**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,DC 20549**

**FORM 10-K/A-1**

**(Mark One)**

**x**                              ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**Forthe fiscal year ended December 31, 2006**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**Forthe transition period from                     to                     **

**CommissionFile Number 0-26996**

**INVESTORS FINANCIAL SERVICES CORP.**

(Exact name of registrantas specified in its charter)

| **Delaware**                              |   | **04-3279817**       |
|-------------------------------------------|--------|----------------------|
| (State or other  jurisdiction of          |   | (I.R.S Employer      |
| incorporation or  organization)           |   | Identification  No.) |
| **200 Clarendon Street**                  |   | ** **           |
| **P.O. Box  9130**                   |   | ** **           |
| **Boston,  Massachusetts**                |   | **02116**            |
| (Address of  principal executive offices) |   | (Zip Code)           |

 

Registrant’s telephonenumber, including area code:  **(617) 937-6700**

Securities registered pursuant to Section 12(b) ofthe Act:

**CommonStock, $.01 Par Value             Registered with the NASDAQ Global Select Market**

Securities registered pursuant to Section 12(g) ofthe Act:

**None**

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act. Yes x   No o

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act. Yes o   No x

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days. Yes x   No o

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, tothe best of registrant’s knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K. x

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the ExchangeAct. (Check one):
| Large accelerated filer x |   | Accelerated  filer o |   | Non-accelerated  filer o |
|---------------------------|--------|---------------------------|--------|-------------------------------|

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Act). Yes o   No x

Theaggregate market value of common stock held by non-affiliates of the registrantwas $2,863,941,561 based on the last reported sale price of $44.90 on TheNASDAQ Global Select Market on June 30, 2006 as reported by NASDAQ.

Asof January 31, 2007, there were 65,986,040 shares of common stockoutstanding.

 

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**EXPLANATORY NOTE**

The purpose of this Amendment No. 1 to the AnnualReport on Form 10-K/A is to include certain information that wasomitted from Part III of the Annual Report on Form 10-K becauseit was intended to be incorporated by reference from the Company’s definitiveProxy Statement for the 2007 Annual Meeting of Stockholders. Because theCompany’s definitive Proxy Statement for the 2007 Annual Meeting ofStockholders will not be filed with the Securities and Exchange Commissionwithin 120 days after the end of the fiscal year ended December 31,2006, the information required by Part III of the Annual Report on Form 10-Kcannot be incorporated by reference and therefore must be included in theAnnual Report. This Amendment No. 1 contains the information that waspreviously omitted from Part III of the Annual Report.

This amended Form 10-K/Adoes not attempt to modify or update any other disclosures set forth in theoriginal Form 10-K, except as required to reflect the additionalinformation included in Part III of this Form 10-K/A.Additionally, this amended Form 10-K/A, except for the additionalinformation included in Part III, speaks as of the filing date of theoriginal Form 10-K and does not update or discuss any other Companydevelopments after the date of the original filing. All information containedin this amended Form 10-K/A and the original Form 10-K issubject to updating and supplementing as provided in the periodic reports thatthe Company has filed and will file after the original filing date with theSecurities and Exchange Commission.

**PART III**

**ITEM 10.**         DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

**Directors andExecutive Officers**

Thefollowing table sets forth the directors and the executive officers of theCompany as of April 16, 2007, their ages, and the positions currently heldby them with the Company. The Company’s executive officers are appointed by,and serve at the discretion of, the board of directors. Each executive officeris a full-time employee of the Company. There is no family relationship betweenany executive officer and any director of the Company.
| Name                       | ** ** | ** ** | ** ** | **Age**                                                     | ** ** | **Position** | ** ** | ** ** | **Year Board Term Will Expire** | ** ** |
|----------------------------|------------|------------|------------|-------------------------------------------------------------|------------|--------------|------------|------------|---------------------------------|------------|
| Kevin J. Sheehan           |       | 55         |       | Chairman of the Board  and Chief Executive Officer          |       | 2007         |
| Michael F. Rogers          |       | 49         |       | President                                                   |       | n/a          |
| John N.  Spinney, Jr. |       | 41         |       | Senior Vice President  and Chief Financial Officer          |       | n/a          |
| Robert D. Mancuso          |       | 46         |       | Senior Vice  President—Marketing and Client Management |       | n/a          |
| Edmund J. Maroney          |       | 50         |       | Senior Vice President—Technology                       |       | n/a          |
| John E. Henry              |       | 42         |       | Senior Vice President,  General Counsel and Secretary       |       | n/a          |
| James M. Oates             |       | 60         |       | Director                                                    |       | 2007         |
| Thomas P. McDermott        |       | 71         |       | Director                                                    |       | 2007         |
| Frank B.  Condon, Jr. |       | 71         |       | Director                                                    |       | 2009         |
| Phyllis S. Swersky         |       | 55         |       | Director                                                    |       | 2008         |
| Richard P. Boyatzi         |       | 57         |       | Director                                                    |       | 2009         |
| John I. Snow, III     |       | 46         |       | Director                                                    |       | 2009         |

 

Mr. Oates is chair of the compensation committeeof which Messrs. Boyatzi, Condon and McDermott are also members. Ms. Swerskyis chair of the audit committee of which Messrs. McDermott and Snow are 

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also members. Mr. Condonis Chair of the Nominating and Corporate Governance Committee of which Messrs. Boyatzi,McDermott and Oates are also members. Ms. Swersky and Mr. Oatesrepresent the Board of Directors on the Community Reinvestment Act Committee. TheCompany was organized in June 1995 to serve as the holding company for theBank and for periods prior to that date, references to the Company mean theBank.

**Mr. Sheehan**has served as a director since 1990. He has been ChiefExecutive Officer and Chairman of the Board of Directors since June 1995.Mr. Sheehan served as President from June 1992 to August 2001. Priorto joining the Company in May 1990 with the Company’s acquisition of theFinancial Products Services Division of the Bank of New England, Mr. Sheehanwas a Senior Vice President at the Bank of New England.

**Mr. Rogers**has been President since August 2001, and has hadresponsibility for all operating areas since 1990. He served as Executive VicePresident from September 1993 to August 2001. Prior to joining theCompany in May 1990 with the Company’s acquisition of the FinancialProducts Services Division of the Bank of New England, Mr. Rogers was aVice President at the Bank of New England.

**Mr. Spinney**has been Senior Vice President since August 2001 and Chief FinancialOfficer since January 2002. Prior to joining the Company in August 2001,Mr. Spinney was an audit partner in the Financial Services Practice ofKPMG LLP, a public accounting firm.

**Mr. Mancuso**has been Senior Vice President—Marketing and Client Management since September 1993.He joined the Company in September 1992. Prior to joining the Company, Mr. Mancusowas Eastern Region Director of Sales for PRJ Associates, a software developmentfirm.

**Mr. Maroney**has been Senior Vice President—Technology since July 1991.Mr. Maroney served as a Systems Manager in the custody department prior tobecoming Senior Vice President. Prior to joining the Company in May 1990with the Company’s acquisition of the Financial Products Services Division ofthe Bank of New England, Mr. Maroney was Vice President at the Bank of NewEngland.

**Mr. Henry**has been General Counsel of the Company since February 1996,Secretary of the Company since January 1997 and Senior Vice Presidentsince April 2000. Prior to joining the Company, Mr. Henry was anassociate at the Boston law firm of Testa, Hurwitz & Thibeault, LLP.Mr. Henry is Chairman of The Arts & Business Council of GreaterBoston, a non-profit organization.

**Mr. Oates**has been a director of the Company since June 1995.Mr. Oates has been the Managing Director of the Wydown Group, a consultingfirm specializing in start-ups, since 1994. Mr. Oates served as Presidentand Chief Executive officer of Neworld Bancorp Incorporated from 1984 to 1994and Chairman of Hudson Castle Group Inc., from 1995 to 2006. Mr. Oates isa Director and Chairman of the Investment Committee and Member of the Audit andPersonnel Committees of Connecticut River Bancorp, Inc., and ConnecticutRiver Bank. Mr. Oates is also a Director and Member of the Executive,Compensation, Audit and Finance Committees and Chairman of the NominatingCommittee of Stifel Financial Corporation, a Director of the New HampshireTrust Co., a Director of twenty-five Phoenix Mutual Funds and Chairman of theBoard of Trustees of the John Hancock Trust and John Hancock Funds II.Mr. Oates is Chairman of the Board of Directors and a Member of theExecutive and Compensation Committees of Emerson Investment Management, Inc.Mr. Oates is also a member of the Finance and Investment Committee of theEndowment for Health, a New Hampshire non-profit corporation and President ofthe Board of Trustees of Middlesex School.

**Mr. McDermott**has been a director of the Company since June 1995.He has been Managing Director of TPM Associates, a consulting firm, since January 1994.He served as Managing Partner, New England Area of Ernst & Young LLPfrom 1989 to 1993. Mr. McDermott is also a director of Harvard University—LASPAUand director Emeritus of ACCION International.

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**Mr. Condon**has been a director of the Company since April 1986.From July 1982 to July 1993, he was Chief Executive Officer andPresident, and from July 1993 to April 1997 he was Chief ExecutiveOfficer and Chairman of Woodstock Corporation, a Boston-based investmentmanagement firm and of its wholly owned subsidiary, Woodstock ServiceCorporation, a provider of financial services. Mr. Condon also serves as aManager of Coal, Energy Investments & Management, LLC and as a consultantto Woodstock Corporation.

**Ms. Swersky**has been a director of the Company since February 1996.She has been President of The Meltech Group, a consulting firm specializing inbusiness advisory services for high-growth potential businesses, since 1995. Ms. Swerskyhas served in various executive management positions in the computer softwareand services industry including chief financial officer, chief operatingofficer and chief executive officer. Ms. Swersky also serves as a Directorof Art Technology Corp., an e-commerce software company, and Berkshire LifeInsurance Company of America, Inc.

**Mr. Boyatzi**joined the Company as a director in January 2006.From 2002 to 2004, Mr. Boyatzi served as the U.S. Financial MarketsConsulting Practice Leader with IBM Global Consulting Services. From 1977 to2002, Mr. Boyatzi served in the Consulting Practice ofPricewaterhouseCoopers focusing on financial services in the United States andEurope.

**Mr. Snow**joined the Company as a director in February 2006.Mr. Snow has been a Managing Director of Boston Projects, Inc., analternative investment management firm, since 2000. He served in otherpositions with Boston Projects, Inc. from 1989 to 2000, prior to which hewas associated with KPMG LLP from 1984 to 1989. Mr. Snow currentlyserves as a Director for the boards of Advanced Duplication Services, HudsonCastle Group, Inc., Hoffco, Inc., Porter Group and Library SystemServices, Inc. Mr. Snow is a member of the Investment Committee ofthe New Hampshire Charitable Foundation, a member of the Investment Committeefor the Endowment for Health, a New Hampshire non-profit corporation, andPresident of the Board of Trustees of the Winchester (MA) Foundation forEducational Excellence.

A director may be removedfor cause, which is generally defined under Delaware law as an event of asubstantial nature which directly affects the rights and interests of a company’sstockholders, such as disclosing trade secrets of the Company or embezzlingcorporate funds, by a vote of at least a majority of the shares of the Company’scapital stock entitled to vote in the election of directors. A director may beremoved without cause by a vote of at least seventy-five percent of the sharesof the Company’s capital stock entitled to vote in the election of directors.

**Section 16(a) BeneficialOwnership Reporting Compliance**

Section 16(a) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”), requiresthe Company’s directors, executive officers and holders of more than 10% of theCompany’s common stock (collectively, “Reporting Persons”) to file with theSecurities and Exchange Commission (the “Commission”) initial reports ofownership and reports of changes in ownership of common stock of the Company. Suchpersons are required by regulations of the Commission to furnish the Companywith copies of all such filings. Based on its review of the copies of suchfilings received by it with respect to the year ended December 31, 2006,the Company believes that all Reporting Persons complied with all Section 16(a) filingrequirements in the year ended December 31, 2006.

**Code of Conduct**

We maintain a Code ofConduct consistent with the rules and regulations of the SecuritiesExchange Act of 1934 that applies to all of our employees and directors. OurCode of Conduct is available on our website at www.ibtco.com.

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**StockholderNominations**

Our board’s nominating andcorporate governance committee will consider nominees recommended bystockholders. Any such recommendations should be submitted in writing to ourSecretary at our principal executive offices in accordance with the nominatingprocedures set forth in our by-laws. Nominees recommended by stockholders willbe evaluated in the same manner as nominees identified by management, the boardor the nominating and corporate governance committee. The committee did notreceive any stockholder nominee recommendations in 2006.

**Audit Committee**

Our board maintains anaudit committee comprised of Phyllis S. Swersky, Chair, Thomas P. McDermott andJohn I. Snow III, all of whom have been determined to be independent. Our boardof directors has determined that Ms. Swersky and Mr. McDermott are “auditcommittee financial experts” as defined in the applicable rules andregulations of the Securities Exchange Act of 1934.

**ITEM 11.**         EXECUTIVECOMPENSATION.

**CompensationDiscussion and Analysis**

In the paragraphsthat follow, we will provide a detailed overview and analysis of ourcompensation programs and policies, the material compensation decisions we havemade under those programs and policies, and the material factors that weconsidered in making those decisions. Later in this report under the heading “ExecutiveCompensation” are tables which contain specific information about thecompensation earned by or paid during 2006 to the following individuals, whomwe refer to as our named executive officers:

·       KevinJ. Sheehan, Chairman and Chief Executive Officer

·       JohnN. Spinney, Jr., Senior Vice President and Chief Financial Officer

·       MichaelF. Rogers, President

·       EdmundJ. Maroney, Senior Vice President—Technology

·       RobertD. Mancuso, Senior Vice President—Marketing and Client Management

The discussion below isintended to help you understand the detailed information provided in thosetables and to put that information into context within our overall compensationprogram.

**Overview**

Our executive compensation program is administered bythe four member compensation committee of our board of directors. The fourmembers of the compensation committee are independent non-employee directors,each of whom qualifies as an “outside director” for purposes of Section 162(m) ofthe Internal Revenue Code.

Each year, thecompensation committee establishes the compensation of the chief executiveofficer. Each year, the chief executive officer determines and recommends thecompensation of the other executive officers of the Company, and thoserecommendations are reviewed, amended as appropriate and approved by thecompensation committee. Various models and matrices used by the compensation committeein setting executive compensation are prepared at the direction of thecommittee by our chief executive officer, our chief financial officer and/orour general counsel. After establishing and approving the compensationpackages, the compensation committee then recommends those packages to the fullboard for approval.

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**Objectives**

Ourcompensation policy for executive officers is designed to achieve the followingobjectives:

·       Tomotivate management to satisfy the increasing demands of our large, global,sophisticated and high-growth client base;

·       Todrive the profitability, competitive posture and dimensions of our companywhile increasing stockholder value;

·       Toreward executives in accordance with our achievement of annual earningsobjectives as well as long-term stock performance goals;

·       Torecognize individual initiative and achievement; and

·       Toprovide competitive compensation that will attract, retain and motivatequalified key executives.

**Methods for Determining and Assessing Compensation Levelsand Programs**

The financial servicesindustry is extremely competitive with regard to attracting and retainingqualified personnel at all levels. That competition is even more intense forsenior management. We compete for employees and management with companiespossessing far greater resources. Each year we are challenged to createexecutive compensation programs that will attract and retain the best and thebrightest while, at the same time, remaining affordable for the Company.

We seek to meet this challengeby ensuring that the majority of compensation for our senior executives isincentive based. As a result, material increases or decreases in compensationare driven by our financial performance and the individual performance ofsenior executives. In short, if we don’t earn it, we don’t pay it.

**Annual Review of Market Data**

Each year, we conduct abenchmark study of compensation in the financial services industry. In 2006, werelied primarily on a database provided by Equilar, Inc. which aggregatesinformation from proxy statements and other documents filed with the Securitiesand Exchange Commission. In addition, we used data from third partycompensation surveys, including Mercer Human Resources Consulting and McLagan Partners.

Reports generated from theEquilar database and relevant surveys allowed the compensation committee toreview and compare base salary, bonus, total cash compensation, equitycompensation and other long term compensation at 21 companies in the financialservices industry and financial services technology industry. These comparatorcompanies include State Street Corporation, the Bank of New York, NorthernTrust, Mellon Financial Corp., SEI Investments Co., J.P. Morgan Chase, PNC FinancialServices Group, Inc. and Synovus Financial Corp.

Thecompensation committee conducted various analyses of the compiled compensationdata, including adjustments based on revenue and growth rate. The compensationcommittee reviewed each component of compensation as well as the total mix ofcompensation. Each year, the compensation committee considers the advisabilityof engaging an independent compensation consultant. In 2006, the committee didnot engage an independent compensation consultant.

**Elements of OurCompensation Program**

Our compensation programfor executive officers consists of the following elements:

·       Basesalary, which is determined on an annual basis;

·       Annualincentive compensation in the form of cash bonuses which are based on theachievement of pre-determined financial objectives;

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·       Long-termequity incentive compensation;

·       Post-employmentbenefits, including employment agreements, change-in-control employmentagreements and retirement benefits; and

·       Perquisitesand health and welfare benefits.

These elements areconsidered both individually and, more importantly, as components of a totalpackage. When the compensation committee reviews the competitiveness of ourtotal compensation package for senior executives, the committee recognizes thateach individual element may be slightly above or below competitive targets. Thecommittee seeks to ensure that the entire package, viewed together, remainscompetitive.

*Base Salary*

Base salary for executive officers is intended to becompetitive with the base salaries offered for similar executive positions atother companies in the financial services industry and related industries, andreflects scope of responsibility, external compensation data, our financialperformance and individual performance. Generally, base salary adjustments areapproved annually prior to December 31, with changes effective thefollowing January 1.

In November 2005, thecompensation committee set the base salaries for executive officers for 2006 ata level the committee believes reflected a mid range of the competitive levelnecessary to retain and motivate the senior executives. Our board approved the2006 base salaries for senior executives in November 2005. In November 2006,the compensation committee set the base salaries for executive officers for2007, taking into account competitive information and our earnings performance.Messrs. Sheehan, Rogers, Maroney and Mancuso received no increase in basesalary for 2007, while Mr. Spinney received an increase of 11%.

*Incentive BonusCompensation*

Incentive bonus compensation for executive officers ispaid under our Senior Executive Bonus Plan and is based on achievingpredetermined targets for GAAP earnings per share. The compensation committeebelieves that GAAP earnings per share provide an objective measure of seniorexecutives’ success in increasing shareholder value. The committee may decidein the future to use additional or different performance measures for thepayment of incentive bonus compensation.

The targets for earnings per share are established bythe compensation committee within the first 90 days of each fiscalyear. The targets are set out in a matrix that specifies bonus compensation asa percentage of base salary depending on the level of earnings per shareperformance achieved during the year. Once established for a fiscal year, thespecific targets under the performance goals may be modified only with theapproval of the full board of directors, except to reflect changes in theCompany’s common stock (such as stock splits, stock dividends orrecapitalizations). There were no modifications to the 2006 earnings per sharetargets in the matrix.

The compensation committee determines earnings pershare target levels based on a review of the Company’s budget and strategicplan for the year, as well as relevant market conditions and other externalfactors. No payments will be made under our Senior Executive Bonus Plan to theextent minimum performance goals are not met. In addition, the compensationcommittee designs the matrix so that the top range of compensation is onlyearned with exceptional earnings out-performance. Payment of the incentivebonus compensation is subject to a review of each executive’s individualperformance. Currently, all payments are made in cash.

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If the earningsupon which incentive bonus payments have been paid are restated, thecompensation committee and the full board of directors, with the assistance ofoutside experts as appropriate, will conduct a detailed analysis of allrelevant factors to determine whether the refund of any amounts paid isappropriate. The factors to be reviewed include, among other things:

·       Whetherevidence of fraud, malfeasance or manipulation of accounting methods to achieveresults exists;

·       Themateriality of the restatement and the impact on bonus payments;

·       Whetherbonus caps were reached in any impacted year; and

·       Whether a legal requirementto refund bonuses exists.

*Incentive BonusCompensation in 2006.*

The earnings per shareincentive bonus compensation targets for 2006 were set by the compensationcommittee and approved by our full board of directors in January 2006. Ourexecutive officers were eligible to receive incentive bonus compensation as apercentage of base salary ranging from 0% to 325%, depending on the level ofearnings per share performance achieved during the year. Our 2006 earnings pershare of $2.28 resulted in payments to our named executive officers equal to190% of base salary, a decrease from payments of 210% of base salary in 2005. Accordingly,approximately 66% of the 2006 cash compensation for our executive officers wasincentive based, tied directly to earnings per share performance.

*Incentive BonusCompensation in 2007.*

In January 2007, thecompensation committee set earnings per share incentive bonus compensationtargets for the year ended December 31, 2007. The named executive officerswill be eligible to receive incentive bonus compensation as a percentage ofbase salary ranging from 0% to 325%, depending on the level of earnings pershare performance achieved during the year. As stated above, the compensationcommittee designed the 2007 matrix so that the top range of compensation isonly earned with exceptional earnings out-performance. If the proposed businesscombination with State Street Corporation is consummated as planned in 2007,incentive bonus compensation received by the named executive officers will bedetermined by their change in control employment agreements and any additionalagreement they may individually execute with State Street Corporation.

*Mr. Mancuso’sSales Commission Agreement*

Mr. Mancuso is noteligible to participate in the Senior Executive Bonus Plan. Instead, Mr. Mancusohas entered into a Sales Commission Agreement with the Company under which heis eligible to receive commission based on business sold by Mr. Mancuso,as well as an override commission on business sold by his staff. Commissionsare paid based on a percentage of revenue received from the applicable clientduring the first year of the relationship. Mr. Mancuso’s commissions arenot capped.

*Long-Term EquityIncentive Compensation*

The compensation committee believes that long-termequity incentive compensation aligns the interests of executive officers withthose of our stockholders. The committee also believes that equity ownership byexecutive officers helps to balance the short-term focus of annual incentivebonus compensation with an emphasis on long-term financial results and may helpto retain key executives.

The compensation committee continually evaluates allforms of long-term equity incentive compensation for executives, includingstock options, restricted stock, restricted stock units and stock 

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appreciation rights. Thecompensation committee to date has primarily used stock options for long-termequity incentive compensation. The committee believes that stock optionsgranted at fair market value are an effective incentive tool because they haveno value to the executive unless our stock price increases. In addition, thecommittee believes that providing for vesting periods of at least four yearsand a term of ten years, encourages executives to focus on long-term financialresults, rather than short term gains. At the same time, the committeerecognizes that in a falling stock market, the Company will continue to incurexpense related to stock options despite the fact that the options may havelittle or no value to an executive. The committee believes that the benefits ofour stock option program outweigh any negative aspects.

When establishing equity incentive grant levels forexecutives, the compensation committee considers information from our annualcompensation benchmarking study, previous grants of equity incentives, vestingschedules and exercise prices of outstanding equity incentives and the currentstock price.

Historically,virtually all stock options to executive officers were granted at the regularlyscheduled November meeting of the full board of directors. In 2006, thecommittee conducted an extensive evaluation of stock option grant practices,and determined to move the grant date for equity incentives to the firstquarter of each fiscal year, after results for the prior year are finalized andreported. As a result, no grants of stock options were made by the compensationcommittee to named executive officers in 2006. In January 2007, thecompensation committee and the full board of directors approved stock optiongrants to the named executive officers as set forth in the following table. Thegrants below have an exercise price of $46.90 which is equal to the fair marketvalue of the Company’s common stock on the date of grant and vest in 108 equalmonthly installments over nine years.

| **Name**                   | ** ** | ** ** | ** ** | **No. of Shares Underlying Option** | ** ** |
|----------------------------|------------|------------|------------|---------------------------------------------------------|------------|
| Kevin J. Sheehan           |       |       | 225,000    |                                                    |       |
| John N.  Spinney, Jr. |       |       | 100,000    |                                                    |       |
| Michael F. Rogers          |       |       | 150,000    |                                                    |       |
| Edmund J. Maroney          |       |       | 100,000    |                                                    |       |

 

If the proposed business combination with State StreetCorporation is consummated, the unvested portion of the above grants will vestat the closing date.

Just as our shareholdersput their money at risk when they invest in our company, we believe that asignificant portion of our executives’ compensation should be at risk, and thatthe portion at risk should increase with the executive’s level ofresponsibility. For example, only 12% of Mr. Sheehan’s total compensationrelated to 2006 was fixed (in the form of salary) and the remaining 88% was atrisk: 22% was represented by his incentive bonus compensation and 66% by hislong-term equity incentive opportunity granted in January 2007. We believethat this weighting of performance-based at-risk compensation most effectivelymeets our critical objectives of performance alignment and long-term retentionof top talent.

*Post-EmploymentBenefits*

*Employment andChange of Control Agreements.*

Each named executive officer is a party to an employmentagreement and a change of control employment agreement with us.

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The employment agreements provide for the key terms ofemployment for each named executive officer, define grounds for termination ofthe executive by us for cause and provide for payments to the executive in theevent of termination by us for no cause or certain terminations by theexecutive for good cause. If we terminate an executive for no cause or theexecutive terminates employment for good cause, the executive will receive hissalary, bonus and health and welfare benefits for the remainder of the contractterm or two years, whichever is greater. A detailed description of theemployment agreements is contained below under the heading “Potential PaymentsUpon Termination or Change-in-Control.”

The change of control employment agreements arerenewed automatically each year and become effective upon a change in controlof the Company. The agreements provide that in the event of a terminationduring the three-year effective term of the agreement, whether by the Companyor its successor without cause, or by the executive for good reason, theterminated executive will receive a lump sum payment equal to three times theexecutive’s most recent annual salary plus a payment equal to three times thehighest of the executive’s three most recent annual bonuses, as well ascontinuing benefits and medical coverage for three years. In addition, theexecutive will receive the actuarial equivalent of the benefit under theCompany’s defined benefit and supplemental pension plans that the executivewould receive if his employment continued for three years after termination. Inaddition, Messrs. Rogers and Maroney will receive age and service credit to age55 under those plans. Payments under the change of control agreements which aresubject to excise tax will be “grossed up” by the Company. A detaileddescription of the change of control employment agreements is contained belowunder the heading “Potential Payments Upon Termination or Change-in-Control.”

In setting theterms and conditions of the employment agreements and change of controlagreements, the compensation committee consulted with outside expertsexperienced in establishing executive employment agreements in the financialservices industry. In addition, the compensation committee reviewed informationregarding post-employment benefits offered by other financial servicesorganizations. As a result of its research, the compensation committee made thefollowing determinations:

·       Inorder to focus on executing the Company’s strategic plans and increasingshareholder value, senior executives should be free of concerns regarding theiremployment status in the event of a change of control or other managementchange;

·       Duringnegotiation of the terms of any change of control, executives will not bedistracted from obtaining the best transaction for shareholders, regardless ofthe executive’s resulting individual employment status, if those executiveshave appropriate personal protections, including provisions allowingtermination at the executive’s option during a specified window after thechange of control; and

·       Becauseemployment agreement and change of control agreement protections are common inthe extremely competitive market for financial services executives, failure toprovide these protections could result in our inability to attract and retainkey talent.

Accordingly, the compensation committee believes thatthe employment agreements and change in control agreements are in the bestinterest of shareholders because they help the Company attract and retain keytalent and allow senior executives to execute the Company’s business plans andstrategic transactions free from distraction and with a sole focus on drivingshareholder value.

The terms of the employment agreements and change ofcontrol agreements are reviewed annually by the compensation committee and thefull board of directors.

Please note that thetabular disclosures set forth in this report regarding post terminationpayments are based on an assumed acquisition date of December 31, 2006 aswell as other assumptions prescribed by regulation. The tables in this reportdo not reflect actual payments that may be received by named executive officersin the proposed business combination with State Street Corporation.

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*Pension Plan andSupplemental Executive Retirement Plan.*

We maintain a qualified pension plan and anon-qualified supplemental executive retirement plan, or SERP. Benefit accrualsunder our pension plan were frozen for all participants in 2004 and as to allnamed executive officers in 2002. Benefits payable to named executive officersunder our pension plan and SERP are based on years of service and final averagemonthly compensation. A detailed presentation of benefits payable to our namedexecutive officers under these retirement plans are set forth below under theheading “Pension Benefits.”

Each year, thecompensation committee considers the appropriateness of maintaining the pensionplan and SERP as well as the levels of compensation provided under the plans. Thecompensation committee believes, based on its review of the market datadiscussed above, that the retirement benefits provided by the pension plan andthe SERP have remained common in the financial services industry, despite thefact that they may be declining in popularity in other industries. In order tocontinue to attract and retain top-level talent in the financial servicesindustry, the committee believes that these benefits are a necessary componentof compensation for key executives. The amount accrued each year for a namedexecutive under the pension plan and SERP is determined based on actuarialcalculations. The compensation committee and full board of directors reviewsand approves the obligation accrued for each named executive under the SERP onan annual basis.

*401(k) Plan.*

Our named executiveofficers are entitled to participate in our 401(k) Plan on the same termsand conditions as all employees.

*Perquisites andHealth and Welfare Benefits*

The compensation committee recognizes that the demandsof our large, global, sophisticated and high growth clients increasinglyrequire the 24 hour a day, seven day a week availability of senior executives. Thecompensation committee has implemented a limited program of perquisites basedon practices common for senior executives in the financial services industrywith the goals of:

·       Ensuringthat the total compensation package for senior executives remains competitive;and

·       Providingbenefits that lessen the impact of or compensate for intrusions into personallives of executives necessitated by the global nature and fast pace of ourbusiness.

Our named executive officers receive the followingperquisites, paid for by the Company: car allowance, parking, tax and estateplanning, executive life insurance and supplemental long-term disability insurance.Dollar amounts associated with these items are set forth below in the SummaryCompensation Table and related footnotes. The compensation committee believesthat these perquisites are an important element of a competitive compensationpackage for senior executives in the financial services industry, and help thecompany to attract and retain key executives.

Our named executiveofficers also are entitled to participate in the health and welfare programsprovided to all employees, on the same terms as other employees. These programsinclude health insurance, dental insurance, a vision plan and various otherprograms and discounts. The compensation committee believes these programs areessential components of compensation for employees at all companies of the sizeand scope of our Company.

**Security OwnershipRequirements and Hedging**

We do not impose equity orsecurity ownership guidelines on executive officers. Because our executiveofficers traditionally have maintained significant ownership positions in ourcommon stock, the 

11

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compensationcommittee does not believe ownership guidelines are necessary at this time. Ourinsider trading policy prohibits employees from buying or selling derivativesecurities based on the common stock of Investors Financial Services Corp.

**Impact of Tax andAccounting Treatment of Executive Compensation**

In order to calculate the true cost of executivecompensation to the Company, the compensation committee must consider the taxand accounting treatment of various forms of compensation. The Internal RevenueCode and related regulations provide generally that in order to qualify for atax deduction, compensation in excess of $1 million paid to a publiccorporation’s executive officers must qualify as performance-based compensation.Compensation that does not qualify for a tax deduction is, in effect, moreexpensive for the Company. The compensation committee seeks to ensure thatvirtually all compensation paid to executive officers is tax deductible underFederal law. Accordingly, the Company’s Senior Executive Bonus Plan has beenapproved by shareholders pursuant to the requirements of Section 162(m) ofthe Internal Revenue Code.

The compensation committee also considers the impactof accounting treatment on compensation expense. With the requirement under FAS123R to expense stock options, the committee now considers issues, such asvesting schedules, that impact the amount of compensation expense recognized ina financial reporting period, creating additional complexities in compensationplanning. In addition, the compensation committee reviews the accounting impactof different forms of equity compensation, including stock options andrestricted stock.

We continue to monitor theregulatory developments under Internal Revenue Code Section 409A, whichwas enacted as part of the American Jobs Creation Act of 2004. Section 409Aimposes substantial limitations and conditions on nonqualified deferredcompensation plans, including certain types of equity compensation andseparation pay arrangements. We intend to amend our compensation arrangements,if necessary, in order to ensure their full compliance with the recentlyreleased final regulations under Section 409A in accordance withapplicable deadlines.

**Conclusion**

The compensation committeeis satisfied that the executive officers of the Company are dedicated toachieving significant improvements in the long-term financial performance ofthe Company and that the compensation policies and programs implemented andadministered have contributed and will continue to contribute towards achievingthat goal.

**COMPENSATIONCOMMITTEE REPORT**

Thecompensation committee of the board of directors of the Company has reviewedand discussed the Compensation, Discussion and Analysis contained in thisAnnual Report on Form 10-K/A with management and, based on suchreview and discussions, the compensation committee recommended that theCompensation Discussion and Analysis be included in this report.

|        | THE COMPENSATION COMMITTEE |
|--------|----------------------------|
|   | James M. Oates, *Chairman* |
|   | Richard P.  Boyatzi        |
|   | Frank B.  Condon, Jr. |
|   | Thomas P.  McDermott       |

 

12

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**SummaryCompensation Table**

The following tableprovides certain summary information concerning the compensation earned forservices rendered in all capacities for the year ended December 31, 2006by our chief executive officer, chief financial officer and each of our threeother most highly compensated executive officers whose total compensation for2006 was in excess of $100,000 and who were serving as executive officers at December 31,2006 (the “named executive officers”). No other executive officers who wouldhave otherwise been includable in this table on the basis of total compensationfor 2006 have been excluded by reason of their termination of employment orchange in executive status during that year.

| **Name and Principal  Position**                                         | ** ** | ** ** | ** ** | **Year** | ** ** | **Salary  ($)** | ** ** | **Option  Awards  ($)(1)** | ** ** | **Non-Equity  Incentive Plan  Compensation  ($)(2)** | ** ** | **Change in  Pension  Value and  Non-qualified  Deferred  Compensation  Earnings  ($)(3)** | ** ** | **All Other  Compensation  ($)(4)** | ** ** | **Total ($)** | ** ** |
|------------------------------------------------------------------------------------|------------|------------|------------|----------|------------|-----------------|------------|----------------------------|------------|-----------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|------------------------------------------|------------|--------------------|------------|
| Kevin J. Sheehan  Chairman and Chief Executive Officer              |       |       | 2006       |     |       | 1,049,070       |       | 65,411                     |       |                                                      | 1,993,233  |                                                                                            |       |                                     | 424,600    |               |       |   | 83,914 |   |   | 3,616,228 |   |
| John N.  Spinney, Jr.  Senior Vice President and Chief Financial Officer |       |       | 2006       |     |       | 450,000         |       | 279,687                    |       |                                                      | 855,000    |                                                                                            |       |                                     | 94,700     |               |       |   | 66,687 |   |   | 1,746,074 |   |
| Michael F. Rogers  President                                                       |       |       | 2006       |     |       | 908,710         |       | 54,498                     |       |                                                      | 1,726,549  |                                                                                            |       |                                     | 161,700    |               |       |   | 61,798 |   |   | 2,913,255 |   |
| Edmund J. Maroney  Senior Vice President—Technology                      |       |       | 2006       |     |       | 623,150         |       | 60,410                     |       |                                                      | 1,183,985  |                                                                                            |       |                                     | 155,700    |               |       |   | 71,988 |   |   | 2,095,233 |   |
| Robert D. Mancuso  Senior Vice President—Marketing and Client Management |       |       | 2006       |     |       | 437,338         |       | 43,607                     |       |                                                      | 899,680    |                                                                                            |       |                                     | 63,900     |               |       |   | 52,617 |   |   | 1,497,142 |   |

----

(1)             Amounts represent the aggregate expense recognized forfinancial statement reporting purposes with respect to 2006 in accordance withFAS123R for stock options granted to the named executive officer.

FAS 123R expense for stock options is based on thefair value of the options on the date of grant using the Black-Scholes optionpricing model. The options resulting in the expense listed in the table abovewere granted on November 17, 2003 and June 15, 2004. The fair valueof each option grant was estimated on the date of grant using the Black-Scholesvaluation model with the following assumptions for the 2003 and 2004 grants,respectively: a risk-free interest rate of 2.77% and 3.40%, an expected life offour years, an expected volatility of 55.03% and 51.73%, and a dividend yieldof 0.16% and 0.16%. Mr. Maroney also received an automatic reload grant onNovember 13, 2006. The Black-Scholes assumptions for that grant were: arisk free interest rate of 4.65%, an expected life of 2 years, an expectedvolatility of 35.58% and a dividend yield of 0.23%.

(2)             For Messrs. Sheehan, Spinney, Rogers and Maroney,the amounts represent payments pursuant to the Company’s Executive Bonus Planearned in 2006, a portion of which were paid in 2007. For Mr. Mancuso,amounts represent payments made in 2006 pursuant to Mr. Mancuso’s salescommission agreement with the Company, some of which payments relate to salesmade in 2005.

(3)             Amounts represent the aggregate change in the actuarialpresent value of the named executive officer’s accumulated benefit under alldefined benefit and actuarial pension plans (including the tax-qualifiedpension plan and the non-qualified SERP) from December 31, 2005 (thepension plan measurement date used for financial statement reporting purposeswith respect to the Company’s audited financial statements for the 2005 fiscalyear) to December 31, 2006 (the pension plan measurement date used forfinancial statement reporting purposes with respect to the Company’s auditedfinancial statements for the 2006 fiscal year).

13

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(4)             Amounts  includethe following compensation and perquisites:

| **Name**                   | ** ** | ** ** | ** ** | **Car  Allowance(a)** | ** ** | **Parking(b)** | ** ** | **Tax  Consulting(c)** | ** ** | **Executive Life  Insurance(d)** | ** ** | **Long Term  Disability(e)** | ** ** | **401(k)   Match(f)** | ** ** | **Total** | ** ** |
|----------------------------|------------|------------|------------|-----------------------|------------|----------------|------------|------------------------|------------|---------------------------------------|------------|-----------------------------------|------------|----------------------------|------------|-----------|------------|
| Kevin J. Sheehan           |       |       | 28,197     |                  |       |           | 1,730      |                   |       |                                  | 16,738     |                              |       |                       | 23,803     |      |       |   | 6,695 |   |   |   | 6,600 |   |   | 83,764 |   |
| John N.  Spinney, Jr. |       |       | 19,042     |                  |       |           | 1,730      |                   |       |                                  | 10,730     |                              |       |                       | 7,326      |      |       |   | 3,758 |   |   |   | 6,600 |   |   | 66,537 |   |
| Michael F. Rogers          |       |       | 16,781     |                  |       |           | 1,730      |                   |       |                                  | 19,657     |                              |       |                       | 11,678     |      |       |   | 5,202 |   |   |   | 6,600 |   |   | 61,648 |   |
| Edmund J. Maroney          |       |       | 27,139     |                  |       |           | 1,730      |                   |       |                                  | 25,182     |                              |       |                       | 5,900      |      |       |   | 5,287 |   |   |   | 6,600 |   |   | 71,838 |   |
| Robert D. Mancuso          |       |       | 26,895     |                  |       |           | 1,730      |                   |       |                                  | 8,584      |                              |       |                       | 3,888      |      |       |   | 4,770 |   |   |   | 6,600 |   |   | 52,467 |   |

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(a)              Includes an allowance for a lease of a car.

(b)             Fees for parking privileges at the Garage at 100Clarendon.

(c)              Fees paid to (1) a public accounting firm forpersonal tax consulting and preparation and (2) to a law firm for estateplanning.

(d)             Amounts paid by the Company to compensate for the costof life insurance premiums for the benefit of the named executive officer.

(e)              Amounts paid by the Company to compensate for the costof additional Long-Term Disability insurance.

(f)               The dollar value of matching contributionsmade pursuant to the Company’s 401(k) plan, a qualified employee benefitdefined contribution plan, for 2006.

**Grants ofPlan-Based Award**

Thetable below shows each grant of an award made to a named executive officerunder any plan during the year ended December 31, 2006.

| ** **                 | ** ** | ** ** | ** ** | **Estimated Future Payouts  Under Non-Equity  Incentive Plan Awards(1)** | ** ** | **All Other  Option Awards:  Number of  Securities** | ** ** | **Exercise or  Base Price of** | ** ** | **Grant Date  Fair Value of  Stock and** | ** ** |
|----------------------------|------------|------------|------------|---------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|-----------------------------------------------|------------|--------------------------------------------------------------|------------|
| **Name**                   | ** ** | ** ** | ** ** | **Grant  Date**                                                                                   | ** ** | **Threshold  ($)**                                                  | ** ** | **Target  ($)**                               | ** ** | **Maximum  ($)**                                             | ** ** | **Underlying  Options (#)(2)** | ** ** | **Option  Awards ($/Sh)** | ** ** | **Option  Awards ($)** | ** ** |
| Kevin J. Sheehan           |       |       |       |                                                                                              | —     |                                                                |       | 1,835,873                                     | ** ** | 3,409,478                                                    | ** ** |   | ** ** | ** ** |   |   | ** ** |   |   |   |   |   |   |
| John N.  Spinney, Jr. |       |       |       |                                                                                              | —     |                                                                |       | 875,000                                       | ** ** | 1,625,000                                                    | ** ** |   | ** ** | ** ** |   |   | ** ** |   |   |   |   |   |   |
| Michael F. Rogers          |       |       |       |                                                                                              | —     |                                                                |       | 1,590,243                                     | ** ** | 2,953,308                                                    | ** ** |   | ** ** | ** ** |   |   | ** ** |   |   |   |   |   |   |
| Edmund J. Maroney          |       | 11/13/06   | ** ** |                                                                                              | —     |                                                                |       | 1,090,513                                     | ** ** | 2,025,238                                                    |       |   | 1,805 | ** ** |   |   | 39.88 |   |   |   | $ | 16,803 |   |   |
| Robert D. Mancuso          |       |       |       |                                                                                              | —     |                                                                |       | 250,000                                       | ** ** |                                                         | (3)        |   | ** ** | ** ** |   |   | ** ** |   |   |   |   |   |   |
|                            |            |            |            |                                                                                                   |            |                                                                     |            |                                               |            |                                                              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)          These columns reflectthe threshold, target and maximum payout levels under our Senior ExecutiveBonus Plan for 2007. The actual amount earn by each named executive officer isreported under the Non-Equity Incentive Plan Compensation column in the SummaryCompensation Table. Additional information about our Senior Executive BonusPlan is included in the Compensation Discussion and Analysis section of thisreport.

(2)          This column reflects thenumber of stock options granted under our 2005 Equity Incentive Plan. The onlygrant to a named executive officer in 2006 was an automatic “reload” optiongrant to Mr. Maroney in connection with the exercise of vested options. Inthe exercise, Mr. Maroney surrendered to the Company shares then owned byhim in payment of the exercise price and received a reload option grant equalto the number of shares surrendered. The reload option grant has an exerciseprice equal to the fair market value on the date of grant and has the sameexpiration date as the options that were exercised.

(3)          Pursuant to Mr. Mancuso’sSales Commission Agreement, Mr. Mancuso is entitled to set percentages ofrevenue derived from sales made by him or his staff. The Sales CommissionAgreement does not cap Mr. Mancuso’s commission eligibility.

14

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**Outstanding EquityAwards at Fiscal Year-End**

Thetable below shows outstanding equity awards at December 31, 2006 for eachnamed executive officer.

|                            | ** ** | **Option Awards** | ** ** |
|----------------------------|------------|------------------------|------------|
| **Name**                   | ** ** | ** **             | ** ** | **Number of   Securities   Underlying   Unexercised   Options   (#) Exercisable** | ** ** | **Number of   Securities   Underlying   Unexercised   Options   (#) Unexercisable** | ** ** | **Option   Exercise   Price ($)** | ** ** | **Option   Expiration   Date** | ** ** |
| Kevin J. Sheehan           |       |                   | 91,512     |   |   |   | — |   |   |   | $ | 5.41 |   |   | 11/18/2007 |   |
|                            |       |                   | 153,304    |   |   |   | — |   |   |   | $ | 5.98 |   |   | 11/16/2008 |   |
|                            |       |                   | 50,456     |   |   |   | — |   |   |   | $ | 7.50 |   |   | 11/18/2007 |   |
|                            |       |                   | 7,976      |   |   |   | — |   |   |   | $ | 7.50 |   |   | 11/16/2008 |   |
|                            |       |                   | 110,808    |   |   |   | — |   |   |   | $ | 10.88 |   |   | 11/15/2009 |   |
|                            |       |                   | 109,688    |   |   |   | — |   |   |   | $ | 10.88 |   |   | 11/15/2009 |   |
|                            |       |                   | 30,148     |   |   |   | — |   |   |   | $ | 10.76 |   |   | 11/18/2007 |   |
|                            |       |                   | 33,372     |   |   |   | — |   |   |   | $ | 10.76 |   |   | 11/16/2008 |   |
|                            |       |                   | 39,162     |   |   |   | — |   |   |   | $ | 34.75 |   |   | 11/13/2010 |   |
|                            |       |                   | 117,124    |   |   |   | — |   |   |   | $ | 34.75 |   |   | 11/13/2010 |   |
|                            |       |                   | 3,158      |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                            |       |                   | 16,362     |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                            |       |                   | 116,842    |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                            |       |                   | 2,850      |   |   |   | — |   |   |   | $ | 34.90 |   |   | 11/18/2007 |   |
|                            |       |                   | 3,428      |   |   |   | — |   |   |   | $ | 29.03 |   |   | 11/16/2008 |   |
|                            |       |                   | 3,219      |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                            |       |                   | 26,781     |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                            |       |                   | —     |   |   |   | 2,874 | (1) |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                            |       |                   | 23,749     |   |   |   | 3,377 | (1) |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                            |       |                   | 2,345      |   |   |   | — |   |   |   | $ | 42.61 |   |   | 11/15/2009 |   |
|                            |       |                   | 2,345      |   |   |   | — |   |   |   | $ | 42.61 |   |   | 11/13/2010 |   |
|                            |       |                   | 63,514     |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/15/2014 |   |
|                            |       |                   | 30,000     |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/15/2014 |   |
|                            |       |                   | 90,000     |   |   |   | — |   |   |   | $ | 39.19 |   |   | 11/14/2015 |   |
| John N.  Spinney, Jr. |       |                   | 9,796      |   |   |   | — |   |   |   | $ | 36.97 |   |   | 6/18/2012 |   |
|                       |       |                   | 2,501      |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                       |       |                   | —     |   |   |   | 2,874 | (2) |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                       |       |                   | 3,334      |   |   |   | 1,293 | (2) |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                       |       |                   | —     |   |   |   | 2,412 | (3) |   |   | $ | 41.45 |   |   | 6/15/2014 |   |
|                       |       |                   | 32,291     |   |   |   | 15,297 | (3) |   |   | $ | 41.45 |   |   | 6/15/2014 |   |
|                       |       |                   | 1,308      |   |   |   | — |   |   |   | $ | 42.66 |   |   | 6/18/2012 |   |
|                       |       |                   | 607        |   |   |   | — |   |   |   | $ | 42.66 |   |   | 11/12/2012 |   |
|                       |       |                   | 20,000     |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/15/2014 |   |
|                       |       |                   | 9,333      |   |   |   | — |   |   |   | $ | 39.19 |   |   | 11/14/2015 |   |
|                       |       |                   | 60,000     |   |   |   | — |   |   |   | $ | 39.19 |   |   | 11/14/2015 |   |
| Michael F. Rogers          |       |                   | 54,436     |   |   |   | — |   |   |   | $ | 10.76 |   |   | 11/18/2007 |   |
|                            |       |                   | 32,444     |   |   |   | — |   |   |   | $ | 10.76 |   |   | 11/16/2008 |   |
|                            |       |                   | 3,354      |   |   |   | — |   |   |   | $ | 28.97 |   |   | 11/12/2007 |   |
|                            |       |                   | 2,876      |   |   |   | — |   |   |   | $ | 34.75 |   |   | 11/13/2010 |   |
|                            |       |                   | 46,080     |   |   |   | — |   |   |   | $ | 34.75 |   |   | 11/13/2010 |   |
|                            |            |                        |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

15

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| Michael F. Rogers (cont’d) |   |   | 97,124 |   |   |   | — |   |   |   | $ | 34.75 |   |   | 11/13/2010 |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---|-------|--------|--------|------------|--------|
|                                 |   |   | 8,122  |   |   |   | — |   |   |   | $ | 33.13 |   |   | 11/18/2007 |   |
|                                 |   |   | 8,990  |   |   |   | — |   |   |   | $ | 33.13 |   |   | 11/16/2008 |   |
|                                 |   |   | 3,158  |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                                 |   |   | 86,878 |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                                 |   |   | 96,842 |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                                 |   |   | 2,850  |   |   |   | — |   |   |   | $ | 34.90 |   |   | 11/18/2007 |   |
|                                 |   |   | 3,476  |   |   |   | — |   |   |   | $ | 36.22 |   |   | 11/18/2007 |   |
|                                 |   |   | 4,454  |   |   |   | — |   |   |   | $ | 36.22 |   |   | 11/16/2008 |   |
|                                 |   |   | 3,219  |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                                 |   |   | 21,781 |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                                 |   |   | 41,513 |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                                 |   |   | 3,324  |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/16/2008 |   |
|                                 |   |   | 8,215  |   |   |   | — |   |   |   | $ | 36.00 |   |   | 11/16/2008 |   |
|                                 |   |   | — |   |   |   | 2874   | (4)    |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                                 |   |   | 19,791 |   |   |   | 2,335  | (4)    |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                                 |   |   | 36,837 |   |   |   | — |   |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                                 |   |   | 2,627  |   |   |   | — |   |   |   | $ | 38.05 |   |   | 11/15/2009 |   |
|                                 |   |   | 25,953 |   |   |   | — |   |   |   | $ | 38.05 |   |   | 11/15/2009 |   |
|                                 |   |   | 65,697 |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/15/2014 |   |
|                                 |   |   | 25,000 |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/15/2014 |   |
|                                 |   |   | 18,100 |   |   |   | — |   |   |   | $ | 34.90 |   |   | 11/15/2009 |   |
|                                 |   |   | 87,875 |   |   |   | — |   |   |   | $ | 39.19 |   |   | 11/14/2015 |   |
|                                 |   |   | 75,000 |   |   |   | — |   |   |   | $ | 39.19 |   |   | 11/14/2015 |   |
| Edmund J. Maroney               |   |   | 16,512 |   |   |   | — |   |   |   | $ | 5.41  |   |   | 11/18/2007 |   |
|                            |   |   | 68,304 |   |   |   | — |   |   |   | $ | 5.98  |   |   | 11/16/2008 |   |
|                            |   |   | 29,752 |   |   |   | — |   |   |   | $ | 7.27  |   |   | 11/18/2007 |   |
|                            |   |   | 9,192  |   |   |   | — |   |   |   | $ | 10.88 |   |   | 11/15/2009 |   |
|                            |   |   | 50,808 |   |   |   | — |   |   |   | $ | 10.88 |   |   | 11/15/2009 |   |
|                            |   |   | 14,052 |   |   |   | — |   |   |   | $ | 10.88 |   |   | 11/15/2009 |   |
|                            |   |   | 12,560 |   |   |   | — |   |   |   | $ | 10.76 |   |   | 11/18/2007 |   |
|                            |   |   | 19,464 |   |   |   | — |   |   |   | $ | 10.76 |   |   | 11/16/2008 |   |
|                            |   |   | 2,062  |   |   |   | — |   |   |   | $ | 22.22 |   |   | 11/18/2007 |   |
|                            |   |   | 2,876  |   |   |   | — |   |   |   | $ | 34.75 |   |   | 11/13/2010 |   |
|                            |   |   | 9,782  |   |   |   | — |   |   |   | $ | 34.75 |   |   | 11/13/2010 |   |
|                            |   |   | 37,124 |   |   |   | — |   |   |   | $ | 34.75 |   |   | 11/13/2010 |   |
|                            |   |   | 1,838  |   |   |   | — |   |   |   | $ | 33.13 |   |   | 11/18/2007 |   |
|                            |   |   | 3,158  |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                            |   |   | 9,316  |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                            |   |   | 76,842 |   |   |   | — |   |   |   | $ | 31.67 |   |   | 11/14/2011 |   |
|                            |   |   | 924    |   |   |   | — |   |   |   | $ | 34.90 |   |   | 11/18/2007 |   |
|                            |   |   | 3,219  |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                            |   |   | 16,781 |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                            |   |   | 2,438  |   |   |   | — |   |   |   | $ | 28.10 |   |   | 11/18/2007 |   |
|                            |   |   | — |   |   |   | 2,874  | (2)    |   |   | $ | 34.79 |   |   | 11/17/2013 |   |

16

----

 

| Edmund J. Maroney (cont’d) |   |   | 15,833  |   |   |   | 1,293  | (2)    |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|---------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---|-------|--------|--------|------------|--------|
|                                 |   |   | 729     |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/16/2008 |   |
|                                 |   |   | 16,736  |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/15/2014 |   |
|                                 |   |   | 20,000  |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/15/2014 |   |
|                                 |   |   | 60,000  |   |   |   | — |   |   |   | $ | 39.19 |   |   | 11/14/2015 |   |
|                                 |   |   | 1,805   |   |   |   | — |   |   |   | $ | 39.88 |   |   | 11/16/2008 |   |
| Robert D. Mancuso               |   |   | 2,800   |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                            |   |   | 951     |   |   |   | — |   |   |   | $ | 31.09 |   |   | 11/12/2012 |   |
|                            |   |   | —  |   |   |   | 2,874  | (2)    |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                            |   |   | 4,584   |   |   |   | 1,293  | (2)    |   |   | $ | 34.79 |   |   | 11/17/2013 |   |
|                            |   |   | 624     |   |   |   | — |   |   |   | $ | 43.59 |   |   | 11/15/2009 |   |
|                            |   |   | 11,757  |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/13/2010 |   |
|                            |   |   | 2,473   |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/13/2010 |   |
|                            |   |   | 27,622  |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/13/2010 |   |
|                            |   |   | 4,685   |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/14/2011 |   |
|                            |   |   | 39,178  |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/14/2011 |   |
|                            |   |   | 2       |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/12/2012 |   |
|                            |   |   | 61,126  |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/17/2013 |   |
|                            |   |   | 1,793   |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/17/2013 |   |
|                            |   |   | 5,767   |   |   |   | — |   |   |   | $ | 40.41 |   |   | 11/12/2012 |   |
|                            |   |   | 111,294 |   |   |   | — |   |   |   | $ | 41.03 |   |   | 11/15/2014 |   |
|                            |   |   | 60,000  |   |   |   | — |   |   |   | $ | 39.19 |   |   | 11/14/2015 |   |

----

(1)          Amounts representincentive stock options and nonqualified stock options that are aggregated asone grant for vesting purposes. The original grant vests in 48 equal monthlyinstallments of 625 shares beginning on November 17, 2003 (the originalgrant date). In any given month, the 625 shares that vest will come from eitherthe incentive stock option or the nonqualified stock option, in accordance withInternal Revenue Code Requirements.

(2)          Amounts representincentive stock options and nonqualified stock options that are aggregated asone grant for vesting purposes. The original grant vests in 48 equal monthlyinstallments of 417 shares beginning on November 17, 2003 (the originalgrant date). In any given month, the 417 shares that vest will come from eitherthe incentive stock option or the nonqualified stock option, in accordance withInternal Revenue Code Requirements.

(3)          Amounts representincentive stock options and nonqualified stock options that are aggregated asone grant for vesting purposes. The original grant vests in 48 equal monthlyinstallments of 1,042 shares beginning on June 15, 2004 (the originalgrant date). In any given month, the 1,042 shares that vest will come fromeither the incentive stock option or the nonqualified stock option, inaccordance with Internal Revenue Code Requirements.

(4)          Amountsrepresent incentive stock options and nonqualified stock options that areaggregated as one grant for vesting purposes. The original grant vests in 48equal monthly installments of 521 shares beginning on November 17, 2003(the original grant date). In any given month, the 521 shares that vest willcome from either the incentive stock option or the nonqualified stock option,in accordance with Internal Revenue Code Requirements.

17

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**OptionExercises**

Thefollowing table sets forth certain information regarding stock option exercisesby the named executive officers in 2006 and the number and the value realizedby each named executive officer through stock option exercises in 2006.

| ** **                 | ** ** | **Option Awards** | ** ** |
|----------------------------|------------|------------------------|------------|
| **Name**                   | ** ** | ** **             | ** ** | **Number of Shares  Acquired on Exercise (#)** | ** ** | **Value Realized on  Exercise ($)(1)** | ** ** |
| Kevin J. Sheehan           |       |                   | 82,448     |   |   |   | 3,173,981 |   |   |
| John N.  Spinney, Jr. |       |                   | 55,468     |   |   |   | 1,579,857 |   |   |
| Michael F. Rogers          |       |                   | 41,272     |   |   |   | 1,227,903 |   |   |
| Edmund J. Maroney          |       |                   | 73,313     |   |   |   | 883,189 |   |   |
| Robert D. Mancuso          |       |                   | 52,920     |   |   |   | 746,448 |   |   |
|                            |            |                        |            |  |  |  |  |  |  |  |  |

----

(1)          Calculatedas the difference between the fair market value of the underlying common stockat the exercise date of the options and the aggregate exercise price. Actualgains on stock option exercises depend on the value of the underlying commonstock on the date the common stock is actually sold.

**PensionBenefits**

Thefollowing table sets forth for each of the Investors Bank & TrustCompany Pension Plan (the “Pension Plan”) and the Investors Bank &Trust Company Supplemental Executive Retirement Plan (the “SERP”), the numberof years of service credited to the named executive officer under the plan asof December 31, 2006 and the actuarial present value of the named executiveofficer’s accumulated benefit under each plan as of December 31, 2006.There were no payments or benefits paid to any named executive officer duringthe year ended December 31, 2006.

| Name                          | ** ** | ** **   | ** ** | **Plan Name** | ** ** | **Number of Years  Credited Service(#)** | ** ** | **Present Value of  Accumulated  Benefit ($)** | ** ** |
|-------------------------------|------------|--------------|------------|--------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| Kevin J. Sheehan              |       | Pension Plan |       |               | 30.6       |                                                    |       |                                                          | 386,600    |   |   |
|                               |       | SERP         |       |               | 30.6       |                                                    |       |                                                          | 8,010,800  |   |   |
| John N.  Spinney, Jr.(1) |       | Pension Plan |       |               | —     |                                                    |       |                                                          | —     |   |   |
|                          |       | SERP         |       |               | 5.0        |                                                    |       |                                                          | 260,000    |   |   |
| Michael F. Rogers             |       | Pension Plan |       |               | 24.3       |                                                    |       |                                                          | 190,300    |   |   |
|                               |       | SERP         |       |               | 24.3       |                                                    |       |                                                          | 3,502,900  |   |   |
| Edmund J. Maroney             |       | Pension Plan |       |               | 21.3       |                                                    |       |                                                          | 180,200    |   |   |
|                          |       | SERP         |       |               | 21.3       |                                                    |       |                                                          | 2,289,700  |   |   |
| Robert D. Mancuso             |       | Pension Plan |       |               | 14.3       |                                                    |       |                                                          | 86,700     |   |   |
|                               |       | SERP         |       |               | 14.3       |                                                    |       |                                                          | 714,300    |   |   |

----

(1)          Mr. Spinney is not aparticipant in the Pension Plan.

18

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In 1971, the Company adopted the Investors Bank &Trust Pension Plan (as amended, the “Pension Plan”), covering all employees whoare at least 21 years of age. In 1996, the Company amended the Pension Plan tofreeze the admission of new entrants after December 31, 1996. The PensionPlan was amended in December 2001 to freeze benefit accruals for certainhighly compensated participants as of December 31, 2002, as well as tochange the maximum allowable compensation projected for future years. Suchhighly compensated participants will receive their full benefit accrual underthe Company’s non-qualified retirement plan, as described below. ThePension Plan was amended in December 2004 to freeze benefit accruals foradditional highly compensated participants as of December 31, 2004. ThePension Plan was further amended in November 2005 to freeze benefitaccruals for all remaining participants. Benefits under the Pension Plan arebased on an employee’s years of service and his or her final average monthlycompensation. A participant’s monthly benefit at normal retirement (*i.e.*, at or after attaining the age of 65 years)payable as a life annuity equals a percentage of the participant’s finalaverage monthly compensation multiplied by years of service. The percentagevaries depending on years of service.

Early retirement benefits are available toparticipants who have attained age 55 and have at least 10 years ofservice. Benefits are payable at retirement in the form of a monthly annuity ora single lump sum.

A participant’s final average monthly compensation isthe average of such participant’s total eligible compensation (*i.e.*, basic cash remuneration excluding incentivecompensation) during the 60 consecutive months in the last 120 months ofemployment affording the highest such average, subject to certain limits oneligible compensation set by Federal law. For 2006, this limit was $220,000. ThePension Plan’s benefit formula described above became effective in 1991, butapplies to all periods of benefit service.

In 1994, the Company adopted the Investors Bank &Trust Supplemental Executive Retirement Plan (as amended, the “SERP”) coveringcertain employees. The SERP is anon-qualified supplemental retirement plan and pays benefits for certainparticipants in addition to benefits paid under the Pension Plan and paysbenefits for certain participants that are not participants in the Pension Plan.Benefits under the SERP are based on an employee’s total compensation orthe portion of such employee’s total compensation not included in thecalculation of benefits to be paid under the Pension Plan. Payments under theSERP are based on years of service and the employee’s final total compensation,including incentive compensation (i.e. bonus and commissions) for the named executiveofficers.

Aggregate benefitsunder the Pension Plan and the SERP are calculated as follows, paid first fromthe Pension Plan to the extent of Internal Revenue Code limits, then from theSERP:

·       1.6%times final average monthly compensation up to covered compensation times yearsof service at normal retirement age up to 25 years of service;

·       2.15%times final average monthly compensation in excess of covered compensationtimes years of service at normal retirement age up to 25 years of service; and

·       0.75%times final average monthly compensation times years of service at normalretirement age in excess of 25 years of service.

The Pension Plan and SERPand the assumptions used by the Company in determining the financial statementimpact of those plans are discussed in detail in Note 13 “Employee BenefitPlans” to our Consolidated Financial Statements as of and for the year ended December 31,2006 contained in this report as originally filed on February 27, 2007.

**Potential PaymentsUpon Termination or Change-in-Control**

Each of the namedexecutive officers is a party to an employment agreement and a change ofcontrol employment agreement with the Company.

19

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*EmploymentAgreements*

The Company entered into amended and restatedemployment agreements with Kevin J. Sheehan, Michael F. Rogers, Edmund J.Maroney and Robert D. Mancuso on May 16, 2000, and with John N. Spinney, Jr.on November 12, 2002, each with a term of three years, subject to annualrenewal and earlier termination. In January 2007, the agreements with Messrs. Sheehan,Spinney, Rogers, Maroney and Mancuso were renewed for a three-year term thatexpires on December 31, 2010.

Messrs. Sheehan’s, Spinney’s, Rogers’, Maroney’sand Mancuso’s agreements provide that the Company will employ Messrs. Sheehan,Spinney, Rogers, Maroney and Mancuso as Chief Executive Officer, Senior VicePresident and Chief Financial Officer, President, Senior Vice President—Technologyand Senior Vice President—Marketing and Client Management, respectively, andwill pay them an annual salary determined by the Company’s Board of Directors,as well as an annual bonus under the Company’s then applicable bonus plans, ifany. The agreements also provide that the Company shall pay to Messrs. Sheehan,Spinney, Rogers, Maroney and Mancuso an amount sufficient to fund a lifeinsurance policy payable to the beneficiaries of their choice in a face amountcomparable to the amount they would receive upon termination of theiremployment by the Company without cause.

Under their employment agreements, the Company mayterminate their employment for cause defined as (i) a finding by amajority of the Board of Directors that the employee has performed his dutiesinadequately, (ii) action or inaction by the employee which results in amaterial breach of the agreement or in the employee unfairly competing with theCompany, (iii) the commission of a felony which shall adversely affect theemployee’s ability to perform his duties, or (iv) the commission of an actof fraud, dishonesty, gross negligence or deliberate disregard for the rules andpolicies of the Company. Termination for cause results in no liability to theCompany beyond the payment of wages to the date of discharge, except in thecase of a termination solely pursuant to a finding by a majority of the Boardof Directors that an individual has performed his or her duties inadequately,in which case the agreements provide for a lump sum payment equal to ninemonths of annual salary at the then current rate, as well as nine months ofcontinuing health and welfare benefits paid for by the Company.

Should their employment beterminated by the Company without cause, by disability, or by Messrs. Sheehan,Spinney, Rogers, Maroney and Mancuso for good reason, which good reasonincludes (i) a material change by the Company of either their authority,functions or duties which results in a reduction in their respective position’sscope, importance or responsibilities, (ii) a failure by the Company tocomply with the terms of their respective employment agreements, and (iii) withrespect to Mr. Sheehan only, a failure by the stockholders to re-elect himas a director of the Company, the agreements provide for a lump sum paymentequal to the sum of (x) the greater of twice their current annual salaryor the salary due to be paid under the remaining term of the agreement plus (y) thenumber of years remaining under the agreement multiplied by the employee’shighest annual bonus during the past three years. The agreements also providefor continuation of medical coverage for the longer of two years or theremaining term of the agreement.

*Change of Control EmploymentAgreements*

The Company also entered into change of controlemployment agreements with Messrs. Sheehan, Rogers, Maroney and Mancuso onMay 16, 2000, and with Mr. Spinney on August 23, 2001. Theagreements with Messrs. Sheehan, Spinney, Rogers, Maroney and Mancusocurrently have a term of three years, subject to automatic annual renewal andearlier termination.

20

----

The change ofcontrol employment agreements become effective upon a change in control of theCompany, defined to be a consolidation, merger, reorganization or sale ortransfer of all or substantially all of the assets of the Company, a change ina majority of the board of directors, or the acquisition by any person of 20%or more of the voting securities of the Company. The agreements provide that ifany of Messrs. Sheehan, Spinney, Rogers, Maroney or Mancuso is terminatedduring the term of his agreement, or terminates his agreement for good reason heshall receive a lump sum severance payment equal to:

·       threetimes his most recent annual salary, plus

·       threetimes the highest of his three most recent annual bonuses, plus

·       401(k) matchingcontributions for three years.

Termination by the executive for good reason includes:(i) a diminution in position or authority, (ii) failure of theCompany or its successor to comply with certain terms of the agreement;(iii) relocation greater than 15 miles, and (iv) termination bythe executive for any reason during the 30-day period following the firstanniversary of the effective date of the agreement.

The executive also will receive continuing health andwelfare benefits and outplacement services for three years. The executive alsowill receive the actuarial equivalent of the benefit under the Company’sdefined benefit and supplemental pension plans that he would receive if hisemployment continued for three years after termination. Messrs. Rogers and Maroneywill also receive age and service credit to age 55 under these plans. Inaddition, all unvested options held by the executive will accelerate and becomefully vested on the change of control date.

If the lump sum severance payment is subject to anexcise tax imposed by Section 4999 of the Internal Revenue Code, then theexecutive will also be entitled to receive a “gross-up payment” in an amountsufficient to satisfy the excise tax. However, if the lump sum severancepayment does not exceed 110% of the greatest amount that could be paid to theexecutive such that the receipt of the lump sum severance payment would notresult in the imposition of an excise tax (the “Reduced Amount”), then nogross-up payment will be made and the lump sum severance payment will be reducedto the Reduced Amount.

The following tables show potential payments to ournamed executive officers under the employment agreements and change of controlemployment agreements, as well as under our supplemental executive retirement plan,for various scenarios involving a change in control or termination ofemployment of each of our named executive officers, assuming the terminationdate to be December 31, 2006, and, where applicable, assuming a change ofcontrol date of December 31, 2006 at a price of $42.67 per share, theclosing price of our common stock on December 29, 2006. The presentationsin this table should be read in conjunction with the disclosure under “EmploymentAgreements” and “Change of Control Employment Agreements” above.

The amounts set forth below do not contemplate anywaiting period that may be necessary to avoid excise tax under Section 409Aof the Internal Revenue Code. If such a waiting period were imposed in any ofthe scenarios below, the Company could incur additional cost related tointerest during the waiting period.

21

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Pleasenote that the following tables do *not* representpayments due to the named executive officers if the proposed businesscombination with State Street Corporation is consummated.

| **Kevin J. Sheehan**         | ** ** | ** ** | ** **     | **Termination For  Cause in Certain  Circumstances(1)** | ** ** | **Voluntary  Termination  with Good  Reason** | ** **     | **Involuntary  Termination  without Cause** | ** ** | **Termination  Following  Change of  Control** | ** **     | **Disability** | ** ** | **Death(2)** | ** **     | **Retirement** | ** ** |
|----------------------------------------|------------|------------|----------------|------------------------------------------------------------------------|------------|----------------------------------------------------|----------------|--------------------------------------------------|------------|-----------------------------------------------------|----------------|----------------|------------|--------------|----------------|----------------|------------|
| **PAYMENTS DUE UPON TERMINATION:**     | ** ** |       | ** **     | ** **                                                             |       |                                               | ** **     | ** **                                       |       |                                                | ** **     | ** **     |       |         | ** **     | ** **     |       | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   |
| **Cash Severance**                     | ** ** |       | ** **     | ** **                                                             |       |                                               | ** **     | ** **                                       |       |                                                | ** **     | ** **     |       |         | ** **     | ** **     |       | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   |
| Base Salary                            |       |       | 786,803        | ** **                                                             |       |                                               | 2,098,140      | ** **                                       |       |                                                | 2,098,140      | ** **     |       |         | 3,147,210      | ** **     |       | 2,098,140 |   | 2,098,140 |   |   | — | ** ** |   |
| Bonus                                  |       |       | —         | ** **                                                             |       |                                               | 5,635,500      | ** **                                       |       |                                                | 5,635,500      | ** **     |       |         | 8,453,250      | ** **     |       | 5,635,500 |   | 5,635,500 |   |   | — | ** ** |   |
| 401(k) Match                      |       |       | —         | ** **                                                             |       |                                               | —         | ** **                                       |       |                                                | —         | ** **     |       |         | 20,250         | ** **     |       | — |   | — |   |   | — | ** ** |   |
| Total Cash  Severance                  |       |       | 786,803        | ** **                                                             |       |                                               | 7,733,640      | ** **                                       |       |                                                | 7,733,640      | ** **     |       |         | 11,620,710     | ** **     |       | 7,733,640 |   | 7,733,640 |   |   | — | ** ** |   |
| **Benefits & Perquisites**    | ** ** |       | ** **     | ** **                                                             |       |                                               | ** **     | ** **                                       |       |                                                | ** **     | ** **     |       |         | ** **     | ** **     |       | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   |
| SERP(3)                                |       |       | 10,008,812     | ** **                                                             |       |                                               | 10,008,812     | ** **                                       |       |                                                | 10,008,812     | ** **     |       |         | 18,580,962     | ** **     |       | 10,008,812 |   | 10,008,812 |   |   | 10,008,812 | ** ** |   |
| Health and Welfare  Benefits           |       |       | 26,750         | ** **                                                             |       |                                               | 71,955         | ** **                                       |       |                                                | 71,955         | ** **     |       |         | 108,921        | ** **     |       | 71,955 |   | — |   |   | — | ** ** |   |
| Outplacement  Services                 |       |       | —         | ** **                                                             |       |                                               | —         | ** **                                       |       |                                                | —         | ** **     |       |         | 25,000         | ** **     |       | — |   | — |   |   | — | ** ** |   |
| Total Benefits                         |       |       | 10,035,562     | ** **                                                             |       |                                               | 10,080,767     | ** **                                       |       |                                                | 10,080,767     | ** **     |       |         | 18,714,883     | ** **     |       | 10,080,767 |   | 10,008,812 |   |   | 10,008,812 | ** ** |   |
| Value of  Accelerated Stock Options(4) |       |       | —         | ** **                                                             |       |                                               | —         | ** **                                       |       |                                                | —         | ** **     |       |         | 49,258         | ** **     |       | — |   | — |   |   | — | ** ** |   |
| **280G Tax  Gross-Up**                 |       |       | —         | ** **                                                             |       |                                               | —         | ** **                                       |       |                                                | —         | ** **     |       |         | 8,627,066      | ** **     |       | — |   | — |   |   | — | ** ** |   |
| **Total  Value: All  Benefits**        | ** ** |       | **10,822,365** | ** **                                                             |       |                                               | **17,814,407** | ** **                                       |       |                                                | **17,814,407** | ** **     |       |         | **39,011,917** | ** **     |       | **17,814,407** | ** ** | **17,742,452** | ** ** |   | **10,008,812** | ** ** |   |

----

Footnotes followafter Mr. Mancuso’s table.

| **John N. Spinney, Jr.** | ** ** | ** ** | ** **  | **Termination For  Cause in Certain  Circumstances(1)** | ** ** | **Voluntary  Termination with  Good Reason** | ** **    | **Involuntary  Termination  without Cause** | ** ** | **Termination  Following  Change of  Control** | ** **    | **Disability** | ** ** | **Death(2)** | ** **    | **Retirement** | ** ** |
|-----------------------------------------|------------|------------|-------------|------------------------------------------------------------------------|------------|--------------------------------------------------------|---------------|--------------------------------------------------|------------|-----------------------------------------------------|---------------|----------------|------------|--------------|---------------|----------------|------------|
| **PAYMENTS DUE UPON TERMINATION:**      | ** ** |       | ** **  | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **    | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| **Cash Severance**                      | ** ** |       | ** **  | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **    | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| Base Salary                             |       |       | 337,500     | ** **                                                             |       |                                                   | 900,000       | ** **                                       |       |                                                | 900,000       | ** **     |       |         | 1,350,000     | ** **     |       |   | 900,000 | ** ** |   | 900,000 |   |   | — | ** ** |   |
| Bonus                                   |       |       | —      | ** **                                                             |       |                                                   | 2,275,000     | ** **                                       |       |                                                | 2,275,000     | ** **     |       |         | 3,412,500     | ** **     |       |   | 2,275,000 | ** ** |   | 2,275,000 |   |   | — | ** ** |   |
| 401(k) Match                       |       |       | —      | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 20,250        | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| Total Cash  Severance                   |       |       | 337,500     | ** **                                                             |       |                                                   | 3,175,000     | ** **                                       |       |                                                | 3,175,000     | ** **     |       |         | 4,782,750     | ** **     |       |   | 3,175,000 | ** ** |   | 3,175,000 |   |   | — | ** ** |   |
| **Benefits &  Perquisites**    | ** ** |       | ** **  | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **    | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| SERP(3)                                 |       |       | 370,  172   | ** **                                                             |       |                                                   | 370,172       | ** **                                       |       |                                                | 370,172       | ** **     |       |         | 1,153,631     | ** **     |       |   | 370,172 | ** ** |   | 370,172 |   |   | 370,172 | ** ** |   |
| Health and Welfare  Benefits            |       |       | 12,822      | ** **                                                             |       |                                                   | 34,814        | ** **                                       |       |                                                | 34,814        | ** **     |       |         | 53,209        | ** **     |       |   | 34,814 | ** ** |   | — |   |   | — | ** ** |   |
| Outplacement  Services                  |       |       | —      | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 25,000        | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| Total Benefits                          |       |       | 382,994     | ** **                                                             |       |                                                   | 404,986       | ** **                                       |       |                                                | 404,986       | ** **     |       |         | 1,231,840     | ** **     |       |   | 404,986 | ** ** |   | 370,172 |   |   | 370,172 | ** ** |   |
| Value of  Accelerated Stock Options(4)  |       |       | —      | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 54,441        | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| **280G Tax  Gross-Up**                  |       |       | —      | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 2,330,598     | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| **Total  Value: All Benefits**          | ** ** |       | **720,494** | ** **                                                             |       |                                                   | **3,579,986** | ** **                                       |       |                                                | **3,579,986** | ** **     |       |         | **8,399,629** | ** **     |       |   | **3,579,986** | ** ** |   | **3,545, 172** | ** ** |   | **370,172** | ** ** |   |

----

Footnotes follow after Mr. Mancuso’s table.

22

----

| **Michael F. Rogers**        | ** ** | ** ** | ** **    | **Termination For  Cause in Certain  Circumstances(1)** | ** ** | **Voluntary  Termination with  Good Reason** | ** **     | **Involuntary  Termination  without Cause** | ** ** | **Termination  Following  Change of  Control** | ** **     | **Disability** | ** ** | **Death(2)** | ** **     | **Retirement** | ** ** |
|----------------------------------------|------------|------------|---------------|------------------------------------------------------------------------|------------|--------------------------------------------------------|----------------|--------------------------------------------------|------------|-----------------------------------------------------|----------------|----------------|------------|--------------|----------------|----------------|------------|
| **PAYMENTS DUE UPON TERMINATION:**     | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **     | ** **                                       |       |                                                | ** **     | ** **     |       |         | ** **     | ** **     |       | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   |
| **Cash Severance**                     | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **     | ** **                                       |       |                                                | ** **     | ** **     |       |         | ** **     | ** **     |       | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   |
| Base Salary                            |       |       | 681,533       | ** **                                                             |       |                                                   | 1,817,420      | ** **                                       |       |                                                | 1,817,420      | ** **     |       |         | 2,726,130      | ** **     |       | 1,817,420 |   | 1,817,420 |   |   | — | ** ** |   |
| Bonus                                  |       |       | —        | ** **                                                             |       |                                                   | 4,881,500      | ** **                                       |       |                                                | 4,881,500      | ** **     |       |         | 7,322,250      | ** **     |       | 4,881,500 |   | 4,881,500 |   |   | — | ** ** |   |
| 401(k) Match                      |       |       | —        | ** **                                                             |       |                                                   | —         | ** **                                       |       |                                                | —         | ** **     |       |         | 20,250         | ** **     |       | — |   | — |   |   | — | ** ** |   |
| Total Cash  Severance                  |       |       | 681,533       | ** **                                                             |       |                                                   | 6,698,920      | ** **                                       |       |                                                | 6,698,920      | ** **     |       |         | 10,068,630     | ** **     |       | 6,698,920 |   | 6,698,920 |   |   | — | ** ** |   |
| **Benefits & Perquisites**    | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **     | ** **                                       |       |                                                | ** **     | ** **     |       |         | ** **     | ** **     |       | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   |
| SERP(3)                                |       |       | 4,868,882     | ** **                                                             |       |                                                   | 4,868,882      | ** **                                       |       |                                                | 4,868,882      | ** **     |       |         | 12,354,857     | ** **     |       | 4,868,882 |   | 4,868,882 |   |   | 4,868,882 | ** ** |   |
| Health and Welfare  Benefits           |       |       | 16,893        | ** **                                                             |       |                                                   | 45,668         | ** **                                       |       |                                                | 45,668         | ** **     |       |         | 69,490         | ** **     |       | 45,668 |   | — |   |   | — | ** ** |   |
| Outplacement  Services                 |       |       | —        | ** **                                                             |       |                                                   | —         | ** **                                       |       |                                                | —         | ** **     |       |         | 25,000         | ** **     |       | — |   | — |   |   | — | ** ** |   |
| Total Benefits                         |       |       | 4,885,775     | ** **                                                             |       |                                                   | 4,914,550      | ** **                                       |       |                                                | 4,914,550      | ** **     |       |         | 12,449,347     | ** **     |       | 4,914,550 |   | 4,868,882 |   |   | 4,868,882 | ** ** |   |
| Value of  Accelerated Stock Options(4) |       |       | —        |                                                                   |       |                                                   | —         |                                             |       |                                                | —         | ** **     |       |         | 41,047         | ** **     |       | — |   | — |   |   | — | ** ** |   |
| **280G Tax  Gross-Up**                 |       |       | —        | ** **                                                             |       |                                                   | —         | ** **                                       |       |                                                | —         | ** **     |       |         | 6,600,678      | ** **     |       | — |   | — |   |   | — | ** ** |   |
| **Total  Value: All Benefits**         | ** ** |       | **5,567,308** | ** **                                                             |       |                                                   | **11,613,470** | ** **                                       |       |                                                | **11,613,470** | ** **     |       |         | **29,159,702** | ** **     |       | **11,613,470** | ** ** | **11,567,802** | ** ** |   | **4,868,882** | ** ** |   |

----

Footnotes followafter Mr. Mancuso’s table.

| **Edmund J. Maroney**        | ** ** | ** ** | ** **    | **Termination For  Cause in Certain  Circumstances(1)** | ** ** | **Voluntary  Termination with  Good Reason** | ** **    | **Involuntary  Termination  without Cause** | ** ** | **Termination  Following  Change of  Control** | ** **    | **Disability** | ** ** | **Death(2)** | ** **     | **Retirement** | ** ** |
|----------------------------------------|------------|------------|---------------|------------------------------------------------------------------------|------------|--------------------------------------------------------|---------------|--------------------------------------------------|------------|-----------------------------------------------------|---------------|----------------|------------|--------------|----------------|----------------|------------|
| **PAYMENTS DUE UPON TERMINATION:**     | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **     | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| **Cash Severance**                     | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **     | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| Base Salary                            |       |       | 467,363       | ** **                                                             |       |                                                   | 1,246,300     | ** **                                       |       |                                                | 1,246,300     | ** **     |       |         | 1,869,450      | ** **     |       |   | 1,246,300 | ** ** |   | 1,246,300 |   |   | — | ** ** |   |
| Bonus                                  |       |       | —        | ** **                                                             |       |                                                   | 3,347,500     | ** **                                       |       |                                                | 3,347,500     | ** **     |       |         | 5,021,250      | ** **     |       |   | 3,347,500 | ** ** |   | 3,347,500 |   |   | — | ** ** |   |
| 401(k) Match                      |       |       | —        | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 20,250         | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| Total Cash  Severance                  |       |       | 467,363       | ** **                                                             |       |                                                   | 4,593,800     | ** **                                       |       |                                                | 4,593,800     | ** **     |       |         | 6,910,950      | ** **     |       |   | 4,593,800 | ** ** |   | 4,593,800 |   |   | — | ** ** |   |
| **Benefits & Perquisites**    | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **     | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| SERP(3)                                |       |       | 3,105,478     | ** **                                                             |       |                                                   | 3,105,478     | ** **                                       |       |                                                | 3,105,478     | ** **     |       |         | 7,610,693      | ** **     |       |   | 3,105,478 | ** ** |   | 3,105,478 |   |   | 3,105,478 | ** ** |   |
| Health and Welfare  Benefits           |       |       | 12,603        | ** **                                                             |       |                                                   | 34,230        | ** **                                       |       |                                                | 34,230        | ** **     |       |         | 52,332         | ** **     |       |   | 34,230 | ** ** |   | — |   |   | — | ** ** |   |
| Outplacement  Services                 |       |       | —        | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 25,000         | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| Total Benefits                         |       |       | 3,118,081     | ** **                                                             |       |                                                   | 3,139,708     | ** **                                       |       |                                                | 3,139,708     | ** **     |       |         | 7,688,025      | ** **     |       |   | 3,139,708 | ** ** |   | 3,105,478 |   |   | 3,105,478 | ** ** |   |
| Value of  Accelerated Stock Options(4) |       |       | —        |                                                                   |       |                                                   | —        |                                             |       |                                                | —        | ** **     |       |         | 32,836         | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| **280G Tax  Gross-Up**                 |       |       | —        | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 4,503,878      | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| **Total  Value: All Benefits**         | ** ** |       | **3,585,444** | ** **                                                             |       |                                                   | **7,733,508** | ** **                                       |       |                                                | **7,733,508** | ** **     |       |         | **19,135,689** | ** **     |       |   | **7,733,508** | ** ** |   | **7,699,278** | ** ** |   | **3,105,478** | ** ** |   |

----

Footnotes follow after Mr. Mancuso’s table.

23

----

| Robert D. Mancuso            | ** ** | ** ** | ** **    | **Termination For  Cause in Certain  Circumstances(1)** | ** ** | **Voluntary  Termination with  Good Reason** | ** **    | **Involuntary  Termination  without Cause** | ** ** | **Termination  Following  Change of  Control** | ** **    | **Disability** | ** ** | **Death(2)** | ** **    | **Retirement** | ** ** |
|----------------------------------------|------------|------------|---------------|------------------------------------------------------------------------|------------|--------------------------------------------------------|---------------|--------------------------------------------------|------------|-----------------------------------------------------|---------------|----------------|------------|--------------|---------------|----------------|------------|
| **PAYMENTS DUE UPON TERMINATION:**     | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **    | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| **Cash Severance**                     | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **    | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| Base Salary                            |       |       | 328,004       | ** **                                                             |       |                                                   | 874,676       | ** **                                       |       |                                                | 874,676       | ** **     |       |         | 1,312,014     | ** **     |       |   | 874,676 | ** ** |   | 874,676 |   |   | — | ** ** |   |
| Bonus                                  |       |       | —        | ** **                                                             |       |                                                   | 1,799,360     | ** **                                       |       |                                                | 1,799,360     | ** **     |       |         | 2,699,040     | ** **     |       |   | 1,799,360 | ** ** |   | 1,799,360 |   |   | — | ** ** |   |
| 401(k) Match                      |       |       | —        | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 20,250        | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| Total Cash Severance                   |       |       | 328,004       | ** **                                                             |       |                                                   | 2,674,036     | ** **                                       |       |                                                | 2,674,036     | ** **     |       |         | 4,031,304     | ** **     |       |   | 2,674,036 | ** ** |   | 2,674,036 |   |   | — | ** ** |   |
| **Benefits &  Perquisites**   | ** ** |       | ** **    | ** **                                                             |       |                                                   | ** **    | ** **                                       |       |                                                | ** **    | ** **     |       |         | ** **    | ** **     |       |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| SERP(3)                                |       |       | 1,083,263     | ** **                                                             |       |                                                   | 1,083,263     | ** **                                       |       |                                                | 1,083,263     | ** **     |       |         | 2,220,926     | ** **     |       |   | 1,083,263 | ** ** |   | 1,083,263 |   |   | 1,083,263 | ** ** |   |
| Health and Welfare  Benefits           |       |       | 10,799        | ** **                                                             |       |                                                   | 29,417        | ** **                                       |       |                                                | 29,417        | ** **     |       |         | 45,114        | ** **     |       |   | 29,417 | ** ** |   | — |   |   | — | ** ** |   |
| Outplacement   Services                |       |       | —        | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | 25,000        | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| Total Benefits                         |       |       | 1,094,062     | ** **                                                             |       |                                                   | 1,112,680     | ** **                                       |       |                                                | 1,112,680     | ** **     |       |         | 2,291,040     | ** **     |       |   | 1,112,680 | ** ** |   | 1,083,263 |   |   | 1,083,263 | ** ** |   |
| Value of  Accelerated Stock Options(4) |       |       | **—**    | ** **                                                             |       |                                                   | **—**    | ** **                                       |       |                                                | **—**    | ** **     |       |         | 32,836        | ** **     |       |   | — | ** ** |   | — |   |   | — | ** ** |   |
| **280G Tax  Gross-Up**                 | ** ** |       | —        | ** **                                                             |       |                                                   | —        | ** **                                       |       |                                                | —        | ** **     |       |         | —        | ** **     |       |   | — | ** ** |   | — | ** ** |   | — | ** ** |   |
| **Total  Value: All Benefits**         | ** ** |       | **1,422,066** | ** **                                                             |       |                                                   | **3,786,716** | ** **                                       |       |                                                | **3,786,716** | ** **     |       |         | **6,355,180** | ** **     |       |   | **3,786,716** | ** ** |   | **3,757,299** | ** ** |   | **1,083,263** | ** ** |   |

----

(1)             Amounts represent payments due if a named executiveofficer is terminated for the continued failure or refusal to render servicesto the Company or due to a determination by the board that the executive hasperformed inadequately after written notice. If a named executive officer isterminated for cause under other circumstances, including gross negligence,breach of fiduciary duty, commission of fraud, deliberate disregard of rules orpolicies, conviction of certain felonies or engaging in unfair competition withthe Company, the named executive officer will receive no severance benefits. Ifa named executive officer voluntarily terminates his employment other than forGood Reason, the named executive officer will receive no severance benefits. Moredetail regarding voluntary termination is provided under “Employment Agreements”above.

(2)             The total cash severance amount will be reduced by thevalue of benefits received by the executive pursuant to the executive lifeinsurance policy maintained by the Company for the benefit of the executive.

(3)             Amounts represent the value at December 31, 2006of the lump sum equivalent of the executive’s accumulated benefit under theSERP, including, for the termination after change in control, the additionalaccruals pursuant to each executive’s change in control employment agreement.

(4)             Amounts represent the difference betweenthe fair market value of our common stock on December 29, 2006 and the exerciseprice of the unvested option multiplied by the number of shares underlying theunvested option.

**DirectorCompensation in 2006**

We use a combination ofcash and equity incentive compensation for our non-employee directors.Mr. Sheehan is not compensated separately for his service on our board ofdirectors. In developing the compensation levels and mix for non-employeedirectors, we consider a number of factors, including the significant timecommitment required of board and committee service as well as the need toattract highly qualified candidates for board service.

24

----

*Cash Compensation.*

Ourdirectors received the following cash compensation in 2006:

| ** **                                     | ** ** | **Retainer** | ** ** | **Fee Per Meeting Attended** | ** ** |
|------------------------------------------------|------------|--------------|------------|---------------------------------------------|------------|
| Board of  Directors                            |       | $            | 30,000     |                                        |       | $ | 2,200 |   |   |
| Audit Committee                                |       | 5,000        | (1)        |                                        | 1,500      |   |   |
| Compensation  Committee                        |       | —       |       |                                        | 1,000      |   |   |
| Nominating and Corporate  Governance Committee |       | —       |       |                                        | 1,000      |   |   |
| Community Reinvestment  Act Committee          |       | —       |       |                                        | 1,000      |   |   |
|                                                |            |              |            |                                             |            |  |  |  |  |

----

(1)          Retainer is for the auditcommittee chair only.

Our cash compensationstructure for non-employee directors remains unchanged for 2007.

*Equity Compensation.*

Each non-employee director also receives an annualgrant of options to purchase 5,000 shares of the Company’s common stock. Thegrant is made to all directors at the annual meeting of the board of directorseach April.

In 2007, pursuant to the termsof the Merger Agreement between the Company and State Street Corporation, theCompany made a cash payment of $141,750 to each director in lieu of the annualoption grant. The cash payment amount was equal to the Black-Scholes value of5,000 options on April 19, 2007.

*Stock OwnershipGuidelines for Directors.*

Our corporate governance guidelines provide thatdirectors shall, over their first three-year term, acquire shares of stockequal in value to that director’s annual cash compensation as a member of ourboard.

The table below summarizesthe compensation we paid to our non-employee directors for the year ended December 31,2006.

| **Name**                   | ** ** | ** ** | ** ** | **Fees Earned or  Paid in  Cash ($)** | ** ** | **Option  Awards ($)(1)(2)** | ** ** | **Total ($)** | ** ** |
|----------------------------|------------|------------|------------|-----------------------------------------------------------|------------|-----------------------------------|------------|--------------------|------------|
| Richard P.  Boyatzi        |       |       | 60,000     |                                                      |       |                              | 26,142     |               |       | 86,142 |   |
| Frank B.  Condon, Jr. |       |       | 64,000     |                                                      |       |                              | 63,009     |               |       | 127,009 |   |
| Robert B.  Fraser(2)       |       |       | 15,600     |                                                      |       |                              | 47,001     |               |       | 62,601 |   |
| Edward F.  Hines(3)        |       |       | 35,000     |                                                      |       |                              | 20,976     |               |       | 55,976 |   |
| Thomas P.  McDermott       |       |       | 67,800     |                                                      |       |                              | 63,009     |               |       | 130,809 |   |
| James M. Oates             |       |       | 69,000     |                                                      |       |                              | 189,206    |               |       | 258,206 |   |
| John I.  Snow, III    |       |       | 51,800     |                                                      |       |                              | 26,142     |               |       | 77,942 |   |
| Phyllis S.  Swersky        |       |       | 64,500     |                                                      |       |                              | 144,742    |               |       | 209,242 |   |

----

(1)          Amounts represent theaggregate expense recognized for financial statement reporting purposes withrespect to 2006 in accordance with FAS123R for all stock options granted to thedirector. On April 18, 2006, each director received a grant of options topurchase 5,000 shares of our common stock. The aggregate fair value of thatgrant was $104,250.

25

----

FAS123R expense for stock options is based on the fair value of the options on thedate of grant using the Black-Scholes option pricing model. The following tableshows the assumptions used for each of the grants resulting in expense during2006.

| **Grant Date** | ** ** | ** ** | ** ** | **Risk Free Interest Rate** | ** ** | **Expected Life** | ** ** | **Volatility** | ** ** | **Dividend Yield** | ** ** |
|---------------------|------------|------------|------------|--------------------------------------------|------------|------------------------|------------|----------------|------------|-------------------------|------------|
| 4/15/03             |       |       | 2.04       | %                                          |       |                   | 4 years    |           |       |                    | 56.34      | % |   |   | 0.21 | % |   |
| 4/13/04             |       |       | 3.40       | %                                          |       |                   | 4 years    |           |       |                    | 51.73      | % |   |   | 0.16 | % |   |
| 6/15/04             |       |       | 3.40       | %                                          |       |                   | 4 years    |           |       |                    | 51.73      | % |   |   | 0.16 | % |   |
| 4/14/05             |       |       | 3.73       | %                                          |       |                   | 4 years    |           |       |                    | 41.58      | % |   |   | 0.21 | % |   |
| 2/23/06             |       |       | 4.63       | %                                          |       |                   | 5 years    |           |       |                    | 42.88      | % |   |   | 0.20 | % |   |
| 4/05/06*            |       |       | 4.79       | %                                          |       |                   | 4.6 years  |           |       |                    | 42.50      | % |   |   | 0.19 | % |   |
| 4/05/06*            |       |       | 4.79       | %                                          |       |                   | 5 years    |           |       |                    | 45.22      | % |   |   | 0.19 | % |   |
| 4/18/06             |       |       | 4.87       | %                                          |       |                   | 5 years    |           |       |                    | 42.01      | % |   |   | 0.19 | % |   |

----

*                   On April 5,2006, one director received two automatic reload grants resulting from anexercise of existing vested options. Because the underlying option grants haddifferent expiration dates, slightly different assumptions applied to thereload grants.

(2)          Mr. Fraser retiredfrom the board in April 2006.

(3)          Mr. Hinesceased serving on the board upon his death in August 2006.

**CompensationCommittee Interlocks and Insider Participation**

Our board of directors hasestablished a compensation committee currently consisting of James M. Oates,Chairman, Richard P. Boyatzi, Frank B. Condon and Thomas P. McDermott, who werethe only members of the compensation committee during 2006. None of ourexecutive officers served as either a director or a member of the compensationcommittee (or other committee of the board of directors performing equivalentfunctions or, in the absence of any such committee, the entire board ofdirectors) of any entity, one of whose executive officers served as a directorof the Company or a member of our compensation committee.

**ITEM 12.**         SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS.

**SecuritiesAuthorized for Issuance Under Equity Compensation Plans**

Thefollowing table presents the number of outstanding options as of December 31,2006 under our 1995 Stock Plan, Amended and Restated 1995 Non-Employee DirectorStock Option Plan and 2005 Equity Incentive Plan, all of which have beenapproved by shareholders. We do not maintain any plan under which our equitysecurities are authorized for issuance which was adopted without shareholderapproval.

| Number of securities  to be issued  upon the exercise of  outstanding options,  warrants and rights | ** ** | **Weighted-average   exercise price of  outstanding options,  warrants and rights** | ** ** | **Number of securities  remaining available for  future issuance under  equity compensation plans  (excluding securities  reflected in first column)** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                                                                       | 5,707,273  |                                                                                                              |       |                                                                                                                                                                                                          | $          | 31 |   |   |   | 4,107,719 |   |   |
|                                                                                                                                                       |            |                                                                                                                   |            |                                                                                                                                                                                                               |            |  |  |  |  |  |  |  |

 

Additional information regarding our equitycompensation plans is provided in the notes to our Consolidated FinancialStatements as of and for the year ended December 31, 2006 as originallyfiled on February 27, 2007.

26

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**SecurityOwnership of Certain Beneficial Owners and Management**

The following tablesets forth certain information regarding beneficial ownership of the Company’scommon stock as of April 16, 2007:  (i) byeach person who, to the knowledge of the Company, beneficially owned more than5% of the shares of the Company’s common stock outstanding at such date; (ii) byeach director, nominee and each executive officer identified in the SummaryCompensation Table included in Item 11 above; and (iii) by all executiveofficers, directors and nominees as a group. Unless otherwise indicated below,each person listed maintains a business address c/o Investors FinancialServices Corp., 200 Clarendon Street, Boston, MA 02116 and, to theknowledge of the Company, all persons listed below have sole voting andinvestment power with respect to their shares of common stock, except to theextent authority is shared by spouses under applicable law or as otherwisenoted.

| **Name and Address  of Beneficial Owner**                                                                      | ** ** | ** ** | ** ** | **Amount and Nature  of Ownership** | ** ** | **Percent  of Class**** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|----------------------------------------------------|------------|------------------------------|------------|
| Entities  associated with  T. Rowe Price Associates, Inc.(1)  100 East Pratt Street  Baltimore, Maryland  21202          |       |       | 6,473,441  |                                               |       |                         | 9.70       | % |   |
| Entities  associated with  FMR Corp.(2)  82 Devonshire Street  Boston, MA 02109                                                    |       |       | 6,303,801  |                                               |       |                         | 9.44       | % |   |
| Entities  associated with  Legg Mason Capital Management Inc.(3)  100 Light Street  Baltimore, MD 21202                            |       |       | 3,797,950  |                                               |       |                         | 5.69       | % |   |
| Entities  associated with  Artisan Partners Limited Partnership(4)  875 East Wisconsin Avenue, Suite 800  Milwaukee, WI 53202 |       |       | 3,666,400  |                                               |       |                         | 5.49       | % |   |
| Entities  associated with  Peak Investments LLC(5)  865 South Figueroa Street  Los Angeles, CA 90017                               |       |       | 3,359,768  |                                               |       |                         | 5.03       | % |   |
| Richard P.  Boyatzi(6)                                                                                                             |       |       | 17,944     |                                               |       |                         | *          |   |   |
| Frank B.  Condon, Jr.(7)                                                                                                      |       |       | 74,770     |                                               |       |                         | *          |   |   |
| Thomas P. McDermott(8)                                                                                                             |       |       | 35,692     |                                               |       |                         | *          |   |   |
| James M. Oates(9)                                                                                                                  |       |       | 60,718     |                                               |       |                         | *          |   |   |
| Phyllis S.  Swersky(10)                                                                                                            |       |       | 34,019     |                                               |       |                         | *          |   |   |
| John I. Snow  III(11)                                                                                                              |       |       | 2,494      |                                               |       |                         | *          |   |   |
| Kevin J.  Sheehan(12)                                                                                                              |       |       | 1,862,665  |                                               |       |                         | 2.74       | % |   |
| Michael F.  Rogers(13)                                                                                                             |       |       | 2,126,241  |                                               |       |                         | 3.14       | % |   |
| Edmund J.  Maroney(14)                                                                                                             |       |       | 598,759    |                                               |       |                         | *          |   |   |
| John N.  Spinney, Jr.(15)                                                                                                     |       |       | 180,699    |                                               |       |                         | *          |   |   |
| Robert D.  Mancuso(16)                                                                                                             |       |       | 410,299    |                                               |       |                         | *          |   |   |
| All executive officers  and directors as a group (12 persons)(17)                                                                  |       |       | 5,694,766  |                                               |       |                         | 8.12       | % |   |

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                 * Less than 1%

          ** Percentage ownership is based upon shares ofcommon stock outstanding as of April 16, 2007. Shares of common stock thatmay be acquired by a listed person within 60 days of April 16, 2007 aredeemed outstanding for purposes of computing the number of shares of commonstock owned by that person, but are not deemed outstanding for purposes ofcomputing the percentage ownership of any other person.

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       (1) These shares are owned by various individual and institutionalinvestors for which T. Rowe Price Associates, Inc. serves as investmentadviser with power to direct investments and/or sole power to vote the shares. T.Rowe Price Associates, Inc. may be deemed to be the beneficial owner ofthe shares but expressly disclaims that it is, in fact, the beneficial owner ofsuch shares. Information with respect to T. Rowe Price Associates, Inc.,and its affiliates is derived from the Schedule 13G/A filed by T. Rowe PriceAssociates, Inc. with the Securities and Exchange Commission on or about February 14,2007.

       (2) All shares may be deemed to be beneficially owned by members of thefamily of Edward C. Johnson 3d, who may be deemed to form a controllinggroup with respect to FMR Corp. and its affiliates. Information with respect toFMR Corp. and its affiliates is derived from the Schedule 13G/A filed jointlyby FMR Corp., Edward C. Johnson 3d and Fidelity Management & ResearchCompany with the Securities and Exchange Commission on or about February 14,2007.

       (3) These shares are owned by various individual and institutionalinvestors for which Legg Mason Capital Management, Inc. serves asinvestment adviser with power to direct investments and/or sole power to votethe shares. All shares may be deemed to be beneficially owned by Legg MasonCapital Management Inc. Information with respect to Legg Mason CapitalManagement Inc. and its affiliates is derived from the Schedule 13G/A filed byLegg Mason Capital Management Inc., with the Securities and Exchange Commissionon or about February 15, 2007.

       (4) All shares may be deemed to be beneficially owned by Andrew A.Ziegler and Carlene Murphy Ziegler who may be deemed to form a controllinggroup with respect to Artisan Partners Limited Partnership. Information withrespect to Artisan Partners Limited Partnership and its affiliates is derivedfrom the Schedule 13G filed jointly by Artisan Partners Limited Partnership,Artisan Investment Corporation, Andrew A. Ziegler, and Carlene Murphy Zieglerwith the Securities and Exchange Commission on or about January 26, 2007.

       (5) All shares may be deemed to be beneficially owned by PeakInvestments LLC. Information with respect to Peak Investments LLC is derivedfrom the Schedule 13G filed by Peak Investments LLC with the Securities andExchange Commission on or about February 14, 2007.

       (6) Includes 1,944 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

       (7) Includes 42,530 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

       (8) Includes 20,700 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

       (9) Includes 25,049 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

(10) Includes 27,440 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

(11) Includes 1,944 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

(12) Includes 1,138,266 shares of common stock which may be purchased pursuantto the exercise of outstanding stock options exercisable as of June 15,2007.

(13) Includes 913,416 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

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(14) Includes 491,393 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

(15) Includes 152,734 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

(16) Includes 335,094 shares of common stock which may be purchasedpursuant to the exercise of outstanding stock options exercisable as of June 15,2007.

(17) Includes 3,393,495 shares of common stock whichmay be purchased by executive officers and directors pursuant to the exerciseof outstanding stock options exercisable as of June 15, 2007.

**ITEM 13.**         CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The Company has adopted a written policy whereby alltransactions between the Company and a related party, as defined by the rules andregulations under the Securities Exchange Act of 1934, will be on terms no lessfavorable to the Company than could be obtained from unrelated third parties andwill be pre-approved or ratified by a majority of the independent members ofthe Company’s Board of Directors.

During 2006, certain directors and executive officersof the Company, and entities associated with such directors and executiveofficers, were customers of, and had ordinary business transactions with, theBank. These transactions may include loans made in the ordinary course of theBank’s business and on substantially the same terms, including interest rateand collateral, as those prevailing at the time for comparable transactionswith unrelated persons with no more than normal risk of collection and whichare made in compliance with applicable law, including Regulation O andRegulation W of the Board of Governors of the Federal Reserve System and Section 13(k) ofthe Exchange Act of 1934, as amended (the “Exchange Act”). No event of defaulthas occurred under any such loan. There are no personal loans or extensions ofcredit to any director or executive officer.

Our board of directors hasdetermined that the following directors are independent under applicable laws, rules andregulations, including the listing standards of the NASDAQ Stock Market:  Richard P. Boyatzi, Frank B. Condon, ThomasP. McDermott, James M. Oates, John I. Snow III and Phyllis S. Swersky.

**ITEM 14.**         PRINCIPALACCOUNTING FEES AND SERVICES.

The Audit Committee of the Board of Directors hasselected the firm of Deloitte & Touche LLP (“Deloitte &Touche”), an independent registered public accounting firm, to serve asauditors for the fiscal year ending December 31, 2007. Deloitte &Touche has served as the Company’s accountants since the fiscal year ended October 31,1989.

Thefollowing table details aggregate fees billed for 2006 and 2005 by Deloitte &Touche to the Company.

| ** **          | ** ** | **Aggregate Fees Billed for  Fiscal Year Ended December 31,** | ** ** |
|---------------------|------------|--------------------------------------------------------------------------------------------------|------------|
| **Services**        | ** ** | ** **                                                                                       | ** ** | **          2006        ** | ** ** | **         2005       ** | ** ** |
| Audit Fees          |       |                                                                                             | $          | 1,017,425 |   |   |   | $ | 755,800 |   |   |
| Audit-Related  Fees |       |                                                                                             | $          | 194,625 |   |   |   | $ | 155,200 |   |   |
| Tax Fees            |       |                                                                                             | $          | — |   |   |   | $ | — |   |   |
| All Other Fees      |       |                                                                                             | $          | — |   |   |   | $ | 102,710 |   |   |
|                     |            |                                                                                                  |            |  |  |  |  |  |  |  |  |  |  |

 

Audit-Related Fees in 2006 represent audit servicesfor the Company’s 401(k) and pension plans, services relating to Deloitte &Touche’s attestation under the FDIC Improvement Act of 1991 and services 

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relating to a qualifiedcollateral report for the Federal Home Loan Bank of Boston. All fees ofDeloitte & Touche for 2006 were pre-approved by the Company’s AuditCommittee.

Audit-Related Fees in 2005 represent audit servicesfor the Company’s 401(k) and pension plans, services relating to Deloitte &Touche’s attestation under the FDIC Improvement Act of 1991 and servicesrelating to a qualified collateral report for the Federal Home Loan Bank ofBoston. All Other Fees in 2005 represent consultation services related to thestart-up of the Company’s operations in the United Kingdom and Luxembourg. Allfees of Deloitte & Touche for 2005 were pre-approved by the Company’sAudit Committee.

The Audit Committee is required to pre-approve theaudit and non-audit services performed by the independent registered publicaccounting firm in order to assure that the provision of such services does notimpair the independence of the registered public accounting firm. The AuditCommittee pre-approved specific services that may be performed by the Company’sindependent registered public accounting firm during 2006 within pre-approvedcost levels. Unless a type of service to be provided by the independent auditorhas already received pre-approval, it requires specific pre-approval by theAudit Committee. Any pre-approved services exceeding pre-approved cost levelsrequire specific further approval by the Audit Committee. Requests or applications to provide services thatrequire approval by the Audit Committee will be submitted to the AuditCommittee by both the independent auditor and the Chief Financial Officer, andmust include a joint statement as to whether, in their view, the request orapplication is consistent with the SEC’s rules on auditor independence.

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**PART IV**

**ITEM 15.   EXHIBITSAND FINANCIAL STATEMENT SCHEDULES.**

|            | **(a)   1.   Consolidated  Financial Statements.**                                                                   |
|------------|------------------------------------------------------------------------------------------------------------------------------------------|
|       | For the following  consolidated financial information included herein, see Index to Consolidated  Financial Statements on Page F-1: |
|       | Report of  Independent Registered Public Accounting Firm.                                                                                |
|       | Consolidated  Balance Sheets as of December 31, 2006 and December 31, 2005.                                                    |
|       | Consolidated  Statements of Income and Comprehensive Income for the Years Ended  December 31, 2006, 2005 and 2004.                  |
|       | Consolidated  Statements of Stockholders’ Equity for the Years Ended December 31,  2006, 2005 and 2004.                        |
|       | Consolidated  Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and  2004.                                       |
|       | Notes to  Consolidated Financial Statements.                                                                                             |
| ** ** | **2.      Financial Statement Schedules.**                                                                      |
|       | None.                                                                                                                                    |
| ** ** | **3.      List of Exhibits.**                                                                                   |
| ** ** | ** **                                                                                                                               |

 
| Exhibit No. | ** ** | ** **                                                                                                                                                                                            | ** ** | **Description** |
|------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------|
| 2.1(13)          |       | Agreement  and Plan of Merger between the Company and State Street Corporation, dated  February 4, 2007                                                                                          |
| 3.1(6)           |       | Certificate  of Incorporation of the Company                                                                                                                                                          |
| 3.2(3)           |       | Certificate  of Amendment of Certificate of Incorporation of the Company                                                                                                                              |
| 3.3(5)           |       | Certificate  of Amendment of Certificate of Incorporation of the Company                                                                                                                              |
| 3.4(8)           |       | Certificate  of Amendment of Certificate of Incorporation of the Company                                                                                                                              |
| 3.5(9)           |       | Certificate  of Amendment of Certificate of Incorporation of the Company                                                                                                                              |
| 3.6(6)           |       | Amended  and Restated Bylaws of the Company                                                                                                                                                           |
| 4.1(6)           |       | Specimen  certificate representing the common stock of the Company                                                                                                                                    |
| 10.1(7)*         |       | Amended  and Restated 1995 Stock Plan                                                                                                                                                                 |
| 10.2(7)*         |       | Amended  and Restated 1995 Non-Employee Director Stock Option Plan                                                                                                                                    |
| 10.3(11)*        |       | 2005  Equity Compensation Plan                                                                                                                                                                        |
| 10.4(6)          |       | Information  Technology Services Contract between the Company and Electronic Data  Systems, Inc., dated September 20, 1995                                                                  |
| 10.5(1)          |       | Lease  Agreement between the Company and John Hancock Mutual Life Insurance Company,  dated November 13, 1995, for the premises located at 200 Clarendon  Street, Boston, Massachusetts          |
| 10.6(11)**       |       | Amendment  to Lease between Investors Financial Services Corp. and 100 & 200 Clarendon  LLC (successors to the John Hancock Mutual Life Insurance Company), dated  January 1, 2005 |
| 10.7(9)*         |       | 1997  Employee Stock Purchase Plan, as amended                                                                                                                                                        |
| 10.8(2)          |       | Amended  and Restated Declaration of Trust among the Company and the Trustees named  therein, dated January 31, 1997                                                                             |
| 10.9(2)          |       | Indenture  between the Company and The Bank of New York, dated January 31, 1997                                                                                                                  |
| 10.10(2)         |       | Common  Securities Guarantee Agreement by the Company as Guarantor, dated  January 31, 1997                                                                                                      |
| 10.11(2)         |       | Capital  Securities Guarantee Agreement between the Company as Guarantor and The Bank  of New York as Capital Securities Guarantee Trustee, dated January 31,  1997                              |

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| 10.12(4)    |   | First  Amendment, effective January 1, 2000 to Information Technology Services  Contract between the Company and Electronic Data Systems, Inc. dated  September 20, 1995                                                     |
|-------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.13(4)*   |   | Amended  and Restated Employment Agreement between the Company and Kevin Sheehan                                                                                                                                                       |
| 10.14(4)*   |   | Change  of Control Employment Agreement between the Company and Kevin Sheehan                                                                                                                                                               |
| 10.15(4)*   |   | Amended  and Restated Employment Agreement between the Company and Michael Rogers                                                                                                                                                      |
| 10.16(4)*   |   | Change  of Control Employment Agreement between the Company and Michael Rogers                                                                                                                                                              |
| 10.17(4)*   |   | Amended  and Restated Employment Agreement between the Company and Edmund Maroney                                                                                                                                                      |
| 10.18(4)*   |   | Change  of Control Employment Agreement between the Company and Edmund Maroney                                                                                                                                                              |
| 10.19(4)*   |   | Amended  and Restated Employment Agreement between the Company and Robert Mancuso                                                                                                                                                      |
| 10.20(4)*   |   | Change  of Control Employment Agreement between the Company and Robert Mancuso                                                                                                                                                              |
| 10.21(4)*   |   | Amended  and Restated Employment Agreement between the Company and John Henry                                                                                                                                                               |
| 10.22(4)*   |   | Change  of Control Employment Agreement between the Company and John Henry                                                                                                                                                                  |
| 10.23(6)*   |   | Change  of Control Employment Agreement between the Company and John N.  Spinney, Jr.                                                                                                                                                  |
| 10.24(7)*   |   | Employment  Agreement between the Company and John N. Spinney, Jr.                                                                                                                                                                     |
| 10.25(9)    |   | Information  Technology Services Agreement dated July 1, 2004 between the Company and  International Business Machines Corporation.                                                                                                    |
| 10.26(10)   |   | Stock  Option Agreement dated November 15, 2004 between the Company and Kevin  J. Sheehan                                                                                                                                              |
| 10.27(10)*  |   | Stock  Option Agreement dated November 15, 2004 between the Company and Kevin  J. Sheehan                                                                                                                                              |
| 10.28(10)*  |   | Stock  Option Agreement dated November 15, 2004 between the Company and Michael  F. Rogers                                                                                                                                             |
| 10.29(10)*  |   | Stock  Option Agreement dated November 15, 2004 between the Company and Michael  F. Rogers                                                                                                                                             |
| 10.30(10)*  |   | Stock  Option Agreement dated November 15, 2004 between the Company and Edmund  J. Maroney                                                                                                                                             |
| 10.31(10)*  |   | Stock  Option Agreement dated November 15, 2004 between the Company and Edmund  J. Maroney                                                                                                                                             |
| 10.32(10)*  |   | Stock  Option Agreement dated November 15, 2004 between the Company and John N.  Spinney, Jr.                                                                                                                                     |
| 10.33(10)*  |   | Stock  Option Agreement dated November 15, 2004 between the Company and Robert  D. Mancuso                                                                                                                                             |
| 10.34(12)** |   | Amended  and Restated Trust 3000 Service Agreement between the Company and SEI  Investments Company dated July 1, 2004.                                                                                                                |
| 10.35(12)   |   | Lease  agreement between the Company and Copley Place Associates, LLC dated  August 2, 1999, as amended.                                                                                                                               |
| 21.1(14)    |   | Subsidiaries  of the Company                                                                                                                                                                                                                |
| 23.1        |   | Consent  of Deloitte & Touche LLP                                                                                                                                                                                                  |
| 24.1(14)    |   | Power  of Attorney (see Power of Attorney and Signature Page of this Report).                                                                                                                                                          |
| 31.1        |   | Certificate  of Kevin J. Sheehan, Chief Executive Officer                                                                                                                                                                                   |
| 31.2        |   | Certificate  of John N. Spinney, Jr., Chief Financial Officer                                                                                                                                                                          |
| 32.1        |   | Certification  of Kevin J. Sheehan, Chief Executive Officer, and John N. Spinney, Jr.,  Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted,  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

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       (1) Previously filed as an exhibit to Form 10-K for thefiscal year ended October 31, 1995.

32

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       (2) Previously filed as an exhibit to Form 10-K for thefiscal year ended December 31, 1996 (File No. 000-26996).

       (3) Previously filed as an exhibit to Form 10-Q for thefiscal quarter ended March 31, 2000.

       (4) Previously filed as an exhibit to Form 10-K for thefiscal year ended December 31, 2000.

       (5) Previously filed as an exhibit to the Company’s RegistrationStatement on Form S-8 filed with the Commission on November 5,2001 (File No. 333-72786).

       (6) Previously filed as an exhibit to Form 10-K for thefiscal year ended December 31, 2001.

       (7) Previously filed as an exhibit to Form 10-K for thefiscal year ended December 31, 2002.

       (8) Previously filed as an exhibit to Form 10-Q for thefiscal quarter ended June 30, 2003.

       (9) Previously filed as an exhibit to Form 10-Q for thefiscal quarter ended June 30, 2004.

(10) Previously filed as an exhibit to Form 10-K for thefiscal year ended December 31, 2004.

(11) Previously filed as an exhibit to Form 10-Q for thefiscal quarter ended March 31, 2005.

(12) Previously filed as an exhibit to Form 10-K for thefiscal year ended December 31, 2005.

(13) Previously filed as an exhibit to Form 8-K filed on February 6,2007.

(14)   Previously filed as an exhibitto Form 10-K filed on February 27, 2007.

*                    Indicates amanagement contract or a compensatory plan, contract or arrangement.

**             Confidentialtreatment requested pursuant to rule 24b-2 promulgated under theSecurities Exchange Act of 1934.

**(b)**         Exhibits.

The Company hereby filesas part of this Form 10-K the exhibits listed in Item 15(a)(3) above.Exhibits which are incorporated herein by reference can be inspected and copiedat the public reference facilities maintained by the Securities and ExchangeCommission, 450 Fifth Street, N.W., Room 1024, Washington, D.C.

**(c)**          FinancialStatement Schedules.

None.

33

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**SIGNATURES**

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, in Boston, Massachusettson the 30th day of April, 2007.

|        | INVESTORS FINANCIAL SERVICES  CORP. |
|--------|-------------------------------------|
|   | By:                                 | /s/ KEVIN J. SHEEHAN |   |
|   |                                | Kevin J. Sheehan |
|   |                                | *Chief Executive Officer and Chairman of the Board* |

 

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