Exhibit 10.1


 


INVESTMENT TECHNOLOGY
GROUP, INC.

FOURTH AMENDED AND RESTATED

1998 STOCK UNIT AWARD PROGRAM


 


 


1.                                       Purpose


 


This Fourth
Amended and Restated 1998 Stock Unit Award Program (the “Program”) is
implemented under the 1994 Stock Option and Long-Term Incentive Plan, as
amended and restated (the “Plan”), of Investment Technology Group, Inc. (the
“Company”) in order to provide an additional incentive to selected members of
senior management and key employees to increase the success of the Company, by
substituting stock units for a portion of the cash compensation payable to such
persons on a mandatory basis, which stock units represent an equity interest in
the Company to be acquired and held under the Program on a long-term,
tax-deferred basis, and otherwise to promote the purposes of the Plan.  The Program is amended and restated herein,
effective for deferrals made after June 30, 2003.  Deferrals made on or prior to June 30, 2003 shall be governed by
the Program as in effect prior to this fourth amendment and restatement.


 


2.                                       Definitions


 


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


 


2.1                                 “Account”
means the account established for each Participant pursuant to Section 7(g) hereof.


 


2.2                                 “Actual Reduction
Amount” means the amount by which a given quarterly or year-end bonus payment
to a Participant is in fact reduced under Section 6.


 


2.3                                 “Administrator” shall
be the person or committee appointed by the Committee to perform ministerial
functions under the Program and to exercise other authority delegated by the
Committee.


 


2.4                                 “Assigned Reduction
Amount” means an amount determined by the Administrator in accordance with
Section 6(b), in the case of an individual Participant, which shall be used
under Section 7(a) to determine the number of Stock Units to be credited to the
Participant’s Account in respect of a given calendar quarter.  The Assigned Reduction Amount does not accumulate
from one quarter to the next.


 


2.5                                 “Basic Stock Unit”
means a Stock Unit granted pursuant to the first sentence of Section 7(a).


 

















 


2.6                                 “Cause” shall be
deemed to exist where a Participant: (i) commits any act of fraud, willful
misconduct or dishonesty in connection with their employment; (ii) fails,
refuses or neglects to timely perform any material duty or job responsibility
and such failure, refusal or neglect is not cured after appropriate warning;
(iii) commits a material violation of any law, rule, regulation or by-law of
any governmental authority (state, federal or foreign), any securities exchange
or association or other regulatory or self-regulatory body or agency applicable
to Company or any of its subsidiaries or affiliates or any general written
policy or directive of Company or any of its subsidiaries or affiliates;
(v) commits a crime involving dishonesty, fraud or unethical business
conduct, or a felony; or (vii) is expelled or suspended, or is subject to an
order temporarily or permanently enjoining Participant from an area of activity
which constitutes a significant portion of Participant’s activities by the
Securities and Exchange Commission, the National Association of Securities
Dealers Regulation, Inc., any national securities exchange or any
self-regulatory agency or governmental authority, state, foreign or federal.


 


2.7                                 “Change of Control”
means and shall be deemed to have occurred if:


 


(a)                                  any person (within
the meaning of the Exchange Act), other than the Company or a Related Party, is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of Voting Securities representing 30% percent or
more of the total voting power of all the then-outstanding Voting Securities;
or


 


(b)                                 the individuals who,
as of the Effective Date, constitute the Board, together with those who first
become directors subsequent to such date and whose recommendation, election or
nomination for election to the Board was approved by a vote of at least a majority
of the directors then still in office who either were directors as of the
Effective Date or whose recommendation, election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
members of the Board; or


 


(c)                                  the stockholders of
the Company approve a merger, consolidation, recapitalization or reorganization
of the Company or one of its subsidiaries, reverse split of any class of Voting
Securities, or an acquisition of securities or assets by the Company or one of
its subsidiaries, or consummation of any such transaction if stockholder
approval is not obtained, other than (I) any such transaction in which the
holders of outstanding Voting Securities immediately prior to the transaction
receive (or retain), with respect to such Voting Securities, voting securities
of the surviving or transferee entity representing more than 50 percent of the
total voting power outstanding immediately after such transaction, with the
voting power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction, or (II) any such
transaction which would result in a Related Party beneficially owning more than
50 percent of the voting securities of the surviving or transferee entity
outstanding immediately after such transaction; or


 


(d)                                 the stockholders 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 sub-stantially
all of the Company’s assets other than any such transaction which would result
in a Related Party owning or acquiring more than 50 percent of the assets owned
by the Company immediately prior to the transaction.


 


2.8                                  “Current Participant”
means a Participant who, during the current year, is subject to mandatory
payment of a portion of compensation by grant of Stock Units under the Program.


 


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2.9                                 “Matching Stock Unit”
means a Stock Unit granted pursuant to the second sentence of Section 7(a).


 


2.10                           “Participant” means an
eligible person who is granted Stock Units under the Program, which Stock Units
have not yet been settled.


 


2.11                           “Related Party” means (a) a
majority-owned subsidiary of the Company; (b) an employee or group of employees
of the Company or any majority-owned subsidiary of the Company; (c) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any majority-owned subsidiary of the Company; or (d) a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of Voting Securities.


 


2.12                           “Retirement” means
Termination of Employment (other than a termination for Cause) after the
Participant has reached age 65 or after the Participant has reached age 55 and
has at least 10 years of service with the Company and its subsidiaries.


 


2.13                           “Stock Unit” means an award,
granted pursuant to Section 6.5 and 6.6 of the Plan, representing a generally
nontransferable right to receive one share of Common Stock at a specified
future date together with a right to Dividend Equivalents as specified in
Section 7(d) hereof and subject to the terms and conditions of the Plan and the
Program.  Notwithstanding anything to
the contrary, in the case of Stock Units granted to employees of ITG Canada
Corp. and KTG Technologies Corp., the Committee may, in its discretion, settle
such Stock Units by delivery of cash equal to the Fair Market Value on the
settlement date of the number of shares of Common Stock equal to the number of
such Stock Units.  Stock Units are
bookkeeping units, and do not represent ownership of Common Stock or any other
equity security.


 


2.14                           “Termination of Employment”
means termination of a Participant’s employment by the Company or a subsidiary
for any reason, including due to death or disability, immediately after which
event the Participant is not employed by the Company or any subsidiary.


 


2.15                           “Voting Securities or
Security” means any securities of the Company which carry the right to vote
generally in the election of directors.


 


3.                                       Administration


 


(a)                                  Authority.  The Program shall be established and
administered by the Committee, which shall have all authority under the Program
as it has under the Plan; provided, however, that terms of the
grant of Stock Units hereunder may not be inconsistent with the express terms
set forth in the Program.  Ministerial
functions under the Program and other authority specifically delegated by the
Committee shall be performed or exercised by and at the direction of the Administrator.


 


(b)                                 Manner of Exercise
of Authority.  Any action of the
Committee or its delegatee with respect to the Program shall be final,
conclusive, and binding on all persons, including the Company, subsidiaries,
participants granted Stock Units which have not yet been settled, and any
person claiming any rights under the Program from or through any Participant,
except that the Committee may take action within a reasonable time after any
such action superseding or overruling a prior action.


 


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(c)                                  Limitation of
Liability.  Each member of the
Committee or delegatee shall be entitled to, in good faith, rely or act upon
any report or other information furnished to him by any officer or other
employee of the Company or any subsidiary or any agent or professional
assisting in the administration of the Plan, such member or person shall not be
personally liable for any action, determination, or interpretation taken or
made in good faith with respect to the Program, and such member or person
shall, to the extent permitted by law, be fully indemnified and protected by
the Company with respect to any such action, determination, or interpretation.


 


(d)                                 Status as Subplan
Under the Plan.  The Program
constitutes a subplan implemented under the Plan, to be administered in
accordance with the terms of the Plan. 
Accordingly, all of the terms and conditions of the Plan are hereby
incorporated by reference, and, if any provision of the Program or a statement
or document relating to Stock Units granted hereunder conflicts with a
provision of the Plan, the provision of the Plan shall govern.


 


4.                                       Stock
Subject to the Program


 


Shares of
Common Stock delivered upon settlement of Stock Units under the Program shall
be shares reserved and available under the Plan.  Accordingly, Stock Units may be granted under the Program if
sufficient shares are then reserved and available under the Plan, and the
number of shares delivered in settlement of Stock Units hereunder shall be
counted against the shares reserved and available under the Plan.  Awards may be granted under the Plan even
though the effect of such grants will be to reduce the number of shares
remaining available for grants hereunder. 
Stock Units granted under the Program in place of compensation under the
Plan resulting from a 162(m) Award (as defined in the Plan) or in place of
compensation under the Company’s Pay-for-Performance Incentive Plan shall be
subject to annual per-person limitations applicable to such compensation under
such plan.


 


5.                                       Eligibility
and Selection


 


The Committee
may select any person who is eligible to be granted an Award under the Plan to
be granted Stock Units under the Program as a mandatory portion of compensation
otherwise payable to the Participant.  A
Participant who is selected to be a Current Participant in one year will not
necessarily be selected to be a Current Participant in a subsequent year.


 


6.                                       Mandatory
Reduction of Bonus Compensation


 


(a)                                  (i)  Amount
of Mandatory Reduction.  A Current
Participant’s cash compensation shall be automatically reduced by an amount
determined in accordance with the following schedule:


 


0% of the
first $200,000 of annual compensation;

15% of the next $100,000 of annual compensation; and

20% of annual compensation in excess of $300,000.


 


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The foregoing notwithstanding,
the Committee may adjust the schedule applicable to an individual Current
Participant and in no event will the amount by which cash compensation is
reduced exceed the amount of bonus payable to the Participant.  For purposes of the Program, the amount by
which cash compensation is reduced hereunder shall be calculated without regard
to any reductions in compensation resulting from Participant’s contributions
under any Section 401(k), Section 125, pension plan, or other plan of the
Company or a subsidiary, and such amount shall not be deemed a reduction in the
Participant’s compensation for purposes of any such Section 401(k), Section
125, pension plan, or other plan of the Company or a subsidiary.


 


(ii)    In lieu of the schedule
set forth in Section 6(a)(i) above, each Current Participant who
participated in the Program for the portion of calendar year 2003 prior to June
30 may make a one-time written, irrevocable election (in the form specified by
the Committee) on or prior to June 30, 2003 to have any and all mandatory
reductions under this Second Amended and Restated Program based on the
following schedule:


 


5% of the first $100,000 of annual compensation;


10% of the next $100,000 of annual compensation;


15% of the next $100,000 of annual compensation; and


20% of annual compensation in excess of  $300,000.


 


(b)                                 Manner of Reduction
of Compensation.  Amounts by which
compensation is reduced under Section 6(a) will be subtracted from bonus
amounts in respect of services during the year otherwise payable to the Current
Participant at or following the end of the first three calendar quarters of
such year and at or following the end of the year.  The amount by which each bonus amount payable following the end
of the first three calendar quarters will be reduced will be calculated based
on a reasonable estimate of total compensation for the year, taking into
account the amount by which compensation previously has been reduced for the
year (i.e., in the case of a Participant employed since the beginning of
the year and for whom estimated annual compensation has not varied during the
year, by calculating an estimated aggregate amount by which compensation will
be reduced for the year and reducing the quarterly bonus payment by one-fourth
of such amount), and will be calculated at the time the year-end bonus amount
otherwise becomes payable based on actual compensation for the year, taking
into account the amount by which compensation previously has been reduced for
the year (i.e., by calculating the actual amount by which compensation
will be reduced for the year and reducing the year-end bonus payment by that
amount less the amount by which compensation was reduced in previous
quarters).  The foregoing
notwithstanding, the Administrator may determine in the case of any individual
Participant, including a Participant who is not paid a bonus on a quarterly
basis, the extent (if any) to which any bonus amounts other than the
Participant’s year-end bonus amount shall be reduced taking into account the
terms of the Participant’s compensation arrangement and the Participant’s
individual circumstances.  In such
cases, the Administrator may assign to the Participant an Assigned Reduction
Amount for each calendar quarter, so that Stock Units will be automatically
granted to such Participant under Section 7(a) at times and in amounts
comparable to grants to other Participants, such that, on a full-year basis,
the aggregate of the Participant’s Assigned Reduction Amounts and any Actual
Reduction Amounts used to determine the number of Stock Units credited to the Participant’s
Account under Section 7(a) for such year will equal the aggregate amount by
which the Participant’s full-year’s compensation is to be reduced (after giving
effect to adjustments under Section 7(b)).


 


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7.                                       Grant
of Stock Units


 


(a)                                  Automatic Grant of
Stock Units.  Each Participant shall
be automatically granted Basic Stock Units, as of fifteen days after the last
day of each calendar quarter, in a number equal to the Participant’s Actual
Reduction Amount or Assigned Reduction Amount (as applicable) divided by the
Fair Market Value of a share of Common Stock on the last day of such calendar
quarter. In addition, each Participant shall be automatically granted Matching
Stock Units, as of fifteen days after the last day of each calendar quarter, in
a number equal to 30% of the number of Basic Stock Units granted under this
Section 7(a) at that date. Stock Units shall be initially credited to the
Participant’s Account as of the date of grant (it being recognized, however,
that the determination of the number of Stock Units granted and the posting of
such transactions to the Account may occur after date of grant under this
Section 7(a), based on the time at which quarterly bonus amounts are determined
and the Actual Reduction Amount or Assigned Reduction Amount determined in
accordance with Section 6 hereof).  Other provisions of the Program notwithstanding,
no grant of Stock Units shall be effective until the date of grant specified in
this Section 7(a), and, at any time prior to such date of grant, the Committee
shall retain full discretion to adjust a Participant’s Actual Reduction Amount
or Assigned Reduction Amount downward or otherwise reduce or cancel the
automatic grant of Stock Units, provided that any such adjustment or reduction
in the number of Stock Units to be issued shall result in a reversal of any
corresponding reduction in compensation under Section 6(b).


 


(b)                                 Risk of Forfeiture;
Cancellation of Certain Stock Units. 
The Basic Stock Units, together with any Dividend Equivalents credited
thereon, shall at all times be fully vested and non-forfeitable.  Matching Stock Units, together with any
Dividend Equivalents credited thereon, will vest 50% on the third anniversary
of the date of grant and the remaining 50% on the sixth anniversary of the date
of grant, provided the Participant remains continuously employed by the Company
through such vesting dates; provided, however, that all Matching
Stock Units (together with Dividend Equivalents credited thereon) will vest in
full at the time of Retirement of the Participant or at the time of closing of
a transaction which constitutes a Change of Control, but in either such event
the Matching Stock Units shall continue to be settled on the schedule set forth
in Section 8(a) below; provided further, however, that all
Matching Stock Units (together with Dividend Equivalents credited thereon) will
vest in full at the time a Participant’s employment terminates due to his or
her death or disability, and all stock units held by such Participant shall be
settled as soon as practicable thereafter. 
If the Participant’s employment by the Company terminates for any reason
other than Retirement, death or disability prior to a vesting date, unless the
Committee provides otherwise, all unvested Matching Stock Units, together with
any Dividend Equivalents credited thereon, shall be forfeited to the
Company.  The foregoing notwithstanding,
if, at the end of a given year (upon calculation of year-end bonuses), the
aggregate of the Participant’s Actual Reduction Amounts and any Assigned
Reduction Amounts used to determine the number of Stock Units credited under
Section 7(a) for such year exceeds the amount by which the full-year’s
compensation should have been reduced under Section 6(a) (the “corrected
full-year amount”), the Participant shall be paid in cash, without interest,
the amount (if any) by which such Actual Reduction Amounts and Assigned
Reduction Amounts exceeded such corrected full-year amount, and any Stock Units
(including Basic Stock Units and Matching


 


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Stock Units relating thereto) credited to the Participant under Section
7 as a result of such excess Actual Reduction Amounts and Assigned Reduction
Amounts shall be cancelled.  Unless otherwise
determined by the Administrator, the Stock Units to be cancelled shall be
cancelled from each of the four quarterly grants in the proportion the Actual
Reduction Amounts and Assigned Reduction Amounts used in determining such
quarterly grant bore to the aggregate of the Actual Reduction Amounts and
Assigned Reduction Amounts used in determining all grants of Stock Units over
the full year.


 


(c)                                  Nontransferability.  Stock Units and all rights relating thereto
shall not be transferable or assignable by a Participant, other than by will or
the laws of descent and distribution, and shall not be pledged, hypothecated,
or otherwise encumbered in any way or subject to execution, attachment, or
similar process.


 


(d)                                 Dividend Equivalents
on Stock Units.  Dividend
Equivalents shall be credited on Stock Units as follows:


 


(i)                   Cash and Non-Common Stock Dividends.  If the Company declares and pays a dividend
or distribution on Common Stock in the form of cash or property other than shares
of Common Stock, then a number of additional Stock Units shall be credited to a
Participant’s Account as of the payment date for such dividend or distribution
equal to (i) the number of Stock Units credited to the Account as of the record date for such dividend or
distribution multiplied by (ii) the amount of cash plus the fair market value
of any property other than shares actually paid as a dividend or distribution
on each outstanding share of Common Stock at such payment date, divided by
(iii) the Fair Market Value of a share of Common Stock at such payment date.


 


(ii)                Common Stock
Dividends and Splits.  If the
Company declares and pays a dividend or distribution on Common Stock in the
form of additional shares of Common Stock, or there occurs a forward split of
Common Stock, then a number of additional Stock Units shall be credited to the
Participant’s Account as of the payment date for such dividend or distribution
or forward split equal to (i) the number of Stock Units credited to the Account
as of the record date for such dividend or distribution or split multiplied by
(ii) the number of additional shares of Common Stock actually paid as a
dividend or distribution or issued in such split in respect of each outstanding
share of Common Stock.


 


(e)                                  Adjustments to
Stock Units.  The number of Stock
Units credited to each Participant’s Account shall be appropriately adjusted,
in order to prevent dilution or enlargement of Participants’ rights with
respect to such Stock Units, to reflect any changes in the number of
outstanding shares of Common Stock resulting from any event referred to in
Section 5.5 of the Plan, taking into account any Stock Units credited to the
Participant in connection with such event under Section 7(d).


 


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(f)                                    Fractional
Shares.  The number of Stock Units
credited to a Participant’s Account shall include fractional shares calculated
to at least three decimal places, unless otherwise determined by the Committee.


 


(g)                                 Accounts and Statements.
The Administrator shall establish, or cause to be established, an Account for
each Participant.  An individual
statement of each Participant’s Account will be issued to each Participant not
less frequently than annually.  Such
statements shall reflect the Stock Units credited to the Participant’s Account,
transactions therein during the period covered by the statement, and other
information deemed relevant by the Administrator.  Such statement may include information regarding other plans and
compensatory arrangements for Directors.


 


(h)                                 Consideration for
Stock Units.  Stock Units shall be
granted for the general purposes set forth in Section 1 of the Program. Except
as specified in Section 6 and 7 of the Program, a Participant shall not be
required to pay any cash consideration or other tangible or definable
consideration for Stock Units, nor may a Participant choose to receive Stock
Units in lieu of other compensation or other compensation in lieu of Stock
Units.  No negotiation shall take place
between the Company and any Participant as to the amount, timing, or other
terms of an award of Stock Units.


 


8.                                       Settlement


 


(a)                                  Issuance and
Delivery of Shares in Settlement. 
Stock Units, together with any Dividend Equivalents credited thereon,
shall be settled by issuance and delivery to the Participant or, following his
death, to the Participant’s designated beneficiary, of a number of shares of
Common Stock equal to the number of such Stock Units as follows:  50% promptly following the third anniversary
of the date of grant of the Stock Units and the remaining 50% promptly
following the sixth anniversary of the date of grant of the Stock Units; provided,
however, that the Committee may, in its discretion, accelerate the
settlement date of any or all Stock Units. 
The Committee may, in its discretion, make delivery of shares hereunder
by depositing such shares into an account maintained for the Participant (or of
which the Participant is a joint owner, with the consent of the Participant)
established in connection with the Company’s Employee Stock Purchase Plan or
another plan or arrangement providing for investment in Common Stock and under
which the Participant’s rights are similar in nature to those under a stock
brokerage account.  If the Committee
determines to settle Stock Units by making a deposit of shares into such an
account, the Company may settle any fractional share by means of such
deposit.  In other circumstances or if
so determined by the Committee, the Company shall instead pay cash in lieu of fractional
shares, on such basis as the Committee may determine.  In no event will the Company in fact issue fractional
shares.  Notwithstanding anything to the
contrary, in the case of Stock Units granted to employees of ITG Canada Corp.
and KTG Technologies Corp., the Committee may, in its discretion, settle such
Stock Units by delivery of cash equal to the Fair Market Value on the
settlement date of the number of shares of Common Stock equal to the number of
such Stock Units.  Upon settlement of
Stock Units, all obligations of the Company in respect of such Stock Units
shall be terminated, and the shares so distributed shall no longer be subject
to any restriction or other provision of the Program.


 


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(b)                                 Tax Withholding.  The Company and any subsidiary may deduct
from any payment to be made to a Participant any amount that federal, state,
local, or foreign tax law requires to be withheld with respect to the
settlement of Stock Units.  At the
election of the Committee, the Company may withhold from the shares of Common
Stock to be distributed in settlement of Stock Units that number of shares
having a Fair Market Value, at the settlement date, equal to the amount of such
withholding taxes.


 


(c)                                  No Elective Deferral.  Participant’s may not elect to further defer
settlement of Stock Units or otherwise to change the applicable settlement date
under the Program.


 


9.                                       General
Provisions


 


(a)                                  No Right to
Continued Employment.  Neither the
Program nor any action taken hereunder, including the grant of Stock Units,
will be construed as giving any employee the right to be retained in the employ
of the Company or any of its subsidiaries, nor will it interfere in any way
with the right of the Company or any of its subsidiaries to terminate such
employee’s employment at any time.


 


(b)                                 No Rights to
Participate; No Stockholder Rights. 
No Participant or employee will have any claim to participate in the
Program, and the Company will have no obligation to continue the Program.  A grant of Stock Units will confer on the
Participant none of the rights of a stockholder of the Company (including no
rights to vote or receive dividends or distributions) until settlement by
delivery of Common Stock, and then only to the extent that such Stock Unit has
not otherwise been forfeited by the Participant.


 


(c)                                  Changes to the
Program.  The Committee may amend,
alter, suspend, discontinue, or terminate the Program without the consent of
Participants; provided, however, that, without the consent of an
affected Participant, no such action shall materially and adversely affect the
rights of such Participant with respect to outstanding Stock Units, except
insofar as the Committee’s action results in accelerated settlement of the
Stock Units.


 


10.                                 Effective
Date and Termination of Program.  This
fourth amended and restated Program shall become effective as of June 30, 2003
(the “Effective Date”), and shall apply to deferrals made after such date.  Unless earlier terminated under Section
9(c), the Program shall terminate at such time after 2003 as no Stock Units
previously granted under the Program remain outstanding.


 


	
  Adopted by
  the Committee:

  	
   

  	
  June 4, 1998

  
	
  Amended and
  restated by the Committee:

  	
   

  	
  February 25,
  1999

  
	
  Amended and
  restated by the Committee:

  	
   

  	
  March 20,
  2002

  
	
  Amended and
  restated by the Committee:

  	
   

  	
  September 3,
  2002

  
	
  Amended and
  restated by the Committee:

  	
   

  	
  June 30,
  2003

  



 


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