**Exhibit10.1**

 

 

**INVESTORS FINANCIAL SERVICES CORP.**

 

**1997 EMPLOYEE STOCK PURCHASE PLAN**

 

 

1.        Purpose.

 

This 1997 EmployeeStock Purchase Plan (the “Plan”) is intended to encourage stock ownership byall eligible employees of Investors Financial Services Corp., a Delawarecorporation (the “Company”), and its participating subsidiaries (as defined inArticle 17) so that they may share in the growth of the Company byacquiring or increasing their proprietary interest in the Company.  The Plan is designed to encourage eligibleemployees to remain in the employ of the Company and its participatingsubsidiaries.  It is intended thatoptions issued pursuant to this Plan will constitute options issued pursuant toan “employee stock purchase plan” within the meaning of Section 423(b) ofthe Internal Revenue Code of 1986, as amended (the “Code”).

 

2.        Administration of thePlan.

 

The Plan may beadministered by a committee appointed by the Board of Directors of the Company(the “Committee”).  The Committee shallconsist of not less than two members of the Company’s Board of Directors.  The Board of Directors may from time to timeremove members from, or add members to, the Committee.  Vacancies on the Committee, however caused,shall be filled by the Board of Directors. The Committee may select one of its members as Chairman, and shall holdmeetings at such times and places as it may determine.  Acts by a majority of the Committee, or actsreduced to or approved in writing by a majority of the members of theCommittee, shall be the valid acts of the Committee.

 

The interpretationand construction by the Committee of any provisions of the Plan or of anyoption granted under it shall be final, unless otherwise determined by theBoard of Directors.  The Committee mayfrom time to time adopt such rules and regulations for carrying out the Plan asit may deem best, provided that any such rules and regulations shall be appliedon a uniform basis to all employees under the Plan.  No member of the Board of Directors or the Committee shall beliable for any action or determination made in good faith with respect to thePlan or any option granted under it.

 

In the event theBoard of Directors fails to appoint or refrains from appointing a Committee,the Board of Directors shall have all power and authority to administer thePlan.  In such event, the word“Committee” wherever used herein shall be deemed to mean the Board ofDirectors.

 

3.        Eligible Employees.

 

All employees whohave completed six months of employment with the Company or any of itsparticipating subsidiaries and whose customary employment is more than twenty(20) hours per week and for more than five (5) months in any calendar yearshall be eligible to receive options under this Plan to purchase the Company’sCommon Stock, and all eligible employees shall have the same rights andprivileges hereunder.  Persons who areeligible employees on the first business day of any Payment Period (as definedin Article 5) shall receive their options as of such day.  Persons who become eligible employees afterany date on which options are granted under this Plan shall be granted optionson the first day of the next succeeding Payment Period on which options aregranted to eligible employees.  In no eventmay an employee be granted an option if such employee, immediately after theoption is granted, owns stock possessing five percent (5%) or more of the totalcombined voting power or value of all classes of stock of the Company or of itsparent corporation or subsidiary corporations, as the terms “parentcorporation” and “subsidiary corporation” are defined in Section 424(e)and (f) of the Code.  For purposes ofdetermining stock ownership under this paragraph, the rules ofSection 424(d) of the Code shall apply, and stock which the employee maypurchase under outstanding options shall be treated as stock owned by theemployee.

 

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4.        Stock Subject to thePlan.

 

The stock subjectto the options under the Plan shall be shares of the Company’s authorized butunissued Common Stock, par value $.01 per share, or shares of such Common Stockreacquired by the Company, including shares purchased in the open market.  The aggregate number of shares which may beissued pursuant to the Plan is 1,620,000, subject to adjustment as provided inArticle 12.  In the event anyoption granted under the Plan shall expire or terminate for any reason withouthaving been exercised in full or shall cease for any reason to be exercisablein whole or in part, the unpurchased shares subject thereto shall again beavailable under the Plan.

 

5.        Payment Period andStock Options.

 

The six-monthperiods January 1 through June 30, and July 1 throughDecember 31, are Payment Periods during which payroll deductions will beaccumulated under the Plan.  The firstPayment Period under the Plan will commence on July 1, 1997 and expire onDecember 31, 1997.

 

Twice each year,on the first business day of each Payment Period, the Company will grant toeach eligible employee who is then a participant in the Plan an option topurchase on the last day of such Payment Period, at the Option Pricehereinafter provided for, a maximum of 8,000 shares, on condition that suchemployee remains eligible to participate in the Plan throughout such PaymentPeriod.  The participant shall beentitled to exercise such option so granted only to the extent of theparticipant’s accumulated payroll deductions on the last day of such PaymentPeriod.  In the event that theparticipant’s accumulated payroll deductions on the last day of the PaymentPeriod would enable the participant to purchase more than 8,000 shares exceptfor the 8,000-share limitation, the excess of the amount of the accumulatedpayroll deductions over the aggregate purchase price of the 8,000 shares shallbe promptly refunded to the participant by the Company, without interest.  The Option Price for each Payment Periodshall be the lesser of (i) 90% of the average market price of theCompany’s Common Stock on the first business day of the Payment Period or(ii) 90% of the average market price of the Company’s Common Stock on thelast business day of the Payment Period, in either event rounded up to avoidfractions of a dollar other than 1/4, 1/2 and 3/4.  The foregoing limitation on the number of shares which may begranted in any Payment Period and the Option Price per share shall be subjectto adjustment as provided in Article 12.

 

For purposes ofthis Plan, the term “average market price” on any date means (i) theaverage (on that date) of the high and low prices of the Company’s Common Stockon the principal national securities exchange on which the Common Stock istraded, if the Common Stock is then traded on a national securities exchange;or (ii) the last reported sale price (on that date) of the Common Stock onthe Nasdaq National Market List, if the Common Stock is not then traded on anational securities exchange; or (iii) the average of the closing bid andasked prices last quoted (on that date) by an established quotation service forover-the-counter securities, if the Common Stock is not reported on the NasdaqNational Market List.  If the Company’sCommon Stock is not publicly traded at the time an option is granted under thisPlan, “average market price” shall mean the fair market value of the CommonStock as determined by the Committee after taking into consideration allfactors which it deems appropriate, including, without limitation, recent saleand offer prices of the Common Stock in private transactions negotiated atarm’s length.

 

For purposes ofthis Plan, the term “business day” means a day on which there is trading on theNasdaq National Market System or on the aforementioned national securitiesexchange, whichever is applicable pursuant to the preceding paragraph.

 

No employee shallbe granted an option which permits the employee’s right to purchase CommonStock under this Plan, and under all other Section 423(b) employee stockpurchase plans of the Company or any parent or subsidiary corporations, toaccrue at a rate which exceeds $25,000 of fair market value of such stock (determinedat the time such option is granted) for each calendar year in which such optionis outstanding at any time.  The purposeof the limitation in the preceding sentence is to comply withSection 423(b)(8) of the Code.  Ifan eligible employee’s accumulated payroll deductions on the last day of thePayment Period would otherwise enable such employee to purchase Common Stock inexcess of the Section 423(b)(8) limitation described in this paragraph,the excess of the amount of the accumulated

 

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payroll deductionsover the aggregate purchase price of the shares actually purchased shall bepromptly refunded to the employee by the Company, without interest.

 

6.        Exercise of Option.

 

Each eligibleemployee who continues to be a participant in the Plan on the last day of aPayment Period shall be deemed to have exercised his/her option on such dateand shall be deemed to have purchased from the Company such number of fullshares of Common Stock reserved for the purpose of the Plan as his/heraccumulated payroll deductions on such date will pay for at the Option Price,subject to the 8,000-share limit of the option and the Section 423(b)(8)limitation described in Article 5. If a person is not an eligible employee on the last day of a PaymentPeriod, he/she shall not be entitled to exercise his/her option.  Only full shares of Common Stock may bepurchased under the Plan.  Unusedpayroll deductions remaining in an employee’s account at the end of a PaymentPeriod by reason of the inability to purchase a fractional share will becarried forward to the succeeding Payment Period.

 

7.        Authorization forEntering the Plan.

 

An employee mayenter the Plan by filling out, signing and delivering to the Company anauthorization:

 

A.            Stating the percentageto be deducted regularly from the employee’s pay;

 

B.             Authorizing thepurchase of stock for the employee in each Payment Period in accordance withthe terms of the Plan; and

 

C.             Specifying the exactname in which stock purchased for the employee is to be issued as providedunder Article 11 hereof.

 

Such authorizationmust be received by the Company at least ten (10) days before the beginningdate of the next succeeding Payment Period.

 

Unless an employeefiles a new authorization or withdraws from the Plan, the deductions andpurchases under the authorization the employee has on file under the Plan willcontinue from one Payment Period to succeeding Payment Periods as long as thePlan remains in effect.

 

The Company willaccumulate and hold for the employee’s account the amounts deducted fromhis/her pay.  No interest will be paidon these amounts.

 

8.        Maximum Amount ofPayroll Deductions.

 

An employee mayauthorize payroll deductions in an amount (expressed as a percentage) not lessthan one percent (1%) but not more than fifteen percent (15%) of the employee’sbase salary compensation actually paid to the employee in the Payment Period,excluding without limitation any benefits, bonuses or commissions.

 

9.        Change in PayrollDeductions.

 

Deductions may notbe increased or decreased during a Payment Period.  However, an employee may withdraw in full from the Plan.

 

10.      Withdrawal from the Plan.

 

An employee maywithdraw from the Plan in whole but not in part, at any time prior to the lastbusiness day of each Payment Period by delivering a withdrawal notice to theCompany, in which event the Company will promptly refund the entire balance ofthe employee’s deductions not previously used to purchase stock under the Plan.

 

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To re-enter thePlan, an employee who has previously withdrawn must file a new authorization atleast ten (10) days before the beginning date of the next Payment Period inwhich he or she wishes to participate. The employee’s re-entry into the Plan becomes effective at the beginningof such Payment Period, provided that he or she is an eligible employee on thefirst business day of the Payment Period.

 

11.      Issuance of Stock.

 

Certificates forstock issued to participants will be delivered as soon as practicable aftereach Payment Period by the Company’s transfer agent.

 

Stock purchasedunder the Plan will be issued only in the name of the employee, or if his/herauthorization so specifies, in the name of the employee and another person oflegal age as joint tenants with rights of survivorship.

 

12.      Adjustments.

 

Upon the happeningof any of the following described events, an optionee’s rights under optionsgranted under the Plan shall be adjusted as hereinafter provided:

 

A.            In the event shares ofCommon Stock of the Company shall be subdivided or combined into a greater orsmaller number of shares or if, upon a reorganization, split-up, liquidation,recapitalization or the like of the Company, the shares of the Company’s CommonStock shall be exchanged for other securities of the Company, each optioneeshall be entitled, subject to the conditions herein stated, to purchase suchnumber of shares of Common Stock or amount of other securities of the Companyas were exchangeable for the number of shares of Common Stock of the Companywhich such optionee would have been entitled to purchase except for suchaction, and appropriate adjustments shall be made in the purchase price pershare to reflect such subdivision, combination or exchange; and

 

B.             In the event theCompany shall issue any of its shares as a stock dividend upon or with respectto the shares of stock of the class which shall at the time be subject tooption hereunder, each optionee upon exercising such an option shall beentitled to receive (for the purchase price paid upon such exercise) the sharesas to which he/she is exercising his/her option and, in addition thereto (at noadditional cost), such number of shares of the class or classes in which suchstock dividend or dividends were declared or paid, and such amount of cash inlieu of fractional shares, as is equal to the number of shares thereof and theamount of cash in lieu of fractional shares, respectively, which he/she wouldhave received if he/she had been the holder of the shares as to which he/she isexercising his/her option at all times between the date of the granting of suchoption and the date of its exercise.

 

Upon the happeningof any of the foregoing events, the class and aggregate number of shares setforth in Article 4 hereof which are subject to options which have been ormay be granted under the Plan and the limitations set forth in the secondparagraph of Article 5 shall also be appropriately adjusted to reflect theevents specified in paragraphs A and B above.  Notwithstanding the foregoing, any adjustments made pursuant toparagraphs A or B shall be made only to the extent that the Committee,based on advice of counsel for the Company, determines whether such adjustmentswould constitute a “modification” (as that terms is defined in Section 424of the Code) or would constitute a change requiring stockholder approval(pursuant to Section 423(b)(2) of the Code).  If the Committee determines that such adjustments wouldconstitute a modification or would require stockholder approval, it may refrainfrom making such adjustments.

 

If the Company isto be consolidated with or acquired by another entity in a merger, a sale ofall or substantially all of the Company’s assets or otherwise (an“Acquisition”), the Committee or the board of directors of any entity assumingthe obligations of the Company hereunder (the “Successor Board”) shall, withrespect to options then outstanding under this Plan, either (i) makeappropriate provision for the

 

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continuation ofsuch options by arranging for the substitution on an equitable basis for theshares then subject to such options either (a) the consideration payablewith respect to the outstanding shares of the Company’s Common Stock inconnection with the Acquisition, (b) shares of stock of the successorcorporation, or a parent or subsidiary of such corporation, or (c) suchother securities as the Successor Board deems appropriate, the fair marketvalue of which shall not materially exceed the fair market value of the sharesof Common Stock subject to such options immediately preceding the Acquisition;or (ii) terminate all outstanding options in exchange for a cash paymentequal to the excess of (a) the fair market value on the date of theAcquisition, of the number of shares of Common Stock that the participant’saccumulated payroll deductions as of the date of the Acquisition couldpurchase, at an option price determined with reference only to the firstbusiness day of the applicable Payment Period and subject to the 8,000-share,Code Section 423(b)(8) and fractional-share limitations on the amount ofstock a participant would be entitled to purchase, over (b) the result ofmultiplying such number of shares by such option price.

 

The Committee orSuccessor Board of Directors shall determine the adjustments to be made underthis Article 12, and its determination shall be conclusive.

 

13.      No Transfer or Assignmentof Employee’s Rights.

 

An employee’srights under the Plan are the employee’s alone and may not be transferred orassigned to, or availed of by, any other person other than by will or the laws ofdescent and distribution.  Any optiongranted under the Plan to an employee may be exercised, during the employee’slifetime, only by the employee.

 

14.      Termination of Employee’sRights,

 

An employee’srights under the Plan will terminate when he/she ceases to be an employeebecause of retirement, voluntary or involuntary termination, resignation,lay-off, discharge, death, change of status or for any other reason and theCompany shall promptly refund, without interest, the entire balance of his orher payroll deduction account under the Plan. Notwithstanding the foregoing, eligible employment shall be treated ascontinuing intact while a participant is on military leave, sick leave or otherbona fide leave of absence, for up to 90 days, or for so long as theemployee’s right to re-employment is guaranteed either by statute or bycontract, if longer than 90 days. A withdrawal notice will be considered as having been received from theemployee on the day his/her employment ceases, and all payroll deductions notused to purchase stock will be refunded.

 

If an employee’spayroll deductions are interrupted by any legal process, a withdrawal noticewill be considered as having been received from the employee on the day theinterruption occurs.

 

15.      Termination andAmendments to Plan.

 

Unless terminatedsooner as provided below, the Plan shall terminate on January 1,2007.  The Plan may be terminated at anytime by the Company’s Board of Directors but such termination shall not affectoptions then outstanding under the Plan. It will terminate in any case when all or substantially all of theunissued shares of stock reserved for the purposes of the Plan have beenpurchased.  If at any time shares ofstock reserved for the purpose of the Plan remain available for purchase butnot in sufficient number to satisfy all then unfilled purchase requirements,the available shares shall be apportioned among participants in proportion totheir options and the Plan shall terminate. Upon such termination or any other termination of the Plan, all payrolldeductions not used to purchase stock will be refunded, without interest.

 

The Committee orthe Board of Directors may from time to time adopt amendments to the Planprovided that, without the approval of the stockholders of the Company, noamendment may (i) increase the number of shares that may be issued under thePlan; (ii) change the class of employees eligible to receive options under thePlan, if such action would be treated as the adoption of a new plan forpurposes of Section 423(b) of the Code; or (iii) cause Rule or (iv)cause Rule 16b-3 under the Securities Exchange Act of 1934 to becomeinapplicable to the Plan.

 

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16.      Limits on Sale of StockPurchased Under the Plan.

 

The Plan isintended to provide shares of Common Stock for investment and not forresale.  The Company does not, however,intend to restrict or influence any employee in the conduct of his/her ownaffairs.  An employee may, therefore,sell stock purchased under the Plan at any time the employee chooses, subjectto compliance with any applicable federal or state securities laws and subjectto any restrictions imposed under Article 21 to ensure that taxwithholding obligations are satisfied.  **THE EMPLOYEEASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.**

 

17.      ParticipatingSubsidiaries.

 

The term“participating subsidiary” shall mean any subsidiary of the Company, as thatterm is defined in Section 424(f) of the Code, which is designated fromtime to time by the Board of Directors to participate in the Plan.  The Board of Directors shall have the powerto make such designation before or after the Plan is approved by thestockholders.

 

18.      Optionees NotStockholders.

 

Neither thegranting of an option to an employee nor the deductions from his/her pay shallconstitute such employee a stockholder of the shares covered by an option untilsuch shares have been actually purchased by the employee.

 

19.      Application of Funds.

 

The proceedsreceived by the Company from the sale of Common Stock pursuant to optionsgranted under the Plan will be used for general corporate purposes.

 

20.      Notice to Company ofDisqualifying Disposition.

 

By electing toparticipate in the Plan, each employee agrees to notify the Company in writingimmediately after the employee transfers Common Stock acquired under the Plan,if such transfer occurs within two years after the first business day ofthe Payment Period in which such Common Stock was acquired.  Each employee further agrees to provide anyinformation about such a transfer as may be requested by the Company or anysubsidiary corporation in order to assist it in complying with the taxlaws.  Such dispositions generally aretreated as “disqualifying dispositions” under Sections 421 and 424 of the Code,which have certain tax consequences to participants and to the Company and itsparticipating subsidiaries.

 

21.      Withholding of AdditionalIncome Taxes.

 

By electing toparticipate in the Plan, each employee acknowledges that the Company and itsparticipating subsidiaries are required to withhold taxes with respect to theamounts deducted from the employee’s compensation and accumulated for thebenefit of the employee under the Plan, and each employee agrees that theCompany and its participating subsidiaries may deduct additional amounts fromthe employee’s compensation, when amounts are added to the employee’s account,used to purchase Common Stock or refunded, in order to satisfy such withholdingobligations.  Each employee furtheracknowledges that when Common Stock is purchased under the Plan the Company andits participating subsidiaries may be required to withhold taxes with respectto all or a portion of the difference between the fair market value of theCommon Stock purchased and its purchase price, and each employee agrees thatsuch taxes may be withheld from compensation otherwise payable to suchemployee.  It is intended that taxwithholding will be accomplished in such a manner that the full amount ofpayroll deductions elected by the participant under Article 7 will be usedto purchase Common Stock.  However, ifamounts sufficient to satisfy applicable tax withholding obligations have notbeen withheld from compensation otherwise payable to any employee, then, notwithstandingany other provision of the Plan, the Company may

 

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withhold suchtaxes from the employee’s accumulated payroll deductions and apply the netamount to the purchase of Common Stock, unless the employee pays to theCompany, prior to the exercise date, an amount sufficient to satisfy suchwithholding obligations.  Each employeefurther acknowledges that the Company and its participating subsidiaries may berequired to withhold taxes in connection with the disposition of stock acquiredunder the Plan and agrees that the Company or any participating subsidiary maytake whatever action it considers appropriate to satisfy such withholdingrequirements, including deducting from compensation otherwise payable to suchemployee an amount sufficient to satisfy such withholding requirements or conditioningany disposition of Common Stock by the employee upon the payment to the Companyor such subsidiary of an amount sufficient to satisfy such withholdingrequirements.

 

22.      Governmental Regulations.

 

The Company’sobligation to sell and deliver shares of the Company’s Common Stock under thisPlan is subject to the approval of any governmental authority required inconnection with the authorization, issuance or sale of such shares, includingthe Securities and Exchange Commission, the Board of Governors of the FederalReserve System, and the Internal Revenue Service.  Government regulations may impose reporting or other obligationson the Company with respect to the Plan. For example, the Company may be required to identify shares of CommonStock issued under the Plan on its stock ownership records and send taxinformation statements to employees and former employees who transfer title tosuch shares.

 

23.      Governing Law.

 

The validity andconstruction of the Plan shall be governed by the laws of the Commonwealth ofMassachusetts**,** without giving effect to the principles of conflicts of lawthereof

 

24.      Approval of Board ofDirectors and Stockholders of the Company.

 

 

The Plan wasadopted by the Stockholders on April 13, 2004

 

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