Exhibit
10.42


TRANSITION SERVICES AGREEMENT


 


This Transition Services
Agreement (“Agreement”) is entered into
between Investment Technology Group, Inc. (“ITG”
or the “Company”), a Delaware corporation and
Howard C. Naphtali (“HCN”).  In consideration of the mutual promises
contained in this Agreement and other valuable consideration, the parties agree
as follows:


 


1.             TERM.  This Agreement will begin on February 4,
2010 and will end on May 3, 2010, subject to HCN and ITG signing, on February 3,
2010, a separation agreement on mutually acceptable terms (the “Separation
Agreement”).


 


2.             STATEMENT OF SERVICES.  HCN agrees to make himself available to ITG
during the term of this Agreement, as a temporary employee, to provide
transition services from his former position of Chief Financial Officer with
ITG.  HCN will perform such services as
are reasonably requested by the Company’s Chief Executive Officer.


 


3.             PAYMENT.  For the services provided during the term of
this Agreement, ITG will pay HCN a salary based on an annualized amount of
$500,000, less any applicable deductions or withholdings, in installments on
approximately the 15th and last day of each month as determined by
the Company in accordance with its employee payroll practices.  HCN will be reimbursed for all reasonable
expenses, which are necessary for, and incident to, the performance of services
under this Agreement.  Expenses must be
justified in accordance with ITG’s expense reimbursement policy.


 


4.             TEMPORARY EMPLOYEE STATUS.  While HCN will perform the services described
in this Agreement as an employee, he acknowledges his status as a temporary
employee.  HCN will not have the
authority to incur any liabilities or obligations of any kind in the name of,
or on behalf of, ITG.


 


5.             NO EMPLOYEE BENEFITS.  HCN acknowledges and agrees that temporary
employees of ITG are not entitled to receive employee benefits of any kind from
ITG.  Therefore, HCN acknowledges and
agrees that he is excluded from participating in any profit sharing,
retirement, equity, welfare or fringe benefit plans or programs as a result of
his employment in accordance with the terms of this Agreement.  For the avoidance of doubt, this provision
shall not limit or modify any terms or agreements related to employee benefits
made pursuant to the Separation Agreement.


 

















 


6.             CODE OF BUSINESS CONDUCT AND
ETHICS.  HCN agrees to conduct
himself on behalf of ITG in accordance with ITG’s Code of Business Conduct and
Ethics.


 


7.             PROTECTION OF ITG’S BUSINESS.  Except as required to perform services under
this Agreement or as required to be disclosed by court or
administrative order,
HCN will not, directly or indirectly, use, publish or otherwise disclose to
others, during the term of this Agreement and after termination, any
confidential information of ITG or its affiliates or any of their respective
customers or suppliers, obtained during the term of this Agreement, and will
take all reasonable precautions to prevent disclosure of the confidential
information to any unauthorized persons or entities.


 


8.             WRITINGS AND OTHER DATA TO
BECOME PROPERTY OF ITG.  HCN agrees
that all notes, writings, drawings, designs, analyses, memoranda and other data
prepared and/or produced by HCN during the term of this Agreement will be the
sole property of ITG, including all rights, title and interest of whatever
kind, and will not be disclosed to any other person or firm by HCN.  Upon termination of this Agreement and his
employment, HCN will return to an appropriate ITG representative all of the
above, and any other property or records of ITG or its affiliates which relate
to the business of ITG or its affiliates.


 


9.             EQUITABLE
RELIEF.  HCN acknowledges that a breach or threatened breach by him of
any of his covenants or agreements with the Company contained in paragraphs 7
and 8 of this Agreement could cause irreparable harm to the Company for which
it would have no adequate remedy at law.  Accordingly, and in addition to
any remedies which the Company may have at law, in the event of an actual or
threatened breach by HCN of any of his covenants or agreements contained in
paragraphs 7 and 8 of this Agreement, the Company shall have the absolute right
to apply to any court of competent jurisdiction for such injunctive or other
equitable relief as such court may deem necessary or appropriate in the
circumstances.


 


10.           NOTICES.  Any notice, request or other communication
required to be given under this Agreement will be in writing and will be deemed
to have been given (i) when delivered in person, (ii) five days after
being deposited in the mail, certified or registered, postage prepaid, return
receipt requested, or (iii) one business day after being delivered to a
reputable overnight courier, delivery charges prepaid.  Except as changed by notice in writing to the
other party, notices will be provided to the following addresses:


 


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  To ITG:

  	
   

  	
  To HCN:

  
	
  Investment Technology Group, Inc.

  	
   

  	
  Howard
  C. Naphtali

  
	
  Attn: General Counsel

  	
   

  	
   

  
	
  380 Madison Avenue

  	
   

  	
   

  
	
  New York, NY 10017

  	
   

  	
   

  






 


11.           ASSIGNMENT.  Neither party may assign its rights or
obligations under this Agreement without the prior written consent of the other
party.


 


12.           SEVERABILITY.  In the event any provision of this Agreement
is determined invalid or unenforceable, that determination will not affect the
other provisions of this Agreement, which will remain in full force and effect.


 


13.           AMENDMENT.  This Agreement will not be changed, modified,
supplemented or amended except by express written agreement signed by HCN and
ITG.


 


14.           NO WAIVER.  The failure of either party to execute a
right or to require performance by the other party of any part of this
Agreement will not affect the full right to exercise any right or to require
performance at any later time, nor will the waiver by either party of a breach
of any provision of this Agreement constitute a waiver of any later breach of
the same or any other provision.


 


15.           APPLICABLE LAW.  This Agreement will be governed by and
construed in accordance with the laws of the State of  New
York without regard to the conflict of laws provisions thereof.


 


16.           COUNTERPARTS.  This Agreement may be executed in
counterparts, each of which will be deemed an original and all of which
together will be deemed one and the same agreement.


 


17.           OPPORTUNITY TO EMPLOY COUNSEL.  HCN has read and fully understands the terms
and conditions set forth in this Agreement, has had time to reflect on and
consider the benefits and consequences of entering into this Agreement, and has
had the opportunity to review the terms with his attorney.


 


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  INVESTMENT TECHNOLOGY
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ Howard C. Naphtali

  	
   

  	
  BY:

  	
  /s/ Robert C. Gasser

  
	
   

  	
  Howard C. Naphtali

  	
   

  	
  Robert C. Gasser

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: February 3, 2010

  	
  Date: February 3, 2010

  
					



 


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