Archipelago Holdings Inc. and Pacific Exchange Inc. are revising the terms of their merger agreement to expedite its closing.

Under the terms of the amended merger agreement, signed by the two companies today, shareholders of PCX Holdings (parent of the Pacific Exchange) will receive 100% of their payment in cash, rather than approximately 80% in cash and 20% in Archipelago common stock, as originally agreed. The change is being made because an all cash deal will no longer require Archipelago to prepare and file a registration statement with the Securities and Exchange Commission, so Archipelago and PCX Holdings believe that this change should accelerate the time to closing of the merger.

However, the overall structure of the total purchase price that Archipelago will pay at closing is not affected by the amendment. Archipelago will still pay an amount — now all in cash — that is equal to the sum of the value of shares of Archipelago common stock owned by PCX Holdings at closing (currently 1,645,415 shares), plus US$17 million (subject to certain adjustments which are unaffected by the amendment).

The acquisition continues to be subject to approval by PCX Holdings shareholders and the SEC, as well as other customary closing conditions. PCXH expects to send a proxy to its shareholders within the next two weeks. Subject to such approvals and closing conditions, the acquisition is expected to close in the third quarter of 2005.