Exhibit 10.6


 


AMENDED AND RESTATED

INVESTMENT TECHNOLOGY GROUP, INC.

DIRECTORS’ EQUITY SUBPLAN


 


1.             Introduction.


 


The Investment Technology Group, Inc.
Directors’ Equity Subplan (the “Subplan”) was originally implemented by Investment
Technology Group, Inc. (the “Company”) under the Investment Technology Group,
Inc. Amended and Restated 1994 Stock Option and Long-term Incentive Plan (the “1994
Plan”) and was merged with and into the Investment Technology Group, Inc. 2007
Omnibus Equity Compensation Plan (the “2007 Plan”) effective as of May 8, 2007
(the “Effective Date”), the terms of which are incorporated herein by reference.
Effective as of the Effective Date, the Subplan shall continue in effect
according to the terms set forth herein as a subplan under the 2007 Plan. The
purpose of the Subplan is to promote ownership by non-employee directors of a
greater proprietary interest in the Company, thereby aligning such non-employee
directors’ interests more closely with the interests of stockholders of the Company,
and to assist the Company in attracting and retaining highly qualified persons
to serve as non-employee directors. The Subplan is amended and restated herein,
effective for Options or Stock Units granted on or after the Effective Date. Options
or Stock Units granted prior to the Effective Date shall be governed by the
Subplan as in effect prior to this amendment and restatement.


 


2.                                       Definitions.


 


Capitalized terms used in the Subplan but not
defined herein shall have the same meanings as defined in the 2007 Plan. In
addition to such terms and the terms defined in Section 1 hereof, the
following terms used in the Subplan shall have the meaning set forth below.


 


(a)                                  “Director”
means a member of the Board who is not employed by the Company or any of its subsidiaries.


 


(b)                                 “Disability”
has the meaning ascribed to such term in section 22(e)(3) of the Code.


 


3.                                       Administration.


 


The Subplan shall be administered by the
Committee. The Committee shall have full authority to construe and interpret
the Subplan, and any action of the Committee with respect to the Subplan shall
be final, conclusive, and binding on all persons.


 


4.                                       Options.


 


(a)                                  Initial
Options. An Option to purchase a number of shares of Company Stock having a
Fair Market Value on the date of grant, based on the Black-Scholes option
pricing model (or such other model utilized by the Company in valuing Company
equity awards in accordance with U.S. Generally Accepted Accounting
Principles), equal to $100,000 will be granted under the Subplan to each person
who is first elected or appointed to serve as a Director


 





















 


of the Company after the Effective Date, such
grants to be effective on the date of such first election or appointment. For
purposes of this Subplan, all determinations of Fair Market Value of Options
using the Black-Scholes option pricing model will be based on the full five
year Option term, the volatility assumption for the Company Stock used in the
Company’s annual report on Form 10-K for the prior year, and the grant date
risk-free interest rate.


 


(b)                                 Annual
Options. An Option to purchase a number of shares of Company Stock having a
Fair Market Value on the date of grant, based on the Black-Scholes option
pricing model (or such other model utilized by the Company in valuing Company
equity awards in accordance with U.S. Generally Accepted Accounting
Principles), equal to $36,000 will be granted, on the forty fifth (45th) day
following each of the Company’s annual meetings of stockholders at which
Directors (or a class of Directors if the Company then has a classified Board
of Directors) are elected or reelected by the Company’s stockholders, to each
Director in office on the date of grant; provided, however, that
no such grant will be made to a person first elected or appointed to serve as a
Director of the Company at such annual meeting of stockholders.


 


(c)                                  Exercise
Price. The exercise price per share of Company Stock purchasable under an
Option will be equal to 100% of the Fair Market Value of a share of Company
Stock on the date of grant of the Option.


 


(d)                                 Option
Term. Each Option will expire five years after the date of grant; provided,
however, that if the Participant ceases to serve as a Director of the
Company prior to five years after the date of grant, the Option will expire as
follows (except as otherwise provided in Section 4(f)): (i) if the Participant
ceases to serve as a Director of the Company due to the Participant’s death, Disability,
or retirement at or after age 65, twelve months after such cessation of
service, but in no event later than five years after the date of grant; and
(ii) if the Participant ceases to serve as a Director of the Company for any
reason other than due to the Participant’s death, Disability, or retirement at
or after age 65, at the date sixty (60) days after such cessation of service,
but in no event later than five years after the date of grant.


 


(e)                                  Exercisability.
Each Option will vest and become exercisable in three equal annual
installments, beginning on the first anniversary of the date of grant and
continuing on the following two anniversaries and will thereafter remain
exercisable until the Option expires; provided, however, that
each Option will vest and become immediately exercisable in full upon a Change
in Control. In the event the Participant ceases to serve as a Director of the
Company by reason of the Participant’s death or Disability, the Option shall
become vested and exercisable in full at the time of such termination. In the
event the Participant ceases to serve as a Director of the Company for any
other reason (except as otherwise provided in Section 4(f) below) any portion
of the Option that has not yet vested shall be forfeited.


 


(f)                                    Continued
Service as an Employee. If a Participant ceases serving as a Director and,
immediately thereafter, he or she is employed by the Company or any subsidiary,
then, solely for purposes of Sections 4(d) and (e) and Sections 5(d) and (e) of
the Subplan, such Participant will not be deemed to have ceased service as a
Director at that time, and his or her continued employment by the Company or
any subsidiary will be deemed to be continued


 


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service as a Director; provided, however,
that such former Director will not be eligible for additional grants of Options
or Stock Units under the Subplan.


 


(g)                                 Method
of Exercise. A Participant (or other person entitled to exercise an Option)
may exercise an Option, in whole or in part, at such time as it is exercisable
and prior to its expiration by giving written notice of exercise to the Company
specifying the Option to be exercised and the number of shares of Company Stock
to be purchased, and paying in full the exercise price as provided in the 2007
Plan.


 


(h)                                 Nontransferability.
Options shall not be assignable or transferable by a Participant except by will
or the laws of descent and distribution (or pursuant to a beneficiary
designation authorized by the Committee, and during the Participant’s lifetime,
such Options and rights shall be exercisable only by such the Participant or
the Participant’s duly appointed guardian or legal representative. The
foregoing notwithstanding, the Committee may provide that Options (or rights or
interests therein), may be transferable, including permitting transfers to a
Participant’s immediate family members (i.e., spouse, children,
grandchildren, or siblings as well as the Participant), to trust for the
benefits of such immediate family members, and to the partnerships in which
such family members are the only parties, or other transfers deemed by the
Committee to be not inconsistent with the purposes of the 2007 Plan.


 


5.                                       Stock
Units.


 


(a)                                  Initial
Stock Units. A number of Stock Units having a value, as determined below on
the date of grant, equal to $100,000 will be granted under the Subplan to each
person who is first elected or appointed to serve as a Director of the Company
after the Effective Date, such grants to be effective on the date of such first
election or appointment. For purposes of this Subplan, all determinations of value
of Stock Units shall be made by treating the value of a Stock Unit as equal to the
Fair Market Value of a share of Company Stock on the date of grant.


 


(b)                                 Annual
Stock Units. A number of  Stock Units
having a value, as determined above on the date of grant, equal to $36,000 will
be granted on the forty fifth (45th) day following each of the Company’s annual
meetings of stockholders at which Directors (or a class of Directors if the
Company then has a classified Board of Directors) are elected or reelected by
the Company’s stockholders, to each Director in office on the date of grant; provided,
however, that no such grant will be made to a person first elected or
appointed to serve as a Director of the Company at such annual meeting of stockholders.


 


(c)                                  Vesting
of Award. The Stock Units will become vested in three equal annual
installments, commencing on the first anniversary of the date of grant and
continuing thereafter on the second and third anniversaries thereof; provided,
however, that the Stock Units will become immediately vested in full
upon a Change in Control. Unless otherwise provided by the Committee, all
amounts receivable in connection with any adjustments to the Stock Units under
Section 5(d) of the 2007 Plan shall be subject to the vesting schedule in this
Section 5(c).


 


(d)                                 Termination
of Service; Forfeiture of Unvested Stock Units. In the event the
Participant ceases to serve as a Director of the Company by reason of the
Participant’s death


 


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or Disability, the Stock Units shall become
vested in full at the time of such termination. In the event the Participant
ceases to serve as a Director of the Company for any other reason (except as
otherwise provided in Section 4(f) above) any portion of the Stock Units that
have not yet vested shall be forfeited.


 


(e)                                  Distribution
of Shares.  The Company shall distribute to the Participant (or
his or her heirs in the event of the Participant’s death) at the time of
vesting of the Stock Units, a number of shares of Company Stock equal to the
number of Stock Units then held by the Participant that became vested at such
time; provided, however, that the Participant may elect that the distribution
of the shares of Company Stock subject to a Stock Unit be deferred until the
time the Participant ceases to be a Director of the Company for any reason
(except as otherwise provided in Section 4(f)), such election to be made in
writing prior to the beginning of the calendar year in which the Stock Unit is
granted to the Participant (except that such a deferral election may be made
(i) in the case of Stock Units granted under Section 5(a) hereof, at any time
on or prior to the date the Director is first elected or appointed to serve as
a Director of the Company, and (ii) in the case of Stock Units granted in
connection with the first annual meeting of stockholders of the Company that
occurs after the Effective Date of this Subplan, at any time on or prior to the
date of grant).


 


(f)                                    Rights
and Restrictions.  The Stock Units shall not be transferable,
other than pursuant to will or the laws of descent and distribution. Prior to
vesting of the Stock Units and delivery of the shares of Company Stock to the
Participant, the Participant shall not have any rights or privileges of a stockholder
as to the shares of Company Stock subject to the Stock Units. Specifically, the
Participant shall not have the right to receive dividends or the right to vote
such shares of Company Stock prior to vesting of the Stock Units and delivery
of the shares of Company Stock.


 


6.                                       General.


 


(a)                                  Compliance
with Legal and Trading Requirements. The Subplan shall be subject to all
applicable laws, rules and regulations, including, but not limited to, federal
and state laws, rules and regulations, and to such approvals by any regulatory
or governmental agency as may be required.


 


(b)                                 Amendment.
The Board may amend, alter, suspend, discontinue, or terminate the Subplan
without the consent of stockholders of the Company or individual Directors; provided,
however, that, without the consent of an affected Director, no
amendment, alteration, suspension, discontinuation, or termination of the
Subplan may impair or, in any other manner, adversely affect the rights of such
Director to outstanding Options or Stock Units granted hereunder.


 


(c)                                  Unfunded
Status of Awards. Section 5 of this Subplan is intended to constitute an “unfunded”
plan of deferred compensation. With respect to any payments not yet made to a
Director, nothing contained in the Subplan shall give any such Director any
rights that are greater than those of a general creditor of the Company; provided,
however, that the Company may authorize the creation of trusts or make
other arrangements to meet the Company’s obligations under the Subplan to deliver
cash, or other property pursuant to any


 


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award, which trusts or other arrangements
shall be consistent with the “unfunded” status of the Subplan unless the
Company otherwise determines with the consent of each affected Director.


 


(d)                                 Nonexclusivity
of the Subplan. The adoption of the Subplan by the Board shall not be
construed as creating any limitations on the power of the Board to adopt such
other compensation arrangements as it may deem desirable, including, without
limitation, the granting of Options and other awards otherwise than under the
Subplan, and such arrangements may be either applicable generally or only in specific
cases.


 


(e)                                  Adjustments.
The adjustment provisions in Section 5(d) of the 2007 Plan are incorporated
herein by reference and shall apply in the case of Options and Stock Units
granted hereunder; provided, however, that no adjustment shall be
made pursuant thereto that causes any Option to be treated as deferred
compensation pursuant to section 409A of the Code.


 


(f)                                    No
Right to Remain on the Board. Neither the Subplan nor the crediting of
awards under the Subplan shall be deemed to give any individual a right to
remain a director of the Company or create any obligation on the part of the
Board to nominate any Director for reelection by the stockholders of the Company.


 


(g)                                 Section
409A . It is intended that this Subplan and awards issued hereunder will
comply with section 409A of the Code (and any regulations and guidelines issued
thereunder) to the extent the awards are subject thereto, and this Subplan and
such awards shall be interpreted on a basis consistent with such intent. This
Subplan and any award agreements issued thereunder may be amended in any
respect deemed by the Board or the Committee to be necessary in order to
preserve compliance with section 409A of the Code.


 


(h)                                 Governing
Law. The validity, construction, and effect of the Subplan shall be
determined in accordance with the laws of the State of New York, without giving
effect to principles of conflict of laws.


 


(i)                                     Titles
and Headings. The titles and headings of the Sections in the Subplan are
for convenience of reference only. In the event of any conflict, the text of
the Subplan, rather than such titles or headings, shall control.


 


Amended and Restated by the Committee effective:  May 8, 2007


 


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