Exhibit 10.1

 

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Employment Agreement”), is made and entered into
as of March 27, 2018 (the “Commencement Date”), by and between Novation
Companies, Inc., a Maryland corporation (the “Company”), and David W. Pointer
(the “Executive”).

RECITALS:

WHEREAS, the Executive is becoming an employee of the Company on the
Commencement Date;

WHEREAS, the Executive and the Company desire to memorialize their relationship
by entering into an employment agreement;

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Company and the Executive
as follows:

1. Employment. The Company hereby agrees to employ the Executive in the position
of Chief Executive Officer and the Executive, in such capacity, agrees to the
terms and conditions hereinafter set forth.

(a) Performance of Duties. The Executive agrees that during the Employment
Period to devote his time, energies and talents in serving as the Chief
Executive Officer of the Company in the best interests of the Company, and to
perform the duties assigned to him by the Board of Directors (the “Board”),
faithfully, efficiently and in a professional manner. Executive agrees that he
shall, not, without the written approval of the Board:

(i) Except as set forth in Schedule I attached hereto and incorporated herein,
serve as or be a consultant to or employee, officer, agent or director of any
Company, partnership or other entity other than the Company (other than civic,
charitable, or other public service organizations); or

(ii) Except as set forth in Schedule I, have more than a ten percent (10%)
ownership interest in any enterprise other than the Company if such ownership
interest would reasonably be expected to have a material adverse effect upon the
ability of the Executive to perform his duties hereunder.

2. Compensation. Subject to the terms and conditions of this Employment
Agreement, during the Employment Period, the Executive shall be compensated by
the Company for his services as follows:

(a) Base Salary. The Executive shall receive a salary of no less than $100,000
per annum (the “Base Salary”), payable in substantially equal monthly or more
frequent installments and subject to normal tax withholdings.

(b) Bonus. The Executive shall be eligible to receive an annual bonus based on
the Company’s performance and the Executive having achieved performance
benchmarks that shall be set jointly by the Board and the Executive each year in
the context of the Executive’s review. The bonus can be paid in the form of
either cash or restricted stock at the discretion of the Board. Subject to the
Board’s discretion and approval, the target amount for Executive Bonus is 50% of
his Base Salary, with a range of between 0% and 150% of his Base Salary.

 

 

(c) Benefits. The Executive shall be a participant in eligible group medical,
dental and 401(k) plans maintained by the Company on substantially the same
terms and conditions as other executives of the Company.

(d) Vacation; Perquisites. The Executive shall be entitled to vacation in
accordance with the Company’s standard vacation policy extended to employees of
the Company generally, at levels commensurate with Executive’s position. The
Executive shall be entitled to any other benefits and perquisites on
substantially the same terms and conditions as may be awarded to the employees
of the Company from time to time.

(e) Travel and Entertainment. The Executive shall be reimbursed by the Company
for all reasonable business, promotional, travel and entertainment expenses
incurred or paid by the Executive during the Employment Period in the
performance of his services under this Employment Agreement in accordance with
the Company’s reimbursement policy and to the extent that such expenses do not
exceed the amounts allocable for such expenses in budgets that are approved from
time to time by the Company. In order that the Company reimburse the Executive
for such allowable expenses, the Executive shall furnish to the Company, in a
timely fashion, the appropriate documentation required by the Internal Revenue
Code in connection with such expenses and shall furnish such other documentation
and accounting as the Company may from time to time reasonably request.

3. Employment Period. The terms set forth in this Employment Agreement will
commence on the Commencement Date and shall remain in effect until terminated
pursuant to Section 4 below (the “Employment Period”), provided that the terms
set forth in Sections 6 and 7 below shall survive. Notwithstanding this, the
Executive’s employment with the Company shall be “at will,” meaning that either
Executive or the Company shall be entitled to terminate Executive’s employment
at any time and for any reason, with or without Cause, subject to the
obligations in Sections 4 and 5.

4. Termination.

(a) Termination at the Company’s Election.

(i) For Cause. At the election of the Company, Executive’s employment may be
terminated for Cause (as defined below) immediately upon written notice to
Executive. For purposes of this Employment Agreement, “Cause” for termination
shall mean that Executive: (A) pleads “guilty” or “no contest” to or is indicted
for or convicted of a felony under federal or state law or a crime under federal
or state law which involves Executive’s fraud or dishonesty; (B) in carrying out
his duties, engages in conduct that constitutes gross negligence or willful
misconduct; (C) fails to reasonably perform the responsibilities of his
position; (D) engages in misconduct that causes material harm to the reputation
of the Company or the Executive’s credibility and reputation no longer conform
to the standard of the Company’s executives; or (E) materially breaches any term
of this Employment Agreement or written policy of the Company, provided that for
subsections (C) through (E), if the breach reasonably may be cured, Executive
has been given at least thirty (30) days after Executive’s receipt of written
notice of such breach from the Company to cure such breach. Whether or not such
breach has been cured will be determined in the judgment of the Board.

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(ii) Upon Disability, Death or Without Cause. At the election of the Company,
Executive’s employment may be terminated without Cause: (A) should Executive, by
reason of any medically determinable physical or mental impairment, become
unable to perform, with or without reasonable accommodation, the essential
functions of his job for the Company hereunder and such incapacity has continued
for a total of ninety (90) consecutive days or for any one hundred eighty (180)
days in a period of three hundred sixty-five (365) consecutive days (a
“Disability”); (B) upon Executive’s death (“Death”); or (C) upon thirty (30)
days’ written notice to Executive for any other reason or for no reason at all
(“Without Cause”).

(b) Termination by Executive. Notwithstanding anything contained elsewhere in
this Employment Agreement to the contrary, Executive may terminate his
employment hereunder at any time and for any reason whatsoever or for no reason
at all in Executive’s sole discretion by giving thirty (30) days’ written notice
to the Company pursuant to Section 10 (“Voluntary Resignation”).

5. Payments Upon Termination of Employment.

(a) Termination for Cause, Death, Disability, or Voluntary Resignation. If
Executive’s employment is terminated by the Company for Cause, Death or
Disability or is terminated by Executive as a Voluntary Resignation, then the
Company shall pay or provide to Executive the following amounts only: (i) his
Base Salary accrued up to and including the date of termination or resignation,
paid within thirty (30) days or at such earlier time required by applicable law;
(ii) accrued, unused vacation time, paid in accordance with the Company’s
written policies and applicable law; (iii) unreimbursed expenses, paid in
accordance with this Employment Agreement and the Company’s written policies;
and (iv) accrued benefits under any Company benefit plan, paid pursuant to the
terms of such benefit plan (collectively, the “Accrued Obligations”).

(b) Termination Without Cause. If the Company terminates Executive’s employment
Without Cause, the Company shall pay to Executive the Accrued Obligations and a
severance payment equal to Executive’s Base Salary for a period of twelve (12)
months, to be paid in installments in accordance with the Company’s standard
payroll practices. Such payments are subject to Executive’s execution and
delivery of a general release (that is no longer subject to revocation under
applicable law) of the Company, its parents, subsidiaries and affiliates and
each of their respective officers, directors, employees, agents, successors and
assigns in a form satisfactory to the Company. All payments under this Section
above shall begin to be made within sixty (60) days following termination of
employment; provided, however, that to the extent required by Code Section 409A
(as defined below), if the sixty (60) day period begins in one calendar year and
ends in the second calendar year, all payments will be made in the second
calendar year. The payments under this Section 5(b) shall immediately cease
should Executive violate any of the obligations set forth in Sections 6 and 7
below.

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(c) Termination Without Cause Following a Change in Control. If, within twelve
(12) months following any Change in Control (as defined below), the Company
terminates Executive’s employment without Cause, the Company shall pay to
Executive the Accrued Obligations and a severance payment equal to Executive’s
Base Salary for a period of eighteen (18) months, to be paid in installments in
accordance with the Company’s standard payroll practices. Such payments are
subject to Executive’s execution and delivery of a general release (that is no
longer subject to revocation under applicable law) of the Company, its parents,
subsidiaries and affiliates and each of their respective officers, directors,
employees, agents, successors and assigns in a form satisfactory to the Company.
All payments under this Section above shall begin to be made within sixty (60)
days following termination of employment; provided, however, that to the extent
required by Code Section 409A (as defined below), if the sixty (60) day period
begins in one calendar year and ends in the second calendar year, all payments
will be made in the second calendar year. The payments under this Section 5(b)
shall immediately cease should Executive violate any of the obligations set
forth in Sections 6 and 7 below. Any payments under this Section 5(c) are in
lieu of, not in addition to, payments under Section 5(b).

(d) Change in Control. For purposes of this Employment Agreement, “Change in
Control” shall be deemed to have occurred if:

(i) any person, other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation owned directly or
indirectly by the shareowners of the Company in substantially the same
proportions as their ownership of stock of the Company, becomes the beneficial
owner, directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company’s
then outstanding voting securities;

(ii) during any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board and any new director whose
election by the Board or nomination for election by the Company’s shareowners
was approved by a vote of a majority 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, cease for any reason to
constitute a majority thereof;

(iii) the consummation of a merger or consolidation of the Company with any
other corporation, other than 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) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or

(iv) the shareowners 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.

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6. Restrictive Covenants. The Executive acknowledges and agrees that (i) the
Executive has a major responsibility for the operation, development and growth
of the Company’s business; (ii) the Executive’s work for the Company will bring
him into close contact with Confidential Information (defined below) of the
Company and its clients; and (iii) the agreements and covenants contained in
this Section 6 are essential to protect the legitimate business interests of the
Company and that the Company will not enter into this Employment Agreement but
for such agreements and covenants. Accordingly, the Executive covenants and
agrees to the following:

(a) Confidential Information.

(i) Executive understands that during his employment, he may have access to
unpublished and otherwise confidential information both of a technical and
non-technical nature, relating to the business of the Company or any of its
parents, subsidiaries, divisions, affiliates (collectively, “Affiliated
Entities”), or clients, including without limitation any of their actual or
anticipated business, research or development, any of their technology or the
implementation or exploitation thereof, including without limitation information
Executive and others have collected, obtained or created, information pertaining
to clients, accounts, vendors, prices, costs, materials, processes, codes,
material results, technology, system designs, system specifications, materials
of construction, trade secrets or equipment designs, including information
disclosed to the Company or any of its Affiliated Entities by others under
agreements to hold such information confidential (collectively, the
“Confidential Information”). Executive agrees to observe all policies and
procedures of the Company and its Affiliated Entities concerning such
Confidential Information. Executive further agrees not to disclose or use,
either during his employment or at any time thereafter, any Confidential
Information for any purpose, including without limitation any competitive
purpose, unless authorized to do so by the Company in writing, except that he
may disclose and use such information in the good faith performance of his
duties for the Company. Executive’s obligations under this Employment Agreement
will continue with respect to Confidential Information, whether or not his
employment is terminated, until such information becomes generally available
from public sources through no fault of Executive or any representative of
Executive. Notwithstanding the foregoing, however, Executive shall be permitted
to disclose Confidential Information as may be required by a subpoena or other
governmental order, provided that he first notifies the Company of such
subpoena, order or other requirement and such that the Company has the
opportunity to obtain a protective order or other appropriate remedy.

(ii) During Executive’s employment, upon the Company’s request, or upon the
termination of his employment for any reason, Executive will promptly deliver to
the Company all documents, records, files, notebooks, manuals, letters, notes,
reports, customer and supplier lists, cost and profit data, e-mail, apparatus,
laptops, computers, smartphones, tablets or other PDAs, hardware, software,
drawings, blueprints, and any other material of the Company or any of its
Affiliated Entities or clients, including all materials pertaining to
Confidential Information developed by Executive or others, and all copies of
such materials, whether of a technical, business or fiscal nature, whether on
the hard drive of a laptop or desktop computer, in hard copy, disk or any other
format, which are in his possession, custody or control.

(b) Non-Competition; Non-Solicitation.

(i) During Executive’s employment with the Company or its Affiliated Entities
and for twenty-four (24) months following the termination thereof for any reason
(the “Restricted Period”), the Executive shall not, within the Territory (as
defined below) directly or indirectly, own, manage, operate, control, consult
with, be employed by, participate in the ownership, management, operation or
control of, or otherwise render services to or engage in, any business engaged
in or competitive with the businesses conducted by the Company or any of its
Affiliated Entities; provided, that the Executive’s ownership of securities of
2% or less of any publicly traded class of securities of a public company shall
not violate this paragraph.

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(ii) Throughout the Restricted Period, the Executive shall not solicit for
business or accept the business of, any person or entity who is, or was at any
time within the previous twelve (12) months, a Customer (as defined below) of
the Company or any of its Affiliated Entities.

(iii) Throughout the Restricted Period, the Executive shall not, directly or
indirectly, employ, solicit, for employment, or otherwise contract for or hire,
the services of any individual who is then an employee of or consultant to the
Company or any of its Affiliated Entities or who was an employee of the Company
or any of its Affiliated Entities during the twelve (12) month period preceding
the termination of his employment.

(iv) Throughout the Restricted Period, the Executive shall not take any action
that could reasonably be expected to have the effect of encouraging or inducing
any employee, consultant, representative, officer, or director of the Company or
any of its Affiliated Entities to cease their relationship with the Company or
any of its Affiliated Entities for any reason.

(v) For purposes of this Employment Agreement, the term “Territory” shall mean
throughout the area comprising the Company’s or any of its Affiliated Entities,
as applicable, market for its services and products within which area Executive
was materially concerned during the twelve (12) month period prior to the
termination of Executive’s employment.

(vi) For purposes of this Employment Agreement, the term “Customer(s)” shall
mean any individual, corporation, partnership, business or other entity, whether
for-profit or not-for-profit, public, privately held, or owned by the United
States government that is a business entity or individual with whom the Company
or any of its Affiliated Entities has done business or with whom Executive has
actively negotiated with during the twelve (12) month period preceding the
termination of Executive’s employment.

(vii) Executive and the Company agrees that in the event a court determines the
length of time, territory or activities prohibited under this Employment
Agreement are too restrictive to be enforceable, the court may reduce the scope
of the restriction to the extent necessary to make the restriction enforceable.

7. Representations, Warranties and Covenants of the Executive.

(a) No Restrictive Covenants. Executive represents and warrants to the Company
that he is not subject to any agreement restricting his ability to enter into
this Employment Agreement and fully carry out his duties and responsibilities
hereunder. Executive hereby indemnifies and holds the Company harmless against
any losses, claims, expenses (including reasonable attorneys’ fees), damages or
liabilities incurred by the Company as a result of a breach of the foregoing
representation and warranty.

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(b)                 Adherence to Code of Ethics and Insider Trading Policy. The
Executive represents and warrants that he has received a copy of the Company’s
Code of Ethics and its Insider Trading Policy. The Executive covenants and
agrees to adhere to both the Code of Ethics and the Insider Trading Policy as
may be amended from time to time. The Executive acknowledges that a material
violation of either the Code of Ethics or the Insider Trading Policy would
constitute a material breach of this Employment Agreement.

(c)                    Assignment of Intellectual Property.

(i) Executive will promptly disclose to the Company any idea, invention,
discovery or improvement, whether patentable or not (“Creations”), conceived or
made by him alone or with others at any time during his employment with the
Company. Executive agrees that the Company owns any such Creations, and
Executive hereby assigns and agrees to assign to the Company all moral and other
rights he has or may acquire therein and agrees to execute any and all
applications, assignments and other instruments relating thereto which the
Company deems necessary or desirable. These obligations shall continue beyond
the termination of his employment with respect to Creations and derivatives of
such Creations conceived or made during his employment with the Company. The
Company and Executive understand that the obligation to assign Creations to the
Company shall not apply to any Creation which is developed entirely on his own
time without using any of the Company’s equipment, supplies, facilities, and/or
Confidential Information (“Executive Creations”) unless such Creation
(i) relates in any way to the business or to the current or anticipated research
or development of the Company or any of its Affiliated Entities, or (ii) results
in any way from his work at the Company.

(ii) In any jurisdiction in which moral rights cannot be assigned, Executive
hereby waives any such moral rights and any similar or analogous rights under
the applicable laws of any country of the world that Executive may have in
connection with the Creations, and to the extent such waiver is unenforceable,
hereby covenants and agrees not to bring any claim, suit or other legal
proceeding against the Company or any of its Affiliated Entities claiming that
Executive’s moral rights to the Creations have been violated.

(iii) Executive agrees to reasonably cooperate with the Company, both during and
after his employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights, patents, trademarks and other
intellectual property rights (both in the United States and foreign countries)
relating to such Creations. Executive shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights and powers of attorney, which
the Company, acting reasonably, may deem necessary or desirable in order to
protect its rights and interests in any Creations. Executive further agrees that
if the Company is unable, after reasonable effort, to secure Executive’s
signature on any such papers, any officer of the Company shall be entitled to
execute such papers as his agent and attorney-in-fact and Executive hereby
irrevocably designates and appoints each officer of the Company as his agent and
attorney-in-fact to execute any such papers on his behalf and to take any and
all actions as the Company may deem necessary or desirable in order to protect
its rights and interests in any Creations, under the conditions described in
this paragraph, all to the exclusion of Executive’s Creations.

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8. Remedies. The Executive acknowledges that the Company would be irreparably
injured by a violation of the covenants contained in Sections 6 or 7, and agrees
that the Company shall be entitled to an injunction restraining the Executive
from any actual or threatened breach of the covenants contained in Sections 6 or
7, or to any other appropriate equitable remedy without bond or other security
being required. Any such relief shall be in addition to and not in lieu of any
appropriate relief in the way of monetary damages that the parties may seek in
arbitration.

9. Waiver of Breach. The waiver by either the Company or the Executive of a
breach of any provision of this Employment Agreement shall not operate as or be
deemed a waiver of any subsequent breach by either the Company or the Executive.
Any waiver must be in writing

10. Notice. Any notice to be given hereunder by a party hereto shall be in
writing and shall be deemed to have been given when received or, when deposited
in the U.S. mail, certified or registered mail, postage prepaid:

(a)to the Executive addressed as follows:

David W. Pointer

PO Box 402

Newman Lake, WA 99025

 

(b)to the Company addressed as follows:

Attention: Carolyn Campbell, CFO

500 Grand Boulevard, #201B

Kansas City, MO 64106

 

with copies to:

Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, New York 10019
Attention: Adam W. Finerman, Esq.

11. Amendment. This Employment Agreement may not be amended orally in any manner
or in writing without the written consent of the Company and the Executive. No
provision of this Employment Agreement may be waived, delayed, modified,
terminated or otherwise impaired without the prior written consent of the
Company and the Executive.

12. Entire Agreement. This Employment Agreement embodies the entire agreement
and understanding of the parties hereto in respect of the Executive’s employment
with the Company contemplated by this Employment Agreement and supersedes all
prior agreements, arrangements and understandings, oral or written, express or
implied, between the parties with respect to such employment. Sections 6 and 7
of this Employment Agreement shall survive the termination of this Employment
Agreement.

13. Applicable Law. The provisions of this Employment Agreement shall be
construed in accordance with the internal laws of the State of Maryland.

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14. Assignment; Successors and Assigns, etc. This Employment Agreement is a
personal contract and Executive may not sell, transfer, assign, pledge or
hypothecate his rights, interests and obligations hereunder. Except as otherwise
herein expressly provided, this Employment Agreement shall be binding upon and
shall inure to the benefit of Executive and his personal representatives and
shall inure to the benefit of and be binding upon the Company and its successors
and assigns, except that the Company may not assign this Employment Agreement
without Executive’s prior written consent, except to an acquirer of all or
substantially all of the assets of the Company.

15. Enforceability. If any portion or provision of this Employment Agreement
(including, without limitation, any portion or provision of any section of this
Employment Agreement) shall to any extent be declared illegal or unenforceable
by a court of competent jurisdiction, then the remainder of this Employment
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Employment
Agreement shall be valid and enforceable to the fullest extent permitted by law.

16. Counterparts. This Employment Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party. Facsimile or .pdf signatures shall have the
same force and effect as original signatures.

17. Arbitration. All disputes and disagreements arising from, relating to, or
otherwise connected with this Employment Agreement, the breach of this
Employment Agreement, the enforcement, interpretation or validity of this
Employment Agreement, or the employment relationship (including any wage claim,
claim for wrongful termination, or any claim based upon any statute, regulation,
or law, including those dealing with employment discrimination or retaliation,
sexual harassment, civil rights, age, or disability) that the Company may have
against you or that you may have against the Company, including the
determination of the scope or applicability of this Employment Agreement to
arbitrate, shall be settled by arbitration administered by the Judicial
Arbitration and Mediation Services (“JAMS”) pursuant to its Comprehensive
Arbitration Rules and Procedures applicable at the time the arbitration is
commenced. A copy of the current version of the JAMS Rules will be made
available to you upon request. The Rules may be amended from time to time and
are also available online https://www.jamsadr.com/rules-employment-arbitration/.
Arbitration shall take place in Baltimore, Maryland and shall be conducted
before a single arbitrator selected by and in accordance with the rules and
procedures of the JAMS. The decision of the arbitrator shall be final and
binding on the parties. Judgment on any award may be entered in any court having
competent jurisdiction, and application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be. The
expenses of the arbitration (including any arbitrator fees) shall be borne
equally by the Executive and the Company. Each of the parties shall bear the
fees and expenses of its own legal counsel.

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

         

/s/ David W. Pointer

  David W. Pointer

 

 

  Novation Companies, Inc.           By:

/s/ Carolyn Campbell

    Name: Carolyn Campbell     Title: Chief Financial Officer

 

 

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SCHEDULE I

 

David W. Pointer currently serves on the following boards of for profit
corporations:

 

CompuMed, Inc.

Solitron Devices, Inc.

 

 

David W. Pointer acts as Managing Partner for VI Capital Fund, LP which owns in
excess of 25% of CompuMed, Inc.