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)


 





















 


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


 





















 


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