Document:

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                                                                   Exhibit 10.17

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

       AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") made as of
this 16th day of May, 2000 by and among Kevin J. Sheehan ("Employee"), Investors
Financial Services Corp., a Delaware corporation ("IFSC"), and Investors Bank &
Trust Company, a Massachusetts chartered trust company having its principal
place of business at 200 Clarendon Street, Boston, Massachusetts (the
"Company").

       WHEREAS, IFSC, the Company and the Employee are parties to an employment
agreement, dated as of October 11, 1995, as amended (the "Prior Agreement"), and
the parties thereto wish to enter into this Agreement in order to update the
Prior Agreement;

       NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:

       1. POSITION AND RESPONSIBILITIES. During the term of this Agreement, the
Employee shall serve as President and Chief Executive Officer of the Company and
of IFSC. The Employee shall also be a member of the Board of Directors of IFSC
(the "IFSC Board"), and a member and Chairman of the Executive Committee of the
IFSC Board. The Employee will have such responsibilities, duties and authority
as he has as of the date hereof in his positions as President and Chief
Executive Officer of the Company and IFSC and Chairman of the Executive
Committee of the IFSC Board, including, without limitation, general supervision
and control over, and responsibility for, the general management and operations
of the Company and its subsidiaries. The Employee will also have such other
responsibilities, duties and authority as may from time to time be assigned to
him that are consistent and commensurate with his status and positions at the
Company and IFSC. The Employee shall at all times report to, and only to, and
his activities shall at all times be subject to the direction and control of,
the IFSC Board, and the Employee shall exercise such powers and comply with and
perform, faithfully and to the best of his ability, such directions and duties
in relation to the business and affairs of the Company, as may from time to time
be vested in or requested of him by the IFSC Board. The Employee agrees to
devote substantially all of his business time, attention and services to the
diligent, faithful and competent discharge of such duties for the successful
operation of the Company's business. During the term hereof, the Employee will
not have any managerial or operations responsibility, other than service on a
board of directors, in any enterprise, firm, corporation, trust or other
business entity other than the Company and IFSC; provided, however, that nothing
herein shall prevent the ownership by the Employee of an equity interest in any
business entity, provided that such ownership does not involve any managerial or
operational responsibility other than serving on the board of directors of a
corporation. Any directorships of corporations other than the Company and IFSC
must be approved in writing by the IFSC Board in advance. At all times during
the term of this Agreement, the Employee's primary place of employment shall be
within fifteen (15) miles of Boston, Massachusetts.

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       2. COMPENSATION: SALARY, ANNUAL BONUS, EQUITY PARTICIPATION AND OTHER
BENEFITS. During the term of this Agreement, the Company shall pay the Employee
the following compensation, including the following salary, bonus and other
fringe and welfare benefits:

       (A) SALARY. In consideration of the services to be rendered by the
Employee to the Company and IFSC, the Company will pay to the Employee an annual
base salary of $550,000 (the "Base Rate"). Such Base Rate shall be payable in
conformity with the Company's customary practices for executive compensation as
such practices shall be established or modified from time to time. The
Employee's Base Rate shall be evaluated annually by the IFSC Board or the
Compensation Committee thereof, and may be increased as appropriate, within
thirty (30) days of the end of each calendar year, but in no circumstances shall
the Base Rate be decreased below the Base Rate that was established for the most
recently concluded calendar year.

       (B) WELFARE AND FRINGE BENEFITS. The Employee will be entitled to
participate in the Company's welfare and fringe benefit plans, programs and
policies generally available to other senior executives of the Company, on the
same basis as such other senior executives. In addition, the Employee will be
entitled to four (4) weeks vacation during each calendar year, which shall
accrue if and to the extent unused. The Employee will be entitled to be
reimbursed for all of his business-related expenses, including but not limited
to telephone usage and business related travel expenses.

       (C) ANNUAL BONUS. For each twelve month period ending on December 31
during the term of this Agreement ("Year End"), in addition to the amounts
payable under Section 2(A) above, the Employee shall receive a cash bonus (the
"Annual Bonus"), with the amount of such bonus to be determined pursuant to such
bonus plan as may from time to time be adopted by the IFSC Board or the
Compensation Committee thereof. The Annual Bonus shall be payable at such times
as the IFSC Board shall establish, provided that the Employee continues to be
employed by the Company on each such Year End except as otherwise provided in
Section 4 hereof.

       (D) EQUITY PARTICIPATION.

            (i) The Employee shall be entitled to participate annually in the
       1995 Stock Plan and any future equity compensation plan that is generally
       made available to other senior executives of the Company, in such amounts
       and on such terms as are determined appropriate thereunder commensurate
       with his position and performance, and in accordance with all of the
       terms and conditions of such plan.

            (ii) The Company agrees that with respect to all options and
       restricted shares to be granted by the Company, upon grant and during the
       term of such options and the vesting period of such restricted shares,
       the Company shall use its reasonable efforts to comply with the
       requirements of Rule 16b-3, promulgated pursuant to the Securities
       Exchange Act of 1934, as amended, as such rule shall be in effect from
       time to time, or with any successor provision ("Rule 16b-311") such that
       such options and restricted shares shall be afforded the benefits of Rule
       16b-3.

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            (iii) The Company agrees that it shall use its best efforts to file
       and cause to become and remain effective a registration statement on Form
       S-8 (or a successor form) such that either the resale by the Employee of
       restricted shares granted to the Employee by the Company or the grant of
       such shares and the purchase of shares by the Employee upon the exercise
       of the options to be granted to the Employee shall be registered under
       the; Securities Act of 1933, as amended, or any successor provision.

       (E) LIFE INSURANCE PREMIUM PAYMENTS AND TAX GROSS-UP. The Company shall
pay to the Employee the cost of premiums (such payments to be "grossed-up" to
account for the tax liability to the Employee on such payments) for a life
insurance policy for the benefit of the Trustees of an insurance trust
designated by the Employee or such other entity or individual as the Employee
shall so designate (the "Life Insurance Policy"). The amount of such policy
shall not exceed the amount of the termination for Good Reason severance payment
determined under Section 4(A) hereof. The Company shall provide reasonable
assistance to the Employee in obtaining the Life Insurance Policy.

       3. TERM. The term of this Agreement shall commence on the date first
above written and shall terminate on the earlier to occur of (i) three (3) years
from such date, or, if later, three (3) years from the date upon which the IFSC
Board last renewed the term as provided below; (ii) the Employee's death, or
upon written notice from the Company to the Employee, if the Employee is
permanently disabled, or (iii) the occurrence of any of the circumstances
described in Section 4 hereof. For the purposes of this Agreement, the Employee
shall be deemed to be permanently disabled if a physician, chosen by the
Company, and reasonably acceptable to the Employee or his legal representative,
determines in good faith that, as a result of a physical or mental condition
caused by injury, illness, disease or mental disorder, the Employee is unable to
perform his duties hereunder for any one hundred twenty (120) work days out of
any 365-day period or for ninety (90) consecutive days in any 365-day period.
Within thirty (30) days of December 31 of each calendar year, the IFSC Board
shall consider the extension of the term of this Agreement to three years from
such December 31. Each such extension shall be effective only when agreed to by
the Employee. In the event that the IFSC Board fails to extend the term of this
Agreement, the Employee may terminate this Agreement for "Good Reason," in
accordance with Section 4(A) hereof, notwithstanding any other term hereof.

       4. TERMINATION. The Employee's employment under this Agreement, and this
Agreement, subject to Section 16 hereof, may be terminated as follows:

       (A) BY THE EMPLOYEE WITH OR WITHOUT GOOD REASON. The Employee may
terminate his employment, with or without Good Reason (as defined below), at any
time upon at least sixty (60) days' advance written notice to the Company. In
the event of a family emergency, including but not limited to the death or
incapacity of an immediate family member, or upon other circumstances deemed
sufficient by a majority of the IFSC Board, the Employee may terminate his
employment upon fifteen (15) days' advance written notice to the Company. In the
event of termination at the Employee's option without Good Reason, the Employee
shall be entitled to no severance or other termination benefits after the
expiration of the sixty-day period referred to above, except as otherwise
required by law. In the event the Employee terminates his

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employment for Good Reason, the Company agrees to pay the Employee, in a lump
sum within fifteen (15) days of the Employee's last day of employment with the
Company, a severance payment equal to the product of (i) the greater of (x) the
remaining number of months in the term of this Agreement and (y) twenty-four
months (the "Severance Period"), divided by twelve, multiplied by (ii) the sum
of the Employee's Base Rate immediately prior to such termination and the Recent
Annual Bonus (as defined below). In addition, during the Severance Period, the
Company shall continue to provide the Employee and his eligible dependents (to
the extent applicable) with group health benefits and life and disability
insurance on the same terms and conditions applicable to active senior
executives of the Company, including cost-sharing (hereinafter the "Welfare
Benefits"), provided, that if the Welfare Benefits cannot be provided to
inactive employees under the terms of the applicable plans or applicable law,
the Company shall provide the Employee with, or pay the Employee for the cost of
obtaining, substitute benefits that are no less favorable in the aggregate than
the Welfare Benefits as in effect immediately prior to the Employee's
termination. Notwithstanding the foregoing, the Company's responsibility for the
cost of the Welfare Benefits shall not exceed twice the cost it paid for such
coverage immediately prior to the Employee's termination. As used in this
Agreement, "Recent Annual Bonus" shall mean the highest Annual Bonus paid or
payable to the Employee (including any deferred amounts) with respect to any of
the three full calendar years ending immediately prior to the Employee's
termination of employment.

            As used in this Agreement, a "Good Reason" shall mean any of the
       following:

            (i) failure to be nominated by the IFSC Board for election to the
       IFSC Board any time such nominations are made, failure of the
       stockholders of IFSC to reelect the Employee to the IFSC Board, failure
       of the IFSC Board to maintain the Employee as a member and Chairman of
       the Executive Committee of the IFSC Board or failure of the IFSC Board to
       reelect the Employee as President and Chief Executive Officer of the
       Company and IFSC, or removal from the IFSC Board, the Executive Committee
       thereof or any such office, provided that such failure or removal is not
       in connection with a termination of the Employee's employment hereunder
       for Cause in accordance with this Section 4B;

            (ii) a material change by the Company or IFSC in the Employee's
       authority, functions, duties or responsibilities as President and Chief
       Executive Officer of the Company and IFSC (including, without limitation,
       material changes in the control or structure of the Company or IFSC)
       which would cause the Employee's position with the Company or IFSC to
       become of less responsibility, importance or scope than the Employee's
       position as of the date of this Agreement, provided that such material
       change is not in connection with a termination of the Employee's
       employment hereunder for Cause in accordance with Section 4B;

            (iii) a failure by the Company to renew this Agreement as provided
       in Section 3 hereof, provided that such nonrenewal is not in connection
       with a termination of the Employee's employment hereunder for Cause in
       accordance with Section 4B; or

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            (iv) a failure by the Company to comply in a material respect with
       any material provision of this Agreement or any other agreement between
       the parties, which has not been cured within fifteen (15) days after
       notice of such noncompliance has been given by the Employee to the
       Company.

       (B) AT THE ELECTION OF THE COMPANY FOR CAUSE. The Company may,
immediately and unilaterally, terminate the Employee's employment hereunder for
Cause at any time during the term of this Agreement. Termination of the
Employee's employment by the Company shall constitute a termination for Cause
under this Agreement if such termination is for one or more of the following
reasons, as found by the IFSC Board by a resolution duly adopted in good faith
by a majority of its members after notice to the Employee and an opportunity to
be heard before the IFSC Board with counsel. As used herein, "Cause" shall mean:

            (i) the continued failure or continued refusal of the Employee to
       render services to the Company or IFSC in accordance with his obligations
       under this Agreement or a reasonable determination by a majority of the
       IFSC Board that the Employee has performed inadequately the duties of his
       employment, in each case continuing for fifteen (15) days after the
       Employee's receipt of written notice specifying the alleged failure,
       refusal or performance inadequacy;

            (ii) gross negligence, dishonesty, breach of fiduciary duty or
       material breach of the material terms of this Agreement or the other
       agreements executed in connection herewith;

            (iii) the commission by the Employee of an act of fraud,
       embezzlement or deliberate disregard of the rules or policies of the
       Company or IFSC or the commission by the Employee of any other action
       with the intent to injure materially the Company or IFSC;

            (iv) the conviction by the Employee of a felony, either in
       connection with the performance of his obligations hereunder or that will
       materially and adversely affect the Employee's ability to perform his
       obligations hereunder; or

            (v) the commission of an act which constitutes unfair competition
       with the Company or which induces any customer of the Company to breach a
       contract with the Company.

       In the event of a termination for Cause pursuant to the provisions of
clauses (ii) through (v) above, inclusive, the Employee shall not be entitled to
severance or other termination benefits, except as required by law. In the event
of a termination for Cause pursuant to the provisions of clause (i) above, the
Company, notwithstanding the remaining term of this Agreement, agrees to (x) pay
the Employee a lump-sum severance payment equal to nine (9) months' salary at
the Employee's Base Rate, within fifteen (15) days of the Employee's last day of
employment by the Company and (y) provide continuing group health benefits
during the nine (9) month severance period to the Employee and his eligible
dependents on the same basis and

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terms and conditions, including cost-sharing, as provided to other active senior
executives of the Company during such period.

       (C) AT THE ELECTION OF THE COMPANY FOR REASONS OTHER THAN FOR CAUSE. The
Company may, immediately and unilaterally, terminate the Employee's employment
hereunder and this Agreement at any time during the term of this Agreement
without Cause by giving sixty (60) days' advance written notice to the Employee
of the Company's election to terminate. During such sixty-day period, the
Employee will be available on a full-time basis for the benefit of the Company
to assist the Company in making the transition to a new, successor officer of
the Company. In the event the Company exercises its right to terminate the
Employee under this Section 4(C), the Company agrees to pay the Employee, in a
lump sum within fifteen (15) days of the Employee's last day of employment with
the Company, a severance payment equal to the amount determined under Section
4(A) hereof and to provide the Welfare Benefits during the Severance Period, in
each case as if the Employee had terminated employment for Good Reason under
Section 4(A) hereof.

       (D) TERMINATION DUE TO DEATH OR DISABILITY. In the event this Agreement
shall terminate due to the Employee's death or upon written notice from the
Company to the Employee if the Employee is permanently disabled, the Company
shall pay the Employee or his legal representatives an amount equal to the
amount payable under Section 4(C) as if the Employee had been terminated other
than for Cause, reduced by any amount payable to an insurance trust or such
other designated individual or entity under the Life Insurance Policy, if any,
in the case of the Employee's death, or under disability insurance provided by
the Company, in the case of the Employee's termination due to his permanent
disability. In addition, upon a termination of the Employee due to his permanent
disability, the Company shall continue to provide the Welfare Benefits during
the Severance Period, as if the Employee's employment had been terminated other
than for Cause under Section 4(C). The provisions of this Section 4(D) shall
survive the termination of this Agreement by reason of the death or permanent
disability of the Employee.

       5. NONCOMPETITION AND CONFIDENTIALITY. In connection with his employment
by the Company, the Employee has previously executed the Noncompetition and
Confidentiality Agreement attached hereto as EXHIBIT A, the terms and conditions
of which are incorporated herein by reference. The Noncompetition and
Confidentiality Agreement shall survive the termination of this Agreement and
shall remain in full force and effect for so long as is provided by its own
terms and as is permitted by law.

       6. CONSENT AND WAIVER BY THIRD PARTIES. The Employee hereby represents
and warrants that he has obtained all waivers and/or consents from third parties
which are necessary to enable him to enjoy employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligation or understanding
with any such third party. The Employee represents that he is not bound by any
agreement or any other existing or previous business relationship, which
conflicts with, or may conflict with, the performance of his obligations
hereunder or prevent the full performance of his duties and obligations
hereunder.

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       7. GOVERNING LAW. This Agreement, the employment relationship
contemplated herein and any claim arising from such relationship, whether or not
arising under this Agreement, shall be governed by and construed in accordance
with the internal law of the Commonwealth of Massachusetts and this Agreement
shall be deemed to be performable in Massachusetts.

       8. SEVERABILITY. In case any one or more of the provisions contained in
the Agreement or the other agreements executed in connection with the
transactions contemplated hereby for any reason shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or such
other agreements, but this Agreement or such other agreements, as the case may
be, shall be construed and reformed to the maximum extent permitted by law.

       9. WAIVERS AND MODIFICATIONS. This Agreement may be modified, and the
rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 9. No waiver by either party of any
breach by the other or any provision hereof shall be deemed to be a waiver of
any later or other breach thereof or as a waiver of any other provision of this
Agreement. This Agreement sets forth all of the terms of the understandings
between the parties with reference to the subject matter set forth herein on or
after the date hereof and may not be waived, changed, discharged or terminated
orally or by any course of dealing between the parties, but only by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought. No modification or waiver by the Company
shall be effective without the consent of at least a majority of the members of
the IFSC Board (excluding the Employee) then in office at the time of such
modification or waiver.

       10. ASSIGNMENT. The Employee acknowledges that the services to be
rendered by him hereunder are unique and personal in nature. Accordingly, the
Employee may not assign any of his rights or delegate any of his duties or
obligations under this Agreement, provided, however, that this Agreement shall
inure to the benefit of Employee's heirs, executors, administrators, personal
and legal representatives, distributees, devisees, legatees and successors. The
rights and obligations of the Company and IFSC under this Agreement shall inure
to the benefit of, and shall be binding upon, the successors and assigns of the
Company and IFSC, respectively. The Company and IFSC agree that a successor in
interest by merger, operation of law, consolidation, assignment, purchase or
otherwise of a controlling interest in the business of the Company or IFSC will
be informed prior to such event of the existence of this Agreement. The Company
and IFSC will require any successor (whether direct or indirect, by purchase,
merger, operation of law, consolidation, assignment or otherwise of a
controlling interest in the business, stock or other assets of the Company or
IFSC) to assume expressly and agree to perform this Agreement. As used in this
Agreement, "the Company" and "IFSC" shall mean the Company and IFSC as
hereinbefore defined and any successors as aforesaid.

       11. ACKNOWLEDGMENTS. The Employee hereby acknowledges and recognizes that
the enforcement of any of the provisions in this Agreement and the
Noncompetition and Confidentiality Agreement incorporated herein may potentially
interfere with the Employee's ability to pursue a proper livelihood. The
Employee represents that he is knowledgeable about the business of the Company.
The Employee recognizes and agrees that the enforcement of the

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Noncompetition and Confidentiality Agreement is intended to ensure the
preservation, protection and continuity of the business trade secrets and
goodwill of the Company. The Employee agrees that, due to the proprietary nature
of the Company's business, the restrictions set forth in the Noncompetition and
Confidentiality Agreement are reasonable as to time and scope. The foregoing
shall not prohibit the Employee from employment with any company by which the
Employee has been employed in the past so long as his activities with any such
company do not otherwise constitute a breach of the Noncompetition and
Confidentiality Agreement.

       12. ENTIRE AGREEMENT. This Agreement, and the Noncompetition and
Confidentiality Agreement and any other plans or agreements referenced herein,
constitute the entire understanding of the parties relating to the subject
matter hereof and, except as provided herein, supersede and cancel all
agreements, written or oral, made prior to the date hereof between the Employee
and the Company relating to employment, salary, bonus, or other compensation of
any description, future equity participation, pension, post-retirement benefits,
severance or other remuneration, other than the Change of Control Agreement
between IFSC and the Employee dated as of May 16, 2000. In addition,
notwithstanding anything contained herein to the contrary, with respect to stock
options granted to the Employee prior to the date of this Agreement, the
definition of "Change of Control" contained in Section 4(D) of the Prior
Agreement shall continue to apply and shall remain in full force and effect.

       13. NOTICES. All notices hereunder shall be in writing and shall be
delivered in person, mailed by certified or registered mail, return receipt
requested, or sent by overnight courier, addressed as follows:

       If to the Company, to:    Investors Financial Services Corp.
                                 200 Clarendon Street
                                 Boston, MA   02116-9130
                                 Attention:  Karen C. Keenan

       If to the Employee:       At the most recent address
                                 on file at the Company.

All notices hereunder shall be deemed to have been given either (i) if
personally, upon receipt, (ii) if sent by overnight courier on the next business
day following the day such notice is delivered to the courier service, or (iii)
if sent by registered or certified mail, on the 5th business day following the
day such mailing is made.

       14. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

       15. SECTION HEADINGS. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.

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       16. SURVIVAL. Notwithstanding any other provision hereof, the provisions
of Sections 2(D), 4, 5, 17, 18, 19 and 20 shall survive any termination of the
Employees employment and the other provisions of this Agreement.

       17. MITIGATION. The Employee shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise, nor, other than as provided in Section 4(D) hereof, shall the amount
of any payment provided for herein be reduced by any compensation earned by the
Employee as the result of employment by another employer or by retirement
benefits or insurance payments after the date of termination or otherwise.

       18. LEGAL EXPENSES. The Company will pay the Employee's reasonable fees
for legal and tax advice and other related expenses associated with the
negotiation and completion of this Agreement, as well as any future amendments
hereto and any disputes arising hereunder, provided, however, in the event of
any dispute arising hereunder, if a court of competent jurisdiction shall render
a final judgment in favor of the Company on the issues in such dispute
hereunder, from which there is no further right of appeal, the Employee shall
reimburse the Company all amounts paid to the Employee under this Section 18
with respect to such dispute.

       19. INDEMNIFICATION. The Company agrees that the Employee shall be
entitled to indemnification, and advancement of expenses in connection
therewith, as a director, officer and employee of the Company, of IFSC and of
any affiliate of the Company or IFSC to the full extent permitted by applicable
law.

       20. WITHHOLDING. The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

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       IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written as an instrument under seal.

Investors Bank & Trust Company               Kevin J. Sheehan
By:
   --------------------------------          -----------------------------------
                                             Signature

Title:
      -----------------------------

Investors Financial Services Corp.
By:
   --------------------------------

Title:
      -----------------------------

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                                                                 Exhibit 10.18

                                CHANGE OF CONTROL
                              EMPLOYMENT AGREEMENT

         AGREEMENT, dated as of the 16th day of May, 2000 (this "Agreement"),
by and between Investors Financial Services Corp., a Delaware corporation
(the "Company"), and Kevin J. Sheehan (the "Executive").

         WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
stockholders to assure that the Company will have the continued dedication of
the Executive, notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined herein). The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to the
current Company and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control that ensure that the compensation and
benefits expectations of the Executive will be satisfied and that are
competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.

         NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

         SECTION 1. CERTAIN DEFINITIONS. (a) "Effective Date" means the first
date during the Change of Control Period (as defined herein) on which a Change
of Control occurs. Notwithstanding anything in this Agreement to the contrary,
if a Change of Control occurs and if the Executive's employment with the Company
is terminated prior to the date on which the Change of Control occurs, and if it
is reasonably demonstrated by the Executive that such termination of employment
(1) was at the request of a third party that has taken steps reasonably
calculated to effect a Change of Control or (2) otherwise arose in connection
with or anticipation of a Change of Control, then "Effective Date" means the
date immediately prior to the date of such termination of employment.

         (b) "Change of Control Period" means the period commencing on the date
hereof and ending on the third anniversary of the date hereof; PROVIDED,
HOWEVER, that, commencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each annual anniversary
thereof, the "Renewal Date"), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate three years
from such Renewal Date, unless, at least 60 days prior to the Renewal Date, the
Company shall give notice to the Executive that the Change of Control Period
shall not be so extended.

         (c) "affiliated company" means any company controlled by, controlling
or under common control with the Company.

<PAGE>

         (d) "Change of Control" means:

         (1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
PROVIDED, HOWEVER, that, for purposes of this Section 1(d), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any affiliated company or (iv) any acquisition by
any corporation pursuant to a transaction that complies with Sections
1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C).

         (2) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; PROVIDED, HOWEVER, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.

         (3) Consummation of a reorganization, merger, consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities that
were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that, as a result of
such transaction, owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the

                                       2

<PAGE>

then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or

         (4) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

         SECTION 2. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company, subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
the Effective Date (the "Employment Period").

         SECTION 3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (1) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the office where the Executive was employed immediately
preceding the Effective Date or at any other location less than 15 miles from
such office.

         (2) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.

         (b) COMPENSATION. (1) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary (the "Annual Base Salary"), which
Annual Base Salary shall be paid in equal monthly installments at an annual rate
at least equal to 12 times the highest monthly base salary paid or payable,
including any base salary that has been earned but deferred, to the Executive by
the Company and the affiliated companies in respect of the 12-month period
immediately preceding the month in which the Effective Date occurs. During

                                       3

<PAGE>

the Employment Period, the Annual Base Salary shall be reviewed at least
annually, beginning no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date. Any increase in the Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. The Annual Base Salary shall not be reduced
after any such increase and the term "Annual Base Salary" shall refer to the
Annual Base Salary as so increased.

         (2) ANNUAL BONUS. In addition to the Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus under the Company's annual Executive Compensation Plan, or any
comparable bonus under any predecessor or successor plan, for the last three
full fiscal years prior to the Effective Date (annualized, in the event that the
Executive was not employed by the Company for the whole of such fiscal year)
(the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than
the end of the third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.

         (3) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies, and programs applicable generally to
other peer executives of the Company and the affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and the affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and the affiliated companies.

         (4) WELFARE BENEFIT PLANS. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and the affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and the affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
that are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and the affiliated
companies.

                                       4

<PAGE>

         (5) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and the affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and the
affiliated companies.

         (6) FRINGE BENEFITS. During the Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and the
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and the affiliated companies.

         (7) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and the affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and the affiliated companies.

         (8) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and the affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and the affiliated companies.

         SECTION 4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
Executive's employment shall terminate automatically if the Executive dies
during the Employment Period. If the Company determines in good faith that the
Disability (as defined herein) of the Executive has occurred during the
Employment Period (pursuant to the definition of "Disability"), it may give to
the Executive written notice in accordance with Section 11(b) of its intention
to terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
PROVIDED that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties. "Disability"
means the absence of the Executive from the Executive's duties with the Company
on a full-time basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness that is determined to be total and permanent
by a

                                       5

<PAGE>

physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.

         (b) CAUSE. The Company may terminate the Executive's employment during
the Employment Period for Cause. "Cause" means:

         (1) the willful and continued failure of the Executive to perform
     substantially the Executive's duties with the Company or any affiliated
     company (other than any such failure resulting from incapacity due to
     physical or mental illness), after a written demand for substantial
     performance is delivered to the Executive by the Board or the Chief
     Executive Officer of the Company that specifically identifies the manner in
     which the Board or the Chief Executive Officer of the Company believes that
     the Executive has not substantially performed the Executive's duties, or

         (2) the willful engaging by the Executive in illegal conduct or gross
     misconduct that is materially and demonstrably injurious to the Company.

For purposes of this Section 4(b), no act, or failure to act, on the part of the
Executive shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel for
the Executive, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof in detail.

         (c) GOOD REASON. The Executive's employment may be terminated by the
Executive for Good Reason. "Good Reason" means:

         (1) the assignment to the Executive of any duties inconsistent in any
     respect with the Executive's position (including status, offices, titles
     and reporting requirements), authority, duties or responsibilities as
     contemplated by Section 3(a), or any other action by the Company that
     results in a diminution in such position, authority, duties or
     responsibilities, excluding for this purpose an isolated, insubstantial and
     inadvertent action not taken in bad faith and that is remedied by the
     Company promptly after receipt of notice thereof given by the Executive;

         (2) any failure by the Company to comply with any of the provisions of
     Section 3(b), other than an isolated, insubstantial and inadvertent failure
     not occurring

                                       6
<PAGE>

     in bad faith and that is remedied by the Company promptly after receipt of
     notice thereof given by the Executive;

         (3) the Company's requiring the Executive to be based at any office or
     location other than as provided in Section 3(a)(1)(B) or the Company's
     requiring the Executive to travel on Company business to a substantially
     greater extent than required immediately prior to the Effective Date;

         (4) any purported termination by the Company of the Executive's
     employment otherwise than as expressly permitted by this Agreement; or

         (5) any failure by the Company to comply with and satisfy Section
     10(c).

         For purposes of this Section 4(c), any good faith determination of Good
Reason made by the Executive shall be conclusive. Anything in this Agreement to
the contrary notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.

         (d) NOTICE OF TERMINATION. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(b). "Notice of
Termination" means a written notice that (1) indicates the specific termination
provision in this Agreement relied upon, (2) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (3) if the Date of Termination (as defined herein) is other than
the date of receipt of such notice, specifies the Date of Termination (which
Date of Termination shall be not more than 30 days after the giving of such
notice). The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's respective rights hereunder.

         (e) DATE OF TERMINATION. "Date of Termination" means (1) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified in the Notice of Termination, as the case may be, (2)
if the Executive's employment is terminated by the Company other than for Cause
or Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (3) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.

         SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD
REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment
Period, the

                                       7

<PAGE>

Company terminates the Executive's employment other than for Cause or
Disability or the Executive terminates employment for Good Reason:

         (1) the Company shall pay to the Executive, in a lump sum in cash
     within 30 days after the Date of Termination, the aggregate of the
     following amounts:

             (A) the sum of (i) the Executive's Annual Base Salary through the
         Date of Termination to the extent not theretofore paid, (ii) the
         product of (x) the higher of (I) the Recent Annual Bonus and (II) the
         Annual Bonus paid or payable, including any bonus or portion thereof
         that has been earned but deferred (and annualized for any fiscal year
         consisting of less than 12 full months or during which the Executive
         was employed for less than 12 full months), for the most recently
         completed fiscal year during the Employment Period, if any (such higher
         amount, the "Highest Annual Bonus") and (y) a fraction, the numerator
         of which is the number of days in the current fiscal year through the
         Date of Termination and the denominator of which is 365, and (iii) any
         compensation previously deferred by the Executive (together with any
         accrued interest or earnings thereon) and any accrued vacation pay, in
         each case, to the extent not theretofore paid (the sum of the amounts
         described in subclauses (i), (ii) and (iii), the "Accrued
         Obligations"); and

             (B) the amount equal to the product of (i) three and (ii) the sum
         of (x) the Executive's Annual Base Salary and (y) the Highest Annual
         Bonus; and

             (C) an amount equal to the excess of (i) the actuarial equivalent
         of the benefit under the Company's qualified defined benefit retirement
         plan (the "Retirement Plan") (utilizing actuarial assumptions no less
         favorable to the Executive than those in effect under the Retirement
         Plan immediately prior to the Effective Date) and any excess or
         supplemental retirement plan in which the Executive participates
         (collectively, the "SERP") that the Executive would receive if the
         Executive's employment continued for three years after the Date of
         Termination, assuming for this purpose that all accrued benefits are
         fully vested and assuming that the Executive's compensation in each of
         the three years is that required by Sections 3(b)(1) and 3(b)(2), over
         (ii) the actuarial equivalent of the Executive's actual benefit (paid
         or payable), if any, under the Retirement Plan and the SERP as of the
         Date of Termination;

         (2) for three years after the Executive's Date of Termination, or such
     longer period as may be provided by the terms of the appropriate plan,
     program, practice or policy, the Company shall continue benefits to the
     Executive and/or the Executive's family at least equal to those that would
     have been provided to them in accordance with the plans, programs,
     practices and policies described in Section 3(b)(4) if the Executive's
     employment had not been terminated or, if more favorable to the Executive,
     as in effect generally at any time thereafter with respect to other peer
     executives of the Company and the affiliated companies and their families,
     PROVIDED,

                                       8
<PAGE>

     HOWEVER, that, if the Executive becomes reemployed with another employer
     and is eligible to receive medical or other welfare benefits under another
     employer provided plan, the medical and other welfare benefits described
     herein shall be secondary to those provided under such other plan during
     such applicable period of eligibility. For purposes of determining
     eligibility (but not the time of commencement of benefits) of the Executive
     for retiree benefits pursuant to such plans, practices, programs and
     policies, the Executive shall be considered to have remained employed until
     three years after the Date of Termination and to have retired on the last
     day of such period;

         (3) the Company shall, at its sole expense as incurred, provide the
     Executive with outplacement services the scope and provider of which shall
     be selected by the Executive in the Executive's sole discretion; and

         (4) to the extent not theretofore paid or provided, the Company shall
     timely pay or provide to the Executive any other amounts or benefits
     required to be paid or provided or that the Executive is eligible to
     receive under any plan, program, policy or practice or contract or
     agreement of the Company and the affiliated companies (such other amounts
     and benefits, the "Other Benefits").

         (b) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of the Other Benefits. The Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of the Other
Benefits, the term "Other Benefits" as utilized in this Section 5(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and the affiliated companies to the estates and
beneficiaries of peer executives of the Company and the affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and the affiliated
companies and their beneficiaries.

         (c) DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of the Other
Benefits. The Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision
of the Other Benefits, the term "Other Benefits" as utilized in this Section
5(c) shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and the affiliated
companies to disabled executives and/or their families in

                                       9

<PAGE>

accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer executives
and their families at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and the affiliated companies and their families.

         (d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment is
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (1) the Executive's Annual Base Salary through the Date
of Termination, (2) the amount of any compensation previously deferred by the
Executive, and (3) the Other Benefits, in each case, to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for the Accrued
Obligations and the timely payment or provision of the Other Benefits. In such
case, all the Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination.

         SECTION 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or the affiliated companies
and for which the Executive may qualify, nor, subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or the affiliated companies.
Amounts that are vested benefits or that the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or the affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement, except as explicitly modified by
this Agreement.

         SECTION 7. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right or action that the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses that the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").

                                       10
<PAGE>

         SECTION 8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

         (a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company or the affiliated companies to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise but determined without
regard to any additional payments required under this Section 8) (the "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code, or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties,
collectively, the "Excise Tax"), then the Executive shall be entitled to receive
an additional payment (the "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 8(a), if it shall be
determined that the Executive is entitled to the Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount that could be paid to the
Executive such that the receipt of the Payments would not give rise to any
Excise Tax (the "Reduced Amount"), then no Gross-Up Payment shall be made to the
Executive and the Payments, in the aggregate, shall be reduced to the Reduced
Amount.

         (b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Deloitte &
Touche LLP or such other certified public accounting firm as may be designated
by the Executive (the "Accounting Firm") that shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments that
will not have been made by the Company should have been made (the
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event the Company exhausts its remedies pursuant to Section 8(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.

                                       11

<PAGE>

         (c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which the Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that the Company desires to contest such claim, the
Executive shall:

         (1) give the Company any information reasonably requested by the
     Company relating to such claim,

         (2) take such action in connection with contesting such claim as the
     Company shall reasonably request in writing from time to time, including,
     without limitation, accepting legal representation with respect to such
     claim by an attorney reasonably selected by the Company,

         (3) cooperate with the Company in good faith in order effectively to
     contest such claim, and

         (4) permit the Company to participate in any proceedings relating to
     such claim;

PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Company shall control all proceedings taken in connection
with such contest, and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; PROVIDED, HOWEVER, that, if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and PROVIDED, FURTHER, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the

                                       12

<PAGE>

Company's control of the contest shall be limited to issues with respect to
which the Gross-Up Payment would be payable hereunder, and the Executive shall
be entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.

         (d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 8(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

         SECTION 9. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or the affiliated
companies, and their respective businesses, which information, knowledge or data
shall have been obtained by the Executive during the Executive's employment by
the Company or the affiliated companies and which information, knowledge or data
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those persons designated
by the Company. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement. In addition, the
Executive shall continue to be bound by the Noncompetition, Nondisclosure and
Inventions Agreement between the Executive and Investors Bank & Trust Company
(the "Noncompetition Agreement"); PROVIDED, HOWEVER, that notwithstanding
anything to the contrary contained in the Noncompetition Agreement or in any
other agreement between the Executive and the Company or any of its affiliated
companies, the provisions of Section 1 of the Noncompeition Agreement shall be
inapplicable and of no further force and effect upon any termination of the
Executive's employment following a Change of Control.

         SECTION 10. SUCCESSORS. (a) This Agreement is personal to the
Executive, and, without the prior written consent of the Company, shall not be
assignable by the Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.

         (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

                                       13

<PAGE>

         (c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
"Company" means the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid that assumes and agrees to perform this
Agreement by operation of law or otherwise.

         SECTION 11. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified other than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

         (b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

             if to the Executive:      At the most recent address on
                                       file at the Company.

             if to the Company:        Investors Financial Services Corp.
                                       200 Clarendon Street
                                       Boston, MA  02116

                                       Attention:  General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

         (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

         (d) The Company may withhold from any amounts payable under this
Agreement such United States federal, state or local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

         (e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.

                                       14

<PAGE>

         (f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a), prior to the Effective Date, the Executive's
employment may be terminated by either the Executive or the Company at any time
prior to the Effective Date, in which case the Executive shall have no further
rights under this Agreement. From and after the Effective Date, this Agreement
shall supersede any other agreement between the parties with respect to the
subject matter hereof, other than Sections 2(D)(ii) through (iii) and Section 19
of the Employment Agreement between the Executive, the Company and Investors
Bank & Trust Company, dated as of May 16, 2000.

                                       15
<PAGE>

         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.

                                           -------------------------------
                                           Kevin J. Sheehan

                                           INVESTORS FINANCIAL SERVICES CORP.

                                           -------------------------------
                                           Name:
                                           Title:

                                       16

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