EXHIBIT 10.1

 

FIRST AMENDMENT
TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

A.            THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT (THE “AGREEMENT”)
ENTERED INTO AS OF MARCH 14, 2007 BY AND BETWEEN CLAYTON HOLDINGS, INC., A
DELAWARE CORPORATION (“COMPANY”) AND KEVIN J. KANOUFF (“EMPLOYEE”) IS HEREBY
AMENDED AS FOLLOWS:

 

1.             SECTION 9 OF THE AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING TWO (2) SENTENCES AT THE END OF SUBSECTION (C)(II) THEREOF:

 

“Employee may only terminate Employee’s employment pursuant to this
Section 9.c.ii. if such termination occurs within six months after the initial
occurrence of such a prohibited Company action.  Company and Employee
acknowledge and agree that the reassignment of Employee from his day to day
responsibilities as President of Clayton Fixed Income Services  to Executive
Vice President of Strategic Alliances for Company on February 1, 2008
constituted such a prohibited Company action and that, as a result of such
reassignment, Employee may terminate Employee’s employment pursuant to this
Section 9.c.ii on or prior to August 1, 2008.”

 

2.             SECTION 9 OF THE AGREEMENT IS HEREBY FURTHER AMENDED BY ADDING
THE FOLLOWING SENTENCE IMMEDIATELY FOLLOWING THE SECOND SENTENCE OF SUBSECTION
(D) THEREOF:

 

“In order to be eligible to receive the payments contemplated by the previous
sentence, Employee must execute such release within forty-five (45) days of
Employee’s receipt of such release.”

 

3.             SECTION 9 OF THE AGREEMENT IS HEREBY FURTHER AMENDED BY ADDING
THE FOLLOWING SUBSECTION (I) IMMEDIATELY FOLLOWING SUBSECTION (H):

 

                “i.            Modified Cutback.   Anything in this Agreement to
the contrary notwithstanding, in the event that any compensation, payment or
distribution by Company to or on behalf of Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise

 

 

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(the “Severance Payments”) would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code” and
such excise tax, together with any interest or penalties incurred by Employee
with respect to such excise tax, the “Excise Tax”), the following provisions
shall apply:

 

(i)            If the Severance Payments, reduced by the sum of (A) the Excise
Tax and (B) the total of the federal, state, and local income and employment
taxes payable by Employee on the amount of the Severance Payments which is in
excess of the Threshold Amount (defined below), are greater than or equal to the
Threshold Amount, Employee shall be entitled to the full benefits payable under
this Agreement.

 

(ii)           If the Threshold Amount is less than (x) the Severance Payments,
but greater than (y) the Severance Payments reduced by the sum of (A) the Excise
Tax and (B) the total of the federal, state, and local income and employment
taxes on the amount of the Severance Payments which is in excess of the
Threshold Amount, then the benefits payable under this Agreement shall be
reduced (but not below zero) to the extent necessary so that the sum of the
Severance Payments shall not exceed the Threshold Amount.

 

For the purposes of this subsection (i), “Threshold Amount” shall mean three
times Employee’s “base amount” within the meaning of Section 280G(b)(3) of the
Code and the regulations promulgated thereunder less one dollar ($1.00).

 

The determination as to which of the alternative provisions of subsection
(i) above shall apply to Employee shall be made by a nationally recognized
accounting firm selected by Company (the “Accounting Firm”), which shall provide
detailed supporting calculations both to Company and Employee within 15 business
days of the date on which Employee’s employment is terminated, if applicable, or
at such earlier time as is reasonably requested by Company or Employee.  For
purposes of determining which of the alternative provisions of subsection
(i) above shall apply, Employee shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation applicable to individuals
for the calendar year in which the determination is to be made, and state and
local income taxes at the highest marginal rates of individual taxation in the
state and locality of Employee’s residence on the date on which Employee’s
employment is terminated, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local

 

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taxes.  Any determination by the Accounting Firm shall be binding upon Company
and Employee.”

 

4.             SECTION 11(A) OF THE AGREEMENT IS HEREBY AMENDED BY DELETING THE
EXISTING PHRASE “TWO-YEAR PERIOD” AND REPLACING IT WITH THE PHRASE “ONE-YEAR
PERIOD.”

 

5.             SECTION 12 OF THE AGREEMENT IS HEREBY AMENDED BY DELETING THE
EXISTING PHRASE “TWO-YEAR PERIOD” AND REPLACING IT WITH THE PHRASE “ONE-YEAR
PERIOD.”

 

6.             SECTION 16 OF THE AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING SUBSECTION (K) IMMEDIATELY FOLLOWING SUBSECTION (J):

 

“k.          Section 409A.   Anything in this Agreement to the contrary
notwithstanding, if at the time of Employee’s separation from service within the
meaning of Section 409A of the Code, Company determines that Employee is a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code,
then to the extent any payment or benefit that Employee becomes entitled to
under this Agreement would be considered deferred compensation subject to the 20
percent additional tax imposed pursuant to Section 409A(a) of the Code as a
result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment
shall not be payable and such benefit shall not be provided until the date that
is the earlier of (i) six months and one day after Employee’s separation from
service, or (ii) Employee’s death.”

 

B.            EXCEPT AS AMENDED HEREIN, THE AGREEMENT IS HEREBY CONFIRMED IN ALL
OTHER RESPECTS.

 

IN WITNESS WHEREOF, this First Amendment is entered into this 13th day of April,
2008 by the parties hereto.

 

 

CLAYTON HOLDINGS, INC.

 

 

 

By:

/s/ Steven Cohen

 

Name: Steven Cohen

 

Title: SVP

 

 

By:

/s/ Kevin J. Kanouff

 

 

Kevin J. Kanouff

 

 

 

 

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