**Exhibit 10(e)(5)**

**EMPLOYMENT AGREEMENT**

**of**

**ROBERT T. CLEMMENS**

EMPLOYMENT AGREEMENT (this “Agreement”),dated as of December 8, 2006 and effective as of the Effective Date (as defined below), between NEWSTAR FINANCIAL, INC., a Delaware corporation (the “Company”), and Robert T. Clemmens (“Executive”). 

In consideration of the mutual agreements set forth below and for other good and valuable consideration given by each party to this Agreement to theother, the receipt and sufficiency of which are hereby acknowledged, the Company agrees to employ Executive and Executive agrees to serve the Company as an employee pursuant to the terms and subject to the conditions that follow. 

1. **Employment**. The Company hereby agrees to employ Executive, and Executive hereby agrees to accept employment with the Company, upon theterms and conditions contained in this Agreement, effective on the effective date of the IPO (as defined below) (the “Effective Date”). Executive’s employment with the Company shall continue, subject to earlier termination ofsuch employment pursuant to the terms hereof, until the second (2nd) anniversary of the Effective Date and thereafter shall automatically renew for one additional one (1) year period, unless a notice of intent not to renew shall bedelivered in accordance with Section 14 by either the Company or Executive, as the case may be, at least ninety (90) days prior to such anniversary date or prior to the expiration of such one year renewal period, as the case may be (suchterm, as and when so extended, the “Employment Period”*)*. Executive represents to the Company that he has no present intention to terminate employment with the Company. 

2. **Duties**. During the Employment Period, Executive shall serve on a full-time basis as Chief Credit Officer – Middle Market andStructured Products Group of the Company. Executive’s duties and responsibilities as the Chief Credit Officer – Middle Market and Structured Products Group of the Company shall include those duties customarily associated with an officerwith a similar title or as may be assigned to him from time to time by the Chief Executive Officer of the Company. Executive shall devote his full business time attention and energies and use his best efforts in his employment with the Company;provided, however, that this Agreement shall not be interpreted as prohibiting Executive from in accordance with the policies and procedures of the Company, managing his personal affairs or engaging in charitable or civic activities, so long as, ineach case, such activities do not interfere in any material respect with the performance of Executive’s duties and responsibilities hereunder. 

3. **Compensation and Benefits**. In consideration of entering into this Agreement and as full compensation for Executive’s services hereunder, during the Employment Period, Executive shall receive the following compensationand benefits: 

(a) Base Salary. The Company shall pay to Executive a base salary (“Base Salary”)of $250,000 per year, payable in accordance with the payroll policies from time to time in effect at the Company. Executive’s Base Salary may be subject to increase (but shall not be subject to decrease) on an annual basis as the Board ofDirectors of the Company or any committee thereof (the “Board of Directors”) shall determine. 

(b) IncentiveBonuses. Executive shall be entitled to participate in such incentive bonus programs as the Board of Directors may adopt from time to time for members of senior management of the Company (“Incentive Bonus”). 

(c) Vacation. Executive shall be entitled to five (5) weeks of paid vacation per calendar year, accrued in accordance with the usual vacationpolicies in effect at the Company. 

(d) Other Benefits. Executive shall participate in and be eligible to receive, but withoutduplication, all other benefits (i.e., benefits other than those of the types covered in Sections 3(a)–(c)) offered to senior executives of the Company, including, without limitation, retirement income plans and health and welfare plans,under and in accordance with the provisions of any employee benefit plan adopted or to be adopted by the Company (collectively, the “Benefit Plans”)other than any severance benefits offered to senior executives in accordance withany such plan. Except as set forth herein, Executive shall not be entitled to any other benefits. 

(e) Retiree Health Program. Forpurposes of Section 6 hereof, the “Retiree Health Program” shall mean a health insurance plan, with a reputable insurance provider that is sponsored by the Company and provides benefits that are substantially similar to thoseprovided to then current employees, participation in which is paid for solely by Executive. The Company will use its reasonable best efforts to ensure that any Retiree Health Program provides coverage for Executive if, as of the date hereof,Executive is eligible for insurance under the Company’s current health insurance plan. 

4. **Reimbursement for Expenses**.During the Employment Period, Executive shall be entitled to incur on behalf of the Company reasonable and necessary expenses in connection with his duties in accordance with Company’s policies and the Company shall pay for or reimburseExecutive for all such expenses upon presentation of proper receipts therefor. The Executive shall comply with such reasonable limitations and reporting requirements with respect to such expenses as the Board of Directors may establish from time totime. 

5. **Termination**. Executive’s employment hereunder may be terminated as follows (each, a “TerminationEvent”): 

(a) Automatically in the event of the death of Executive; 

(b) At the option of the Company, by the Board of Directors (acting through the Chairman or Secretary) orby written notice to Executive in the event of the Permanent Disability of Executive. As used herein, the term “Permanent Disability” shall mean a physical or mental incapacity or disability which renders Executive unable to renderthe services required hereunder (A) for one hundred eighty (180) days in any twelve (12) month period or (B) for a period of ninety (90) consecutive days. 

(c) At the option of the Company for Cause (as defined in Section 6(e)); 

(d) At the option of the Company at any time without Cause*,* subject to the Company’s obligations under Section 6(c) hereof; 

(e) At the option of Executive for Good Reason (as defined in Section 6(k)); 

(f) At the option of Executive, at any time, for any reason, on ninety (90) days prior written notice to the Company; 

(g) At the option of Executive upon Retirement (as defined in Section 6(m)) of Executive; or 

(h) At the option of Executive upon Early Retirement (as defined in Section 6(n)); or 

(i) At the option of Executive upon Extended Retirement (as defined in Section 6(o)) of Executive 

(j) At the option of Executive for Company Failure to Renew (as defined in Section 6(p)). 

6. **Payments**. 

(a)Death. If the Termination Event is due to Executive’s death, Executive’s legal representatives shall be entitled to receive, as soon as practicable following the date of termination: 

(i) any accrued but unpaid Base Salary through the date of termination, plus 

(ii) an amount equal to the greater of (x) Incentive Bonus paid or earned but unpaid to Executive in respect of the prior fiscal year or(y) the average Incentive Bonus paid or earned but unpaid to Executive in respect of the three (3) previous fiscal years, pro-rated for the period from the beginning of the then current fiscal year and ending on the date of termination(the “Pro Rated Bonus”), plus 

(iii) any accrued and unpaid vacation pay or other benefits which may be owing in accordance with theCompany policies and applicable law, plus 

(iv) acceleration of vesting and exercisability of (A) all of Executive’s shares ofrestricted stock issued prior to or in connection with the initial public offering of the Company’s common stock (the “IPO”) and subject to a restricted stock agreement (the “Restricted Stock”), (B) all ofthe options to purchase common stock issued by the Company to Executive prior to or in connection with the IPO (the “Options” and, together with the Restricted Stock, the “IPO Incentive Equity”) and (C) anyother equity incentive awards (“Equity Awards” and, together with the IPO Incentive Equity, the “Incentive Equity”) issued to Executive under the Company’s Equity Incentive Award Plan. For purposes of thisAgreement, “vesting” shall mean, in the case of Restricted Stock, ceasing to be subject to forfeiture, plus 

(v) a period of one(1) year following the date of termination to exercise any vested Options. 

(b) Permanent Disability. If the Termination Eventis due to Executive’s Permanent Disability, Executive or his legal representatives shall be entitled to receive, as soon as practicable following the date of termination: 

(i) any accrued but unpaid Base Salary payable through the date of termination, plus 

(ii) the Pro Rated Bonus, plus 

(iii) anyaccrued and unpaid vacation pay or other benefits which may be owing in accordance with Company policies and applicable law, plus 

(iv)acceleration of vesting and exercisability of the Incentive Equity, plus 

(v) a period of one (1) year following the date oftermination to exercise any vested Options. 

(c) Termination Without Cause or for Good Reason. If the Termination Event istermination by the Company at any time during the Employment Period without Cause or by the Executive at any time during the Employment Period for Good Reason, Executive shall be entitled to: 

(i) any accrued but unpaid Base Salary through the date of termination, plus 

(ii) the Pro Rated Bonus payable as soon as practicable following the date of termination, plus 

(iii) any accrued and unpaid vacation pay, unreimbursed expenses or other benefits which may beapplicable to and owing in accordance with Company policies or applicable law, plus 

(iv) the Base Salary (which shall be the Base Salaryas of the date of termination) during the Severance Period (as defined in Section 6(l)), payable in accordance with the payroll practices then in effect at the Company, plus 

(v) an amount equal to the greater of (x) the Incentive Bonus paid or earned but unpaid to Executive in respect of the prior fiscal year or(y) the average Incentive Bonus paid or earned but unpaid to Executive in respect of the three (3) previous fiscal years, payable as soon as practicable following the date of termination, plus 

(vi) the continuation of all health benefits during the Severance Period at the same cost to Executive as though Executive continued his employment withthe Company, plus 

(vii) the reimbursement by the Company for up to $10,000 for the cost of outplacement services during the one yearfollowing the date of termination, plus 

(viii) the acceleration of vesting and exercisability of the Incentive Equity that would havevested during the Severance Period, plus 

(ix) a period of ninety (90) days following the end of the Severance Period to exercise anyvested Options; 

provided, however, that the Company’s obligations under Section 6(c)(vi) shall terminate prior to the end of theSeverance Period if, during the Severance Period, Executive obtains health benefits from a new employer that are substantially equivalent to those provided by the Company; provided, further, if Executive is a “specifiedemployee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and the payments described above do not satisfy any applicable exemptions, then such payments shall not be made priorto the first day following the six-month period beginning on the date of termination of employment if such payments would otherwise violate Section 409A, Department of Treasury regulations and other interpretive guidance issued thereunder,including without limitation any such regulations or other guidance that may be issued after the Effective Date (“Section 409A Guidance”) and such payments shall instead be accumulated and paid to Executive on the first day of theseventh month following his termination of employment. All payments due Executive under this Section 6(c) after the six-month period following Executive’s termination of employment shall be paid in accordance with the terms of thisSection 6(c). 

(d) Termination for Cause or Voluntary Termination by Executive. If the Termination Event is termination by theCompany for Cause pursuant to Section 5(c) or termination by Executive pursuant to Section 5(f), except for Base Salary through the 

day on which Executive’s employment was terminated and any accrued and unpaid vacation pay or other benefits which may be owing in accordance with theCompany’s policies or applicable law, Executive shall not be entitled to receive severance or any other compensation or benefits after the last date of employment with the Company. If termination is for Cause, all of (i) the IncentiveEquity that is unvested as of the date of termination and (ii) the Options that remain unexercised as of the date of termination, shall be forfeited for no consideration. If termination is by Executive pursuant to Section 5(f),(i) all of the Incentive Equity that is unvested as of the date of termination shall be forfeited for no consideration and (ii) Executive shall have one (1) year following the date of termination to exercise any vested Options.

(e) Cause Defined. For the purpose of this Agreement, the term “Cause” shall mean (i) the willful andcontinued failure of Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand forsubstantial performance is delivered to Executive by the Board of Directors, which specifically identifies the manner in which the Board of Directors believes that Executive has not substantially performed Executive’s duties, or(ii) willful engaging by Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company or its affiliates, or (iii) conviction of or made a plea of guilty or nolo contendere to, afelony, or (iv) a material breach of his or her obligations under Section 7 or Section 8 hereof. For purposes of this definition of “Cause”, no act or failure to act on the part of Executive shall be considered“willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that Executive’s actions or omission was in the best interests of the Company. Any act, or failure to act, based uponexpress authority given pursuant to a resolution duly adopted by the Board of Directors with respect to such act or omission or upon the instructions of the Chief Executive Officer of the Company or based upon the advice of counsel for the Companyshall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. Notwithstanding the foregoing, Executive cannot be terminated for “Cause” unless the Company hasnotified Executive in writing that his or her employment or consultancy arrangement is being terminated for Cause which notice shall specify the Cause event and Executive is given an opportunity, at least 30 days after receipt of such written noticefrom the Company, to make a presentation to the Board of Directors that Executive should not be terminated for Cause. 

(f) TerminationUpon Retirement. If the Termination Event is due to the Retirement of Executive, Executive shall be entitled to receive, as soon as practicable following the date of termination: 

(i) any accrued but unpaid Base Salary through the date of termination, plus 

(ii) the Pro Rated Bonus, plus 

(iii) any accrued and unpaid vacation pay or other benefits which may be owing in accordance withCompany policies and applicable law, plus 

(iv) the right to participate in the Retiree Health Program, plus 

(v) acceleration of vesting of the Restricted Stock and the continued vesting and exercisability of Options in the same manner that the Options wouldvest and become exercisable had Executive continued his employment with the Company, plus 

(vi) a period equal to the full length of theremaining term (as set forth in the applicable grant notice) to exercise any vested Options; 

provided, however, that the Company’sobligations under Section 6(f)(iv) shall terminate if at any time Executive obtains retiree health benefits from a different employer and provided, further, if Executive is a “specified employee” as defined inSection 409A, and the payments described above do not satisfy any applicable exemptions, then such payments shall not be made prior to the first day following the six-month period beginning on the date of termination of employment if suchpayments would otherwise violate Section 409A Guidance and such payments shall instead be paid to Executive on the first day of the seventh month following his termination of employment. 

(g) Termination Upon Early Retirement. If the Termination Event is by Executive due to Early Retirement, Executive shall be entitled to receive:

(i) any accrued but unpaid Base Salary through the date of termination, plus 

(ii) any accrued and unpaid vacation pay or other benefits which may be owing in accordance with Company policies and applicable law, plus 

(iii) the right to participate in the Retiree Health Program, plus 

(iv) a period equal to the full length of the remaining term (as set forth in the applicable grant notice) to exercise any vested Options; provided, however, all of the Incentive Equity that is unvested as of the dateof termination, shall be forfeited for no consideration; 

provided, however, that the Company’s obligations under Section 6(g)(iii)shall terminate if at any time Executive obtains retiree health benefits from a different employer. 

(h) Termination Upon ExtendedRetirement. If the Termination Event is due to the Extended Retirement of Executive, Executive shall be entitled to receive, as soon as practicable following the date of termination: 

(i) any accrued but unpaid Base Salary through the date of termination, plus 

(ii) an amount equal to the Incentive Bonus paid or earned but unpaid to Executive in the prior fiscalyear, pro-rated for the period from the beginning of the then current fiscal year and ending on the date of termination, plus 

(iii) anyaccrued and unpaid vacation pay or other benefits which may be owing in accordance with Company policies and applicable law, plus 

(iv)the right to participate in the Retiree Health Program, plus 

(v) accelerated vesting of any Incentive Equity in the form of restrictedstock and the continued vesting and exercisability of any Incentive Equity in the form of options in the same manner that such options would vest and become exercisable had Executive continued his employment with the Company, plus 

(vi) a period equal to the full length of the remaining term (as set forth in the applicable grant notice) to exercise any vested Options; 

provided, however, that the Company’s obligations under Section 6(h)(iv) shall terminate if at any time Executive obtains retiree healthbenefits from a different employer and provided, further, if Executive is a “specified employee” as defined in Section 409A, and the payments described above do not satisfy any applicable exemptions, then such paymentsshall not be made prior to the first day following the six-month period beginning on the date of termination of employment if such payments would otherwise violate Section 409A Guidance and such payments shall instead be paid to Executive onthe first day of the seventh month following his termination of employment. 

(i) Company Failure to Renew. If the Termination Eventis Company Failure to Renew, Executive shall be entitled to receive: 

(i) any accrued but unpaid Base Salary through the date oftermination, plus 

(ii) the Pro Rated Bonus, payable as soon as practicable following the date of termination, plus 

(iii) any accrued and unpaid vacation pay or other benefits which may be owing in accordance with Company policies and applicable law, plus 

(iv) once Executive reaches the age of 55 and if, at the time of the expiration of the Agreement for failure of the Company to renew, Executive hadat least three (3) years of service with the Company following the IPO, the right to participate in the Retiree Health Program, plus 

(v) acceleration of vesting of the Restricted Stock and continued vesting and exercisability of the Options in the same manner that the Options would vest and become exercisable had Executive continued his employment with the Company

provided, however, that the Company’s obligations under Section 6(i)(v) shall terminate if at anytime Executive obtains retiree health benefits from a different employer and provided, further, if Executive is a “specified employee” as defined in Section 409A, and the payments described above do not satisfy anyapplicable exemptions, then such payments shall not be made prior to the first day following the six-month period beginning on the date of termination of employment if such payments would otherwise violate Section 409A Guidance and suchpayments shall instead be paid to Executive on the first day of the seventh month following his termination of employment. 

(j) Changeof Control. 

(i) Special Payment. If, at any time during the two (2) year period following a Change of Control (as definedin Section 6(j)(ii)), the Executive’s employment is terminated without Cause or by the Executive for Good Reason, the Executive will receive (A) his Base Salary through the date of termination, plus (B) an amount equal to twotimes Base Salary (which shall be the Base Salary as of the date of termination), payable in a lump sum as soon as practicable following the date of termination, plus (C) the Pro Rated Bonus, payable as soon as practicable following the date oftermination, plus (D) an amount equal to two times the greater of (x) Incentive Bonus paid or earned but unpaid to Executive in respect of the prior fiscal year or (y) the average Incentive Bonus paid or earned but unpaid to Executivein respect of the three (3) previous years, payable as soon as practicable following the date of termination (E) any accrued and unpaid vacation pay, unreimbursed expenses or other benefits which may be applicable to and owing inaccordance with Company policies or applicable law, plus (F) the continuation of all health benefits during the Severance Period, plus (G) the reimbursement by the Company for up to $10,000 for the cost of outplacement services during theone year following the date of termination, plus (H) acceleration of vesting and exercisability of all Incentive Equity; provided, however, if Executive is a “specified employee” as defined in Section 409A and thepayments described above do not satisfy any applicable exemptions, then such payments shall not be made prior to the first day following the six-month period beginning on the date of termination of employment if such payments would otherwise violate409A Guidance and such payments shall instead be accumulated and paid to Executive on the first day of the seventh month following his termination of employment. All payments due Executive under this Section 6(j) after the six-month periodfollowing Executive’s termination of employment shall be paid in accordance with the terms of this Section 6(j). 

(ii) Changeof Control Defined. For purposes of this Section, the term “Change of Control” shall mean the occurrence of one or more of the following events: 

(A) the consummation of a merger or consolidation of the Company with or into any other corporation or other entity in which holders of the Company’s voting securities immediately prior to such merger orconsolidation will not, directly or indirectly, continue to hold at least a majority of the outstanding voting securities of the Company; 

(B) a sale, lease, exchange or other transfer (in one transaction or a related series of transactions)of all or substantially all of the Company’s assets; 

(C) the acquisition by any person or any group of persons, acting together inany transaction or related series of transactions, of such quantity of the Company’s voting securities as causes such person, or group of persons, to own beneficially, directly or indirectly, as of the time immediately after such transaction orseries of transactions, 50% or more of the combined voting power of the voting securities of the Company other than as a result of (X) an acquisition of securities directly from the Company or (Y) an acquisition of securities by theCompany which by reducing the voting securities outstanding increases the proportionate voting power represented by the voting securities owned by any such person or group of persons to 50% or more of the combined voting power of such votingsecurities; 

(D) a change in the composition of the Board within a two (2) year period such that a majority of the members of theBoard are not Continuing Directors. As used herein, the term “Continuing Directors” shall mean as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of Board of Directors ofthe Company immediately after the date of the IPO, or (ii) was nominated for election or elected to the Company’s Board of Directors with the approval of, or whose election to the Board of Directors was ratified by, at least a majority ofthe Continuing Members who were members of the Company’s Board of Directors at the time of that nomination or election; or 

(E) theliquidation or dissolution of the Company; 

provided, however, that in no case shall (1) the public offering and sale of the Company’s CommonStock by its stockholders pursuant to a registered secondary offering or (2) the voluntary or involuntary bankruptcy of the Company constitute a Change in Control. 

(k) Good Reason Defined. For purposes of this Agreement, “Good Reason” shall mean in the absence of written consent of Executive (i) a reduction by the relevant Company Entity in theExecutive’s annual base salary from such Executive’s annual base salary then in effect, (ii) a forced relocation by the relevant Company Entity of the Executive’s place of employment to a location greater than twenty five(25) miles from his or her initial place of employment or outside of Fairfield County, Connecticut, or (iii) a material diminution by the relevant Company Entity in the Executive’s principal duties and responsibilities. A change orrestructuring of the reporting structure of the Company or of the person to which Executive directly reports shall not constitute a material diminution of Executive’s duties and responsibilities for purposes of clause (iii). Notwithstanding theforegoing, in the event that Executive provides written notice of termination for Good Reason in reliance upon this provision, the Company shall have the opportunity to cure such circumstances within thirty (30) days of receipt of such notice.

(l) Severance Defined. For purposes of this Agreement, “Severance Period” shall mean, as applicable, (i) theperiod beginning on the date of termination of 

Executive’s employment pursuant to Section 5(d) and ending on the date which is one (1) year thereafter or (ii) the period beginning onthe date of termination of Executive’s employment pursuant to Section 6(j)(i) and ending on the date which is two (2) years thereafter. 

(m) Retirement Defined. For the purposes of this Agreement, the term “Retirement” shall mean when Executive is fifty-five (55) years of age or older and has been employed by the Companyfor five (5) or more years after the date of the IPO and such Executive terminates employment for no other reason. 

(n) EarlyRetirement Defined. For the purposes of this Agreement, the term “Early Retirement” shall mean when Executive’s age plus his years of employment with the Company equal fifty-five (55); provided, however, Executive must beemployed by the Company for a minimum of three (3) years after the date of the IPO. 

(o) Extended Retirement Defined. For thepurposes of this Agreement, the term “Extended Retirement” shall mean when Executive is fifty-five (55) years of age or older and has been employed by the Company for ten (10) or more years and such Executive terminatesemployment for no other reason. 

(p) Company Failure to Renew Defined. For purposes of this Agreement, the term “CompanyFailure to Renew” shall mean the delivery by the Company of a notice of intent not to renew pursuant to Section 1 and the notification by Executive within ninety (90) days after receipt of a notice of intent not to renew thatExecutive intends to terminate his employment. 

(q) Condition to Payment. All payments and benefits due to Executive under thisSection 6 which are not otherwise required by law shall be contingent upon (i) execution by Executive (or Executive’s beneficiary or estate) of a general release of all claims to the maximum extent permitted by law against theCompany, their affiliates and their current and former stockholders, directors, employees and agents, in such form as determined by the Company in its sole discretion and (ii) compliance by Executive with his obligations under any stockholders,restricted stock or other agreement to which the Company and Executive are a party. 

(r) No Other Severance. Executive herebyacknowledges and agrees that, other than the severance payments described in this Section 6, upon termination, Executive shall not be entitled to any other severance under any Company benefit plan or severance policy generally available to theCompany’s employees or otherwise. 

(s) Survival; Conflicting Terms. Any provision in this Section 6 regarding IncentiveEquity or the right to participate in the Retiree Health Program shall survive any termination or expiration of this Agreement. Section 6(j) shall survive a Change of Control regardless of whether this Agreement is terminated in connection witha Change of Control or expires by its terms following a Change of Control. In the event 

of a conflict between the terms of this Agreement and any Incentive Equity documentation, the terms of this Agreement regarding the Incentive Equity shallprevail. 

7. **Confidentiality**. 

(a) The Executive agrees that Confidential Information was and shall be made available in connection with the Executive’s employment by or consultancy with the Company. The Executive acknowledges that theConfidential Information that he or she develops or invents in connection with his or her employment by or services to a Company Entity or has obtained or will obtain in connection therewith is the property of such Company Entity. The Executiveagrees that he or she will not disclose any Confidential Information to any other Person, except that Confidential Information may be disclosed: (i) to the extent required by applicable law, rule or regulation (including complying with any oralor written questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process to which the Executive is subject); provided that the Executive gives such Company Entity prompt notice ofsuch requests, to the extent practicable, so that such Company Entity may seek an appropriate protective order or similar relief (and the Executive shall cooperate with such efforts by such Company Entity at Company expense, and shall in any eventmake only the minimum disclosure required by such law, rule or regulation unless the Executive reasonably believes that other disclosure is necessary or advisable in order to avoid adverse consequences to the Executive), (ii) if the priorwritten consent of the Board of Directors shall have been obtained, or (iii) to such Persons to the extent necessary in the reasonable judgment of the Executive to perform his duties as an employee of or consultant to a Company Entity and, inhis reasonable judgment, such disclosure is not harmful to the Company. 

(b) “Confidential Information” shall mean anyinformation relating to the business or affairs of a Company Entity or, as provided below, any of their respective affiliates, including, but not limited to, customer identities, potential customers, employees, business and financial strategies,methods or practices, business plans, financial models, proposals, documents or materials owned, developed or possessed by a Company Entity, profit margins or other proprietary information used by such Company Entity or any of its affiliates;provided that Confidential Information shall not include (i) information that is or becomes generally known to the public other than as a result of a disclosure by the Executive in violation of this Agreement, (ii) information thatwas known to the Executive prior to becoming a consultant to or an employee of the Company or (iii) information which becomes known to the Executive following a Termination Event, through no wrongful act of the Executive, by disclosure from athird party unless the Executive has reason to believe that such third party is under an obligation or duty of confidentiality or secrecy with respect to such information or is an employee, officer, director or stockholder of a Company Entity; andprovided, further, that (A) in such case where any affiliate has a separate confidentiality requirement or agreement to which any Company Entity is subject, such confidentiality requirement or agreement shall supersede therequirements herein and (B) unless a confidentiality requirement or agreement referred to in the preceding clause (A) exists with respect to an 

affiliate, Confidential Information for purposes of this definition as it relates to affiliates shall be deemed to include only Confidential Information ofaffiliates, the employees or consultants of which, are participants or observers at meetings of the Board of Directors of the Company. 

8.**Restrictive Covenants**. 

(a) During the term of employment and for a period of one (1) year after the effective date ofthe Termination Event, Executive shall not, directly or indirectly (i) cause, solicit, induce or encourage any employees, consultants or contractors of the Company to leave such employment or service, or hire, employ or otherwise engage anysuch individual, or (ii) cause, induce or encourage any customer, supplier or licensor of the Company, or any other Person who has a material business relationship with the Company, to terminate or modify any such relationship. 

(b) During the term of employment and for a period of one (1) year after the effective date of the Termination Event, Executive shall not, directlyor indirectly alone or as a partner, officer, director, shareholder, member, sole proprietor, employee or consultant of any other firm or entity, personally engage or participate in any Restricted Business, as such term is defined below, as amaterial portion of his or her responsibilities. 

(c) The parties hereto agree that, if any court of competent jurisdiction in a finalnonappealable judgment determines that a specified time period, a specified business limitation or any other relevant feature of this Section 8 is unreasonable, arbitrary or against public policy, then a lesser time period, businesslimitation or other relevant feature which is determined to be reasonable, not arbitrary and not against public policy may be enforced against the applicable party. 

(d) “Restricted Business” shall mean any of the following: (i) the business of extending senior, subordinated or asset-based loans to middle-market companies as targeted by the Company at theeffective date of the Termination Event, (ii) providing real estate financing of the types offered by the Company at the effective date of the Termination Event, (iii) extending asset-backed loans or investing in asset-backed securitieswith financial products of the types then offered by the Company at the effective date of the Termination Event or (iv) any other material line of business engaged in by the Company at the effective date of the Termination Event. 

(e) The Board of Directors shall, in its sole discretion, have the authority and discretion to waive any provision of this Section 8 or tomake a determination that a business is not a Restricted Business for purposes hereof. 

9. **Indemnification**. If Executive is aparty to any action, suit or proceeding by reason of the fact that Executive is or was an officer or agent of the Company, the Company will indemnify Executive to the fullest extent permitted by the laws of the state 

of the Company’s incorporation, in effect at that time, or the certificate of incorporation and bylaws of the Company, whichever affords the greaterprotection to Executive. 

10. **Withholding Taxes**. Executive acknowledges and agrees that the Company may directly orindirectly withhold from any payments under this Agreement all federal, state, city or other taxes that will be required pursuant to any law or governmental regulation. 

11. **Section 409A.** To the extent applicable, this Agreement shall be interpreted in accordance with 409A Guidance. Notwithstanding any provision of the Agreement to the contrary, (i) if, at thetime of Executive’s termination of employment with the Company, Executive is a “specified employee” as defined in 409A Guidance and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a resultof such termination of employment is necessary in order to prevent any accelerated or additional tax under 409A Guidance, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reductionin such payments or benefits ultimately paid or provided to Executive) until the date that is six months following Executive’s termination of employment with the Company (or the earliest date as is permitted under Section 409A) and(ii) if any other payments of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A, the Company may (a) adopt such amendments to the Agreement, includingamendments with retroactive effect, that the Company determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Agreement and/or (b) take such other actions as the Company determines necessary orappropriate to comply with the requirements of 409A Guidance. The Company shall consult with Executive in good faith regarding the implementation of this Section 11; provided that none of the Company, any of its affiliates, or any of theiremployees or representatives shall have any liability to Executive with respect thereto. 

12. **Effect of Prior Agreements**.This Agreement constitutes the sole and entire agreement and understanding between Executive and the Company with respect to the matters covered hereby and thereby, and there are no other promises, agreements, representations, warranties or otherstatements between Executive and the Company in respect to such matters not expressly set forth in this Agreement. This Agreement supersede all prior and contemporaneous agreements, understandings or other arrangements, whether written or oral,concerning the subject matter thereof. 

13. **Notices**. Any notice required, permitted, or desired to be given pursuant to anyof the provisions of this Agreement shall be deemed to have been sufficiently given or served for all purposes when telecopied, when delivered by hand or received by registered or certified mail, postage prepaid, or by nationally reorganizedovernight courier service addressed to the party to receive such notice at the following address or any other address substituted therefor by notice pursuant to these provisions: 

If to the Company, at: 

NewStar Financial, Inc. 

500 Boylston Street 

Suite 1600 

Boston, MA 02116 

Attention: Timothy J. Conway 

Facsimile:(617) 848 4300 

If to Executive, at: 

Robert T. Clemmens 

13 Ridgecrest 

Stamford, CT 06824 

14.**Assignability**. The obligations of Executive may not be delegated and Executive may not, without the Company’s written consent thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this Agreementor any interest herein. Any such attempted delegation or disposition shall be null and void and without effect. The Company and Executive agree that this Agreement and all of the Company’ rights and obligations hereunder may be assigned ortransferred by the Company to and may be assumed by and become binding upon and may inure to the benefit of any affiliate of or successor to the Company. The term “successor” shall mean, with respect to the Company, any other corporationor other business entity which, by merger, consolidation, purchase of the assets, or otherwise, acquires all or a material part of its assets. Any assignment by either of the Company of its rights or obligations hereunder to any affiliate of orsuccessor of the Company shall not be a termination of employment for purposes of this Agreement. 

15. **Modification**. ThisAgreement may not be modified or amended except in writing signed by the parties. No term or condition of this Agreement will be deemed to have been waived except in writing by the party charged with waiver. A waiver will operate only as to thespecific term or condition waived and will not constitute a waiver for the future or act on anything other than that which is specifically waived. 

16. **Governing Law**. This Agreement has been executed and delivered in the Commonwealth of Massachusetts and its validity, interpretation, performance and enforcement will be governed by the laws of that state applicable tocontacts made and to be performed entirely within that state. 

17. **Severability**. All provisions of this Agreement areintended to be severable. In the event any provision or restriction contained herein is held to be invalid or unenforceable in any respect, in whole or in part, such finding will in no way affect the validity or enforceability of any other provisionof this Agreement. The parties hereto further agree that any such invalid or unenforceable provision will be deemed modified so that it will be enforced to the greatest extent permissible under law, and to the extent that any court of competentjurisdiction determines any restriction herein to be unreasonable in any respect, such court may limit this Agreement to render it reasonable in the light of the circumstances in which it was entered into and specifically enforce this Agreement aslimited. 

18. **No Waiver**. No course of dealing or any delay on the part of the Company or Executive inexercising any rights hereunder shall operate as a waiver of any such rights. No waiver of any default or breach of this Agreement shall be deemed a continuing waiver of any other breach or default. 

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

20. **Binding Arbitration**.

(a) Generally. Executive and the Company hereby agree that any controversy or claim arising out of or relating to this Agreement,the employment relationship between Executive and the Company, or the termination thereof, including the arbitrability of any controversy or claim, which cannot be settled by mutual agreement will be finally settled by binding arbitration inaccordance with the Federal Arbitration Act (or if not applicable, the applicable state arbitration law) as follows: Any party who is aggrieved will deliver a notice to the other party setting forth the specific points in dispute. Any pointsremaining in dispute twenty (20) days after the giving of such notice may, upon ten (10) days’ notice to the other party, be submitted to arbitration in Boston, Massachusetts, to the American Arbitration Association, before a singlearbitrator appointed in accordance with the Commercial Dispute Resolution Procedures and Rules of the American Arbitration Association, as such procedures and rules may be amended from time to time and modified only as herein expressly provided. Thearbitrator may enter a default decision against any party who fails to participate in the arbitration proceedings. 

(b) BindingEffect. The decision of the arbitrator on the points in dispute will be final, unappealable and binding, and judgment on the award may be entered in any court having jurisdiction thereof. The parties agree that this provision has been adopted bythe parties to rapidly and inexpensively resolve any disputes between them and that this provision will be grounds for dismissal of any court action commenced by either party with respect to this Agreement, other than post-arbitration actionsseeking to enforce an arbitration award. In the event that any court determines that this arbitration procedure is not binding, or otherwise allows any litigation regarding a dispute, claim, or controversy covered by this Agreement to proceed, theparties hereto hereby waive any and all right to a trial by jury in or with respect to such litigation. 

(c) Fees and Expenses.Executive or his beneficiaries shall pay all attorney’s fees and expenses incurred by Executive or his beneficiaries in resolving any claim or dispute arising out of or relating to this Agreement. If it is finally determined that Executive orhis beneficiaries prevailed with respect to such claim or dispute, the Company shall reimburse all attorney’s fees and expenses incurred by Executive. 

(d) Confidentiality. The parties will keep confidential, and will not disclose to any person,except as may be required by law, the existence of any controversy under this Section 20, the referral of any such controversy to arbitration or the status or resolution thereof. In addition, the confidentiality restrictions set forth in theNon-Competition Agreement shall continue in full force and effect. 

(e) Waiver. Executive acknowledges that this agreement to submitto arbitration includes all controversies or claims of any kind (e.g., whether in contract or in tort, statutory or common law, legal or equitable) now existing or hereafter arising under any federal, state, local or foreign law (except for anyclaims or controversy arising out of the Non-Competition Agreement), including, but not limited to, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Employee Retirement IncomeSecurity Act, the Family and Medical Leave Act, the Americans With Disabilities Act and all similar federal, state and local laws, and Executive hereby waives all rights thereunder to have a judicial tribunal and/or a jury determine such claims.

21. **Acknowledgment**. Executive acknowledges that before entering into this Agreement, Executive has had the opportunity toconsult with any attorney or other advisor of Executive’s choice, and that this provision constitutes advice from the Company to do so if Executive chooses. Executive further acknowledges that Executive has entered into this Agreement ofExecutive’s own free will, and that no promises or representations have been made to Executive by any person to induce Executive to enter into this Agreement other than the express terms set forth herein. Executive further acknowledges thatExecutive has read this Agreement and understands all of its terms, including the waiver of rights set forth in Section 20(e). 

*Remainder of page intentionally blank*

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day written above.

NEWSTAR FINANCIAL, INC. 

By:  /s/  TIMOTHY J. CONWAY 

        Name: Timothy J. Conway 

        Title: President 

ROBERT T. CLEMMENS 

/s/ ROBERT T. CLEMMENS