of distributions allocable to the Returned Portion as they are received by Buyer from the Company.

3. Waiver of Rights TO FUTURE PAYMENTS FROM STREETLINKS

Seller hereby waives all right and interest in and to any future payment, distribution, or liquidation from the Company, including any amounts accrued and unpaid as of the Effective Date.

4. Representations and Warranties of Seller

Seller represents and warrants to Buyer as follows:

(a)Seller has duly executed and delivered this Agreement and the Separation Agreement, and they constitute the legal, valid and binding obligation of Seller, enforceable against him in

accordance with their respective terms.

(b)The Membership Interest constitutes all equity or membership interests in the Company owned directly or indirectly by Seller. Seller is the record and beneficial owner and holder of the Membership Interest, free and clear of all liens and, upon the consummation of the transactions contemplated herein, Buyer shall have good and marketable title to all of the Membership Interest free and clear of all liens.

5. Representations and Warranties OF Buyer

Buyer represents and warrants to Seller that the execution and delivery by Buyer of this Agreement and the performance of its obligations hereunder have been duly authorized by all requisite company action of Buyer. This Agreement constitutes the legal, valid and binding obligation of Buyer, enforceable against it in accordance with its terms.

6. Miscellaneous

(a)Public Announcement. Any public announcement or similar publicity with respect to this Agreement or the transactions contemplated by this Agreement will be issued, if at all, at such time and in such manner as Buyer shall determine.

(b)Notices. Notices and all other communications provided for in this Agreement will be in writing and will be delivered personally or sent by certified mail, return receipt requested, postage prepaid, or prepaid overnight courier to the parties at the addresses set forth below (or such other addresses as will be specified by the parties by like notice):

If to Seller:

Steve Haslam

[Redacted Personal Address]

If to Buyer:

NovaStar Financial, Inc.

2114 Central Street, Suite 600

Kansas City, Missouri 64108

Attention: W. Lance Anderson

With a copy (which shall not constitute notice) to:

Bryan Cave LLP

1200 Main Street, Suite 3500

Kansas City, Missouri 64105

Attention: Gregory G. Johnson

Each party, by written notice furnished to the other parties, may modify the applicable delivery

address, but any notice of change of address will be effective only upon receipt. Such notices, demands, claims and other communications will be deemed given in the case of delivery by a courier service, the day designated for delivery; or in the case of certified U.S. mail, five (5) days after deposit in the U.S. mail, but in no event will any such communications be deemed to be given later than the date they are actually received.

(c)Further Assurances. The parties agree to: (i) furnish upon request to each other such further information; (ii) execute and deliver to each other such other documents; and (iii) do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.

(d)Entire Agreement and Modification. This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes any prior agreement between or among the parties with respect to the subject matter hereof. This Agreement shall not be modified or amended in any manner other than by the written agreement of all of the parties hereto.

(e)Assignments, Successors, and No Third-Party Rights. This Agreement will be binding upon and inure to the benefit of the parties and their respective successors and assigns, and with respect to Seller, his personal representatives and heirs. No rights or obligations of Buyer under this Agreement may be assigned or transferred by Buyer except that those rights or obligations may be assigned or transferred to any affiliate of Buyer, or pursuant to a merger or consolidation in which Buyer is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of Buyer. No rights or obligations of Seller under this Agreement may be assigned or transferred by Seller.

(f)Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, arbitrator or other authority, the other provisions of this Agreement will remain in full force and effect and such invalid or unenforceable provision shall be reformed and enforced to the maximum extent permitted by applicable law.

(g)Section Headings. The headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any purpose.

(h)Governing Law; Consent to Jurisdiction. This Agreement and the legal relations thus created between or among the parties shall be governed and construed under and in accordance with the laws of the state of Indiana, without regard to conflicts of laws principles. For purposes of determining any controversy arising under this Agreement, each of the Parties hereby consents to the jurisdiction, personal and otherwise, of the federal and state courts of the state of Indiana and of the state of Missouri, which jurisdiction shall be exclusive as to the federal and state courts of any state other than Indiana and Missouri, and hereby waives any objections of any nature to venue in such courts.

(i)Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. Counterpart signature page to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

SELLER:

/s/ Steve Haslam

Steve Haslam

BUYER:

NovaStar Financial, Inc.

By: /s/ W. Lance Anderson

Name: W. Lance Anderson

Title: Chief Executive Officer

EX-10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made and entered into as of March 8, 2012 (the “Effective Date”), by and between NovaStar Financial, Inc. (the “Company”) and Steve Haslam (“Employee”).

1. EMPLOYMENT BY THE COMPANY

1.1Employment. The Company hereby employs Employee, and Employee hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement. Employee and the Company acknowledge that Employee was, but no longer is, employed by StreetLinks LLC, an affiliate of the Company, and may become employed by other members of the Company Group (defined below), as an at-will employee, and that such other employment, by itself, shall not be deemed to violate any of the provisions hereof or diminish the Company's rights hereunder.

1.2Term. Employee's employment with the Company shall commence on the Effective Date and continue for a period of three (3) years, unless sooner terminated pursuant to the provisions of this Agreement (“Original Period”). Upon the conclusion of the Original Period, this Agreement shall continue for successive one (1) year periods (each a “Renewal Period”) unless the Company or Employee has given written notice to the other party, at least sixty (60) days prior to the beginning of any such Renewal Period, that such party does not wish to continue the Agreement for such Renewal Period. The Original Period and any Renewal Period(s) that go into effect are referred to collectively as the “Employment Period.”

1.3Duties. Employee shall be employed by the Company in the position of Chief Operating Officer reporting to the chief executive officer. Employee shall have the authority, duties and responsibilities assigned to Employee by the chief executive officer 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.

1.4Efforts. Employee hereby agrees that he will devote his working time and attention, and give his diligent effort and skill, to the business and interests of Company on a full-time basis, and that he will perform such services as may from time to time be assigned to him, and shall do his utmost to further enhance and develop the best interests and welfare of the Company in all respects.

1.5Conflicts. Employee shall not, without prior written consent of the Company, at any time during the Employment Period, accept employment with any individual, corporation, partnership, limited liability company or partnership, association, governmental authority, trust or any other entity or organization (“Person”) other than the Company or any member of the Company Group. In addition, without the prior written consent of the Company, Employee shall not render services of a business, professional or commercial nature to any person other than the Company or any member of the Company Group, or engage in any venture or activity, if the Company in good faith believes that such services, venture or activity interferes with Employee's performance of his duties.

1.6Authority. Employee represents and warrants to the Company that he has not entered into any non-competition, non-solicitation, confidentiality or other agreement, and is not now under any obligation of a contractual or other nature, that would prevent Employee from entering into this Agreement or performing

his duties hereunder. Employee hereby represents and warrants to the Company that Employee has not misappropriated any confidential, business proprietary, trade secret and/or other any other business information from any of Employee's former employers, and hereby covenants and agrees that Employee shall not use or disclose to the Company any such information in performing his or her job duties for the Company or otherwise.

2. COMPENSATION

2.1Base Salary. The Company agrees to pay Employee an initial minimum annual base salary (“Base Salary”) of Four Hundred Thousand Dollars ($400,000), payable in accordance with the Company's regular payroll schedule, but reduced dollar-for-dollar by any amount of base salary paid to Employee by any member of the Company Group. The Base Salary shall be reviewed annually by the Company and may be adjusted upward or downward in accordance with the Company's performance review policies. Any adjustment to the Base Salary will become the “Base Salary” for purposes of this Agreement.

2.2Incentive Pay. Employee shall be eligible to receive incentive compensation (“Incentive Pay”)based upon the calculation described below, but reduced dollar-for-dollar by any amount of incentive compensation paid to Employee by any member of the Company Group.

The Incentive Pay is calculated at one percent (1%) of Cash Earnings, with the maximum amount of Incentive Pay payable in any one year equal to three times the Base Salary then in effect. “Cash Earnings” shall mean the Company's consolidated, unrestricted cash and cash equivalents at the end of the calendar year, minus

a.consolidated, unrestricted cash and cash equivalents at the beginning of the calendar year;

b.cash transferred during the year from restricted to unrestricted (such as cash collateral for surety bonds);

c.cash received on legacy mortgage securities;

d.extraordinary, unusual or non-operating cash gains or receipts, such as capital transactions (including proceeds from sales of subsidiaries, net of cash investments in such subsidiaries);

and plus extraordinary, unusual or non-operating cash losses or payments (such as non-cash equivalent investments such as long-term investments and investments in operating businesses (all, without duplication). The Incentive Pay for any calendar year is subject to proration based upon the number of days the Employee was employed by the Company in such year, and is payable on the first payday in February of the succeeding year.

Incentive Pay for any calendar year or portion thereof shall be deemed earned only at the end of such calendar year such that, in the event Employee is not employed by the Company on the last day of the Company's fiscal year, no Incentive Pay is deemed earned by or is payable to Employee for such year

2.3Benefits. The Company and Employee acknowledge that Employee is entitled to participate in any employee benefits plans, perquisites and fringe benefits (“Benefits”) that the Company directly or indirectly extends generally from time to time to other similarly-situated employees. To the extent Employee receives Benefits from a member of the Company Group, then such Benefits are in lieu of similar Benefits to be provided by the Company to the extent thereof, it being understood that Employee does not expect to receive duplicate or supplemental Benefits thereby. Separate written descriptions of available Benefits will

be provided or made available from time to time, it being acknowledged that the Company and any member of the Company Group may, in their sole and absolute discretion, modify these benefits in whole or in part at any time.

2.4Taxes. Employee shall be responsible for the payment of all taxes associated with the Base Salary, any Incentive Pay awarded to Employee in accordance with Section 2.2 hereof, any Benefits received by Employee in accordance with Section 2.3 hereof, and any Equity Awards (as defined below) awarded to Employee in accordance with Section 2.7.

2.5Vacation. Employee shall be entitled to four (4) weeks of paid vacation per calendar year, which will be earned at a rate of one week on the first day of each quarter of the calendar year, and taken in accordance with the Company's standard vacation policies. Employee shall be permitted to “roll forward” to a succeeding calendar year up to two (2) weeks of vacation time which was not used in the current calendar year. Any vacation taken with respect to Employee's employment with any member of the Company Group shall be deemed to reduce the amount of vacation available to Employee from the Company, day for day.

2.6Business 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. The amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year. The reimbursement of an eligible expense will be made in accordance with the Company's policies and procedures, but in no event later than the last day of the calendar year following the calendar year in which the expense is incurred. The right to reimbursement is not subject to liquidation or exchange for another benefit.

2.7Equity 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. TERMINATION OF EMPLOYMENT

3.1Termination by the Company for Cause. Employee's employment may be terminated by the Company for Cause at any time by delivery of written notice of termination to Employee. For purposes of this Agreement, “Cause” shall mean the occurrence of any of the following events, as determined in the good faith judgment of the chief executive officer or the Board of Directors of the Company:

a.Employee's conviction of, or entry of a plea of nolo contendere to, any felony involving theft or willful destruction of money or other property, or any felony or misdemeanor involving moral turpitude, dishonesty or fraud, or any other felony or misdemeanor where the performance of Employee's obligations to the Company is materially and adversely affected;

b.willful misconduct, gross negligence or gross insubordination of Employee in connection with the performance of his duties and services to the Company;

c.Employee's breach of his material obligations under this Agreement; or

d.any act by Employee constituting fraud, breach of fiduciary duty or intentional malfeasance or misfeasance, whether or not against the Company or its affiliates, which is materially harmful to the Company, any member of the Company Group, or their reputation.

3.2Termination by the Company without Cause. Employee's employment may be terminated by the Company without Cause at any time by delivery of written notice of termination to Employee. A termination of this Agreement by the Company with respect to a Renewal Period pursuant to Section 1.2 shall not be deemed a termination of employment by the Company without Cause.

3.3Termination by Employee. Employee's employment may be terminated by Employee upon not less than thirty (30) days' prior written notice from Employee to the Company. A termination of this Agreement by the Employee with respect to a Renewal Period pursuant to Section 1.2 shall not be deemed a termination of employment by the Employee.

3.4Termination for Death or Disability. Employee's employment shall be terminated automatically upon the death of Employee, and may be terminated by the Company, by delivery of written notice of termination to Employee, following the Disability of Employee, consistent with any rights or obligations of the Company and the Employee under the Americans with Disabilities Act and other applicable law. Termination for death or Disability is separate and distinct from termination with Cause and from termination without Cause, and will give rise only to the rights and obligations expressly provided in Section 4.3 hereof.

3.5Disability Defined. For purposes of this Agreement, Employee shall be considered to be suffering from a “Disability” if, as determined in the good faith judgment of the chief executive officer, Employee is unable to materially perform his duties hereunder with or without reasonable accommodation for an aggregate of ninety (90) days (whether or not consecutive) during any one hundred eighty (180) day period.

3.6Termination for Good Reason. Employee may terminate his employment for Good Reason upon not less than thirty (30) days' prior written notice from the Employee to the Company, which notice must be provided not more than ninety (90) days after the initial existence of the event giving rise to such Good Reason. “Good Reason” means any of the following: (i) a material adverse reduction in Employee's duties or responsibilities (not due to Disability), (ii) a relocation of Employee's offices on the date hereof to a location more than fifty (50) miles from the primary offices of the Company or any company within the Company Group (without the consent of the Employee), or (iii) the failure of the Company to pay the Employee the compensation he is due pursuant to this Agreement. The Company has the right, but not the obligation, to cure any such conditions, and thus negate the termination for Good Reason, during the notice period.

3.7Termination Upon Change of Control. Employee's employment may be terminated upon the occurrence of, or at any time after, a Change of Control (as defined in Section 3.8) by delivery of written notice of termination to Employee.

3.8Change in Control. A “Change in Control” shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied.

a.Any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other than the Company; any trustee or other fiduciary holding securities under an executive benefit plan of the Company; or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company), is or becomes the “beneficial owner” (as defined by Rule 13d-3 under the Exchange Act), directly or indirectly, of the securities of the Company (not including

any securities acquired directly from the Company or from a transferor in a transaction expressly approved or consented to by the Board of Directors) representing more than 50% of the combined voting power of the Company's then outstanding securities; or

b.During any period of two consecutive years (not including any period prior to the execution of the Agreement), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (a), (c) or (d) of this section), (i) whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved or (ii) whose election is to replace a person who ceases to be a director due to death, disability or age, cease for any reason to constitute a majority thereof; or

c.The stockholders of the Company approve a merger or consolidation of the Company with another corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an executive benefit plan of the Company, at least 75% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires more than 50% of the combined voting power of the Company's then outstanding securities; or

d.The stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets.

3.9Automatic Resignation from Other Employment and Positions Within the Company Group. Upon the Date of Termination, Employee will automatically be deemed to have terminated his employment, if any, by any other member of the Company Group and have tendered his resignation from any and all positions (including, without limitation, officer, director and manager positions) then held with the Company or with any member of the Company Group, without any separate or additional payment, benefit or obligation being owed or payable to him by the Company or any member of the Company Group. A termination of Employee's employment with any member of the Company Group (not the Company), however, shall not be deemed a termination of employment under this Agreement.

3.10Administrative Leave. In the case of any termination pursuant to this Article 3, or the Company's consideration of a termination thereby, the Company may elect (but is not obligated) to place Employee on paid administrative leave during the notice period thereof (if applicable) or during such consideration, as the case may be. During such leave, the Company may prohibit or restrict the Employee from the Company and/or the Company Group offices and from contacting the Company and/or the Company Group employees, suppliers and/or customers.

3.11Exclusive Methods of Termination. This Agreement may only be terminated as set forth in Section 1.2 or this Article 3.

4. TREATMENT OF COMPENSATION AND BENEFITS UPON TERMINATION

4.1For Cause; By the Employee. If Employee's employment is terminated pursuant to Section 3.1 or 3.3, Employee will be entitled to receive only the following: (a) Employee's accrued but unpaid Base Salary as of the date that Employee's employment with the Company terminates (the “Date of Termination”); (b) Employee's accrued but unused vacation as of the Date of Termination; (c) reimbursement for business expenses incurred prior to the Date of Termination, to the extent provided in Section 2.6 hereof; and (d) continuation of such benefits as required by law, and not otherwise.

4.2Other than for Cause; For Good Reason; Change of Control. If Employee's employment is terminated pursuant to Section 3.2, 3.6, or 3.7, Employee will be entitled to receive only: (a) the payments and benefits specified in Section 4.1; and (b) a severance amount equal to twelve (12) months of Employee's Base Salary in effect as of the Date of Termination payable in equal installments over such period (commencing on the Date of Termination) in accordance with the Company's regular payroll schedule in effect as of the Date of Termination. Notwithstanding the foregoing, eligibility for any severance amount is contingent upon the Company's receipt and the effectiveness of a general release of claims from Employee on terms satisfactory to the Company in its sole discretion, which release must be provided and become effective within 90 days of the Date of Termination.

4.3For Death or Disability. If Employee's employment is terminated pursuant to Section 3.4, , Employee will be entitled to receive only the payments and benefits specified in Section 4.1.

4.4Section 409A Requirements. It is intended that this Agreement shall comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury regulations relating thereto and any Internal Revenue Service or Treasury rules or other guidance issued thereunder (collectively, “Code Section 409A”). It is also intended that amounts payable pursuant to Section 4.2 of this Agreement qualify for certain exceptions to the definition of “deferred compensation” within the meaning of Code Section 409A. Notwithstanding any other provision in this Agreement to the contrary, if Employee is considered a “specified employee” within the meaning of Code Section 409A (as determined in accordance with the methodology established by the Company as in effect on the date of termination), any payment that constitutes “deferred compensation” within the meaning of Code Section 409A that is otherwise due to Employee under this Agreement during the six-month period immediately following Employee's separation from service (as determined in accordance with Code Section 409A) on account of Employee's separation from service shall be accumulated and paid to Employee on the first business day of the seventh month following his Date of Termination. Each severance pay installment paid pursuant to Section 4.2 of this Agreement shall be treated as a separate payment for purposes of Code Section 409A. Notwithstanding any other provision in this Agreement to the contrary, any references to termination of employment or Date of Termination shall mean and refer to the date of Employee's “separation from service” as that term is defined in Code Section 409A.

5. ADDITIONAL OBLIGATIONS

5.1Obligation to Maintain Confidentiality. Employee acknowledges that the information, observations and data obtained by him during the course of his performance under this Agreement concerning the business and affairs of the Company or any member of the Company Group are the property of the Company or the respective member of the Company Group. Such information includes, without limitation, (a) all trade secrets, unpublished proprietary or other information with respect to any business that is conducted or may in the future be conducted by the Company or any member of the Company Group, (b) any present or proposed services or products, including intellectual property rights, software, source code and business methods, (c) all policies and procedures, (d) the identity of, all contracts and agreements with, and all other information relating to the Company's or the members' of the Company Group relationship with third parties,

including actual, former, and potential clients, customers, suppliers, lenders and consultants, (e) the manner in which business is conducted, sales techniques, and methods of software development and data processing, and (f) budgets, forecasts, and financial information, and (g) strategic plans and proposals, including acquisition opportunities. Employee agrees that, during the Employment Period and at any time thereafter, Employee will not disclose to any third party or use other than for the Company's or the Company Group's benefit any of such information, observations or data without the Company's or the respective Company Group's written consent, unless and to the extent that the aforementioned matter, (i) become generally known to and available for use by the public other than as a result of Employee's acts or omissions, or (ii) are required to be disclosed pursuant to any applicable law or court order. Employee agrees to deliver to the Company and to each member of the Company Group upon any termination of Employee's employment, or at any other time the Company may request, all memoranda, notes, plans, records, reports and other documents (and copies thereof) relating to the business of the Company or any member of the Company Group that Employee may then possess or have under his control.

5.2Ownership of Property. Employee acknowledges that all inventions, software, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports, patent applications, copyrightable work and mask work (whether or not including any confidential information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) that relate to the Company's or Company Group members' actual or anticipated business, research and development, or then existing products or services and that are conceived, developed, contributed to, made, or reduced to practice by Employee (either solely or jointly with others) while employed by the Company (including any of the foregoing that constitutes any proprietary information or records) (“Work Product”) belong to the Company and Employee hereby assigns, and agrees to assign, all Work Product to the Company. Any copyrightable work prepared in whole or in part by Employee in the course of his work for any of the foregoing entities shall be deemed a “work made for hire” under copyright laws, and the Company shall own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Employee hereby assigns and agrees to assign to the Company all right, title, and interest, including without limitation, copyright in and to such copyrightable work. Employee shall promptly disclose such Work Product and copyrightable work to the Company and perform all actions reasonably requested by the Company (whether during or after the Employment Period) to establish and confirm the Company's ownership (including, without limitation, assignments, consents, powers of attorney, and other instruments).

5.3Third Party Information. Employee understands that the Company will receive from third parties confidential or proprietary information (“Third Party Information”) that may be subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. While Employee is employed by the Company and at any time thereafter, and without in any way limiting the provisions of Section 5.1 above, Employee will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than personnel of the Company who need to know such information in connection with their work for the Company) or use, except in connection with his work for the Company, Third Party Information, unless expressly authorized by the Company in writing or unless and to the extent such Third Party Information is required to be disclosed pursuant to any applicable law or court order.

5.4Noncompetition and Nonsolicitation. In addition to other obligations that the Employee may have to the Company, Employee hereby agrees that Employee shall not, directly or indirectly (other than through and for the benefit of the Company), during the Employment Period and for a period of twelve (12) months immediately after the Date of Termination:

a.anywhere in the United States,transact any business with, own any interest directly or indirectly in, or be associated with or employed in any capacity by or on behalf of any Person engaged or seeking to engage in any business or enterprise competing directly or indirectly with the Company's Business or the Business of any member of the Company Group. For purposes of this Agreement, the term “Business” shall mean (i) mortgage or appraisal management software, product or service development, manufacture and sale, (ii) mortgage or appraisal regulatory compliance software, product or service development, manufacture and sale, (iii) the business of appraisal management companies (AMCs), (iv) providing financial settlement services (including, without limitation, for income tax preparation businesses), tailored banking accounts, small dollar banking products and related services; (v) acting as an intermediary for banking products on behalf of banking institutions, (vi) providing services in the “asset light” third party logistics provider market, (vii) providing services within the local and long distance residential moving industry; and (viii) such other products and services contemplated by the Company's business plan or the business plan of any member of the Company Group, as of the Effective Date or during the Employment Period.

b.solicit, for Employee or any other Person, business from any customers, clients or accounts of the Company or any member of the Company Group or any potential customers, clients or accounts that may be targeted by the Company or any member of the Company Group and in any manner that would likely cause an adverse effect upon the Business, or encourage, in any way or for any reason, any current or potential customer, client or account of the Company or any member of the Company Group to sever or alter the relationship of such customer, client or account with the Company or any member of the Company Group;

c.solicit, employ, retain as a consultant, interfere with or attempt to entice away from the Company or any member of the Company Group any employee of the Company or any member of the Company Group, during that person's employment and for a period of twelve (12) months thereafter; or

d.induce any supplier, contractor, vendor, licensor, licensee, business relation, representative or agent of the Company or any member of the Company Group to terminate or modify its relationship with the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group, or in any way interfere with the relationship between the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group and such other party (including, without limitation, making any negative or disparaging statements regarding the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group).

5.5Non-Disparagement. Employee agrees that he shall not disparage the Company, its affiliates (including, without limitation, Streetlinks, LLC, Advent Financial Services, LLC, Mango Moving, LLC, and their successors; collectively, the “Company Group”) or any of its past and present employees, managers, members, products or services. For purposes of this Agreement, the term “disparage” includes, without limitation, comments or statements to the press, to the Company's or the Company Group's employees or to any individual or entity with whom the Company or the Company Group has a business relationship (including, without limitation, any customer, client, supplier, vendor, referral source or other business relation of the Company or the Company Group) that would adversely affect in any manner (a) the conduct of any business of the Company or the Company Group (including, without limitation, any business plans or prospects) or (b) the business reputation of the Company or the Company Group.

5.6Cooperation. Upon the receipt of reasonable notice from the Company (including notice on behalf of the Company by its outside counsel), Employee agrees that while employed by the Company and, subject to Employee's other business commitments in reasonable respects, thereafter, Employee will respond and provide information with regard to matters in which Employee has knowledge as a result of Employee's employment with the Company and will provide reasonable assistance to the Company and its representatives in defense of any claims that may be made against the Company, and will assist the Company in the prosecution of any claims that may be made by the Company, to the extent that such claims may relate to the period of Employee's employment with the Company. If Employee is required to provide any services pursuant to this Section 5.6 following termination of his employment with the Company, the Company shall, upon presentation of appropriate documentation, reimburse Employee for reasonable out-of-pocket expenses incurred in connection with the performance of such services.

5.7Additional Acknowledgments. Employee acknowledges that the provisions of Section 5.4 are in consideration of good and valuable consideration as set forth in this Agreement. In addition, Employee agrees and acknowledges that the restrictions contained in Section 5.4 do not preclude Employee from earning a living, nor do they unreasonably impose limitations on Employee's ability to earn a living. Employee agrees and acknowledges that the potential harm to the Company of the non-enforcement of Section 5.4 outweighs any potential harm to Employee of its enforcement by injunction or otherwise. Employee acknowledges that the Company has and will have extensive goodwill and that the goodwill extends throughout the United States. Employee further acknowledges that he has carefully read this Agreement and has given careful consideration to the restraints imposed upon Employee by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of confidential and proprietary information of the Company now existing or to be developed in the future. Employee expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

5.8Other Rights. Employee recognizes and acknowledges that none of the above provisions, nor the Company's exercise of any rights under this Agreement, shall limit the rights of the Company under applicable statutes and common law rules, including those related to confidentiality and trade secrets.

5.9Investment Exception. Nothing in this Agreement shall be deemed to prohibit Employee from owning (as an investor only) equity or debt investments in any corporation, partnership or other entity which is not competitive with the Company's Business. Any such investments shall not require the Company's prior written consent.

6. MISCELLANEOUS

6.1Specific Performance. Employee understands and expressly acknowledges that the provisions of Article 5 of this Agreement are material terms of this Agreement and that the covenants and agreements made by Employee in Article 5 of this Agreement are made in consideration of the execution of this Agreement by the Company. Employee acknowledges that any breach of the provisions of Article 5 of this Agreement shall result in serious and irreparable injury to the Company for which the Company cannot be adequately compensated by monetary damages alone. Employee agrees, therefore, that, in addition to any other remedies either of them may have, the Company shall independently be entitled to enforce the specific performance of this Agreement and to seek both temporary and permanent injunctive relief (to the extent permitted by law).

6.2Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company. The Company

may assign this Agreement upon written notice to Employee. Employee may not assign any right or obligation under this Agreement without the prior written consent of the Company, which may be withheld for any or no reason.

6.3Entire Agreement: Amendment. This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes any prior agreement by and between the parties with respect to the subject matter hereof. This Agreement can be modified only by a written instrument executed by Employee and an officer of the Company (not Employee) duly authorized to do so.

6.4Waiver. Failure to insist upon compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver of or relinquishment of such right or power at any other time or times. References herein to the consent of the Company, or of any member of the Company Group, shall be deemed to mean the written consent of its chief executive officer or board of directors, respectively.

6.5Notices. Any notices, demands and communications under this Agreement shall be in writing and shall be deemed to have been duly given and received (i) if delivered personally or actually received, (ii) three (3) business days after being mailed, certified mail, return receipt requested, or (iii) one (1) business day after being sent by a nationally recognized overnight delivery service, to the parties as set forth below or at such other address as may have been furnished by a party to the other party in accordance with the foregoing:

If to the Company:    NovaStar Financial, Inc.

2114 Central, Suite 600

Kansas City, Missouri 64108

Attention: W. Lance Anderson

With a copy (which shall not constitute notice) to:

Bryan Cave LLP

Attention: Gregory G. Johnson

1200 Main Street, Suite 3500

Kansas City, Missouri 64105

If to Employee:    Steve Haslam

2114 Central, Suite 600

Kansas City, Missouri 64108

Headings. Article and Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any purpose.

6.6Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law.If the final judgment of a court of competent jurisdiction declares that any provision of this Agreement invalid

or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability shall have the power, and is hereby directed, to reduce the scope, duration or area of the provision, to delete specific words or phrases and to replace any invalid or unenforceable provision with a provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable provision, and this Agreement shall be enforced as so modified.

6.7Survivability. The provisions of this Agreement which by their terms call for performance subsequent to termination of this Agreement, shall so survive such termination.

6.8No Defense. The existence of any claim, demand, action or cause of action of Employee against the Company, whether or not based upon this Agreement, will not constitute a defense to the enforcement by the Company of any covenant or agreement contained herein.

6.9Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

6.10Governing Law. This Agreement and the legal relations thus created between the parties hereto shall be governed by and construed under and in accordance with the laws of the State of Missouri, without regard to conflicts of laws principles.

6.11Representation by Counsel. Employee acknowledges that (i) Bryan Cave LLP has represented the Company, and not Employee, in connection with this Agreement, (ii) Employee has been encouraged to retain his own counsel in connection with this Agreement and (iii) the terms of this Agreement were the subject of negotiations between the Company and Employee.

6.12Termination of Employment Agreement with StreetLinks. The Company and Employee acknowledge that the Employment Agreement dated August 1, 2008 between StreetLinks LLC and Employee has been terminated and that such termination does not trigger the payment of any amounts or benefits thereunder or otherwise.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first written above.

EMPLOYEE:

/s/ Steve Haslam

Steve Haslam

COMPANY:

NOVASTAR FINANCIAL, INC

By: /s/ W. Lance Anderson

W. Lance Anderson

Chief Executive Officer

EX-10.3

Exhibit 10.3

EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT

EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of the 8th day of March, 2012, by and between NovaStar Financial, Inc., a Maryland corporation (the “Company”) and Steve Haslam (the “Optionee”).

WHEREAS, pursuant to the terms of the NovaStar Financial, Inc. 2004 Incentive Stock Plan, as amended (the “Plan”), the Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that the Optionee is to be granted an option to purchase a specified number of shares of the Company's common stock on the terms and conditions set forth herein;

WHEREAS, the Optionee is now an employee of the Company or a Subsidiary of the Company; and

WHEREAS, the Company and the Optionee desire to enter into this Agreement for the purpose of memorializing the terms and conditions of the option.

NOW, THEREFORE, the Company and the Optionee agree as follows:

1.Grant Subject to Plan. The Option (as defined below) is expressly subject to all terms and provisions of the Plan, and the terms and provisions of such Plan are incorporated herein by reference. Capitalized terms not defined herein shall have the meaning ascribed thereto in the Plan.

2.Number of Shares and Option Price. Pursuant to the action of the Committee, which action was effective on March 8, 2012 (the “Date of Grant”), the Optionee is hereby granted a non-qualified stock option (the “Option”) to purchase one million five hundred thousand (1,500,000) shares of the Company's common stock (the “Option Shares”), at the purchase price of Sixty-Three Cents ($0.63) per share (the “Option Price”). The Option Price is equal to or greater than the price at which the Company's common stock was last sold as quoted on the Pink Sheets of the OTC on the Date of Grant.

3.Period of Option. The term of the Option and of this Agreement shall commence on the Date of Grant and terminate upon the expiration of ten (10) years from the Date of Grant. Upon termination of the Option, all rights of the Optionee hereunder shall cease.

4.Conditions of Exercise. This Option may be exercised, in whole or in part at any time, or from time to time, up to ten (10) years from the Date of Grant, but only during the period in which such Option remains exercisable as herein provided. The Option Shares shall vest as follows: Three Hundred Seventy Five Thousand (375,000) shares on March 8, 2013; Three Hundred Seventy Five Thousand (375,000) shares on March 8, 2014; Three Hundred Seventy Five Thousand (375,000) shares on March 8, 2015; and Three Hundred Seventy Five Thousand (375,000) shares on March 8, 2016.

5.Nontransferability of Option. Other than a transfer as described in Section 5(c) of the Plan or otherwise in the discretion of the Administrator pursuant to Section 5(c) of the Plan, the Option and this Agreement shall not be transferable.

6.Exercise of Option. The Option may be exercised as described in Section 5 of the Plan or in the following manner: the Optionee, or the person or persons having the right to exercise the Option upon the death or Disability of the Optionee, shall deliver to the Company written notice specifying the number of Option shares which he or she elects to purchase, together with either (i) cash, (ii) shares of Company common stock having a Fair Market Value determined as of the date of exercise, (iii) cancellation of any indebtedness owed by the Company to the Optionee, or (iv) any combination of the above, the sum of which equals the total price to be paid upon the exercise of the Option, and the stock purchased shall thereupon be promptly delivered. The Optionee will not be deemed to be a holder of any shares pursuant to exercise of the Option until the date of issuance to him or her of a stock certificate for such shares and until the shares are paid in full.

7.Adjustment for Changes in Capitalization. As described in Section 3(d) of the Plan, in the event of any extraordinary corporate changes occurring after the date hereof, the Administrator shall make adjustments to the Option as set forth therein.

8.Termination by Death. If the Optionee's servicewith the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, to the full extent of the Option Shares, for a period of twelve (12) months or until the expiration of the stated term of such Option, whichever period is shorter.

9.Termination by Reason of Disability. If the Optionee's servicewith the Company or any Subsidiary terminates by reason of Disability, any Option held by the Optionee may thereafter be exercised, to the full extent of the Option Shares, for a period of twelve (12) months from the date of such termination of employment or until the expiration of the stated term of such Option, whichever period is shorter; provided, however, that if the Optionee dies within such twelve (12) month period and prior to the expiration of the stated term of such Option, such Option may thereafter be exercised for a period of twelve (12) months from the date of death or until the expiration of the stated term of such Option, whichever period is shorter.

10.Other Termination. If the Optionee's servicewith the Company (and/or any Subsidiary, as the case may be, such that Optionee is no longer employed by either the Company or any Subsidiary) terminates for any reason other than death or Disability, the Option may be exercised to the extent it has become exercisable, for a period of three (3) months from the date of such termination or until the expiration of the stated term of the Option, whichever period is shorter; provided, however, that if the Optionee dies within such three (3) month period and prior to the expiration of the stated term of such Option, such Option may thereafter be exercised to the extent it has become exercisable for a period of three (3) months from the date of death or until the expiration of the stated term of the Option, whichever period is shorter.

11.Option Not an Incentive Stock Option. It is intended that the Option shall not be treated as an incentive stock option under Section 422 or the Internal Revenue Code of 1986, as amended.

12.No Contract of Employment. Nothing contained in this Agreement shall be considered or construed as creating a contract of employment for any specified period of time.

13.Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

14.Entire Agreement; Amendments. No modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referred hereto, and signed by the parties hereto. This Agreement supersedes all prior agreements and understandings between the Optionee and the Company to the extent that any such agreements or understandings conflict with the terms hereof.

15.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Missouri without regard to the principles of conflicts of law, which might otherwise apply.

[signature page follows]

IN WITNESS WHEREOF, this Agreement is executed as of the day and year first above written.

NOVASTAR FINANCIAL, INC.

/s/ W. Lance Anderson

Name: W. Lance Anderson

Title: Chief Executive Officer

OPTIONEE

/s/ Steve Haslam

Steve Haslam

EX-10.4

Exhibit 10.4    

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made and entered into as of March 2, 2012 (the “Effective Date”), by and between NovaStar Financial, Inc. (the “Company”) and Matthew Lautz (“Employee”).

1. EMPLOYMENT BY THE COMPANY

1.1Employment. The Company hereby employs Employee, and Employee hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement. Employee and the Company acknowledge that Employee was, but no longer is, employed by Corvisa, LLC, an indirect subsidiary of the Company (“Corvisa”) and may become employed by other members of the Company Group (defined below), as an at-will employee, and that such other employment, by itself, shall not be deemed to violate any of the provisions hereof or diminish the Company's rights hereunder.

1.2Term. Employee's employment with the Company shall commence on the Effective Date and continue for a period of three (3) years, unless sooner terminated pursuant to the provisions of this Agreement (“Original Period”). Upon the conclusion of the Original Period, this Agreement shall continue for successive one (1) year periods (each a “Renewal Period”) unless the Company or Employee has given written notice to the other party, at least sixty (60) days prior to the beginning of any such Renewal Period, that such party does not wish to continue the Agreement for such Renewal Period. The Original Period and any Renewal Period(s) that go into effect are referred to collectively as the “Employment Period.”

1.3Duties. Employee shall be employed by the Company in the position of Chief Information Officer reporting to the chief executive officer or any officer designated by the chief executive officer. Employee shall have the authority, duties and responsibilities assigned to Employee by the chief executive officer or any officer designated by the chief executive officer 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.

1.4Efforts. Employee hereby agrees that he will devote his working time and attention, and give his diligent effort and skill, to the business and interests of Company on a full-time basis, and that he will perform such services as may from time to time be assigned to him, and shall do his utmost to further enhance and develop the best interests and welfare of the Company in all respects.

1.5Conflicts. Employee shall not, without prior written consent of the Company, at any time during the Employment Period, accept employment with any individual, corporation, partnership, limited liability company or partnership, association, governmental authority, trust or any other entity or organization (“Person”) other than the Company or any member of the Company Group. In addition, without the prior written consent of the Company, Employee shall not render services of a business, professional or commercial nature to any person other than the Company or any member of the Company Group, or engage in any venture or activity, if the Company in good faith believes that such services, venture or activity interferes with Employee's performance of his duties.

1.6Authority. Employee represents and warrants to the Company that he has not entered into any non-competition, non-solicitation, confidentiality or other agreement, and is not now under any obligation of a contractual or other nature, that would prevent Employee from entering into this Agreement or performing

his duties hereunder. Employee hereby represents and warrants to the Company that Employee has not misappropriated any confidential, business proprietary, trade secret and/or other any other business information from any of Employee's former employers, and hereby covenants and agrees that Employee shall not use or disclose to the Company any such information in performing his or her job duties for the Company or otherwise.

2. COMPENSATION

2.1Base Salary. The Company agrees to pay Employee an initial minimum annual base salary (“Base Salary”) of Two Hundred Thousand Dollars ($200,000), payable in accordance with the Company's regular payroll schedule, but reduced dollar-for-dollar by any amount of base salary paid to Employee by any member of the Company Group. The Base Salary shall be reviewed annually by the Company and may be adjusted upward or downward in accordance with the Company's performance review policies. Any adjustment to the Base Salary will become the “Base Salary” for purposes of this Agreement.

2.2Incentive Pay. Employee shall be eligible to receive incentive compensation (“Incentive Pay”)of up to One Hundred Fifty Thousand Dollars ($150,000) based upon goals established by the Company from time to time, but reduced dollar-for-dollar by any amount of incentive compensation paid to Employee by any member of the Company Group. 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; 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, and shall be paid by the Company (and, as the case may be, any member of the Company Group) no later than March 15 of the calendar year following the calendar year in which such Incentive Pay is earned. 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.

2.3Benefits. The Company and Employee acknowledge that Employee is entitled to participate in any employee benefits plans, perquisites and fringe benefits (“Benefits”) that the Company directly or indirectly extends generally from time to time to other similarly-situated employees.. To the extent Employee receives Benefits from any member of the Company Group, then such Benefits are in lieu of similar Benefits to be provided by the Company to the extent thereof, it being understood that Employee does not expect to receive duplicate or supplemental Benefits thereby. Separate written descriptions of available Benefits will be provided or made available from time to time, it being acknowledged that the Company and any member of the Company Group may, in their sole and absolute discretion, modify these benefits in whole or in part at any time.

2.4Taxes. Employee shall be responsible for the payment of all taxes associated with the Base Salary, any Incentive Pay awarded to Employee in accordance with Section 2.2 hereof, any Benefits received by Employee in accordance with Section 2.3 hereof, and any Equity Awards (as defined below) awarded to Employee in accordance with Section 2.7.

2.5Vacation. Employee shall be entitled to four (4) weeks of paid vacation per calendar year, which will be earned at a rate of one week on the first day of each quarter of the calendar year, and taken in accordance with the Company's standard vacation policies. Employee shall be permitted to “roll forward”

to a succeeding calendar year up to two (2) weeks of vacation time which was not used in the current calendar year. Any vacation taken with respect to Employee's employment with any member of the Company Group shall be deemed to reduce the amount of vacation available to Employee from the Company, day for day.

2.6Business 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. The amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year. The reimbursement of an eligible expense will be made in accordance with the Company's policies and procedures, but in no event later than the last day of the calendar year following the calendar year in which the expense is incurred. The right to reimbursement is not subject to liquidation or exchange for another benefit.

2.7Equity 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. TERMINATION OF EMPLOYMENT

3.1Termination by the Company for Cause. Employee's employment may be terminated by the Company for Cause at any time by delivery of written notice of termination to Employee. For purposes of this Agreement, “Cause” shall mean the occurrence of any of the following events, as determined in the good faith judgment of the chief executive officer or the Board of Directors of the Company:

a.Employee's conviction of, or entry of a plea of nolo contendere to, any felony involving theft or willful destruction of money or other property, or any felony or misdemeanor involving moral turpitude, dishonesty or fraud, or any other felony or misdemeanor where the performance of Employee's obligations to the Company is materially and adversely affected;

b.willful misconduct, gross negligence or gross insubordination of Employee in connection with the performance of his duties and services to the Company;

c.Employee's breach of his material obligations under this Agreement; or

d.any act by Employee constituting fraud, breach of fiduciary duty or intentional malfeasance or misfeasance, whether or not against the Company or its affiliates, which is materially harmful to the Company, any member of the Company Group, or their reputation.

3.2Termination by the Company without Cause. Employee's employment may be terminated by the Company without Cause at any time by delivery of written notice of termination to Employee. A termination of this Agreement by the Company with respect to a Renewal Period pursuant to Section 1.2 shall not be deemed a termination of employment by the Company without Cause.

3.3Termination by Employee. Employee's employment may be terminated by Employee upon not less than thirty (30) days' prior written notice from Employee to the Company. A termination of this Agreement by the Employee with respect to a Renewal Period pursuant to Section 1.2 shall not be deemed a termination of employment by the Employee.

3.4Termination for Death or Disability. Employee's employment shall be terminated automatically upon the death of Employee, and may be terminated by the Company, by delivery of written notice of termination to Employee, following the Disability of Employee, consistent with any rights or

obligations of the Company and the Employee under the Americans with Disabilities Act and other applicable law. Termination for death or Disability is separate and distinct from termination with Cause and from termination without Cause, and will give rise only to the rights and obligations expressly provided in Section 4.3 hereof.

3.5Disability Defined. For purposes of this Agreement, Employee shall be considered to be suffering from a “Disability” if, as determined in the good faith judgment of the chief executive officer, Employee is unable to materially perform his duties hereunder with or without reasonable accommodation for an aggregate of ninety (90) days (whether or not consecutive) during any one hundred eighty (180) day period.

3.6Termination for Good Reason. Employee may terminate his employment for Good Reason upon not less than thirty (30) days' prior written notice from the Employee to the Company, which notice must be provided not more than ninety (90) days after the initial existence of the event giving rise to such Good Reason. “Good Reason” means any of the following: (i) a material adverse reduction in Employee's duties or responsibilities (not due to Disability), (ii) a relocation of Employee's offices on the date hereof to a location more than fifty (50) miles from the primary offices of the Company or any company within the Company Group (without the consent of the Employee), or (iii) the failure of the Company to pay the Employee the compensation he is due pursuant to this Agreement. The Company has the right, but not the obligation, to cure any such conditions, and thus negate the termination for Good Reason, during the notice period.

3.7Termination Upon Change of Control. Employee's employment may be terminated upon the occurrence of, or at any time after, a Change of Control (as defined in Section 3.8) by delivery of written notice of termination to Employee.

3.8Change in Control. A “Change in Control” shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied.

a.Any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other than the Company; any trustee or other fiduciary holding securities under an executive benefit plan of the Company; or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company), is or becomes the “beneficial owner” (as defined by Rule 13d-3 under the Exchange Act), directly or indirectly, of the securities of the Company (not including any securities acquired directly from the Company or from a transferor in a transaction expressly approved or consented to by the Board of Directors) representing more than 50% of the combined voting power of the Company's then outstanding securities; or

b.During any period of two consecutive years (not including any period prior to the execution of the Agreement), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (a), (c) or (d) of this section), (i) whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved or (ii) whose election is to replace a person who ceases to be a director due to death, disability or age, cease for any reason to constitute a majority thereof; or

c.The stockholders of the Company approve a merger or consolidation of the Company

with another corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an executive benefit plan of the Company, at least 75% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires more than 50% of the combined voting power of the Company's then outstanding securities; or

d.The stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets.

3.9Automatic Resignation from Other Employment and Positions Within the Company Group. Upon the Date of Termination, Employee will automatically be deemed to have terminated his employment, if any, by any other member of the Company Group and have tendered his resignation from any and all positions (including, without limitation, officer, director and manager positions) then held with the Company or with any member of the Company Group, without any separate or additional payment, benefit or obligation being owed or payable to him by the Company or any member of the Company Group. A termination of Employee's employment with any member of the Company Group (not the Company), however, shall not be deemed a termination of employment under this Agreement.

3.10Administrative Leave. In the case of any termination pursuant to this Article 3, or the Company's consideration of a termination thereby, the Company may elect (but is not obligated) to place Employee on paid administrative leave during the notice period thereof (if applicable) or during such consideration, as the case may be. During such leave, the Company may prohibit or restrict the Employee from the Company and/or the Company Group offices and from contacting the Company and/or the Company Group employees, suppliers and/or customers.

3.11Exclusive Methods of Termination. This Agreement may only be terminated as set forth in Section 1.2 or this Article 3.

4. TREATMENT OF COMPENSATION AND BENEFITS UPON TERMINATION

4.1For Cause; By the Employee. If Employee's employment is terminated pursuant to Section 3.1 or 3.3, Employee will be entitled to receive only the following: (a) Employee's accrued but unpaid Base Salary as of the date that Employee's employment with the Company terminates (the “Date of Termination”); (b) Employee's accrued but unused vacation as of the Date of Termination; (c) reimbursement for business expenses incurred prior to the Date of Termination, to the extent provided in Section 2.6 hereof; and (d) continuation of such benefits as required by law, and not otherwise.

4.2Other than for Cause; For Good Reason; Change of Control. If Employee's employment is terminated pursuant to Section 3.2, 3.6, or 3.7, Employee will be entitled to receive only: (a) the payments and benefits specified in Section 4.1; and (b) a severance amount equal to twelve (12) months of Employee's Base Salary in effect as of the Date of Termination payable in equal installments over such period (commencing on the Date of Termination) in accordance with the Company's regular payroll schedule in effect as of the Date of Termination. Notwithstanding the foregoing, eligibility for any severance amount is contingent upon the Company's receipt and the effectiveness of a general release of claims from Employee on terms satisfactory to the Company in its sole discretion, which release must be provided and become

effective within 90 days of the Date of Termination.

4.3For Death or Disability. If Employee's employment is terminated pursuant to Section 3.4, , Employee will be entitled to receive only the payments and benefits specified in Section 4.1.

4.4Section 409A Requirements. It is intended that this Agreement shall comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury regulations relating thereto and any Internal Revenue Service or Treasury rules or other guidance issued thereunder (collectively, “Code Section 409A”). It is also intended that amounts payable pursuant to Section 4.2 of this Agreement qualify for certain exceptions to the definition of “deferred compensation” within the meaning of Code Section 409A. Notwithstanding any other provision in this Agreement to the contrary, if Employee is considered a “specified employee” within the meaning of Code Section 409A (as determined in accordance with the methodology established by the Company as in effect on the date of termination), any payment that constitutes “deferred compensation” within the meaning of Code Section 409A that is otherwise due to Employee under this Agreement during the six-month period immediately following Employee's separation from service (as determined in accordance with Code Section 409A) on account of Employee's separation from service shall be accumulated and paid to Employee on the first business day of the seventh month following his Date of Termination. Each severance pay installment paid pursuant to Section 4.2 of this Agreement shall be treated as a separate payment for purposes of Code Section 409A. Notwithstanding any other provision in this Agreement to the contrary, any references to termination of employment or Date of Termination shall mean and refer to the date of Employee's “separation from service” as that term is defined in Code Section 409A.

5. ADDITIONAL OBLIGATIONS

5.1Obligation to Maintain Confidentiality. Employee acknowledges that the information, observations and data obtained by him during the course of his performance under this Agreement concerning the business and affairs of the Company or any member of the Company Group are the property of the Company or the respective member of the Company Group. Such information includes, without limitation, (a) all trade secrets, unpublished proprietary or other information with respect to any business that is conducted or may in the future be conducted by the Company or any member of the Company Group, (b) any present or proposed services or products, including intellectual property rights, software, source code and business methods, (c) all policies and procedures, (d) the identity of, all contracts and agreements with, and all other information relating to the Company's or the members' of the Company Group relationship with third parties, including actual, former, and potential clients, customers, suppliers, lenders and consultants, (e) the manner in which business is conducted, sales techniques, and methods of software development and data processing, and (f) budgets, forecasts, and financial information, and (g) strategic plans and proposals, including acquisition opportunities. Employee agrees that, during the Employment Period and at any time thereafter, Employee will not disclose to any third party or use other than for the Company's or the Company Group's benefit any of such information, observations or data without the Company's or the respective Company Group's written consent, unless and to the extent that the aforementioned matter, (i) become generally known to and available for use by the public other than as a result of Employee's acts or omissions, or (ii) are required to be disclosed pursuant to any applicable law or court order. Employee agrees to deliver to the Company and to each member of the Company Group upon any termination of Employee's employment, or at any other time the Company may request, all memoranda, notes, plans, records, reports and other documents (and copies thereof) relating to the business of the Company or any member of the Company Group that Employee may then possess or have under his control.

5.2Ownership of Property. Employee acknowledges that all inventions, software, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports, patent

applications, copyrightable work and mask work (whether or not including any confidential information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) that relate to the Company's or Company Group members' actual or anticipated business, research and development, or then existing products or services and that are conceived, developed, contributed to, made, or reduced to practice by Employee (either solely or jointly with others) while employed by the Company (including any of the foregoing that constitutes any proprietary information or records) (“Work Product”) belong to the Company and Employee hereby assigns, and agrees to assign, all Work Product to the Company. Any copyrightable work prepared in whole or in part by Employee in the course of his work for any of the foregoing entities shall be deemed a “work made for hire” under copyright laws, and the Company shall own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Employee hereby assigns and agrees to assign to the Company all right, title, and interest, including without limitation, copyright in and to such copyrightable work. Employee shall promptly disclose such Work Product and copyrightable work to the Company and perform all actions reasonably requested by the Company (whether during or after the Employment Period) to establish and confirm the Company's ownership (including, without limitation, assignments, consents, powers of attorney, and other instruments).

5.3Third Party Information. Employee understands that the Company will receive from third parties confidential or proprietary information (“Third Party Information”) that may be subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. While Employee is employed by the Company and at any time thereafter, and without in any way limiting the provisions of Section 5.1 above, Employee will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than personnel of the Company who need to know such information in connection with their work for the Company) or use, except in connection with his work for the Company, Third Party Information, unless expressly authorized by the Company in writing or unless and to the extent such Third Party Information is required to be disclosed pursuant to any applicable law or court order.

5.4Noncompetition and Nonsolicitation. In addition to other obligations that the Employee may have to the Company, Employee hereby agrees that Employee shall not, directly or indirectly (other than through and for the benefit of the Company), during the Employment Period and for a period of twelve (12) months immediately after the Date of Termination:

a.anywhere in the United States,transact any business with, own any interest directly or indirectly in, or be associated with or employed in any capacity by or on behalf of any Person engaged or seeking to engage in any business or enterprise competing directly or indirectly with the Company's Business or the Business of any member of the Company Group. For purposes of this Agreement, the term “Business” shall mean (i) mortgage or appraisal management software, product or service development, manufacture and sale, (ii) mortgage or appraisal regulatory compliance software, product or service development, manufacture and sale, (iii) the business of appraisal management companies (AMCs), (iv) providing financial settlement services (including, without limitation, for income tax preparation businesses), tailored banking accounts, small dollar banking products and related services; (v) acting as an intermediary for banking products on behalf of banking institutions, (vi) providing services in the “asset light” third party logistics provider market, (vii) providing services within the local and long distance residential moving industry; and (viii) such other products and services contemplated by the Company's business plan or the business plan of any member of the Company Group, as of the Effective Date or during the Employment Period.

b.solicit, for Employee or any other Person, business from any customers, clients or accounts of the Company or any member of the Company Group or any potential customers, clients

or accounts that may be targeted by the Company or any member of the Company Group and in any manner that would likely cause an adverse effect upon the Business, or encourage, in any way or for any reason, any current or potential customer, client or account of the Company or any member of the Company Group to sever or alter the relationship of such customer, client or account with the Company or any member of the Company Group;

c.solicit, employ, retain as a consultant, interfere with or attempt to entice away from the Company or any member of the Company Group any employee of the Company or any member of the Company Group, during that person's employment and for a period of twelve (12) months thereafter; or

d.induce any supplier, contractor, vendor, licensor, licensee, business relation, representative or agent of the Company or any member of the Company Group to terminate or modify its relationship with the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group, or in any way interfere with the relationship between the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group and such other party (including, without limitation, making any negative or disparaging statements regarding the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group).

5.5Non-Disparagement. Employee agrees that he shall not disparage the Company, its affiliates (including, without limitation, Streetlinks, LLC, Advent Financial Services, LLC, Mango Moving, LLC, and their successors; collectively, the “Company Group”) or any of its past and present employees, managers, members, products or services. For purposes of this Agreement, the term “disparage” includes, without limitation, comments or statements to the press, to the Company's or the Company Group's employees or to any individual or entity with whom the Company or the Company Group has a business relationship (including, without limitation, any customer, client, supplier, vendor, referral source or other business relation of the Company or the Company Group) that would adversely affect in any manner (a) the conduct of any business of the Company or the Company Group (including, without limitation, any business plans or prospects) or (b) the business reputation of the Company or the Company Group.

5.6Cooperation. Upon the receipt of reasonable notice from the Company (including notice on behalf of the Company by its outside counsel), Employee agrees that while employed by the Company and, subject to Employee's other business commitments in reasonable respects, thereafter, Employee will respond and provide information with regard to matters in which Employee has knowledge as a result of Employee's employment with the Company and will provide reasonable assistance to the Company and its representatives in defense of any claims that may be made against the Company, and will assist the Company in the prosecution of any claims that may be made by the Company, to the extent that such claims may relate to the period of Employee's employment with the Company. If Employee is required to provide any services pursuant to this Section 5.6 following termination of his employment with the Company, the Company shall, upon presentation of appropriate documentation, reimburse Employee for reasonable out-of-pocket expenses incurred in connection with the performance of such services.

5.7Additional Acknowledgments. Employee acknowledges that the provisions of Section 5.4 are in consideration of good and valuable consideration as set forth in this Agreement. In addition, Employee agrees and acknowledges that the restrictions contained in Section 5.4 do not preclude Employee from earning a living, nor do they unreasonably impose limitations on Employee's ability to earn a living. Employee agrees and acknowledges that the potential harm to the Company of the non-enforcement of Section 5.4 outweighs any potential harm to Employee of its enforcement by injunction or otherwise. Employee acknowledges

that the Company has and will have extensive goodwill and that the goodwill extends throughout the United States. Employee further acknowledges that he has carefully read this Agreement and has given careful consideration to the restraints imposed upon Employee by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of confidential and proprietary information of the Company now existing or to be developed in the future. Employee expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

5.8Other Rights. Employee recognizes and acknowledges that none of the above provisions, nor the Company's exercise of any rights under this Agreement, shall limit the rights of the Company under applicable statutes and common law rules, including those related to confidentiality and trade secrets.

5.9Investment Exception. Nothing in this Agreement shall be deemed to prohibit Employee from owning (as an investor only) equity or debt investments in any corporation, partnership or other entity which is not competitive with the Company's Business. Any such investments shall not require the Company's prior written consent.

6. MISCELLANEOUS

6.1Specific Performance. Employee understands and expressly acknowledges that the provisions of Article 5 of this Agreement are material terms of this Agreement and that the covenants and agreements made by Employee in Article 5 of this Agreement are made in consideration of the execution of this Agreement by the Company. Employee acknowledges that any breach of the provisions of Article 5 of this Agreement shall result in serious and irreparable injury to the Company for which the Company cannot be adequately compensated by monetary damages alone. Employee agrees, therefore, that, in addition to any other remedies either of them may have, the Company shall independently be entitled to enforce the specific performance of this Agreement and to seek both temporary and permanent injunctive relief (to the extent permitted by law).

6.2Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company. The Company may assign this Agreement upon written notice to Employee. Employee may not assign any right or obligation under this Agreement without the prior written consent of the Company, which may be withheld for any or no reason.

6.3Entire Agreement: Amendment. This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes any prior agreement by and between the parties with respect to the subject matter hereof. This Agreement can be modified only by a written instrument executed by Employee and an officer of the Company (not Employee) duly authorized to do so.

6.4Waiver. Failure to insist upon compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver of or relinquishment of such right or power at any other time or times. References herein to the consent of the Company, or of any member of the Company Group, shall be deemed to mean the written consent of its chief executive officer or board of directors, respectively.

6.5Notices. Any notices, demands and communications under this Agreement shall be in writing and shall be deemed to have been duly given and received (i) if delivered personally or actually received,

(ii) three (3) business days after being mailed, certified mail, return receipt requested, or (iii) one (1) business day after being sent by a nationally recognized overnight delivery service, to the parties as set forth below or at such other address as may have been furnished by a party to the other party in accordance with the foregoing:

If to the Company:NovaStar Financial, Inc.

2114 Central, Suite 600

Kansas City, Missouri 64108

Attention: W. Lance Anderson

With a copy (which shall not constitute notice) to:

Bryan Cave LLP

Attention: Gregory G. Johnson

1200 Main Street, Suite 3500

Kansas City, Missouri 64105

If to Employee:Matthew Lautz

[Redacted Personal Address]

With a copy (which shall not constitute notice) to:

Quarles & Brady, LLP

Attention: Michael Aldana

411 E. Wisconsin Avenue

Milwaukee, WI 53202

Headings. Article and Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any purpose.

6.6Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law.If the final judgment of a court of competent jurisdiction declares that any provision of this Agreement invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability shall have the power, and is hereby directed, to reduce the scope, duration or area of the provision, to delete specific words or phrases and to replace any invalid or unenforceable provision with a provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable provision, and this Agreement shall be enforced as so modified.

6.7Survivability. The provisions of this Agreement which by their terms call for performance subsequent to termination of this Agreement, shall so survive such termination.

6.8No Defense. The existence of any claim, demand, action or cause of action of Employee against the Company, whether or not based upon this Agreement, will not constitute a defense to the enforcement by the Company of any covenant or agreement contained herein.

6.9Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

6.10Governing Law. This Agreement and the legal relations thus created between the parties hereto shall be governed by and construed under and in accordance with the laws of the State of Missouri, without regard to conflicts of laws principles.

6.11Representation by Counsel. Employee acknowledges that (i) Bryan Cave LLP has represented the Company in connection with this Agreement, (ii) Quarles & Brady, LLP has represented Employee in connection with this Agreement, and (iii) the terms of this Agreement were the subject of negotiations between the Company and Employee; and their respective legal counsel.

6.12Termination of Employment Agreement with Corvisa. The Company and Employee acknowledge that the Employment Agreement dated November 4, 2010 between Corvisa and Employee has been terminated in conjunction with entering into this Agreement and that such termination does not trigger the payment of any amounts or benefits thereunder or otherwise.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first written above.

EMPLOYEE:

/s/ Matthew Lautz

Matthew Lautz

COMPANY:

NOVASTAR FINANCIAL, INC

By:/s/ W. Lance Anderson

W. Lance Anderson

Chief Executive Officer

EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made and entered into as of March 1, 2012 (the “Effective Date”), by and between NovaStar Financial, Inc. (the “Company”) and Brett Monger (“Employee”).

1. EMPLOYMENT BY THE COMPANY

1.1Employment. The Company hereby employs Employee, and Employee hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement. Employee and the Company acknowledge that Employee may become employed by other members of the Company Group (defined below), as an at-will employee, and that such other employment, by itself, shall not be deemed to violate any of the provisions hereof or diminish the Company's rights hereunder.

1.2Term. Employee's employment with the Company shall commence on the Effective Date and continue for a period of three (3) years, unless sooner terminated pursuant to the provisions of this Agreement (“Original Period”). Upon the conclusion of the Original Period, this Agreement shall continue for successive one (1) year periods (each a “Renewal Period”) unless the Company or Employee has given written notice to the other party, at least sixty (60) days prior to the beginning of any such Renewal Period, that such party does not wish to continue the Agreement for such Renewal Period. The Original Period and any Renewal Period(s) that go into effect are referred to collectively as the “Employment Period.”

1.3Duties. Employee shall be employed by the Company in the position of Chief Accounting Officer reporting to the chief financial officer Employee shall have the authority, duties and responsibilities assigned to Employee by the chief financial officer 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.

1.4Efforts. Employee hereby agrees that he will devote his working time and attention, and give his diligent effort and skill, to the business and interests of Company on a full-time basis, and that he will perform such services as may from time to time be assigned to him, and shall do his utmost to further enhance and develop the best interests and welfare of the Company in all respects.

1.5Conflicts. Employee shall not, without prior written consent of the Company, at any time during the Employment Period, accept employment with any individual, corporation, partnership, limited liability company or partnership, association, governmental authority, trust or any other entity or organization (“Person”) other than the Company or any member of the Company Group. In addition, without the prior written consent of the Company, Employee shall not render services of a business, professional or commercial nature to any person other than the Company or any member of the Company Group, or engage in any venture or activity, if the Company in good faith believes that such services, venture or activity interferes with Employee's performance of his duties.

1.6Authority. Employee represents and warrants to the Company that he has not entered into any non-competition, non-solicitation, confidentiality or other agreement, and is not now under any obligation of a contractual or other nature, that would prevent Employee from entering into this Agreement or performing his duties hereunder. Employee hereby represents and warrants to the Company that Employee has not

misappropriated any confidential, business proprietary, trade secret and/or other any other business information from any of Employee's former employers, and hereby covenants and agrees that Employee shall not use or disclose to the Company any such information in performing his or her job duties for the Company or otherwise.

2. COMPENSATION

2.1Base Salary. The Company agrees to pay Employee an initial minimum annual base salary (“Base Salary”) of One Hundred Thousand Dollars ($100,000), payable in accordance with the Company's regular payroll schedule, but reduced dollar-for-dollar by any amount of base salary paid to Employee by any member of the Company Group. The Base Salary shall be reviewed annually by the Company and may be adjusted upward or downward in accordance with the Company's performance review policies. Any adjustment to the Base Salary will become the “Base Salary” for purposes of this Agreement.

2.2Incentive Pay. Employee shall be eligible to receive (but is not hereby entitled to) incentive compensation (“Incentive Pay”)based upon goals established by the Company from time to time. 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. Incentive Pay for any calendar year or portion thereof shall be deemed earned only at the end of such calendar year such that, in the event Employee is not employed by the Company on the last day of the Company's fiscal year, no Incentive Pay is deemed earned by or is payable to Employee for such year.

2.3Benefits. The Company and Employee acknowledge that Employee is entitled to participate in any employee benefits plans, perquisites and fringe benefits (“Benefits”) that the Company directly or indirectly extends generally from time to time to other similarly-situated employees. To the extent Employee receives Benefits from a member of the Company Group, then such Benefits are in lieu of similar Benefits to be provided by the Company to the extent thereof, it being understood that Employee does not expect to receive duplicate or supplemental Benefits thereby. Separate written descriptions of available Benefits will be provided or made available from time to time, it being acknowledged that the Company and any member of the Company Group may, in their sole and absolute discretion, modify these benefits in whole or in part at any time.

2.4Taxes. Employee shall be responsible for the payment of all taxes associated with the Base Salary, any Incentive Pay awarded to Employee in accordance with Section 2.2 hereof, any Benefits received by Employee in accordance with Section 2.3 hereof, and any Equity Awards (as defined below) awarded to Employee in accordance with Section 2.7.

2.5Vacation. Employee shall be entitled to three (3) weeks of paid vacation per calendar year, which will be earned at a rate of one week on the first day of each trimester of the calendar year, and taken in accordance with the Company's standard vacation policies. Employee shall be permitted to “roll forward” to a succeeding calendar year up to two (2) weeks of vacation time which was not used in the current calendar year. Any vacation taken with respect to Employee's employment with any member of the Company Group shall be deemed to reduce the amount of vacation available to Employee from the Company, day for day.

2.6Business 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. The amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year. The

reimbursement of an eligible expense will be made in accordance with the Company's policies and procedures, but in no event later than the last day of the calendar year following the calendar year in which the expense is incurred. The right to reimbursement is not subject to liquidation or exchange for another benefit.

2.7Equity 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. TERMINATION OF EMPLOYMENT

3.1Termination by the Company for Cause. Employee's employment may be terminated by the Company for Cause at any time by delivery of written notice of termination to Employee. For purposes of this Agreement, “Cause” shall mean the occurrence of any of the following events, as determined in the good faith judgment of the chief executive officer or the Board of Directors of the Company:

a.Employee's conviction of, or entry of a plea of nolo contendere to, any felony involving theft or willful destruction of money or other property, or any felony or misdemeanor involving moral turpitude, dishonesty or fraud, or any other felony or misdemeanor where the performance of Employee's obligations to the Company is materially and adversely affected;

b.willful misconduct, gross negligence or gross insubordination of Employee in connection with the performance of his duties and services to the Company;

c.Employee's breach of his material obligations under this Agreement; or

d.any act by Employee constituting fraud, breach of fiduciary duty or intentional malfeasance or misfeasance, whether or not against the Company or its affiliates, which is materially harmful to the Company, any member of the Company Group, or their reputation.

3.2Termination by the Company without Cause. Employee's employment may be terminated by the Company without Cause at any time by delivery of written notice of termination to Employee. A termination of this Agreement by the Company with respect to a Renewal Period pursuant to Section 1.2 shall not be deemed a termination of employment by the Company without Cause.

3.3Termination by Employee. Employee's employment may be terminated by Employee upon not less than thirty (30) days' prior written notice from Employee to the Company. A termination of this Agreement by the Employee with respect to a Renewal Period pursuant to Section 1.2 shall not be deemed a termination of employment by the Employee.

3.4Termination for Death or Disability. Employee's employment shall be terminated automatically upon the death of Employee, and may be terminated by the Company, by delivery of written notice of termination to Employee, following the Disability of Employee, consistent with any rights or obligations of the Company and the Employee under the Americans with Disabilities Act and other applicable law. Termination for death or Disability is separate and distinct from termination with Cause and from termination without Cause, and will give rise only to the rights and obligations expressly provided in Section 4.3 hereof.

3.5Disability Defined. For purposes of this Agreement, Employee shall be considered to be

suffering from a “Disability” if, as determined in the good faith judgment of the chief executive officer, Employee is unable to materially perform his duties hereunder with or without reasonable accommodation for an aggregate of ninety (90) days (whether or not consecutive) during any one hundred eighty (180) day period.

3.6Termination for Good Reason. Employee may terminate his employment for Good Reason upon not less than thirty (30) days' prior written notice from the Employee to the Company, which notice must be provided not more than ninety (90) days after the initial existence of the event giving rise to such Good Reason. “Good Reason” means any of the following: (i) a material adverse reduction in Employee's duties or responsibilities (not due to Disability), (ii) a relocation of Employee's offices on the date hereof to a location more than fifty (50) miles from the primary offices of the Company or any company within the Company Group (without the consent of the Employee), or (iii) the failure of the Company to pay the Employee the compensation he is due pursuant to this Agreement. The Company has the right, but not the obligation, to cure any such conditions, and thus negate the termination for Good Reason, during the notice period.

3.7Termination Upon Change of Control. Employee's employment may be terminated upon the occurrence of, or at any time after, a Change of Control (as defined in Section 3.8) by delivery of written notice of termination to Employee.

3.8Change in Control. A “Change in Control” shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied.

a.Any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other than the Company; any trustee or other fiduciary holding securities under an executive benefit plan of the Company; or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company), is or becomes the “beneficial owner” (as defined by Rule 13d-3 under the Exchange Act), directly or indirectly, of the securities of the Company (not including any securities acquired directly from the Company or from a transferor in a transaction expressly approved or consented to by the Board of Directors) representing more than 50% of the combined voting power of the Company's then outstanding securities; or

b.During any period of two consecutive years (not including any period prior to the execution of the Agreement), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (a), (c) or (d) of this section), (i) whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved or (ii) whose election is to replace a person who ceases to be a director due to death, disability or age, cease for any reason to constitute a majority thereof; or

c.The stockholders of the Company approve a merger or consolidation of the Company with another corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an executive benefit plan of the Company, at least 75% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation,

or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires more than 50% of the combined voting power of the Company's then outstanding securities; or

d.The stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets.

3.9Automatic Resignation from Other Employment and Positions Within the Company Group. Upon the Date of Termination, Employee will automatically be deemed to have terminated his employment, if any, by any other member of the Company Group and have tendered his resignation from any and all positions (including, without limitation, officer, director and manager positions) then held with the Company or with any member of the Company Group, without any separate or additional payment, benefit or obligation being owed or payable to him by the Company or any member of the Company Group. A termination of Employee's employment with any member of the Company Group (not the Company), however, shall not be deemed a termination of employment under this Agreement.

3.10Administrative Leave. In the case of any termination pursuant to this Article 3, or the Company's consideration of a termination thereby, the Company may elect (but is not obligated) to place Employee on paid administrative leave during the notice period thereof (if applicable) or during such consideration, as the case may be. During such leave, the Company may prohibit or restrict the Employee from the Company and/or the Company Group offices and from contacting the Company and/or the Company Group employees, suppliers and/or customers.

3.11Exclusive Methods of Termination. This Agreement may only be terminated as set forth in Section 1.2 or this Article 3.

4. TREATMENT OF COMPENSATION AND BENEFITS UPON TERMINATION

4.1For Cause; By the Employee. If Employee's employment is terminated pursuant to Section 3.1 or 3.3, Employee will be entitled to receive only the following: (a) Employee's accrued but unpaid Base Salary as of the date that Employee's employment with the Company terminates (the “Date of Termination”); (b) Employee's accrued but unused vacation as of the Date of Termination; (c) reimbursement for business expenses incurred prior to the Date of Termination, to the extent provided in Section 2.6 hereof; and (d) continuation of such benefits as required by law, and not otherwise.

4.2Other than for Cause; For Good Reason; Change of Control. If Employee's employment is terminated pursuant to Section 3.2, 3.6, or 3.7, Employee will be entitled to receive only: (a) the payments and benefits specified in Section 4.1; and (b) a severance amount equal to six (6) months of Employee's Base Salary in effect as of the Date of Termination payable in equal installments over such period (commencing on the Date of Termination) in accordance with the Company's regular payroll schedule in effect as of the Date of Termination. Notwithstanding the foregoing, eligibility for any severance amount is contingent upon the Company's receipt and the effectiveness of a general release of claims from Employee on terms satisfactory to the Company in its sole discretion, which release must be provided and become effective within 90 days of the Date of Termination.

4.3For Death or Disability. If Employee's employment is terminated pursuant to Section 3.4, , Employee will be entitled to receive only the payments and benefits specified in Section 4.1.

4.4Section 409A Requirements. It is intended that this Agreement shall comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury regulations relating thereto and any Internal Revenue Service or Treasury rules or other guidance issued thereunder (collectively, “Code Section 409A”). It is also intended that amounts payable pursuant to Section 4.2 of this Agreement qualify for certain exceptions to the definition of “deferred compensation” within the meaning of Code Section 409A. Notwithstanding any other provision in this Agreement to the contrary, if Employee is considered a “specified employee” within the meaning of Code Section 409A (as determined in accordance with the methodology established by the Company as in effect on the date of termination), any payment that constitutes “deferred compensation” within the meaning of Code Section 409A that is otherwise due to Employee under this Agreement during the six-month period immediately following Employee's separation from service (as determined in accordance with Code Section 409A) on account of Employee's separation from service shall be accumulated and paid to Employee on the first business day of the seventh month following his Date of Termination. Each severance pay installment paid pursuant to Section 4.2 of this Agreement shall be treated as a separate payment for purposes of Code Section 409A. Notwithstanding any other provision in this Agreement to the contrary, any references to termination of employment or Date of Termination shall mean and refer to the date of Employee's “separation from service” as that term is defined in Code Section 409A.

5. ADDITIONAL OBLIGATIONS

5.1Obligation to Maintain Confidentiality. Employee acknowledges that the information, observations and data obtained by him during the course of his performance under this Agreement concerning the business and affairs of the Company or any member of the Company Group are the property of the Company or the respective member of the Company Group. Such information includes, without limitation, (a) all trade secrets, unpublished proprietary or other information with respect to any business that is conducted or may in the future be conducted by the Company or any member of the Company Group, (b) any present or proposed services or products, including intellectual property rights, software, source code and business methods, (c) all policies and procedures, (d) the identity of, all contracts and agreements with, and all other information relating to the Company's or the members' of the Company Group relationship with third parties, including actual, former, and potential clients, customers, suppliers, lenders and consultants, (e) the manner in which business is conducted, sales techniques, and methods of software development and data processing, and (f) budgets, forecasts, and financial information, and (g) strategic plans and proposals, including acquisition opportunities. Employee agrees that, during the Employment Period and at any time thereafter, Employee will not disclose to any third party or use other than for the Company's or the Company Group's benefit any of such information, observations or data without the Company's or the respective Company Group's written consent, unless and to the extent that the aforementioned matter, (i) become generally known to and available for use by the public other than as a result of Employee's acts or omissions, or (ii) are required to be disclosed pursuant to any applicable law or court order. Employee agrees to deliver to the Company and to each member of the Company Group upon any termination of Employee's employment, or at any other time the Company may request, all memoranda, notes, plans, records, reports and other documents (and copies thereof) relating to the business of the Company or any member of the Company Group that Employee may then possess or have under his control.

5.2Ownership of Property. Employee acknowledges that all inventions, software, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports, patent applications, copyrightable work and mask work (whether or not including any confidential information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) that relate to the Company's or Company Group members' actual or anticipated business, research and development, or then existing products or services and that are conceived,

developed, contributed to, made, or reduced to practice by Employee (either solely or jointly with others) while employed by the Company (including any of the foregoing that constitutes any proprietary information or records) (“Work Product”) belong to the Company and Employee hereby assigns, and agrees to assign, all Work Product to the Company. Any copyrightable work prepared in whole or in part by Employee in the course of his work for any of the foregoing entities shall be deemed a “work made for hire” under copyright laws, and the Company shall own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Employee hereby assigns and agrees to assign to the Company all right, title, and interest, including without limitation, copyright in and to such copyrightable work. Employee shall promptly disclose such Work Product and copyrightable work to the Company and perform all actions reasonably requested by the Company (whether during or after the Employment Period) to establish and confirm the Company's ownership (including, without limitation, assignments, consents, powers of attorney, and other instruments).

5.3Third Party Information. Employee understands that the Company will receive from third parties confidential or proprietary information (“Third Party Information”) that may be subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. While Employee is employed by the Company and at any time thereafter, and without in any way limiting the provisions of Section 5.1 above, Employee will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than personnel of the Company who need to know such information in connection with their work for the Company) or use, except in connection with his work for the Company, Third Party Information, unless expressly authorized by the Company in writing or unless and to the extent such Third Party Information is required to be disclosed pursuant to any applicable law or court order.

5.4Noncompetition and Nonsolicitation. In addition to other obligations that the Employee may have to the Company, Employee hereby agrees that Employee shall not, directly or indirectly (other than through and for the benefit of the Company), during the Employment Period and for a period of twelve (12) months immediately after the Date of Termination:

a.anywhere in the United States,transact any business with, own any interest directly or indirectly in, or be associated with or employed in any capacity by or on behalf of any Person engaged or seeking to engage in any business or enterprise competing directly or indirectly with the Company's Business or the Business of any member of the Company Group. For purposes of this Agreement, the term “Business” shall mean (i) mortgage or appraisal management software, product or service development, manufacture and sale, (ii) mortgage or appraisal regulatory compliance software, product or service development, manufacture and sale, (iii) the business of appraisal management companies (AMCs), (iv) providing financial settlement services (including, without limitation, for income tax preparation businesses), tailored banking accounts, small dollar banking products and related services; (v) acting as an intermediary for banking products on behalf of banking institutions, (vi) providing services in the “asset light” third party logistics provider market, (vii) providing services within the local and long distance residential moving industry; and (viii) such other products and services contemplated by the Company's business plan or the business plan of any member of the Company Group, as of the Effective Date or during the Employment Period.

b.solicit, for Employee or any other Person, business from any customers, clients or accounts of the Company or any member of the Company Group or any potential customers, clients or accounts that may be targeted by the Company or any member of the Company Group and in any manner that would likely cause an adverse effect upon the Business, or encourage, in any way or for any reason, any current or potential customer, client or account of the Company or any member of

the Company Group to sever or alter the relationship of such customer, client or account with the Company or any member of the Company Group;

c.solicit, employ, retain as a consultant, interfere with or attempt to entice away from the Company or any member of the Company Group any employee of the Company or any member of the Company Group, during that person's employment and for a period of twelve (12) months thereafter; or

d.induce any supplier, contractor, vendor, licensor, licensee, business relation, representative or agent of the Company or any member of the Company Group to terminate or modify its relationship with the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group, or in any way interfere with the relationship between the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group and such other party (including, without limitation, making any negative or disparaging statements regarding the Company, any member of the Company Group, any of the Company's affiliates, or any of the affiliates of any member of the Company Group).

5.5Non-Disparagement. Employee agrees that he shall not disparage the Company, its affiliates (including, without limitation, Streetlinks, LLC, Advent Financial Services, LLC, Mango Moving, LLC, and their successors; collectively, the “Company Group”) or any of its past and present employees, managers, members, products or services. For purposes of this Agreement, the term “disparage” includes, without limitation, comments or statements to the press, to the Company's or the Company Group's employees or to any individual or entity with whom the Company or the Company Group has a business relationship (including, without limitation, any customer, client, supplier, vendor, referral source or other business relation of the Company or the Company Group) that would adversely affect in any manner (a) the conduct of any business of the Company or the Company Group (including, without limitation, any business plans or prospects) or (b) the business reputation of the Company or the Company Group.

5.6Cooperation. Upon the receipt of reasonable notice from the Company (including notice on behalf of the Company by its outside counsel), Employee agrees that while employed by the Company and, subject to Employee's other business commitments in reasonable respects, thereafter, Employee will respond and provide information with regard to matters in which Employee has knowledge as a result of Employee's employment with the Company and will provide reasonable assistance to the Company and its representatives in defense of any claims that may be made against the Company, and will assist the Company in the prosecution of any claims that may be made by the Company, to the extent that such claims may relate to the period of Employee's employment with the Company. If Employee is required to provide any services pursuant to this Section 5.6 following termination of his employment with the Company, the Company shall, upon presentation of appropriate documentation, reimburse Employee for reasonable out-of-pocket expenses incurred in connection with the performance of such services.

5.7Additional Acknowledgments. Employee acknowledges that the provisions of Section 5.4 are in consideration of good and valuable consideration as set forth in this Agreement. In addition, Employee agrees and acknowledges that the restrictions contained in Section 5.4 do not preclude Employee from earning a living, nor do they unreasonably impose limitations on Employee's ability to earn a living. Employee agrees and acknowledges that the potential harm to the Company of the non-enforcement of Section 5.4 outweighs any potential harm to Employee of its enforcement by injunction or otherwise. Employee acknowledges that the Company has and will have extensive goodwill and that the goodwill extends throughout the United States. Employee further acknowledges that he has carefully read this Agreement and has given careful

consideration to the restraints imposed upon Employee by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of confidential and proprietary information of the Company now existing or to be developed in the future. Employee expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

5.8Other Rights. Employee recognizes and acknowledges that none of the above provisions, nor the Company's exercise of any rights under this Agreement, shall limit the rights of the Company under applicable statutes and common law rules, including those related to confidentiality and trade secrets.

5.9Investment Exception. Nothing in this Agreement shall be deemed to prohibit Employee from owning (as an investor only) equity or debt investments in any corporation, partnership or other entity which is not competitive with the Company's Business. Any such investments shall not require the Company's prior written consent.

6. MISCELLANEOUS

6.1Specific Performance. Employee understands and expressly acknowledges that the provisions of Article 5 of this Agreement are material terms of this Agreement and that the covenants and agreements made by Employee in Article 5 of this Agreement are made in consideration of the execution of this Agreement by the Company. Employee acknowledges that any breach of the provisions of Article 5 of this Agreement shall result in serious and irreparable injury to the Company for which the Company cannot be adequately compensated by monetary damages alone. Employee agrees, therefore, that, in addition to any other remedies either of them may have, the Company shall independently be entitled to enforce the specific performance of this Agreement and to seek both temporary and permanent injunctive relief (to the extent permitted by law).

6.2Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company. The Company may assign this Agreement upon written notice to Employee. Employee may not assign any right or obligation under this Agreement without the prior written consent of the Company, which may be withheld for any or no reason.

6.3Entire Agreement: Amendment. This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes any prior agreement by and between the parties with respect to the subject matter hereof. This Agreement can be modified only by a written instrument executed by Employee and an officer of the Company (not Employee) duly authorized to do so.

6.4Waiver. Failure to insist upon compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver of or relinquishment of such right or power at any other time or times. References herein to the consent of the Company, or of any member of the Company Group, shall be deemed to mean the written consent of its chief executive officer or board of directors, respectively.

6.5Notices. Any notices, demands and communications under this Agreement shall be in writing and shall be deemed to have been duly given and received (i) if delivered personally or actually received, (ii) three (3) business days after being mailed, certified mail, return receipt requested, or (iii) one (1) business

day after being sent by a nationally recognized overnight delivery service, to the parties as set forth below or at such other address as may have been furnished by a party to the other party in accordance with the foregoing:

If to the Company:NovaStar Financial, Inc.

2114 Central, Suite 600

Kansas City, Missouri 64108

Attention: W. Lance Anderson

With a copy (which shall not constitute notice) to:

Bryan Cave LLP

Attention: Gregory G. Johnson

1200 Main Street, Suite 3500

Kansas City, Missouri 64105

If to Employee:Brett Monger

2114 Central, Suite 600

Kansas City, Missouri 64108

Headings. Article and Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any purpose.

6.6Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law.If the final judgment of a court of competent jurisdiction declares that any provision of this Agreement invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability shall have the power, and is hereby directed, to reduce the scope, duration or area of the provision, to delete specific words or phrases and to replace any invalid or unenforceable provision with a provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable provision, and this Agreement shall be enforced as so modified.

6.7Survivability. The provisions of this Agreement which by their terms call for performance subsequent to termination of this Agreement, shall so survive such termination.

6.8No Defense. The existence of any claim, demand, action or cause of action of Employee against the Company, whether or not based upon this Agreement, will not constitute a defense to the enforcement by the Company of any covenant or agreement contained herein.

6.9Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

6.10Governing Law. This Agreement and the legal relations thus created between the parties

hereto shall be governed by and construed under and in accordance with the laws of the State of Missouri, without regard to conflicts of laws principles.

6.11Representation by Counsel. Employee acknowledges that (i) Bryan Cave LLP has represented the Company, and not Employee, in connection with this Agreement, (ii) Employee has been encouraged to retain his own counsel in connection with this Agreement and (iii) the terms of this Agreement were the subject of negotiations between the Company and Employee.

6.12Termination of Other Employment Agreement. The Company and Employee acknowledge and agree that the Employment Agreement dated May 19, 2008 between NovaStar Mortgage, Inc. and Employee is hereby terminated and that such termination does not trigger the payment of any amounts or benefits thereunder or otherwise.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first written above.

EMPLOYEE:

/s/ Brett Monger

Brett Monger

COMPANY:

NOVASTAR FINANCIAL, INC.

By: /s/ W. Lance Anderson

W. Lance Anderson

Chief Executive Officer

EX-10.6

Exhibit 10.6

EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT

EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of the 8th day of March, 2012, by and between NovaStar Financial, Inc., a Maryland corporation (the “Company”) and Brett Monger (the “Optionee”).

WHEREAS, pursuant to the terms of the NovaStar Financial, Inc. 2004 Incentive Stock Plan, as amended (the “Plan”), the Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that the Optionee is to be granted an option to purchase a specified number of shares of the Company's common stock on the terms and conditions set forth herein;

WHEREAS, the Optionee is now an employee of the Company or a Subsidiary of the Company; and

WHEREAS, the Company and the Optionee desire to enter into this Agreement for the purpose of memorializing the terms and conditions of the option.

NOW, THEREFORE, the Company and the Optionee agree as follows:

1.Grant Subject to Plan. The Option (as defined below) is expressly subject to all terms and provisions of the Plan, and the terms and provisions of such Plan are incorporated herein by reference. Capitalized terms not defined herein shall have the meaning ascribed thereto in the Plan.

2.Number of Shares and Option Price. Pursuant to the action of the Committee, which action was effective on March 8, 2012 (the “Date of Grant”), the Optionee is hereby granted a non-qualified stock option (the “Option”) to purchase fifty thousand (50,000) shares of the Company's common stock (the “Option Shares”), at the purchase price of Sixty-Three Cents ($0.63) per share (the “Option Price”). The Option Price is equal to or greater than the price at which the Company's common stock was last sold as quoted on the Pink Sheets of the OTC on the Date of Grant.

3.Period of Option. The term of the Option and of this Agreement shall commence on the Date of Grant and terminate upon the expiration of ten (10) years from the Date of Grant. Upon termination of the Option, all rights of the Optionee hereunder shall cease.

4.Conditions of Exercise. This Option may be exercised, in whole or in part at any time, or from time to time, up to ten (10) years from the Date of Grant, but only during the period in which such Option remains exercisable as herein provided. The Option Shares shall vest as follows: Twelve Thousand Five Hundred (12,500) shares on March 8, 2013; Twelve Thousand Five Hundred (12,500) shares on March 8, 2014; Twelve Thousand Five Hundred (12,500) shares on March 8, 2015; and Twelve Thousand Five Hundred (12,500) shares on March 8, 2016.

5.Nontransferability of Option. Other than a transfer as described in Section 5(c) of the Plan or otherwise in the discretion of the Administrator pursuant to Section 5(c) of the Plan, the Option and this Agreement shall not be transferable.

6.Exercise of Option. The Option may be exercised as described in Section 5 of the Plan or in the following manner: the Optionee, or the person or persons having the right to exercise the Option upon the death or Disability of the Optionee, shall deliver to the Company written notice specifying the number of Option shares which he or she elects to purchase, together with either (i) cash, (ii) shares of Company common stock having a Fair Market Value determined as of the date of exercise, (iii) cancellation of any indebtedness owed by the Company to the Optionee, or (iv) any combination of the above, the sum of which equals the total price to be paid upon the exercise of the Option, and the stock purchased shall thereupon be promptly delivered. The Optionee will not be deemed to be a holder of any shares pursuant to exercise of the Option until the date of issuance to him or her of a stock certificate for such shares

and until the shares are paid in full.

7.Adjustment for Changes in Capitalization. As described in Section 3(d) of the Plan, in the event of any extraordinary corporate changes occurring after the date hereof, the Administrator shall make adjustments to the Option as set forth therein.

8.Termination by Death. If the Optionee's servicewith the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, to the full extent of the Option Shares, for a period of twelve (12) months or until the expiration of the stated term of such Option, whichever period is shorter.

9.Termination by Reason of Disability. If the Optionee's servicewith the Company or any Subsidiary terminates by reason of Disability, any Option held by the Optionee may thereafter be exercised, to the full extent of the Option Shares, for a period of twelve (12) months from the date of such termination of employment or until the expiration of the stated term of such Option, whichever period is shorter; provided, however, that if the Optionee dies within such twelve (12) month period and prior to the expiration of the stated term of such Option, such Option may thereafter be exercised for a period of twelve (12) months from the date of death or until the expiration of the stated term of such Option, whichever period is shorter.

10.Other Termination. If the Optionee's servicewith the Company (and/or any Subsidiary, as the case may be, such that Optionee is no longer employed by either the Company or any Subsidiary) terminates for any reason other than death or Disability, the Option may be exercised to the extent it has become exercisable, for a period of three (3) months from the date of such termination or until the expiration of the stated term of the Option, whichever period is shorter; provided, however, that if the Optionee dies within such three (3) month period and prior to the expiration of the stated term of such Option, such Option may thereafter be exercised to the extent it has become exercisable for a period of three (3) months from the date of death or until the expiration of the stated term of the Option, whichever period is shorter.

11.Option Not an Incentive Stock Option. It is intended that the Option shall not be treated as an incentive stock option under Section 422 or the Internal Revenue Code of 1986, as amended.

12.No Contract of Employment. Nothing contained in this Agreement shall be considered or construed as creating a contract of employment for any specified period of time.

13.Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

14.Entire Agreement; Amendments. No modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referred hereto, and signed by the parties hereto. This Agreement supersedes all prior agreements and understandings between the Optionee and the Company to the extent that any such agreements or understandings conflict with the terms hereof.

15.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Missouri without regard to the principles of conflicts of law, which might otherwise apply.

[signature page follows]

IN WITNESS WHEREOF, this Agreement is executed as of the day and year first above written.

NOVASTAR FINANCIAL, INC.

/s/ W. Lance Anderson

Name: W. Lance Anderson

Title: Chief Executive Officer

OPTIONEE

/s/ Brett Monger

Brett Monger

EX-99.1

Exhibit 99.1

NOVASTAR ANNOUNCES MANAGEMENT PROMOTIONS

KANSAS CITY, MO., March 9, 2012 - NovaStar Financial, Inc. (NOVS.PK) is pleased to announce the following promotions:

Steve Haslam to Chief Operating Officer of NovaStar: Steve is Chief Executive Officer of StreetLinks LLC, a subsidiary of NovaStar, and will continue to hold this title in addition to his new role as COO of NovaStar. “Steve has done a great job growing StreetLinks from an early stage investment into one of the leading appraisal management companies in the industry. During this time he has developed a strong leadership team within the StreetLinks organization that is now ready for additional responsibility in running the business, allowing Steve to expand his role. As COO of NovaStar, Steve will continue to guide StreetLinks growth, help build our other businesses, and give us the ability to expand the portfolio of businesses we own and operate,” said Lance Anderson, Chief Executive Officer of NovaStar.

Matt Lautz to Vice President and Chief Information Officer of NovaStar: Prior to this promotion, Matt was President of Corvisa, LLC, a subsidiary of StreetLinks. “The merger of Corvisa into StreetLinks gave us the flexibility to expand Matt's role to be focused more broadly on all of the NovaStar companies. Matt is an incredible technology leader for our organization and has done a great job building a world-class technology platform that can be used to support the growth of all the businesses we operate today and in the future,” said Mr. Anderson.

Brett Monger to Vice President, Controller and Chief Accounting Officer of NovaStar: Prior to this promotion, Brett was a manager in NovaStar's accounting department. “The demands on the Company's accounting function are growing with our portfolio of businesses. Brett's experience at NovaStar and his public accounting background suit him well to meet these demands,” said Rodney Schwatken, Chief Financial Officer of NovaStar.

“I would like to congratulate Steve, Matt and Brett on their promotions and thank them for all their hard work to date,” said Mr. Anderson. “These promotions represent continued progress in the rebuilding efforts of NovaStar.”

About NovaStar

NovaStar Financial, Inc. acquires and operates early stage businesses that we consider to be in the technology-enabled services industry. We currently own majority interests in StreetLinks LLC, Advent Financial Services, Inc. and Mango Moving, LLC.

For more information, please reference our website at www.novastarfinancial.com or contact Matt Kaltenrieder, Investor Relations, (816.237.7508 or IR@novastarfinancial.com.)