Document:

Exhibit
10.32

 

ARCHIPELAGO HOLDINGS, L.L.C.

SHARE OPTION AWARD AGREEMENT

 

THIS AWARD AGREEMENT, made this
           day of
                  ,
200     (the “Grant Date”), by and between
Archipelago Holdings, L.L.C., a Delaware limited liability company (the “Company”),
and
                              
(the “Employee”) pursuant to the Archipelago Holdings, L.L.C.
200   Long-Term Incentive Plan (the “Plan”).

 

W I T N E S S E T H:

 

WHEREAS, the Company has adopted the Plan and
determined that it is in the interest of the Company to enter into this Award
Agreement.

 

NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, the parties hereto hereby agree as follows:

 

1.             Grant of Option.  The Company hereby grants to the Employee
pursuant to the Plan the right and option (an “Option”) to purchase,
subject to the vesting and exercise provisions of Section 4, all or any part of
an aggregate of
                      
shares (the “Option Shares”) of the Company’s Class    Shares
(“Shares”) at a purchase price per Share of 
                    
(the “Option Exercise Price”).  If an
executed copy of this Award Agreement is not returned to the Company by
                  ,
200    , the grant of Options hereunder shall be null and
void, unless the Company determines, in its sole discretion, that any delay was
for good cause.

 

2.             Additional Documents. Definitions.  The Plan, which is incorporated in this
Award Agreement by reference and made a part hereof, shall govern all aspects
of this Award Agreement except as otherwise specifically stated herein.  For purposes of this Award Agreement all
terms not defined in this Award Agreement or in Annex A attached hereto shall
have the respective meanings specified under the Plan.

 

3.             Term of Option.  Subject to earlier termination as provided
in Section 5, the Option shall expire and cease to be exercisable on the tenth
(10th) anniversary of the Grant Date (the “Expiration Date”).

 

4.             Vesting and Exercisability.  Except as otherwise provided herein, the Option
shall vest in equal installments on each of
                              ;
provided, however, that neither this Option nor any portion thereof may be
exercised prior to the earlier of (x) the Company’s Initial Public Offering and
(y) the fifth anniversary of
                            
(the “Exercise Event”).

 

5.             Termination of Employment.

 

(a)           Upon
the Employee’s Termination of Employment for Cause, the Option (whether vested
or unvested) shall terminate immediately and no longer be exercisable.

 

 

(b)           Upon
the Employee’s Termination of Employment for any reason other than death,
Disability or dismissal for Cause, the Employee may exercise the Option on the
following terms and conditions:  (i)
exercise may be made only to the extent that the Option vested prior to the
Employee’s Termination of Employment and to the extent that the Employee was
otherwise entitled to exercise the Option on the date of the Employee’s
Termination of Employment and (ii) exercise must occur by the earlier of 30
days after the Employee’s Termination of Employment and the Expiration Date.

 

(c)           Upon
the Employee’s Termination of Employment for Disability, the Option shall be
exercisable on the following terms and conditions:  (i) the Option shall continue to vest as if the Employee was
still employed with the Company as long as the Employee continues to have a
Disability, (ii) exercise may be made only to the extent that the Employee was
otherwise entitled to exercise the Option on the date of Termination of
Employment and (iii) exercise must occur by the later of 6 months after the
Options fully vest and 6 months after the occurrence of an Exercise Event, but
in no case later than the Expiration Date.

 

(d)           If
an Employee dies while employed by the Company or while the Employee has a
Disability covered under Section 5(c), the Option shall be exercisable on the
following terms and conditions:  (i) all
Options shall immediately vest, (ii) exercise may be made, after an Exercise
Event, until the later of 12 months following such Exercise Event and 12 months
after death and (iii) notwithstanding (ii), exercise must occur by the
Expiration Date.  Any such exercise
shall be made only by the Employee’s executor or administrator, unless the
Employee’s will specifically disposes of the Option, in which case such
exercise shall be made only by the recipient of such specific disposition.  If an Employee’s personal representative or
the recipient of a specific disposition under the Employee’s will shall be
entitled to exercise the Option pursuant to the preceding sentence, such
representative or recipient shall be bound by all the terms and conditions of
the Plan and this Award Agreement which would have applied to the Employee.

 

6.             Method of Exercising Option.

 

(a)           Any
unexercised portion of a vested Option shall be exercised by the filing of a
written notice with the Company, on such form and in such manner as the Company
shall prescribe.  Such notice shall
include a certification by the Employee that he/she has not engaged in
Competitive Activity or conduct that would constitute a basis for a Termination
of Employment for Cause (or, in the event the Employee is not then employed by
the Company, that he/she has not engaged in any Competitive Activity or
Detrimental Activity).  The Company, at
its discretion, may hold any request to exercise an Option in abeyance until
such certification has been confirmed to the Committee’s satisfaction.  This Option may be exercised only in respect
of whole Shares.  Full payment for the
Option Shares purchased shall be made at the time of any exercise under this
Award Agreement and shall be made: (i) in cash or by certified or official bank
check; or (ii) by delivery of Shares (which, if acquired pursuant to exercise
of a Share option or under an award made under the Plan or any other
compensatory plan of the Company, were acquired at least six months prior to
the option exercise date) having a

 

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Fair Market Value (determined as of the exercise date) equal to all or
part of the Option Exercise Price and a certified or official bank check (or
the equivalent thereof acceptable to the Company) for any remaining portion of
the full Option Exercise Price; or (iii) at the discretion of the Company and
to the extent permitted by law, by such other method as the Company may from
time to time prescribe.

 

(b)           At
the time of exercise, the Employee shall pay to the Company such amount as the
Company deems necessary to satisfy its obligation to withhold Federal, state or
local income or other taxes (including FICA) incurred by reason of such
exercise or the transfer of Option Shares thereupon by tendering to the Company
a check in the amount of such withholding or, if permitted by the Company, by
electing to have withheld upon exercise, Option Shares having a Fair Market
Value equal to the amount of such statutory minimum tax withholding.

 

7.             Issuance of Shares.  As promptly as practical after receipt of
such written notification of exercise and full payment of the Option Exercise
Price, any required tax withholding and receipt of such Consents as the Company
deems necessary or desirable, the Company shall issue or transfer to the
Employee the number of Option Shares with respect to which such Option has been
exercised (less Shares withheld in satisfaction of tax withholding obligations,
if any), and shall deliver to the Employee a certificate or certificates
therefor, registered in the Employee’s name. 
The Company may postpone such delivery until it receives satisfactory
proof that the issuance or transfer of such Option Shares will not violate any
of the provisions of the Securities Act of 1933, as amended (the “Securities
Act”), or the Securities Exchange Act of 1934, as amended, any rules or
regulations of the Securities and Exchange Commission promulgated thereunder,
or the requirements of applicable state law relating to authorization, issuance
or sale of securities, or until there has been compliance with the provisions
of such acts or rules.

 

8.             Rights as Shareholder.  Neither the Employee nor any permitted
transferee of the Option shall have any of the rights of a member or
shareholder with respect to any Option Shares except to the extent that a
certificate or certificates for such Option Shares shall have been issued upon
the exercise of the Option as provided herein, and no adjustment shall be made
for cash distributions in respect of such Option Shares for which the
distribution date (or record date, in the event the Company becomes a
corporation) is prior to the date upon which such Employee or permitted
transferee shall become the holder of record thereof.

 

9.             Purchase for Purpose of Investment.

 

(a)           Securities
Law Restrictions.  Regardless of
whether the offering and sale of Option Shares under the Plan have been registered
under the Securities Act or have been registered or qualified under the
securities laws of any state, the Company at its discretion may impose
restrictions upon the sale, pledge or other transfer of such Option Shares
(including the placement of appropriate legends on certificates or the
imposition of stop-transfer instructions) if, in the judgment of the Company,
such restrictions are necessary or desirable in order to achieve compliance
with the Securities Act, the securities laws of any state or any other law.

 

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(b)           Market
Stand-Off.  In connection with any
underwritten public offering by the Company of its equity securities pursuant
to an effective registration statement filed under the Securities Act,
including the Company’s Initial Public Offering, the Employee shall not
directly or indirectly sell, make any short sale of, loan, hypothecate, pledge,
offer, grant or sell any option or other contract for the purchase of, purchase
any option or other contract for the sale of, or otherwise dispose of or
transfer, or agree to engage in any of the foregoing transactions with respect
to, any Option Shares acquired under this Award Agreement without the prior
written consent of the Company.  Such
restriction (the “Market Stand-Off”) shall be in effect for such period
of time following the date of the final prospectus for the offering as may be
required by the Company; provided, however, that with respect to any particular
underwritten public offering, such period shall not exceed 180 days.

 

In the event of any adjustment of, changes in or
additions to the Option Shares, any new, substituted or additional interests or
securities which are by reason of such adjustment, change or addition
distributed with respect to any Option Shares subject to the Market Stand-Off,
or into which such Option Shares thereby become convertible, shall immediately
be subject to the Market Stand-Off.  In
order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions
with respect to the Option Shares acquired under this Award Agreement until the
end of the applicable stand-off period. 
The Company’s underwriters shall be beneficiaries of the agreement set
forth in this Section 9(b).  This
Section 9(b) shall not apply to Option Shares that are registered in the public
offering under the Securities Act.

 

(c)           Investment
Intent at Grant.  The Employee
represents and agrees that at the time of grant the Option Shares to be
acquired upon exercising this Option will be acquired for investment, and not
with a view to the sale or distribution thereof.

 

(d)           Investment
Intent at Exercise.  In the event
that the sale of Option Shares under the Plan is not registered under the
Securities Act but an exemption is available which requires an investment
representation or other representation, the Employee shall represent and agree
at the time of exercise that the Option Shares being acquired upon exercising
this Option are being acquired for investment, and not with a view to the sale
or distribution thereof, and shall make such other representations as are
deemed necessary or appropriate by the Company and its counsel.

 

(e)           Legends.  If the Company chooses to deliver
certificates to evidence the Option Shares purchased under this Award Agreement
in an unregistered transaction all such certificates shall bear the following
legend (and such other restrictive legends as are required or deemed advisable
under the provisions of any applicable law):

 

“THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY OTHER
JURISDICTION, AND MAY NOT BE OFFERED, SOLD

 

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OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL (A) REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS
OF ANY OTHER JURISDICTION, OR (B) IN THE OPINION OF COUNSEL, IN FORM AND
SUBSTANCE SATISFACTORY TO ARCHIPELAGO, SUCH OFFER, SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.”

 

(f)            Removal
of Legends.  If, in the opinion of
the Company and its counsel, any legend placed on a stock certificate
representing Option Shares sold under this Award Agreement is no longer
required, the holder of such certificate shall be entitled to exchange such
certificate for a certificate representing the same number of Option Shares but
without such legend.

 

(g)           Administration.  Any determination by the Company and its
counsel in connection with any of the matters set forth in this Section 9 shall
be conclusive and binding on the Employee and all other persons.

 

10.           Right of Recapture.  If at any time within six months after the
date on which the Employee exercises the Option: (a) there is a Termination of
Employment for Cause (or, if still employed by the Company, engages in any
activity that would constitute a basis for a Termination of Employment for
Cause); or (b) the Employee engages in any activity determined in the discretion
of the Company to be Competitive Activity, then any gain realized by the
Employee from the exercise of the Option (“Gain”) shall be paid by the Employee
to the Company upon notice from the Company. 
Such Gain shall be determined as of the date of the Option exercise
without regard to any subsequent change in the Fair Market Value of a Share (as
the difference between the aggregate exercise price of the Option Shares and
the Fair Market Value of the Option Shares on their respective Option exercise
dates).  The Company shall have the
right to offset such Gain against any amounts otherwise owed to the Employee by
the Company (including, without limitation, against any wages, vacation pay, or
pursuant to any benefit plan or other compensatory arrangement) to the maximum
extent permitted by law.

 

11.           Right of Offset.  The Company shall have the right to offset
against the obligation to deliver Option Shares in respect of any Award
Agreement, any outstanding amounts then owed by the Employee to the Company.

 

12.           Notices.  All notices required or permitted hereunder shall be given in
writing by personal delivery, by confirmed facsimile transmission (with a copy
dispatched by express delivery or registered or certified mail), or by express
delivery via express mail or any reputable express courier service.  Notices shall be addressed:

 

(a)           if
to the Company, at 100 South Wacker Drive, 20th Floor, Chicago, IL 60606,
Attention:                ;
Fax: at,                    ;
Confirm:           ; or

 

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(b)           if
to the Employee, at the address set forth on the signature page; or

 

(c)           as
to either party, at such other address as may be designated by notice in the
manner set forth herein.

 

Notices which are delivered personally, by confirmed
facsimile transmission, or by courier as aforesaid, shall be effective on the
date of delivery.

 

13.           Amendment.  The Committee may from time to time revise or amend this Award
Agreement, in its sole discretion, in any manner that it deems appropriate,
including, but not limited to, any amendment effected to preserve or obtain
fixed accounting treatment pursuant to APB 25, as revised from time to time.

 

14.           Binding Effect.

 

(a)           Any
action taken or decision made by the Committee arising out of or in connection
with the construction, administration, interpretation or effect of this Award
Agreement shall lie within its sole and absolute discretion, as the case may
be, and shall be final, conclusive and binding on the Employee and all persons
claiming under or through the Employee.

 

(b)           Subject
to Section 11 hereof, this Award Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.

 

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15.           No Right to Perform Services.  Neither the granting of this Option, nor the
exercise thereof, shall be construed as granting Employee any right to perform
services for, or remain an employee of, the Company.  The right of the Company to terminate Employee’s services and
employment at any time and for any reason, is specifically reserved.

 

16.           Governing Law.  This Award Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware.

 

17.           Severability.  If any provision of this Award Agreement shall hereafter be held
to be invalid, unenforceable or illegal in whole or in part, in any
jurisdiction under any circumstances for any reason, (a) such provision shall
be reformed to the minimum extent necessary to cause such provision to be valid,
enforceable and legal while preserving the intent of the parties as expressed
in, and the benefits to the parties provided by, this Award Agreement or (b) if
such provision cannot be so reformed, such provision shall be severed from this
Agreement and an equitable adjustment shall be made to this Award Agreement
(including, without limitation, addition of necessary further provisions to
this Award Agreement) so as to give effect to the intent as so expressed and
the benefits so provided.  Such holding
shall not affect or impair the validity, enforceability or legality of such
provision in any other jurisdiction or under any other circumstances.  Neither such holding nor such reformation or
severance shall affect or impair the legality, validity or enforceability of
any other provision of this Award Agreement.

 

18.           Entire Award Agreement.  This Award Agreement and the Plan comprise
the whole agreement between the parties hereto with respect to the subject
matter hereof, and may not be modified or terminated orally.

 

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IN WITNESS WHEREOF, the parties hereto have executed
this Award Agreement as of the day and year first above written.

 

	
   

  	
  Archipelago Holdings,
  L.L.C.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Employee]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

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Annex A

Certain Definitions

 

As used in this Award Agreement, the following terms
shall have the following meanings:

 

(a)           “Cause”
shall mean  (i) conviction, or plea of
nolo contendere (or a similar plea), in a criminal proceeding, whether in
respect of a felony or misdemeanor; (ii) misconduct; (iii) dishonesty; (iv)
material violation of the Company’s policies or procedures; (v) willful or
repeated failure or refusal to perform the Employee’s duties satisfactorily
after receiving notice from the Company; (vi) engaging in Detrimental Activity;
or (vii) such other or different circumstances as the Committee may determine
to constitute Cause; in each case as determined by the Committee, which
determination shall be final, binding and conclusive.

 

(b)           “Competitive
Activity” shall mean engaging in activity with an entity that trades stocks
electronically as an electronic communication network, alternative trading
system or stock exchange, if such activity is determined by the Committee,
which determination shall be final, binding and conclusive, to be in
competition with any activity of the Company.

 

(c)           “Consents”
shall mean (i) any and all listings, registrations or qualifications in respect
thereof upon any securities exchange or under any federal, state or local law,
rule or regulation, (ii) any and all written agreements and representations by
the Employee with respect to the disposition of Option Shares, or with respect
to any other matter, which the Committee shall deem necessary or desirable to
comply with the terms of any such listing, registration or qualification or to
obtain an exemption from the requirement that any such listing, qualification
or registration be made, (iii) any and all consents, clearances and approvals
by any governmental or other regulatory bodies, and (iv) any and all consents
or authorizations required to comply with, or required to be obtained under,
applicable local law or otherwise required by the Committee.

 

(d)           “Detrimental
Activity” means  (i) using
confidential information received during employment with the Company relating
to the business affairs of the Company or any of its clients, in breach of such
person’s undertaking to keep such information confidential; or (ii) direct or
indirect persuasion or any attempt to persuade by any means, any employee of
the Company to terminate their employment with the Company or to breach any of
the terms of their employment with the Company; or (iii) any other activity otherwise
deemed to be detrimental, inimical, contrary or harmful to the interests of the
Company, in each case as determined by the Committee, which determination shall
be final, binding and conclusive.

 

(e)           “Disability”
of an Employee shall mean the Employee’s inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 6 months.  An Employee shall not be considered to be
permanently and totally disabled unless such

 

 

Employee furnishes proof satisfactory to the Company in its sole
discretion of the existence thereof in such form and manner, and at such times,
as the Committee may require.

 

(f)            “Termination
of Employment” shall mean the Employee’s ceasing to be employed by the
Company.  The Committee, in its
discretion, may determine (a) whether any leave of absence constitutes a
termination of employment for purposes of this Award Agreement and (b) when a
change in the Employee’s association or status with the Company constitutes a
Termination of Employment for purposes of this Award Agreement.  The Committee shall have the right to
determine whether an Employee’s Termination of Employment is a dismissal for
Cause and the date of termination in such case, which date the Committee may
retroactively deem to be the date of the action that is cause for
dismissal.  Such determinations of the
Committee shall be final, binding and conclusive.Exhibit 10.34

 

EXECUTION COPY

 

 

AMENDED AND RESTATED 

CHANGE IN CONTROL SEVERANCE AGREEMENT

 

THIS AMENDED AND RESTATED AGREEMENT is entered into as of the 15th day
of June, 2004, by and between Archipelago Holdings, L.L.C., a Delaware limited
liability company, and its successors (the “Company”), and
Nelson J. Chai (“Executive”).

 

W I T N E S S E T H

 

WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its members; and

 

WHEREAS, the Company recognizes that the possibility of a change in
control may arise and that such possibility may result in the departure or
distraction of management personnel to the detriment of the Company and its
members; and

 

WHEREAS, the Board (as defined in Section 1) has determined that
it is in the best interests of the Company and its members to secure
Executive’s continued services and to ensure Executive’s continued dedication
to his duties in the event of any threat or occurrence of a Change in Control
(as defined in Section 1) of the Company; and

 

WHEREAS, the Company and Executive entered into a Change in Control
Severance Agreement as of May 23, 2002 (the “Original Agreement”);

 

WHEREAS, the Company and Executive desire to amend and restate the
Original Agreement; and

 

WHEREAS, the Board has authorized the Company to enter into this
Agreement.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree that the Original Agreement be amended and restated as follows:

 

1.                                       Definitions.  As used in this Agreement, the following
terms shall have the respective meanings set forth below:

 

(a)                                  “Board”
means the Board of Managers of the Company (or the Board of Directors of the
Company in the event the Company becomes, or any successor to the Company is or
becomes, a corporation).

 

 

(b)                                 “Bonus
Amount” means the Executive’s actual annual incentive bonus paid
or payable by the Company (or its Subsidiaries) for the year immediately prior
to the year in which the Change in Control occurs.

 

(c)                                  “Cause”
means (i) the willful failure by the Executive to substantially perform
the Executive’s responsibilities, after demand for substantial performance has
been given by the Board that specifically identifies how the Executive has not
performed such responsibilities; (ii) the willful engaging by the
Executive in illegal conduct or gross misconduct which is materially and demonstrably
injurious to the Company; (iii) the conviction of a felony or a guilty or
nolo contendere plea by the Executive with respect thereto; (iv) the
willful engaging by the Executive in fraud in connection with the business of
the Company or misappropriation of the Company’s funds or property; or
(v) the willful engaging by the Executive in any conduct which constitutes
an employment disqualification under applicable law (including statutory
disqualification as defined under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)). 
For purpose of this paragraph (c), no act or failure to act by
Executive shall be considered “willful” unless done or omitted to be done by
Executive in bad faith and without reasonable belief that Executive’s action or
omission was in the best interests of the Company or its affiliates.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board, based upon
the advice of counsel for the Company or upon the instructions of the Company’s
chief executive officer shall be conclusively presumed to be done, or omitted
to be done, by Executive in good faith and in the best interests of the
Company.

 

(d)                                 “Change in
Control” means the occurrence of any one of the following
events:

 

(i)                                     individuals
who, on the day after the consummation of the initial public offering of the
Company’s shares of stock (the “IPO Date”), constituted the Board (the
“Incumbent
Directors”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a manager or
director of the Board subsequent to the IPO Date (A) whose election or
nomination for election was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board (either by a specific vote or by approval
of the proxy statement of the Company in which such person is named as a
nominee for manager or director, without written objection to such nomination)
shall be an Incumbent Director or (B) who was appointed, designated or elected
pursuant to the terms of the Ninth Amended and Restated Limited Liability
Company Agreement of the Company, as the same may be amended or supplemented
from time to time (the “LLC Agreement”) shall be an Incumbent Director; provided,
however, that with respect to clause (A) no individual initially elected
or nominated as a manager or director of the Board as a result of an actual or
threatened election contest with respect to managers or directors or as a
result of any other actual or threatened solicitation of proxies or consents by
or on behalf of any person other than the Board shall be deemed to be an
Incumbent Director; and, provided, further that if

 

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the IPO Date has not occurred by December 31, 2004, then for
purposes of this Section 1(d), the “IPO Date” shall mean the date hereof;

 

(ii)                                  any
“person” (as such term is defined in Section 3(a)(9) of the Exchange Act
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company’s then outstanding securities
eligible to vote for the election of managers or directors of, or possessing
the right to appoint or designate 40% or more of the managers or directors to,
the Board (the “Company Voting Securities”); provided,
however, that the event described in this paragraph (ii) shall not
be deemed to be a Change in Control by virtue of any of the following
acquisitions:  (A) by the Company or any Subsidiary, (B) by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Subsidiary, (C) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) pursuant to a
Non-Qualifying Transaction (as defined in paragraph (iii)), or
(E) pursuant to any acquisition by Executive or any group of persons
including Executive (or any entity controlled by Executive or any group of
persons including Executive); and, provided, further, that a
person shall not be deemed a beneficial owner of 40% of such combined voting
power solely by reason of the ability, together with other members of the
Company,  to appoint, designate or elect
managers to the Board pursuant to the terms of the LLC Agreement; or

 

(iii)                               the
consummation of a merger, consolidation, statutory share exchange, sale of all
or substantially all of the Company’s assets or similar form of transaction
(including a transaction whereby another business is acquired by the Company by
way of a contribution to the Company) involving the Company or any of its
Subsidiaries that requires the approval of the Company’s members or
stockholders, whether for such transaction or the issuance of securities in the
transaction (a “Business Combination”), unless
immediately following such Business Combination:  (A) at least 55% of the total voting power of (x) the
entity resulting from such Business Combination (the “Surviving Corporation”),
or (y) if applicable, the ultimate parent entity that directly or
indirectly has beneficial ownership of at least 95% of the voting securities
eligible to elect managers or directors of the Surviving Corporation (the “Parent
Corporation”), is represented by Company Voting Securities that
were outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Company Voting Securities
were converted pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same proportion as the voting
power of such Company Voting Securities among the holders thereof immediately
prior to the Business Combination, (B) no person (other than any employee
benefit plan (or related trust) sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the beneficial owner,
directly or indirectly, of 40% or 

 

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more of the total voting power of the outstanding voting securities
eligible to elect persons to the board of managers or board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) and (C) at least a majority of the members of the board of
managers or board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the consummation of
the Business Combination were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying
Transaction”).

 

Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 40% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which reduces the
number of Company Voting Securities outstanding; (provided, that if
after such acquisition by the Company such person becomes the beneficial owner
of additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur).

 

(e)                                  “Date of
Termination” means (i) subject to Section 9(b), the
effective date on which Executive’s employment by the Company terminates as
specified in a prior written notice by the Company or Executive, as the case
may be, to the other, delivered pursuant to Section 10 or (ii) if
Executive’s employment by the Company (or its Subsidiaries) terminates by
reason of death, the date of death of Executive.

 

(f)                                    “Disability”
means termination of Executive’s employment by the Company due to Executive’s
absence from Executive’s duties with the Company (or its Subsidiaries) on a
full-time basis for at least one hundred eighty (180) days in any consecutive
twelve (12) month period as a result of Executive’s incapacity due to physical
or mental illness.

 

(g)                                 “Good
Reason” means, without Executive’s express written consent, the
occurrence of any of the following events after a Change in Control:

 

(i)                                     any
change in the duties or responsibilities (including reporting responsibilities)
of Executive that is inconsistent in any material and adverse respect with
Executive’s position(s), duties, responsibilities or status with the Company
(or its Subsidiaries) immediately prior to such Change in Control (including
any material and adverse diminution of such duties or responsibilities) or a
material and adverse change in Executive’s titles with the Company (or its
Subsidiaries) as in effect immediately prior to such Change in Control; provided,
that, no change in duties, responsibilities or title shall constitute a Good
Reason event until nine (9) months after a Change in Control (unless such
period is

 

4

 

shortened by the person who is the CEO of the Company immediately prior
to the Change in Control);

 

(ii)                                  a
reduction by the Company (or its Subsidiaries) in Executive’s rate of annual
base salary or annual target bonus opportunity (including any material and
adverse change in the formula for such annual bonus target) as in effect on the
date hereof, or, if greater, immediately prior to such Change in Control or as
the same may be increased from time to time thereafter;

 

(iii)                               any
requirement of the Company (or its Subsidiaries) that Executive (A) be
based anywhere more than fifty (50) miles from the office where Executive is
located as of May 23, 2002 or (B) travel on Company (or its Subsidiaries)
business to an extent substantially greater than the travel obligations of Executive
immediately prior to such Change in Control; provided, that, no increase
in travel shall constitute a Good Reason event until nine (9) months after a
Change in Control (unless such period is shortened by the person who is the CEO
of the Company immediately prior to the Change in Control); or

 

(iv)                              the
failure of the Company to obtain the assumption agreement from any successor as
contemplated in Section 9(b).

 

An isolated, insubstantial and inadvertent action taken in good faith
and which is remedied by the Company within ten (10) days after receipt of
notice thereof given by Executive shall not constitute Good Reason.  Executive’s right to terminate employment
for Good Reason shall not be affected by Executive’s incapacities due to mental
or physical illness and Executive’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any event or condition
constituting Good Reason.

 

(h)                                 “Qualifying
Termination” means a termination of Executive’s employment (i)
by the Company other than for Cause or (ii) by Executive for Good Reason.  Termination of Executive’s employment on
account of death, Disability or Retirement shall not be treated as a Qualifying
Termination.

 

(i)                                     “Retirement”
means Executive’s mandatory retirement (not including any mandatory early
retirement) in accordance with the Company’s (or its Subsidiary’s) retirement
policy generally applicable to its salaried employees, as in effect immediately
prior to the Change in Control, or in accordance with any retirement
arrangement established with respect to Executive with Executive’s written
consent.

 

(j)                                     “Subsidiary”
means any corporation or other entity in which the Company has a direct or
indirect ownership interest of 50% or more of the total combined voting power
of the then outstanding securities or interests of such corporation or other
entity entitled to vote generally in the election of directors or in which the
Company has the right to receive 50% or more of the distribution of profits or
50% or more of the assets or liquidation or dissolution.

 

5

 

(k)                                  “Termination
Period” means the period of time beginning with a Change in
Control and ending one (1) year following such Change in Control.  Notwithstanding anything in this Agreement
to the contrary, if (i) Executive’s employment is terminated prior to a
Change in Control for reasons that would have constituted a Qualifying
Termination if they had occurred following a Change in Control;
(ii) Executive reasonably demonstrates that such termination (or Good
Reason event) was at the request of a third party who had indicated an
intention or taken steps reasonably calculated to effect a Change in Control;
and (iii) a Change in Control involving such third party (or a party
competing with such third party to effectuate a Change in Control) does occur,
then for purposes of this Agreement, the date immediately prior to the date of
such termination of employment or event constituting Good Reason shall be
treated as a Change in Control.  For
purposes of determining the timing of payments and benefits to Executive under
Section 4, the date of the actual Change in Control shall be treated as
Executive’s Date of Termination under Section 1(e).

 

2.                                       Obligation
of Executive.  In the event of a
tender or exchange offer, proxy contest, or the execution of any agreement
which, if consummated, would constitute a Change in Control, Executive agrees
not to voluntarily leave the employ of the Company, other than as a result of
Disability, Retirement or an event which would constitute Good Reason if a
Change in Control had occurred, until the Change in Control occurs or, if
earlier, such tender or exchange offer, proxy contest, or agreement is
terminated or abandoned.

 

3.                                       Term
of Agreement.  This Agreement shall
be effective on the date hereof and shall continue in effect until the third
anniversary of the date hereof. 
Commencing on the first anniversary of the date hereof and each
anniversary thereafter, this Agreement shall be automatically extended for
additional one year terms unless the Company gives the Executive written notice
of its intention to terminate further automatic extensions and permit this
Agreement to expire at the end of the then current term; provided, however,
that, this Agreement shall in any event continue in effect for a period of one
(1) year after a Change in Control, if such Change in Control shall have
occurred during the term of this Agreement. 
Notwithstanding anything in this Section to the contrary, this Agreement
shall terminate if Executive or the Company terminates Executive’s employment
prior to a Change in Control, except as provided in Section 1(k).

 

4.                                       Payments
Upon Termination of Employment.

 

(a)                                  Qualifying
Termination.  If during the
Termination Period the employment of Executive shall terminate pursuant to a
Qualifying Termination, then the Company shall provide the following
compensation and benefits to Executive:

 

(i)                                     Within
ten (10) days following the Date of Termination, the Company shall pay a lump-sum
cash amount equal to the sum of (A) Executive’s base salary through the Date of
Termination and any bonus amounts which have become payable, to the extent not
theretofore paid or deferred, (B) a pro  rata

 

6

 

portion of Executive’s annual bonus for the fiscal year in which
Executive’s Date of Termination occurs in an amount at least equal to
(1) Executive’s Bonus Amount, multiplied by (2) a fraction, the numerator
of which is the number of days in the fiscal year in which the Date of
Termination occurs through the Date of Termination and the denominator of which
is three hundred sixty-five (365), and reduced by (3) any amounts paid from the
Company’s annual incentive plan for the fiscal year in which Executive’s Date
of Termination occurs and (C) any compensation previously deferred by Executive
other than pursuant to a tax-qualified plan (together with any interest and
earnings thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid;

 

(ii)                                  Within
ten (10) days following the Date of Termination, the Company shall pay a
lump-sum cash amount equal to (A) two (2) times Executive’s highest annual rate
of base salary during the 12-month period immediately prior to Executive’s Date
of Termination, plus (B) two (2) times Executive’s Bonus Amount (provided
that the total amount payable under this Section 4(a)(ii) shall not be
less than $1,500,000);

 

(iii)                               For
a period of twenty-four (24) months following Executive’s Date of Termination,
the Company shall provide Executive (and Executive’s dependents, if applicable)
with the same level of medical, dental, accident, disability and life insurance
benefits upon substantially the same terms and conditions (including
contributions required by Executive for such benefits) as existed immediately
prior to Executive’s Date of Termination (or, if more favorable to Executive,
as such benefits and terms and conditions existed immediately prior to the
Change in Control); provided, that, if Executive cannot continue to
participate in the Company plans providing such benefits, the Company shall
otherwise provide such benefits on the same after-tax basis as if continued
participation had been permitted. 
Notwithstanding the foregoing, in the event Executive becomes reemployed
with another employer and becomes eligible to receive welfare benefits from
such employer, the welfare benefits described herein shall be secondary to such
benefits during the period of Executive’s eligibility, but only to the extent
that the Company reimburses Executive for any increased cost and provides any
additional benefits necessary to give Executive the benefits provided
hereunder;

 

(iv)                              Any
Company share options or share (or other equity-based) awards previously
granted to Executive, whether vested or not, as of the Date of Termination
shall be fully vested as of the Date of Termination, and, notwithstanding any
provision to the contrary in Executive’s share option award agreement, all
unexercised Company share options as of the Date of Termination shall be
exercisable until the one (1) year anniversary of the Date of Termination and
one half of any unexercised Company share options as of the Date of Termination
(without regard to any share options exercised prior to the one (1) year
anniversary of the Date of Termination) shall be exercisable between the one 

 

7

 

(1) year and two (2) year anniversary of the Date of Termination, and
the “Right of Recapture” provision in Executive’s share option award agreement
shall no longer be applicable;

 

(v)                                 To
the maximum extent permitted under applicable law, all contributions made by
the Company, for the account of Executive, to any and all tax qualified pension
plans of the Company (including but not limited to the Section 401(k) plan
of the Company) shall immediately vest in full on the Date of Termination.  If such accelerated vesting is not permitted
under applicable law, the Company shall, within ten (10) days following the
Date of Termination, pay to the Executive an additional lump-sum cash amount
equal to the sum of the then unvested portions of all such Company
contributions; plus

 

(vi)                              Outplacement
services with a cost of up to $20,000 for a period of up to twelve (12) months
shall be made available at the expense of the Company through and at the
facilities of a reputable and experienced outplacement services provider
selected by the Company with the approval of the Executive, which approval
shall not be withheld unreasonably.

 

(b)                                 Non-Qualifying
Termination.  If during the
Termination Period the employment of Executive shall terminate other than by
reason of a Qualifying Termination, then the Company shall pay to Executive
within thirty (30) days following the Date of Termination, a lump-sum cash
amount equal to the sum of (i) Executive’s base salary through the Date of
Termination and any bonus amounts which have become payable, to the extent not
theretofore paid or deferred, and (ii) any compensation previously
deferred by Executive other than pursuant to a tax-qualified plan (together
with any interest and earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid. 
The Company may make such additional payments, and provide such
additional benefits, to Executive as the Company and Executive may agree in
writing.

 

(c)                                  Condition.  The Company shall not be required to make
the payments and provide the benefits specified in Section 4(a) unless
Executive executes and delivers to the Company an agreement releasing the
Company, its affiliates and its officers, directors and employees from all
claims and liabilities Executive may have (other than for the payments,
benefits and enforcement of rights provided under this Agreement).

 

5.                                       Section 280G.

 

(a)                                  Gross-Up.  Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment, award,
benefit or distribution (including any acceleration) by the Company (or any of
its affiliates) or any entity which effectuates a Change in Control (or any of
its affiliates) to or for the benefit of the Executive (whether pursuant to the
terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 5) (a

 

8

 

“Payment”) would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”),
or any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then the
Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.

 

(b)                                 Determination.  All determinations required to be made under
this Section 5, including whether and when a Gross-Up Payment is required,
the amount of such Gross-Up Payment, the amount of any Option Redetermination
(as defined below) and the assumptions to be utilized in arriving at such
determination, shall be made by the Company’s independent auditors or such
other certified public accounting firm of national standing reasonably
acceptable to the Executive as may be designated by the Company (the “Accounting
Firm”) which shall provide detailed supporting calculations both
to the Company and the Executive within fifteen (15) business days of the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. 
Notwithstanding the foregoing, in the event (i) the Board shall
determine prior to the Change in Control that the Accounting Firm is precluded
from performing such services under applicable auditor independence rules, (ii)
the Audit Committee of the Board determines that it does not want the
Accounting Firm to perform such services because of auditor independence
concerns or (iii) the Accounting Firm is serving as accountant or auditor for
the person(s) effecting the Change in Control, the Board shall appoint another
nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder).  All fees
and expenses of the Accounting Firm shall be borne solely by the Company.  Any
Gross-Up Payment, as determined pursuant to this Section 5, shall be paid
by the Company to the Executive within ten (10) days of the later of (i) the
due date for the payment of any Excise Tax and (ii) the receipt of the
Accounting Firm’s determination.  If
the Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall furnish the Executive with a written opinion to such effect, and to
the effect that failure to report the Excise Tax, if any, on the Executive’s
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty.  Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive.  As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (“Underpayment”)
or Gross-Up Payments are made by the Company which should not have been made (“Overpayment”),
consistent with the calculations required to be made hereunder.  In the event the Executive is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid

 

9

 

by the Company to or for the benefit of the Executive.  In the event the amount of Gross-Up Payment
exceeds the amount necessary to reimburse the Executive for his Excise Tax, the
Accounting Firm shall determine the amount of the Overpayment that has been
made and any such Overpayment shall be promptly paid by the Executive to or for
the benefit of the Company.  The
Executive shall cooperate, to the extent his expenses are reimbursed by the
Company, with any reasonable requests by the Company in connection with any
contests or disputes with the Internal Revenue Service in connection with the
Excise Tax.

 

(c)                                  Option
Redetermination.  In the event that
the Company determines that the value of any accelerated vesting of share
options held by the Executive shall be redetermined within the context of
Treasury Regulation §1.280G-1 Q/A 33 (the “Option Redetermination”), the Executive
shall (i) file with the Internal Revenue Service an amended federal income tax
return that claims a refund of the overpayment of the Excise Tax attributable
to such Option Redetermination and (ii) promptly pay the refundable Excise Tax
to the Company.

 

6.                                       Withholding
Taxes.  The Company may withhold
from all payments due to Executive (or his beneficiary or estate) hereunder all
taxes which, by applicable federal, state, local or other law, the Company is
required to withhold therefrom.

 

7.                                       Reimbursement
of Expenses.  If any contest or
dispute shall arise under this Agreement involving termination of Executive’s
employment with the Company or involving the failure or refusal of the Company
to perform fully in accordance with the terms hereof and a final and
non-appealable order is entered which finds in part or in full for Executive,
the Company shall reimburse Executive for all reasonable legal fees and
expenses, if any, incurred by Executive in connection with such contest or
dispute, together with interest in an amount equal to the applicable federal
rate.

 

8.                                       Scope
of Agreement.  Nothing in this
Agreement shall be deemed to entitle Executive to continued employment with the
Company or its Subsidiaries, and, except as provided in Section 1(k), if
Executive’s employment with the Company shall terminate prior to a Change in
Control, Executive shall have no further rights under this Agreement; provided,
however, that any termination of Executive’s employment during the
Termination Period shall be subject to all of the provisions of this Agreement.

 

9.                                       Successors;
Binding Agreement.

 

(a)                                  This
Agreement shall not be terminated by any Business Combination.  In the event of any Business Combination,
the provisions of this Agreement shall be binding upon the Surviving
Corporation (and the Parent Corporation, if any), and such Surviving
Corporation (and the Parent Corporation, if any) shall be treated as the
Company hereunder.

 

10

 

(b)                                 The
Company agrees that in connection with any Business Combination, it will cause
any successor entity to the Company unconditionally to assume, by written instrument
delivered to Executive (or his beneficiary or estate), all of the obligations
of the Company hereunder.  Failure of
the Company to obtain such assumption prior to the effectiveness of any such
Business Combination that constitutes a Change in Control, shall be a breach of
this Agreement and shall constitute Good Reason hereunder and shall entitle
Executive to compensation and other benefits from the Company in the same
amount and on the same terms as Executive would be entitled hereunder if Executive’s
employment were terminated following a Change in Control by reason of a
Qualifying Termination.  For purposes of
implementing the foregoing, the date on which any such Business Combination
becomes effective shall be deemed the date Good Reason occurs, and shall be the
Date of Termination if requested by Executive.

 

(c)                                  This
Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. 
If Executive shall die while any amounts would be payable to Executive
hereunder had Executive continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to such person or persons appointed in writing by Executive to receive such
amounts or, if no person is so appointed, to Executive’s estate.

 

10.                                 Notice.  (a) 
For purposes of this Agreement, all notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or by reputable commercial delivery
service or five (5) days after deposit in the United States mail, certified and
return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

 

 

If to the Company:

 

100 South Wacker Drive

Chicago, Illinois 60606

Attention: 
General Counsel

 

or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.

 

(b)                                 Subject
to Section 9(b), a written notice of Executive’s Date of Termination by
the Company or Executive, as the case may be, to the other, shall (i) indicate
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, set forth in reasonable detail the facts and circumstances
claimed to provide a

 

11

 

basis for termination of Executive’s employment under the provision so
indicated and (iii) specify the termination date (which date shall be not less
than fifteen (15) (thirty (30), if termination is by the Company for
Disability) nor more than sixty (60) days after the giving of such notice).  The failure by Executive or the Company to
set forth in such notice any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of Executive or the
Company hereunder or preclude Executive or the Company from asserting such fact
or circumstance in enforcing Executive’s or the Company’s rights hereunder.

 

11.                                 Full
Settlement; Resolution of Disputes. 
(a)  The Company’s obligation to
make any payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall be in lieu and in full settlement of all other
severance payments to Executive under any other severance or employment
agreement between Executive and the Company (or its Subsidiaries), and any
severance plan of the Company (or its subsidiaries).  The Company’s obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action
which the Company may have against Executive or others.  In no event shall Executive be obligated to
seek other employment or take other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement and, except
as provided in Section 4(b), such amounts shall not be reduced whether or
not Executive obtains other employment.

 

(b)                                 Except
to the extent required by applicable rules and regulations of any
self-regulatory organization of which the Company or Archipelago, L.L.C., an
affiliate of the Company, is a member, any controversy or claim between the
Executive and the Company arising out of or relating to or concerning this
Agreement will be finally settled by arbitration in Chicago, Illinois
administered by the American Arbitration Association (the “AAA”) under its
Commercial Arbitration Rules then in effect. 
However, the AAA’s Commercial Arbitration Rules will be modified in the
following ways:  (i) each arbitrator will agree to treat as
confidential evidence and other information presented to them, (ii) there
will be no authority to award punitive damages (and the Executive and the Company
agree not to request any such award) and (iii) a decision must be rendered
within 10 business days of the parties’ closing statements or submission
of post-hearing briefs.

 

12.                                 Employment
with Subsidiaries.  Employment with
the Company for purposes of this Agreement shall include employment with any
Subsidiary.

 

13.                                 Survival.  The respective obligations and benefits
afforded to the Company and Executive as provided in Sections 4 (to the
extent that payments or benefits are owed as a result of a termination of
employment that occurs during the term of this Agreement), 5 (to the extent
that Payments are made to Executive as a result of a Change in Control that
occurs during the term of this Agreement), 6, 7, 9(c) and 11 shall survive
the termination of this Agreement.

 

12

 

14.                                 GOVERNING
LAW; VALIDITY.  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. 
THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT
SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS
AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

 

15.                                 Covenants Not to Solicit Company
Clients and Employees; Confidential Information.

 

(a)                                  Non-Solicit. 
During the term of this Agreement, and for a one year period after the
Date of Termination by the Company or the Executive for any reason, the
Executive shall not, in any manner, directly or indirectly, (i) solicit any
client or prospective client of the Company or its affiliates to whom the
Executive provided services, or for whom the Executive transacted business, or
whose identity became known to the Executive in connection with the Executive’s
employment with the Company or its affiliates to transact business with a
competing business or reduce or refrain from doing any business with the
Company or its affiliates, (ii) interfere with or damage (or attempt to
interfere with or damage) any relationship between the Company or its
affiliates and any such client or prospective client, or (iii) solicit or hire
any person who at such time is, or who within the past six months was, an
employee of the Company or its affiliates to apply for or accept employment
with any competing business.  The term
“solicit” as used in this Agreement means any communication of any kind
whatsoever, regardless of by whom initiated, inviting, encouraging or
requesting any person or entity to take or refrain from taking any action.

 

(b)                                 Confidential Information. 
The Executive hereby acknowledges that, as an employee of the Company,
he will be making use of, acquiring and adding to confidential information of a
special and unique nature and value relating to the Company and its strategic
plan and financial operations.  The
Executive further recognizes and acknowledges that all confidential information
is the exclusive property of the Company, is material and confidential, and is
critical to the successful conduct of the business of the Company.  Accordingly, the Executive hereby covenants
and agrees that he will use confidential information for the benefit of the
Company only and shall not at any time, directly or indirectly, during the term
of this Agreement and thereafter divulge, reveal or communicate any
confidential information to any person, firm, corporation or entity whatsoever,
or use any confidential information for his own benefit or for the benefit of
others.

 

(c)                                  Survival. 
Any termination of the Executive’s employment or of this Agreement shall
have no effect on the continuing operation of this Section 15.

 

13

 

(d)                                 Blue Pencil. 
The terms and provisions of this Section 15 are intended to be
separate and divisible provisions and if, for any reason, any one or more of
them is held to be invalid or unenforceable, neither the validity nor the
enforceability of any other provision of this Agreement shall thereby be
affected.  The parties hereto
acknowledge that the potential restrictions on the Executive’s future
employment imposed by this Section 15 are reasonable in both duration and
geographic scope and in all other respects. 
If for any reason any court of competent jurisdiction shall find any
provisions of this Section 15 unreasonable in duration or geographic scope
or otherwise, the Executive and the Company agree that the restrictions and
prohibitions contained herein shall be effective to the fullest extent allowed
under applicable law in such jurisdiction.

 

(e)                                  Consideration. 
The parties acknowledge that this Agreement would not have been entered
into and the benefits described in Sections 4, 5 or 7 would not have been
promised in the absence of the Executive’s promises under this Section 15.

 

16.                                 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.

 

17.                                 Miscellaneous.  No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by Executive and by a duly authorized officer of the Company.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. 
Failure by Executive or the Company to insist upon strict compliance
with any provision of this Agreement or to assert any right Executive or the
Company may have hereunder, including without limitation, the right of
Executive to terminate employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.  Except as otherwise
specifically provided herein, the rights of, and benefits payable to,
Executive, his estate or his beneficiaries pursuant to this Agreement are in
addition to any rights of, or benefits payable to, Executive, his estate or his
beneficiaries under any other employee benefit plan or compensation program of
the Company.

 

14

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Executive has executed
this Agreement as of the day and year first above written.

 

	
   

  	
  ARCHIPELAGO HOLDINGS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/GERALD D. PUTNAM

  
	
   

  	
  Name:  Gerald D. Putnam

  
	
   

  	
  Title:    Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  /s/NELSON J. CHAI

  
	
   

  	
  Nelson J. Chai

  

 

15

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