Document:

Exhibit
10.40

 

December 21,
2009

 

Steven
R. Vigliotti

 

Dear
Steven,

 

I
am pleased to offer you the position of Managing Director and Chief Financial
Officer of Investment Technology Group, Inc. (“ITG”
or the “Company”), in accordance with the terms stated in this letter
agreement (the “Letter Agreement”).  The exercise of your responsibilities
will take place in the New York office located at 380 Madison Ave, NY, NY, will
be subject to the review and approval of both the CEO and the Board of
Directors of ITG, and will at all times be in conformity with ITG’s compliance
and regulatory procedures.

 

1.   (a)                            Your base salary will be a
semi-monthly rate of $20,833.33 ($500,000 annualized), less applicable
withholdings, to be paid to you in equal installments on approximately the 15th and the last day of each month as determined
by the Company in accordance with its payroll practices.

 

(b)                     Contingent
upon your performance and the performance of the Company, you will receive an
annual bonus pursuant to the Company’s Amended and Restated Pay-for-Performance
Incentive Plan, if applicable, and any such other plan or program that from
time-to-time may be adopted by the Company. A portion of such annual
bonus, consistent with the portion allocated to other executive officers, may
be awarded in Stock Units (“Stock Award”), which will have terms consistent
with ITG’s 2007 Omnibus Equity Compensation Plan (“Equity Plan”).  The Stock Award will have
the same structure and be subject to the same vesting schedule as those awarded
to other executive officers.

 

All
cash and equity bonuses will be paid or granted to you in accordance with the
Company’s practice related to bonus payments to the Company’s other executive
officers.  This generally occurs within
90 days of the end of the Company’s fiscal year. For 2010, you will have an initial total bonus target of $1,000,000.
In no event will you be eligible for, and
you shall not earn or 

 

 

receive, any bonus if you are not employed by ITG on the
date such bonuses are paid.

 

Notwithstanding the foregoing, the bonuses you will
receive with respect to fiscal year 2010 shall not be lower than $750,000 (the “2010
Minimum”), a portion of which may be a Stock Award. In the event you are
terminated by ITG without Cause, or you terminate your employment with ITG for
Good Reason prior to the payment date of such bonus, you would still be
entitled to such payment in cash on or before the date such bonus would
otherwise have been paid, which will occur no later than 90 days after December 31,
2010.

 

For all purposes of this Letter Agreement, the terms “Cause,”
and “Good Reason” shall have the meanings set forth in Exhibit A attached
hereto.

 

(c)                      You will also receive a Stock Award with a value of $500,000 (the “Sign
on Award”) based upon the fair market value of ITG stock on your first day of
employment.  This grant will be
memorialized in a separate Stock Unit Grant Agreement and will vest in full on
the third anniversary of your first day of employment. This agreement is
subject to your continued employment with ITG through such date, and will have
terms consistent with ITG’s Equity Plan.  However, should your employment
with ITG be terminated by ITG without Cause or by you for Good Reason, prior to
the vesting of the Sign on Award, ITG will pay you, within 60 days of your last
day of employment with ITG, an amount equivalent to the then current market
value of the Sign on Award. This payment would be subject to you signing ITG’s
standard separation and release agreement, which both parties hereto agree to
execute within 30 days of the termination of your employment with the Company.

 

(d)                     You shall be eligible to receive additional equity awards as and when
equity awards are granted to executive officers generally, with the amount and
terms of such awards determined on the same bases as awards granted to
executive officers generally, including any matching Stock Awards granted under
the EDA Program, if applicable.

 

2.               Your employment
is contingent upon:

 

(a)                      your acceptance and acknowledgement of all applicable Company policies
and agreements to the extent delivered to you in writing;

 

(b)                     your
execution of the Employee Agreement With Respect To Non-Solicitation and
Confidential and Proprietary Information, a copy of which is attached hereto;

 

(c)                      your execution of the Change in Control Agreement which is attached
hereto;

 

(d)                     your
providing proper documentation demonstrating your eligibility to work in the
United States;

 

(e)                      your successful completion of a background check (including, but not limited
to, current and prior employment dates and compensation) and satisfactory
completion of a drug test.  The background check and drug test must be 

 

 

successfully completed prior to your start date. 
We will provide you with the appropriate release and authorization forms from
time to time for your review and signature; and

 

(f)                        you successfully obtaining and/or transferring to ITG (or to any
affiliates to which you may be assigned) any and all required regulatory
approvals and registrations needed in the performance of your position.

 

3.               Either you or
ITG may terminate your employment at any time, with or without Cause, for any
reason or for no reason upon 90 days written notice.  ITG agrees to provide you with termination
benefits similar to those made available to other terminated executive officers
in the event you are terminated by ITG without Cause.

 

4.               You will be
entitled to participate in the same benefit programs provided to all full-time
executive officers of ITG in accordance with the plans’ terms and you will be
entitled to up to five (5) weeks of paid vacation annually.

 

5.               ITG shall
reimburse you for all reasonable expenses incurred in the course of performing
your duties, consistent with ITG’s policies in effect from time to time with
respect to travel, entertainment and other business expenses, subject to ITG’s
requirements with respect to reporting and documentation of expenses.

 

6.               As an applicant
for employment, you may be fingerprinted in accordance with SEC Rule 17f-2.

 

7.               Except as required
under your existing consulting agreement with NYSE Technologies, Inc.
dated August 26, 2009 and as amended thereafter, you will be expected to
devote your full working time and attention and all of your efforts, skills,
and abilities to performing your duties in the sole interest of ITG.  In performing your duties, you will be
expected to comply with all applicable laws and all policies and procedures of
ITG.  By signing this Letter Agreement,
you confirm that you are not subject to, and you will not be in violation or
breach of, any agreement or restriction that in any way prohibits you from
joining our Company or performing your work with us.  You also agree that you will not disclose to
ITG any confidential information of any third party.

 

8.               You are
required to maintain all licenses and registrations necessary to perform your
job duties during the course of your employment with ITG.

 

9.               ITG
agrees to continue and maintain a directors’ and officers’ liability insurance
policy covering you to the extent ITG provides such coverage for its other
executive officers.

 

10.         ITG
agrees to indemnify you to the fullest extent permitted or authorized by
applicable law and the Company’s certificate of incorporation or bylaws, as in
effect from time to time.

 

11.         Your expected employment date with ITG is February 1, 2010.  This offer will expire
on December 31, 2009.

 

12.         In the
event of any dispute under the provisions of this Letter Agreement, other than
a dispute in which the primary relief sought is an equitable remedy such as an
injunction, the parties shall be required to have the dispute, controversy or
claim 

 

 

                        settled
by arbitration in New York, New York in accordance with the National Rules for
the Resolution of Employment Disputes then in effect of the American
Arbitration Association, before an arbitrator agreed to by both parties. 
If the parties cannot agree upon the choice of arbitrator, the Company and you
will each choose an arbitrator.  The two arbitrators will then select a
third arbitrator who will serve as the actual arbitrator for the dispute,
controversy or claim.  Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by either
party in accordance with applicable law in any court of competent
jurisdiction.  This arbitration provision shall be specifically
enforceable.  The arbitrators shall have no authority to modify any
provision of this Letter Agreement or to award a remedy for a dispute involving
this Letter Agreement other than a benefit specifically provided under or by
virtue of the Agreement.

 

13.         Section 409A.

 

This
Letter Agreement shall be interpreted to avoid any penalty sanctions under
section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  If any payment or benefit cannot be provided
or made at the time specified herein without incurring sanctions on you or the
Company under section 409A of the Code, then such benefit or payment shall be
provided in full at the earliest time thereafter when such sanctions will not
be imposed.  This Letter Agreement, and
all policies and documents referenced herein, contain all of the terms of the
proposed relationship between you and ITG, and this Letter Agreement may only
be subsequently modified by an instrument in writing, signed by both you and an
authorized officer of ITG.

 

We
hope that you are as excited as we are to bring high technology products to the
financial services markets.  Your experience and skills will be an asset
to us, and we look forward to having you on our team.  We, therefore, hope
that you will indicate your acceptance of our offer by signing a copy of this
Letter Agreement and returning it to Peter Goldstein in the Human Resources
Department at 380 Madison Avenue, NY, NY 10017.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Robert Gasser

  
	
   

  	
  Robert
  Gasser

  
	
   

  	
  President
  and CEO

  

 

 

	
  Agreed
  to and Accepted By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Steven R. Vigliotti

  	
   

  
	
  Steven
  R. Vigliotti

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  December 21, 2009

  	
   

  

 

 

Exhibit A

 

For purposes of this
exhibit, “Executive” shall mean Steven R. Vigliotti.

 

“Cause” shall mean the
occurrence of any one or more of the following: (i) the Executive’s
willful failure to substantially perform his duties with the Company (other
than any such failure resulting from the Executive’s Disability (as defined in Section 22(e)(3) of
the U.S. Internal Revenue Code of 1986, as amended)), after a written demand
for substantial performance is delivered to the Executive that specifically
identifies the manner in which the Company believes that the Executive has not substantially
performed his duties, and the Executive has failed to remedy the situation
within fifteen (15) business days of such written notice from the Company; (ii) gross
negligence in the performance of the Executive’s duties which results in
material financial harm to the Company; (iii) the Executive’s conviction
of, or plea of guilty or nolo contendere, to any felony or any other crime
involving the personal enrichment of the Executive at the expense of the
Company; (iv) the Executive’s willful engagement in conduct that is demonstrably
and materially injurious to the Company, monetarily or otherwise; or (v) the
Executive’s willful material violation of any provision of the Company’s code
of conduct.

 

“Good Reason” means, without
the Executive’s express written consent, the occurrence of any one or more of
the following:

 

(i)                                     a material reduction of the
Executive’s primary functional authorities, duties, or responsibilities as
Chief Financial Officer of the Company or the assignment of duties to the Executive
inconsistent with those of Chief Financial Officer of the Company (other than
an insubstantial and inadvertent reduction or assignment that is remedied by
the Company promptly after receipt of notice thereof given by the Executive),
or the Executive no longer reporting directly to the Company’s CEO;

 

(ii)                                  the Company’s requiring the
Executive to be based at a location in excess of thirty five (35) miles from
the location of the Executive’s principal job location or office;

 

(iii)                               a material reduction by the
Company of the Executive’s base salary in effect on the Effective Date, or as
the same shall be increased from time to time, unless such reduction applies on
substantially the same percentage basis to all employees of the Company generally;

 

(iv)                              a material reduction in the
Executive’s participation in any of the Company’s annual incentive compensation
plans in which the Executive participates, unless such failure applies to all
plan participants generally;

 

 

(v)                                 if the Company provides
written notice that the Change in Control Agreement will not be extended prior
to the vesting of your Sign on Award; and

 

(vi)                              a material breach of this
Agreement by the Company;

 

provided, however,
that for any of the foregoing to constitute Good Reason, the Executive must
provide written notification of his intention to resign within 30 days after
the Executive knows or has reason to know of the occurrence of any such event,
and the Company shall have 30 business days from the date of receipt of such
notice to effect a cure of the condition constituting Good Reason, and, upon
cure thereof by the Company, such event shall no longer constitute Good Reason.Exhibit
10.41

 

The material marked by
asterisks within brackets ([**]) on pages 1, 2 and 6 of this document has
been omitted pursuant to a request for confidential treatment from the
Commission in accordance with 17 C.F.R. § 240.24b-2.

 

CONFIDENTIAL

 

December 23,
2009

 

VIA HAND
DELIVERY

 

Howard C. Naphtali

[**]

 

Dear Howard:

 

This letter will confirm
the agreement (the “Agreement”) that has been reached by and between you
and Investment Technology Group, Inc. (“ITG” or the “Company”)
in connection with your separation from service with ITG.

 

1.             Separation
from Service.

 

(a)           Effective on the close of business February 3,
2010 (the “Separation Date”), upon mutual agreement between you and the
Company, you have voluntarily resigned from all positions with the Company and
its subsidiaries, including your positions as Chief Financial Officer, Managing
Director, and an officer of the applicable subsidiaries of the Company, and a
member of the applicable boards of directors of the Company’s subsidiaries on
which you served and any committee(s) thereof.  You agree promptly to execute any documents
necessary to effectuate such resignations. 
Beginning February 4, 2010 and ending May 3, 2010 (the “Transition
Services Agreement Termination Date”), you will provide short-term
transition services to the Company at the reasonable request of the Company’s
Chief Executive Officer pursuant to the terms of a Transition Services
Agreement to be negotiated by you and the Company (the “Transition Services
Agreement”).

 

(b)           On the Separation Date, you will
receive a final paycheck which will include a payment for all unpaid
compensation you have earned through the Separation Date, less any applicable
deductions and withholdings.  If you are
a participant in the Investment Technology Group, Inc. 401(k) Plan,
you will cease to participate in that plan as of the Separation Date.  A contribution to the 401(k) plan (based
on the historical amount you have elected to contribute to such plan) will be
deducted from your final paycheck.  Specific information concerning
the distribution of your 401(k) Plan account will be forwarded to you
separately.  Except as set forth

 

 

herein
and in the Transition Services Agreement (pursuant to the terms of such
Transition Services Agreement), you are not entitled to any additional
compensation, bonuses, payments, benefits, damages, attorneys’ fees or costs of any kind
from ITG and the Releasees (as defined in Paragraph 3 below).

 

2.             Separation
Payments and Benefits. 
Subject to your execution and non-revocation of this Agreement and in
consideration for your agreement to be bound by the promises set forth in
Paragraphs 4 and 6 of this Agreement, in addition to the amounts described in
Paragraph 1 above and, as stated in Paragraph 1(b) above, in lieu of any
other compensation under any plan or program:

 

(a)           The Company will pay you (i) on February 16,
2010, in one lump sum, One Million Four Hundred Thirty Thousand Dollars
($1,430,000) and (ii) in eleven (11) monthly installments, the aggregate
amount of Two Million One Hundred Five Thousand Nine Hundred Nineteen Dollars
($2,105,919), in each case less any applicable deductions and
withholdings.  The first of the eleven (11) installments
will be made on February 16, 2010 with subsequent payments paid on or about
each monthly anniversary of the first payment date in accordance with the Company’s
regularly scheduled payroll date.

 

(b)           If you timely elect to continue group
health coverage under the provisions of the law known as “COBRA”, ITG will pay
for the first twelve (12) months of your COBRA coverage. ITG will send you a
separate notice detailing your rights under COBRA and if you have any questions
about that notice, please contact Human Resources at [**].  Upon
completion of the twelfth month of COBRA coverage, ITG will cease contributing
towards the cost of the COBRA premium on your behalf.  Thereafter, you will be responsible for the
full cost of any further COBRA coverage. 
Notwithstanding the foregoing, in the event you become eligible for (i) healthcare
coverage through subsequent employment, or (ii) Medicare or Medicaid, ITG’s
obligation to pay for your COBRA premium on your behalf will cease as of the
date of such eligibility and you will be responsible for the full cost of any
COBRA coverage that is incurred by ITG after the date of such subsequent
eligibility for healthcare coverage. You must immediately notify ITG of such
eligibility by contacting Human Resources at [**] or via email to [**] as soon
as you become aware of such eligibility.

 

(c)           All outstanding stock options you
hold as of the Transition Services Agreement Termination Date that are not
already vested and exercisable as of the Transition Services Agreement
Termination Date will automatically terminate as of the Transition Services
Agreement Termination Date.  Outstanding stock options that
you hold that are already vested as of the Transition Services Agreement
Termination Date shall, pursuant to the terms of the applicable stock option
grant agreement evidencing such outstanding vested stock options, expire 60
days after the Transition Services Agreement Termination Date.  In
addition, all stock unit

 

2

 

awards granted to you
under the Company’s Amended and Restated Stock Unit Award Program Subplan (the “SUA
Program”) that are not already vested as of the Transition Services
Agreement Termination Date will automatically vest pursuant to the terms of the
SUA Program and will be issued to you in accordance with the terms of the SUA
Program.  Shares subject to stock unit
awards granted to you under the SUA Program that are already vested as of the
Transition Services Agreement Termination Date will be issued to you in
accordance with the terms of the SUA Program.

 

(d)           Subject to your compliance with the
covenants in Paragraph 4 below, you will continue to vest in all Basic Units,
as defined in the Company’s Equity Deferral Award Program Subplan (the “EDA
Subplan”) and Matching Units, as defined in the EDA Subplan, awarded to you
pursuant to the grant notice dated March 23, 2009 under the EDA Subplan,
as if you continued in employment with the Company on each applicable vesting
date set forth in the grant notice, and the Basic Units and Matching Units will
be settled on the schedule set forth in Section 7(a)(i) and (ii) of
the EDA Subplan; provided that if (i) a change in control occurs prior to
the applicable settlement date and the change in control transaction
constitutes a “change in control event” within the meaning of such term under
section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
or (ii) you incur a Disability (as defined in the EDA Subplan) or die
prior to the applicable settlement date, in either case, any remaining Basic
Units and Matching Units that have not yet vested and been settled shall be
settled within 30 days following the date of the change in control, or within
60 days of your Disability or death, as applicable.  If a change in control occurs and the change
in control transaction is not a “change in control event” within the meaning of
such term under section 409A of the Code, any remaining Basic Units and
Matching Units that have not yet been settled will not be settled upon the
change in control but will continue to be settled according to the schedule set
forth in Section 7(a)(i) and (ii) of the EDA Subplan.  In no event will you, directly or indirectly,
designate the calendar year of settlement.

 

3.             General
Release of All Claims.

 

(a)           Except as provided in (f) below,
you, on behalf of yourself, your spouse, children, estate, successors and
assigns, release and give up any and all claims,  grievances, injuries, controversies, agreements,
covenants, promises, debts, accounts, actions, causes of action, suits,
arbitrations, sums of money, wages, attorneys’ fees, costs, damages, each which
you may have against ITG and the Releasees (as defined below), jointly and
individually, of whatever kind whatsoever each to the maximum extent legally
capable of being waived, including but not limited to, claims arising out of
your employment or other associations with the Company, or the termination of
your employment with the Company.  This
includes all claims based on anything that has occurred from the beginning of
time to the date of your signing of this Agreement, regardless of whether you
know of the claim or of your right to make a claim.  This release includes, but is not limited to,
any claims under: the Age Discrimination in Employment Act, 29

 

3

 

U.S.C.
Section 621, et seq., the Older Workers’ Benefits Protection Act, the
Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification
Act, 42 U.S.C. Section 1981, Title VII of the Civil Rights Act of 1964,
the Sarbanes-Oxley Act of 2002, the Family and Medical Leave Act, the Equal Pay
Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
(including, but not limited to, claims for breach of fiduciary duty under
ERISA), the Americans With Disabilities Act, the New York Executive Law, the
New York Labor Law,
New York State Human Rights Law, New York State Constitution, New York Civil
Rights Law, New York City Human Rights Law, and all amendments to those laws;
any claims under any other federal, state, or local employment discrimination
law, and any claim under any other federal, state or local law dealing with
employment or benefits, or concerning any other matter whatsoever; any claim
under any agreement, whether express or implied; and any public policy,
contract, tort or other common law claim, or any claim in equity.

 

(b)           In exchange for your release in (a) above,
the Company releases and gives up any and all claims it may have against you or
your executors, administrators, successors or assigns of whatever kind
whatsoever to the maximum extent provided by law, arising out, and within the
scope, of your employment with the Company or the termination thereof.  This includes all claims based on anything
that has occurred from the beginning of time to the date the Company signs this
Agreement, regardless of whether the Company knows of the claim or of its right
to make a claim; provided that the claims released by the
Company will not include any claims arising from your willful misconduct,
misrepresentation or fraud or any act or omission by you constituting criminal
conduct or a violation of the rules and/or regulations of any regulatory
agency or self-regulatory organization.  This release includes, but is not limited
to, any claim under any agreement, whether express or implied and any public
policy, contract, tort or other common law claim.

 

(c)           You agree that your employment and
contractual relationship, if any, with ITG and the Releasees is severed as of
the Transition Services Agreement Termination Date and that none of ITG and the
Releasees have any obligation to reemploy you.

 

(d)           You hereby acknowledge and agree
that, upon receiving the payments set forth above, you will have received all
amounts due from the Company through the Separation Date including, but not
limited to, the following: (i) all compensation earned, (ii) payment
for all accrued but unused paid vacation time, and (iii) reimbursement for
all reasonable and necessary business, travel and entertainment expenses
incurred on behalf of the Company.

 

(e)           For purposes of this Agreement, the
term “ITG and the Releasees” includes ITG and its past, present and future
direct and indirect parents, subsidiaries, affiliates, divisions, predecessors,
successors, and assigns, and their respective current and former officers, directors,

 

4

 

shareholders,
representatives, agents and employees, in their official and individual
capacities, jointly and individually.

 

(f)            The only claims that you are not
waiving and releasing under this Agreement are claims you may have for: (i) unemployment,
state disability, worker’s compensation, and/or paid family leave insurance
benefits pursuant to the terms of applicable state law; (ii) continuation
of existing participation in ITG-sponsored group health insurance program under
the federal law known as “COBRA” and/or under an applicable state law
counterpart(s); (iii) any benefits entitlements that are vested as of your
Separation Date pursuant to the terms of an ITG-sponsored benefit plan; (iv) any
claim not legally waivable by law; provided, however, that should you
successfully contest the validity of the release hereunder, any monetary or
economic benefit so obtained shall be offset by the value of all amounts paid
or provided under this Agreement and the Transition Services Agreement; (v) any
claim you may have to receive any amounts payable to you under this Agreement
or any other claim to enforce your rights under this Agreement or the
Transition Services Agreement; (vi) any claim you may have to
indemnification as an officer, director or employee of the Company and its
subsidiaries pursuant to the articles of incorporation or by-laws (or other
governing instruments) of the Company and its subsidiaries  and (vii) any claim or
right that may arise after the date you execute this Agreement.

 

4.             Continuing Obligations Following Your Separation
from Service.

 

(a)           You agree, upon reasonable notice
from the Company, to provide truthful and reasonable cooperation, including but
not limited to your appearance at interviews with the Company’s counsel, (i) in
connection with the defense of any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, demands and causes of action of
any nature whatsoever, which are asserted by any person or entity concerning or
related to any matter that arises out of or concerns events or occurrences
during your employment with the Company, and (ii) concerning requests for
information about the business of the Company or your involvement or participation
therein.  The Company will reimburse you
for reasonable and necessary travel and other expenses which you may incur at
the specific request of the Company and as approved by the Company in
accordance with its policies and procedures established from time to time.

 

(b)           By signing below, you
represent and warrant that you will return no later than the Transition Services Agreement Termination
Date any and all original and duplicate copies of all files, calendars,
books, records, notes, manuals, computer disks, diskettes and any other
magnetic and other media materials and any and all Company property and
equipment, including, but not limited to, computers and modems you have in your
possession or under your control belonging to ITG or the Releasees and
containing confidential or proprietary information concerning ITG or the
Releasees or their customers or operations. 
No later than the Transition Services

 

5

 

Agreement Termination Date, you will
also return your Company keys, credit cards, etc., to the Company.  Notwithstanding anything set forth in this
Paragraph, you shall be entitled to retain the laptop previously provided to
you by ITG (and any other office equipment as specifically agreed to by you and
ITG’s Chief Executive Officer) subject to the following sentence.  By signing this Agreement, you confirm that,
as of the Transition
Services Agreement Termination Date, you will not have in your
possession or under your control any of the documents or materials described in
this Paragraph.

 

(c)           You agree that for a period of three (3) months
following the Separation Date, you will be on garden leave and will not in any
manner, directly or indirectly, engage or participate in, any business, entity
or endeavor other than civic or charitable activities. 
For the period beginning on the Transition Services Agreement
Termination Date through the twelve (12) month anniversary of the Separation
Date, you will not in any manner, directly or indirectly, engage, participate
or be interested in any business, entity or endeavor with [**].  You will be deemed to be directly or
indirectly engaged or participating in, a business, entity or endeavor with
Liquidnet or Instinet if you are a principal, agent, stockholder (or other
proprietary or financial interest holder), director, officer, employee,
salesperson, sales representative, broker, partner, individual proprietor,
lender, consultant or otherwise.

 

(d)           You agree that you will not,
for the period of time from the Transition Services Agreement Termination Date
to the date on which all of the Basic Units and Matching Units granted to you
pursuant to the EDA Subplan are settled in accordance with Paragraph 2(d) above
(the “Non-Solicitation Period”), directly solicit, recruit, hire, or
participate in the solicitation, recruitment, or hiring of any employee,
contractor or consultant of ITG or any of its direct or indirect subsidiaries
employed or retained by ITG or any of its direct or indirect subsidiaries at
any time during the Non-Solicitation Period; provided, however, that the
foregoing prohibition shall not apply to any former employee who was
involuntarily terminated by ITG.

 

(e)           You agree that you will not, at any
time hereafter, make, or cause to be made, any statement, observation or
opinion, in each case, of a public nature, that disparages, impugns or in any
way reflects adversely upon the business, good will or reputation of the
Company or any Releasees.  The
restriction in the preceding sentence will include, but not be limited to, your
agreement that you will not, without the prior consent of the Company, initiate
any contacts with, nor respond to any inquiries from, the media concerning the
Company, your employment with the Company and/or your separation from service
with the Company.  All employees of the
Company who are aware of the existence of this Agreement will not, at any time
hereafter, make, issue or authorize any public statement, observation or
opinion that disparages, impugns or in any way reflects adversely upon your
reputation.  The provisions of this
Paragraph 4(e) will not impair either party’s right to provide truthful
testimony or other information as required by law or regulatory requirement.

 

6

 

(f)            You agree that you have certain
obligations under the terms of that certain Patent and Confidentiality Agreement dated
April 4, 1997, as amended on December 30, 2007 related to Inventions
and Proprietary Information (in each case, as defined in such Patent and
Confidentiality Agreement) which obligations are hereby incorporated by
reference and made part of this Agreement.

 

(g)           You acknowledge and agree
that the restrictions and agreements contained in Paragraphs 4(a) through
4(f), in view of the nature of the business in which ITG and the Releasees are
engaged, are reasonable, necessary and in the Company’s best interests in order
to protect the legitimate interests of ITG and the Releasees, and that any
violation thereof shall be deemed to be a material breach of this Agreement and
that the Company shall be entitled to pursue any and all remedies available to
it in a court of competent jurisdiction including, but not limited to
application for temporary, preliminary, and permanent injunctive relief, without
the requirement to post a bond, as well as damages, an equitable accounting of
all earnings, profits and other benefits arising from such violation.  In the event the Company brings an action to
redress a violation of Paragraphs 4(a) through 4(f) or either party
brings an action concerning an alleged breach of any other provision of this
Agreement, the prevailing party in any claims in such action shall be entitled
to recover all of its reasonable attorneys’ fees and costs incurred in
connection therewith.  If the Company
prevails in any claims in such action, you will be liable for the return of the separation
payments and benefits.

 

5.             No
Admissions.  The Company
and you agree that nothing contained in this Agreement is an admission by the
Company or you of any wrongdoing, liability, unlawful conduct or breach of any
duty or obligation.

 

6.             Confidentiality.  You agree that, absent disclosure of this
Agreement by the Company, you have kept, and will keep, the existence and terms
of this Agreement confidential, and will not disclose them to anyone except
your attorneys, financial advisors and immediate family members, whom you will
advise of this confidentiality provision. 
No other disclosure will be permitted except:  (a) pursuant to an action to enforce the
terms of this Agreement, in which case  
parties will seek that it be introduced under seal to the court, (b) in
response to a request by any governmental or regulatory agency, (c) as may
be required by any state or federal law or regulation, or (d) in response
to compulsory process of law.  The
parties further agree that nothing in this Agreement will prohibit or restrict
you from providing information to, testifying or otherwise assisting in any
investigation or proceeding brought by, any federal, state or local regulatory
agency, law enforcement agency, legislative body, or self-regulatory
organization.

 

7.             Governing
Law.  This Agreement will
be construed under the laws of the State of New York.

 

7

 

8.             Entire Agreement.  This Agreement
and the Transition Services Agreement cancels, supersedes and replaces any and
all prior agreements (written, oral or implied-in-fact or in law) between you
and the Company regarding all of the subjects covered by this Agreement except
as otherwise specifically provided in this Agreement.  This Agreement is the full, complete and
exclusive agreement between you and the Company regarding the subjects covered
by this Agreement, and neither you nor the Company is relying on any
representation or promise that is not expressly stated in this Agreement.  This Agreement may not be changed unless the
changes are in writing and signed by each of the parties.

 

9.             Severability.  With the exception of Paragraph 3, if any
provision of this Agreement or the application thereof is held invalid, the
invalidity will not affect other provisions or applications, and to this end
the provisions of this Agreement are declared to be severable.  In the event Paragraph 3 is held
unenforceable by any court having competent jursidiction over this Agreement in
connection with any action initiated or otherwise prosecuted by you, the
Company’s obligations under Paragraph 2 will be null and void, and you will be
liable for the return of the separation payments and benefits except as
otherwise provided in Paragraph 3(f)(iv).

 

10.           Review, Revocation Period
and Acknowledgments.  You
acknowledge that  under the Older Workers Benefit
Protection Act, you have had over twenty-one (21) calendar days after the date
you received this Agreement within which to review and  consider it, to discuss it with an attorney
of your choosing and to decide whether or not to sign it.  This Agreement, should you choose
to accept it, may only be signed on the Separation Date. You further understand and acknowledge
that you will have seven (7) days following the date of your execution of
this Agreement within which to revoke this Agreement (this deadline
will be extended to the next business day should it fall on a Saturday, Sunday
or holiday recognized by the U.S. Postal Service), and that this Agreement will not become effective or
enforceable until that seven (7) day revocation period has expired.  In the event you seek to revoke this
Agreement, you must provide the Company with written notice no later than the
close of business on the seventh (7th) day following your execution of this
Agreement.  Any notice of revocation will
be sent to P. Mats Goebels, Managing Director, General Counsel, Investment
Technology Group, Inc., 380 Madison Avenue, 4th Floor, New York, NY,
10017.  You are hereby advised to consult
with an attorney of your choice prior to executing this Agreement.

 

YOU UNDERSTAND THAT THIS AGREEMENT RELEASES ANY AND ALL CLAIMS AND
RIGHTS YOU MAY HAVE AGAINST THE COMPANY AND ALL OF THE OTHER RELEASEES AS
SET FORTH ABOVE, AND THAT BY SIGNING THIS AGREEMENT, YOU ACKNOWLEDGE AND AFFIRM
THAT:  (1) YOU ARE COMPETENT; (2) YOU
WERE AFFORDED A REASONABLE TIME PERIOD OF OVER TWENTY-ONE (21) DAYS TO REVIEW
AND CONSIDER THIS AGREEMENT,

 

8

 

AND
THAT ONCE YOU HAVE SIGNED THIS AGREEMENT YOU WILL THEN BE PERMITTED TO REVOKE
THIS AGREEMENT AT ANY TIME DURING THE PERIOD OF SEVEN DAYS FOLLOWING ITS
EXECUTION BY DELIVERING TO ITG A WRITTEN NOTICE OF REVOCATION; (3) YOU
HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY OF YOUR CHOICE PRIOR TO EXECUTING
THIS AGREEMENT; (4) YOU HAVE READ AND UNDERSTAND AND ACCEPT THIS AGREEMENT
AS FULLY AND FINALLY RESOLVING, WAIVING AND RELEASING ANY AND ALL CLAIMS AND
RIGHTS WHICH YOU MAY HAVE AGAINST THE COMPANY AND THE OTHER RELEASEES AS
SET FORTH ABOVE; (5) NO PROMISES OR INDUCEMENTS HAVE BEEN MADE TO YOU
EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT; AND (6) YOU HAVE
SIGNED THIS AGREEMENT FREELY, KNOWINGLY AND VOLUNTARILY, INTENDING TO BE
LEGALLY BOUND BY ITS TERMS.

 

IN EXCHANGE FOR YOUR WAIVERS, RELEASES AND COMMITMENTS SET FORTH
HEREIN, INCLUDING YOUR WAIVER AND RELEASE OF ALL CLAIMS ARISING UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT, THE PAYMENTS, BENEFITS AND OTHER
CONSIDERATIONS THAT YOU ARE RECEIVING PURSUANT TO THIS AGREEMENT EXCEED ANY
PAYMENT, BENEFIT OR OTHER THING OF VALUE TO WHICH YOU WOULD OTHERWISE BE
ENTITLED, AND ARE JUST AND SUFFICIENT CONSIDERATION FOR THE WAIVERS, RELEASES
AND COMMITMENTS SET FORTH HEREIN.

 

11.           Application of Section 409A
of the Internal Revenue Code.

 

(a)                                  This Agreement
will be interpreted to avoid any penalty sanctions under section 409A of the
Code.  If any payment or benefit cannot
be provided or made at the time specified herein without you incurring
sanctions under section 409A of the Code, then such benefit or payment will be
provided in full at the earliest time thereafter when such sanctions will not
be imposed.  Each payment made under this
Agreement will be treated as a separate payment and the right to a series of
installment payments under this Agreement will be treated as a right to a
series of separate payments.  In no event
will you, directly or indirectly, designate the calendar year of payment.

 

(b)                                 All reimbursements
and in-kind benefits provided under this Agreement will be made or provided in
accordance with the requirements of section 409A of the Code, including, where
applicable, the requirement that (i) any reimbursement will be for
expenses incurred during your lifetime (or during a shorter period of time
specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement, or in kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in kind benefits to be
provided,

 

9

 

in
any other calendar year, (iii) the reimbursement of an eligible expense
will be made on or before the last day of the calendar year following the year
in which the expense is incurred, and (iv) the right to reimbursement or
in kind benefits is not subject to liquidation or exchange for another benefit.

 

(c)                                  Notwithstanding
any provision of this Agreement to the contrary, if, at the time of your “separation
from service” with the Company, the Company has securities which are publicly
traded on an established securities market and you are a “specified employee”
(within the meaning of such term under section 409A of the Code) and it is
necessary to postpone the commencement of any compensation payments or benefits
otherwise payable pursuant to this Agreement as a result of your “separation
from service” to prevent any accelerated or additional tax under section 409A
of the Code, then the Company will postpone the commencement of the payment of
any such payments or benefits hereunder (without any reduction in such payments
or benefits ultimately paid or provided to you) that are not otherwise paid
within the short-term deferral and separation pay plan exceptions under section
409A of the Code, until the first payroll date that occurs after the date that
is six months following your “separation of service” with the Company.  If any payments are postponed due to such
requirements, such postponed a mounts will be paid in a lump sum to you on the
first payroll date that occurs after the date that is six (6) months
following your “separation of service” with the Company.  If you die during the postponement period
prior to the payment of postponed amount, the amounts withheld on account of section
409A of the Code will be paid to the personal representative of your estate
within sixty (60) days after the date of your death.

 

[SIGNATURE PAGE FOLLOWS]

 

10

 

Very
truly yours,

 

 

	
  INVESTMENT TECHNOLOGY GROUP,
  INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Robert C. Gasser

  	
   

  
	
   

  	
  Robert C. Gasser

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AGREED TO AND ACCEPTED
  BY:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Howard C. Naphtali

  	
   

  
	
  Howard C. Naphtali

  	
   

  
	
   

  	
   

  
	
  Dated: February 3,
  2010

  	
   

  

 

11

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