Exhibit 10.1

 

AGREEMENT

 

THIS AGREEMENT, dated as of December 30, 2005, between Archipelago
Holdings, Inc., a Delaware corporation (including any successor thereto, the
“Company”), and Gerald D. Putnam (the “Executive”) pertains to the Employment
Agreement between the Company and the Executive dated as of December 19, 2001,
as amended (the “Employment Agreement”), Executive’s Restricted Stock Units
issued under the Company 2004 Stock Incentive Plan (each an “RSU”) and
Executive’s unvested stock options issued under various Company equity
compensation plans (each a “Stock Option”), is effective as of December 30,
2005.

 

WHEREAS, completion of the mergers (the “Mergers”) contemplated by the Agreement
and Plan of Merger, dated as of April 20, 2005, as amended and restated as of
July 20, 2005, and as amended as of October 20, 2005 and as of November 2, 2005,
by and among, the New York Stock Exchange, Inc. (the “NYSE”), the Company, and
certain subsidiaries of such entities, is expected to occur during the first
quarter of 2006;

 

WHEREAS, the Employment Agreement provides that if, during the Employment Period
(as defined in the Employment Agreement), the Executive’s employment is
terminated by the Company without Cause or the Executive resigns for Good Reason
(as defined in the Employment Agreement), the Executive will be entitled to
receive the benefits described in the Employment Agreement in accordance with
the terms and conditions set forth therein;

 

WHEREAS, the RSUs contain provisions that provide for the accelerated vesting
and delivery of the underlying Company common stock upon certain terminations
without cause or for good reason following a merger of the Company (such as the
Mergers);

 

WHEREAS, the Stock Options contain provisions that provide for the accelerated
vesting thereof upon certain terminations without cause or for good reason
following a merger of the Company (such as the Mergers);

 

WHEREAS, the NYSE has consented to the Company’s payment of the amounts set
forth in Section 1 below and the other provisions hereof, and to entry into this
Agreement by December 31, 2005 in order to ensure that Executive will continue
employment with the combined entity following the Mergers, comply with new
Section 409A of the Internal Revenue Code (which applies to certain arrangements
that provide for the deferral of compensation) and realize significant
tax-related cost savings; and

 

WHEREAS, the Company and the Executive desire to enter into this Amendment;

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.             Employment Agreement.  On December 30, 2005, the Company shall
pay to the Executive a lump sum cash payment in an amount equal to three times
the sum of the Executive’s (i) current annual salary plus (ii) average annual
bonus for 2004 and 2005 (as provided for in Section 4(a)(i)(A) of the Employment
Agreement).  Such payment shall be subject to applicable tax withholding.  Upon
payment of such amount, the Employment Agreement shall terminate and be of no
further force or effect, except that (a) Sections 4(a)(iii)

 

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and 11(i) (including the related definitions in Section 3) of the Employment
Agreement shall continue to apply to any Company stock options held by Executive
as of the date hereof, (b) Section 4(a)(ii) (including the related definitions
in Section 3) shall continue to apply upon Executive’s termination of employment
to the extent provided in the Employment Agreement, provided that, in lieu of
continuation of benefits described therein, the Company shall pay Executive a
cash payment of $45,000, less applicable taxes; (c) Section 7 of the Employment
Agreement (relating to the “Gross-Up Payment”) shall continue to apply,
(d) Section 8 of the Employment Agreement (relating to covenants not to compete
or solicit and confidential information) shall continue to apply during
Executive’s employment and following termination thereof for any reason and
(e) Section 10 and 11(d) of the Employment Agreement (relating to dispute
resolution and tax withholding) shall continue to apply, in each instance as if
such provisions of the Employment Agreement were fully set forth herein.

 

2.             Restricted Stock Unit Vesting and Payment; Tax Withholding.  On
December 30, 2005, all RSUs shall vest in full and no longer be subject to any
right of recapture set forth in the applicable RSU award agreement.  On
December 30, 2005, the Company shall issue to the Executive the number of shares
of Company common stock attributable to such vesting, provided that the Company
shall satisfy applicable tax withholding by reducing the number of shares
delivered to the Executive by the amount of shares having a fair market value
equal to the minimum statutory withholding taxes applicable to the payment of
such shares.

 

3.             Stock Options.  Immediately prior to the consummation of the
Mergers, subject to the Executive’s continued employment with the Company
through such date, 75 percent of each tranche of Stock Options that are then
outstanding and unvested shall become immediately vested and exercisable in full
and no longer be subject to any right of recapture set forth in the applicable
stock option award agreement (the “Option Acceleration”).  However,
notwithstanding anything to the contrary contained in this Agreement or the
Employment Agreement to the contrary, in the event the Option Acceleration
(together with any other payments under this Agreement or otherwise (the
“Payments”)) would constitute “excess parachute payments” under Section 280G of
the Code, the Option Acceleration will be reduced to the extent necessary so
that when aggregated with all other Payments, the Present Value (as defined
below) of the Option Acceleration shall be equal to three (3) times the
Executive’s “base amount,” as determined in accordance with Section 280G of the
Code, less $10,000.00 (the “Reduced Amount”).  If the Option Acceleration is
required to be reduced to result in the Reduced Amount, the Company shall
promptly give the Executive notice to that effect and a copy of the detailed
calculation thereof, and the Executive may then elect, in his sole discretion,
which and how much of the Option Acceleration shall be eliminated or reduced (as
long as after such election the Present Value of the aggregate Payments equals
the Reduced Amount), and shall advise the Company in writing of his or her
election within five days of his receipt of notice.  If no such election is made
by the Executive within such five-day period, the Company may elect which and
how much of such Option Acceleration shall be eliminated or reduced (as long as
after such election the Present Value of the aggregate Payments equals the
Reduced Amount) and shall notify the Executive promptly of such election,
provided that if the consummation of the Mergers occurs prior to the Executive’s
and the Company’s determination under this Section 3, the Executive’s right to
exercise the options that accelerate pursuant to the first sentence of this
Section 3 shall be suspended until such time as such determination shall be

 

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made.  “Present Value” means such value determined in accordance with Sections
280G(b)(2)(A)(ii) and 280G(d)(4) of the Code.

 

4.             Successors; Binding Agreement.  This Agreement shall be binding
upon and inure to the benefit of the Company and its successors and on Executive
and his personal or legal representatives and successors.

 

5.             Governing Law.  The interpretation, construction and performance
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Illinois without regard to the principle
of conflicts of laws.

 

6.             Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.

 

IN WITNESS WHEREOF, the Executive and the Company have executed this Amendment
(which may be executed in counterparts, each of which shall be an original and
together shall constitute one document) all as of the day and year first above
written.

 

 

 

/s/ Gerald D. Putnam

 

 

Gerald D. Putnam

 

 

 

 

 

 

 

 

ARCHIPELAGO HOLDINGS, INC.

 

 

 

 

 

By:

/s/ Kevin J. P. O’Hara

 

 

 

 

 

Name:

Kevin J. P. O’Hara

 

 

 

 

 

Title:

Chief Administrative Officer, General Counsel and Corporate Secretary

 

 

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