EXHIBIT 10.19


 


ARCHIPELAGO HOLDINGS

EMPLOYEE STOCK PURCHASE PLAN


 


1. Purpose. The purpose of the Archipelago Holdings Employee Stock
Purchase Plan (the “Plan”) is to provide eligible employees of Archipelago
Holdings, L.L.C. and its successors (the “Company”) and its subsidiaries with
an opportunity to acquire an interest in the Company through the purchase of
common stock of the Company (the “Common Stock”), with accumulated payroll
deductions. The Company intends the Plan to qualify as an “employee stock purchase
plan” within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the “Code”), and the provisions of the Plan shall be
construed in a manner consistent with the requirements of Section 423 of
the Code.


 


2. Definitions.


 


a. “Authorization Form” shall mean a form supplied by and delivered to
the Company by a Participant authorizing payroll deductions as set forth in
Section 5 hereof and such other terms and conditions as the Company may
determine from time to time.


 


b. “Board” shall mean the Board of Directors of the Company.


 


c. “Committee” shall mean a committee of at least three members, which
may consist of directors, officers or other employees, designated by the Board
to administer the Plan and to perform the functions set forth herein. In the
absence of a designation to the contrary, the “Committee” shall be the
Compensation Committee of the Board.


 


d. “Compensation” shall mean earnings from regular pay, overtime pay,
commission, double overtime, retroactive pay, incentive pay, management bonus,
adjustment to regular pay and short term disability pay payable by the Company
or its Designated Subsidiaries to an Employee determined prior to the
Employee’s pre-tax contributions pursuant to Section 125 and
Section 401(k) of the Code, but excluding the value of stock options or
non-taxable fringe benefits provided by the Company or a Subsidiary.


 


e. “Designated Subsidiaries” shall mean Subsidiaries that have been
designated by the Committee from time to time, in its sole discretion, as
eligible to participate in the Plan.


 


f. “Eligible Employee” shall mean any person who is regularly employed
by the Company or one of its Designated Subsidiaries and who has completed at
least ninety (90) days of continuous full-time employment with the Company or a
Designated Subsidiary excluding:


 


(1) any Employee who customarily is employed
for not more than five (5) months in a calendar year; or


 


(2) any Employee who would own (immediately
after the grant of an option under the Plan and applying the rules of
Section 424(d) of the


 

















 


Code in determining stock ownership) shares, and/or hold outstanding
options to purchase shares, possessing five percent (5%) or more of the total
combined voting power or value of all classes of shares of the Company.


 


g. “Exercise Date” shall mean the last business day of each Offering
Period in which payroll deductions are made under the Plan.


 


h. “Fair Market Value” means, with respect to a share of Common Stock
on any day, the closing price of the Common Stock on the principal securities
exchange on which the shares of Common Stock are then traded, or, if not
traded, the price set by the Committee.


 


i. “IPO Date” shall mean the date of the commencement of the initial
public offering of shares of Common Stock.


 


j. “Offering Date” shall mean the first business day of each Offering
Period of each Plan Year.


 


k. “Offering Period” shall mean a period of six (6) months, or such
other period of time as determined from time to time by the Committee. The
first Offering Period shall commence on the date specified by the Committee.


 


l. “Participant” shall mean an Eligible Employee who participates in
the Plan.


 


m. “Plan Year” shall mean the period beginning on the first day of the
first Offering Period and ending on December 31 of the year in which the
first Offering Period occurs and each calendar year thereafter.


 


n. “Subsidiary” shall mean any corporation, if any, having the
relationship to the Company described in Section 424(f) of the Code.


 


3. Eligibility and Participation.


 


a. Any person who is an Eligible Employee on an Offering Date shall be
eligible to become a Participant in the Plan beginning on that Offering Date
and shall become a Participant as of that Offering Date by completing an
Authorization Form and filing it with the Company by the date required by the
Company. Such authorization will remain in effect for subsequent Offering
Periods, until modified or terminated by the Participant.


 


b. Any person who first becomes an Eligible Employee during an Offering
Period shall be eligible to become a Participant in the Plan as of the first
day of the Offering Date occurring after the date on which that person became
an Eligible Employee and shall become a Participant as of such date by
completing an Authorization Form and filing it with the Company by the date
required by the Company. Such authorization will remain in effect for
subsequent Offering Periods, until modified or terminated by the Participant.


 


c. A person shall cease to be a Participant upon the earliest to


 


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occur of:


 


(1) the date the Participant ceases to be an
Eligible Employee, for any reason;


 


(2) the first day of the Offering Period
beginning after the date on which the Participant ceases payroll deductions
under the Plan; or


 


(3) the date of a withdrawal from the Plan by
the Participant as provided in Section 8 hereof.


 


4. Grant of Option.


 


a. On each Offering Date, the Company shall grant each Eligible
Employee an option to purchase shares of Common Stock, subject to the
limitations set forth in Sections 3.b., 3.c. and 10 hereof.


 


b. The option price per share of the Common Stock subject to an
offering shall be set by the Committee prior to the commencement of each
Offering Period, provided that such option exercise price shall not be less
than the lesser of: (i) eighty-five percent (85%) of the Fair Market Value of a
share of Common Stock on the Offering Date or (ii) eighty-five percent (85%) of
the Fair Market Value of a share of Common Stock on the Exercise Date.


 


c. No Participant shall be granted an option which permits his rights
to purchase Common Stock under the Plan and all other employee stock purchase
plans of the Company to accrue at a rate which exceeds $25,000 of the Fair
Market Value of the Common Stock (determined at the time the option is granted)
for each calendar year in which such stock option is outstanding at any time;
for purposes of this limitation, there shall be counted only options to which
Section 423 of the Code applies.


 


5. Payroll Deductions.


 


a. A Participant may, in accordance with rules adopted by the
Committee, submit an Authorization Form authorizing a payroll deduction of any
whole number percentage from one percent (1%) to ten percent (10%) (or such
other percentage as may be established by the Committee from time to time in
its sole discretion) of such Participant’s Compensation on each pay period
during the Offering Period. A Participant may increase or decrease such payroll
deduction (including a cessation of payroll deductions) effective as of each
Offering Date, provided that the Employee files with the Company the
Authorization Form requesting such change by the date required by the Company.


 


b. All payroll deductions made by a Participant shall be credited to such
Participant’s account under the Plan. A Participant may not make any additional
payments into such account.


 


6. Exercise of Option.


 


a. Unless a Participant withdraws from the Plan as provided in
Section 8 hereof, such Participant’s option to purchase shares will be
exercised automatically on the Exercise Date, and the maximum number of whole
shares 


 


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subject to such option will be purchased for such Participant at the
applicable option price with the accumulated payroll deductions and cash
dividends (credited pursuant to Section 9 hereof) in such Participant’s
account. No fractional shares will be issued under the Plan. During a
Participant’s lifetime, his or her option to purchase shares hereunder is exercisable
only by such Participant.


 


b. The shares of Common Stock purchased upon exercise of an option
hereunder shall be credited to the Participant’s account under the Plan and
shall be deemed to be transferred to the Participant on the Exercise Date and,
except as otherwise provided herein, the Participant shall have all rights of a
stockholder with respect to such shares. Shares of Common Stock received upon
stock dividends or stock splits shall be treated as having been purchased on
the Exercise Date of the shares to which they relate.


 


7. Delivery of Common Stock. As promptly as practicable after receipt
by the Plan’s administrator or brokerage firm of a written request from any
Participant, the Plan’s administrator or brokerage firm, as the case may be,
shall arrange the delivery to such Participant of a stock certificate
representing the shares of Common Stock which the Participant requests to
withdraw. Withdrawals may be made no more frequently than twice each Plan Year
unless approved by the Committee in its sole discretion.


 


8. Withdrawal; Termination of Employment.


 


a. A Participant may withdraw all, but not less than all, the payroll
deductions and cash dividends credited to such Participant’s account under the
Plan at any time by giving written notice to the Company received at least
thirty (30) days prior to the Exercise Date (or such other notice period as may
be established by the Committee from time to time in its sole discretion). All
such payroll deductions and cash dividends credited to such Participant’s
account will be paid to such Participant promptly after receipt of such
Participant’s notice of withdrawal and such Participant’s option for the
Offering Period in which the withdrawal occurs will be automatically
terminated. No further payroll deductions for the purchase of shares of Common
Stock will be made for such Participant during such Offering Period, and any
additional cash dividends during the Offering Period will be distributed to the
Participant.


 


b. Upon termination of a Participant’s status as an Employee during the
Offering Period for any reason, including voluntary termination, retirement or
death, the payroll deductions and cash dividends remaining credited to such
Participant’s account will be returned (and any future cash dividends will be
distributed) to such Participant or, in the case of such Participant’s death,
his estate, and such Participant’s option will be automatically terminated. A
Participant’s status as an Employee shall not be considered terminated in the case
of a leave of absence agreed to in writing by the Company (including, but not
limited to, military and sick leave), provided that such leave is for a period
of not more than six (6) months or reemployment upon expiration of such leave
is guaranteed by contract or statute.


 


c. A Participant’s withdrawal from an offering will not have any 


 


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effect upon such Participant’s eligibility to participate in a
succeeding offering.


 


9. Dividends.


 


a. Dividends paid in Common Stock or stock splits of the Common Stock
shall be credited to the accounts of Participants. Dividends paid in cash or
property other than Common Stock shall be distributed to Participants as soon
as practicable.


 


b. No interest shall accrue on or be payable with respect to the
payroll deductions or dividends of a Participant in the Plan.


 


10. Stock.


 


a. The maximum number of shares of Common Stock which shall be reserved
for sale under the Plan shall be 1.85 million, subject to adjustment upon the
occurrence of an event as provided in Section 14 hereof. Such shares may
be authorized but unissued Common Stock or authorized and issued Common Stock
held in the Company’s treasury or acquired by the Company for the purposes of
the Plan. Shares subject to any lapsed or expired option shall again become
available for transfer pursuant to options granted or to be granted under the
Plan. If the total number of shares which would otherwise be subject to options
granted under the Plan on an Offering Date exceeds the number of shares then
available under the Plan (after deduction of all shares for which options have
been exercised or are then outstanding), the Committee shall make a pro rata
allocation of the shares remaining available for option grant in as uniform a
manner as shall be practicable and as it shall determine to be equitable. In
such event, the Committee shall give written notice to each Participant of such
reduction of the number of option shares affected thereby and shall similarly
reduce the rate of payroll deductions, if necessary. The 1.85 million share
figure referred to above shall be adjusted based upon any conversion rate
applicable to the shares of Archipelago Holdings, L.L.C. in connection with an
initial public offering of shares of Common Stock.


 


b. Shares of Common Stock to be delivered to a Participant under the
Plan will be registered in the name of the Participant or, at the election of
the Participant, in the name of the Participant and another person as joint
tenants with rights of survivorship.


 


11. Administration. The Plan shall be administered by the Committee,
and the Committee may select an administrator to whom its duties and
responsibilities hereunder may be delegated. The Committee shall have full
power and authority, subject to the provisions of the Plan, to promulgate such
rules and regulations as it deems necessary for the proper administration of
the Plan, to interpret the provisions and supervise the administration of the
Plan, and to take all action in connection therewith or in relation thereto as
it deems necessary or advisable. Any decision reduced to writing and signed by
a majority of the members of the Committee shall be fully effective as if it
had been made at a meeting duly held. The determination of the Committee on any
matters relating to the Plan shall be final, binding and conclusive. The
Company will pay all expenses incurred in the administration of the Plan. No
member of the 


 


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Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan, and all members of
the Committee shall be fully indemnified by the Company with respect to any
such action, determination or interpretation.


 


12. Transferability. Neither payroll deductions credited to a
Participant’s account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will or the laws of descent and
distribution) by the Participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with
Section 8 hereof.


 


13. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.


 


14. Effect of Certain Changes. In the event of any increase, reduction,
or change or exchange of shares of Common Stock for a different number or kind
of shares or other securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, stock dividend, stock
split or reverse stock split, combination or exchange of shares, repurchase of
shares, change in corporate structure, distribution of an extraordinary
dividend or otherwise, the Committee shall conclusively determine the
appropriate equitable adjustments, if any, to be made under the Plan, including
without limitation adjustments to the number of shares of Common Stock which
have been authorized for issuance under the Plan but have not yet been granted
under options, as well as the price per share of Common Stock covered by each
option under the Plan which has not yet been exercised.


 


15. Termination or Amendment. The Board may at any time terminate or
amend the Plan. No such termination can adversely affect options previously
granted and no amendment may make any change in any option theretofore granted
which adversely affects the rights of any Participant. No amendment shall be
effective unless approved by the stockholders of the Company if stockholder
approval of such amendment is required to comply with any law, regulation or
stock exchange rule.


 


16. Notices. All notices or other communications by a Participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.


 


17. No Employment Rights. Nothing in the Plan shall confer upon any
Participant the right to continue in the employ of the Company or any
Subsidiary or affect any right which the Company or any Subsidiary may have to
terminate such employment.


 


18. Regulations and other Approvals; Governing Law.


 


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a. THIS PLAN AND THE RIGHTS OF ALL PERSONS CLAIMING HEREUNDER SHALL BE
CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS.


 


b. The obligation of the Company to sell or deliver shares of Common
Stock with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable Federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.


 


c. The Plan is intended to comply with Rule 16b-3 as promulgated under
Section 16 of the Securities Exchange Act of 1934 and the Committee shall
interpret and administer the provisions of the Plan in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.


 


19. Arbitration. Any dispute, controversy or claim between the Company
and any participant arising out of or relating to or concerning the provisions
of the Plan shall be finally settled by arbitration in Chicago, Illinois
before, and in accordance with, the rules then obtaining of the American
Arbitration Association (the “AAA”) in accordance with the commercial
arbitration rules of the AAA. Prior to arbitration, all disputes, controversies
or claims maintained by any participant must first be submitted to the
Committee in accordance with claim procedures determined by the Committee in
its sole discretion.


 


20. Withholding of Taxes. If the Participant makes a disposition,
within the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any share or shares issued to such Participant
pursuant to such Participant’s exercise of an option, and such disposition
occurs within the two-year period commencing on the day after the Offering Date
or within the one-year period commencing on the day after the Exercise Date,
such Participant shall, within five (5) days of such disposition, notify the
Company thereof and thereafter immediately deliver to the Company any amount of
Federal, state or local income taxes and other amounts which the Company
informs the Participant the Company is required to withhold.


 


21. Adoption Date; Effective Date; Approval of Stockholders. The Plan
was adopted on February 26, 2004. The Plan shall become effective on the
IPO Date. In the event that the IPO Date has not occurred by December 31,
2004, the Plan shall expire and be null and void without any force or effect.
The Plan shall be submitted to the stockholders of the Company for their
approval within twelve (12) months after the date the Plan is adopted by the
Board. The Plan is conditioned upon the approval of the stockholders of the
Company, and failure to receive their approval shall render the Plan and all
outstanding options issued thereunder void and of no effect.


 


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