ITT EDUCATIONAL SERVICES INC
EX-10.42
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<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit 10.42</font></b></p>

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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">SECOND AMENDMENT TO THE<br></font></b><b><font style="font-weight:bold;">1999 OUTSIDE DIRECTORS STOCK OPTION PLAN</font></b></p>

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<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHEREAS, the Board of Directors of ITT Educational Services, Inc. (the
&#147;Company&#148;) adopted the 1999 Outside Directors Stock Option Plan (the &#147;Plan&#148;) on
July&nbsp;28, 1999; and</font></p>

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<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHEREAS, the Board of Directors now desires to amend the Plan in a
respect that does not require shareholder approval.</font></p>

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<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">NOW, THEREFORE, the Plan is hereby amended as follows:</font></p>

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<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Subsection&nbsp;6(f)
of the Plan is hereby amended to read as follows:</p>

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<p style="font-size:10.0pt;margin:0in 0in .0001pt 2.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(f)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>An Option shall not
be exercisable unless the person exercising the Option has been, at all times
during the period beginning with the date of grant of the Option and ending on
the date of such exercise, in continuous service on the Board, except that:</p>

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<p style="font-size:10.0pt;margin:0in 0in .0001pt 2.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>if any Grantee of
an Option shall die or become permanently disabled or shall retire with the
consent of the Board, holding an Option that has not expired and has not been
fully exercised, he or his executor, administrators, heirs, or distributees, as
the case may be, may, at any time within the longer of (I) one year after the
date of such event or (II) one-half of the number of full months the Grantee
served on the Board up to 120 (but in no event after the Option has expired
under the provisions of subparagraph&nbsp;6(d) above), exercise the Option with
respect to any shares as to which the Grantee could have exercised the Option
at the time of his death, disability, or retirement; or</p>

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<p style="font-size:10.0pt;margin:0in 0in .0001pt 2.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>if a Grantee shall
cease to serve as a director of the Company for any reason other than those set
forth in 6(f)(i) above, while holding an Option that has not expired and has
not been fully exercised, the Grantee, at any time within three months of the
date he ceased to be such an Eligible Director (but in no event after the Option
has expired under the provisions of subparagraph&nbsp;6(d) above), may exercise
the Option with respect to any shares of Common Stock as to </p>

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<p style="margin:0in 0in .0001pt 2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">which he could have exercised the Option on the date he ceased to be
such an Eligible Director.</font></p>

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<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>This
Second Amendment to the Plan shall become effective upon its adoption by the
Board of Directors of the Company.</p>

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<p style="margin:0in 0in .0001pt 2.75in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Adopted
by the Board of Directors of ITT Educational<br>
Services, Inc. on April&nbsp;20, 2004</font></b></p>

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