Document:

Exhibit 10.1

May 5, 2006

Ms. Nancy Schmelkin

817 Kingsbridge Way
Buffalo Grove, IL 60089

Dear Nancy:

This letter will confirm the agreement between you and Aksys, Ltd. (the
“Company”) regarding your separation of employment from the Company.

1.    Separation from the
Company

For sound business reasons, the Company has decided to terminate your
employment effective May 5, 2006. By signing this letter agreement, you
acknowledge that your separation from Aksys Ltd will be effective on May 5,
2006 (the “Separation Date”). As of the Separation Date, you will no longer be
required to fulfill any of the duties and responsibilities associated with your
position.

2.    Vacation Pay

You will be paid
for all unused vacation that you have earned through your Separation Date. This
payment will be made no later than the regularly scheduled pay date of May 15,
2006, regardless of whether you sign this letter agreement.

3.    Severance Payment

After the Effective Date (as defined below) of this letter agreement,
the Company agrees to pay you $106,087.50, less deductions required by law (the
“Settlement Amount”), representing six months severance pay, paid out in
equal installments made on each regularly-scheduled pay date after the
Effective Date. These payments will continue until the total amount of your
Settlement Amount has been paid (the Severance Period)  Such
Settlement Amount shall not be considered compensation for purposes of any
employee benefit plan, program, policy or arrangement maintained or hereafter
established by the Company or any of its affiliates. You understand that the
Settlement Amount paid to you represents the consideration for signing this
Release and is not salary, wages or benefits to which you were already entitled.
You also acknowledge and represent that you have already received everything
(other than expense reimbursements for items submitted on or prior to the date
hereof) to which you were entitled by virtue of your employment relationship
with the Company.

4.    Payment of Salary
Withhold

You will receive a check for $10,609 (less applicable withholding) as
part of the regularly scheduled May 15 payroll. This amount is based on a
withhold of $1,768 per pay period for 6 pay periods.

 

5.    Retention Payments
through 2006

You will not be eligible to receive any payments from this program
after the Separation Date.

6.    Stock Options

Any stock options you may have may be exercised or expire according to
the terms of the applicable company stock option plan.

7.    Medical Benefits

As of your Separation Date, you will be eligible for continued medical
coverage under COBRA. For the Severance Period, the same premium you paid as an
employee will be withheld from each severance check, and the Company will pay
the remainder. At the conclusion of the Severance Period, you will be
responsible for the payment of the entire COBRA premium.

8.         Telephone and
Laptop Computer

The Company agrees that you may continue to use the laptop computer
until you succeed in finding full time employment or establish an independent
consulting practice as your primary employment . You will be removed from the
Company information system effective on your Separation Date.

9.    Release by You

(a)                                  You (for yourself, your heirs, assigns or
executors) release and forever discharge the Company, its affiliates, and its
and their directors, officers, investors, agents, and employees (the “Releasees”)
from any and all claims, suits, demands, causes of action, contracts, including
without limitation any employment or severance agreements or letter, covenants,
obligations, debts, costs, expenses, attorneys’ fees, liabilities of whatever
kind or nature in law or equity, by statute or otherwise whether now known or
unknown, vested or contingent, suspected or unsuspected, and whether or not
concealed or hidden, which have existed or may have existed, or which do exist,
through the date this letter agreement becomes effective and enforceable (“Claims”)
of any kind, which relate in any way to your employment with the Company or the
termination of that employment, except those arising out of the performance of
this letter agreement, all claims for employee benefits, including without
limitation under the Employee Retirement Income Security Act of 1974, as
amended, and all claims related to your rights under the 401(k), health
insurance, dental insurance, long term disability, short term disability, life
and AD&D insurance plans of the Company. Such released claims include, without
in any way limiting the generality of the foregoing language, any

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                                                and all claims of employment discrimination,
wrongful discharge or discharge in violation of public policy under any local,
state, or federal law or ordinance, including, without limitation, Title VII of
the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
Discrimination in Employment Act of 1967 (“ADEA”); the Americans with
Disabilities Act of 1990; the Family and Medical Leave Act; the Illinois Human
Rights Act; and any and all claims for unpaid bonuses or other compensation,
under any federal, state or local law or ordinance.

(b)                                 In signing this Release you acknowledge that
you intend that it shall be effective as a bar to each and every one of the
Claims hereinabove mentioned or implied. You expressly consent that this
Release shall be given full force and effect according to each and all of its
express terms and provisions, including those relating to unknown and
unsuspected Claims (notwithstanding any state statute that expressly limits the
effectiveness of a general release of unknown, unsuspected and unanticipated
Claims), if any, as well as those relating to any other Claims hereinabove
mentioned or implied. You specifically waive any rights you may have pursuant
to California Civil Code § 1542, which reads:
“SECTION 1542. [CERTAIN CLAIMS NOT AFFECTED BY GENERAL RELEASES.]  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR.”  You
acknowledge and agree that this waiver is an essential and material term of
this Release and without such waiver the Company would not have paid the
Settlement Amount described in paragraph 3.

(c)                                  You agree that in the event you bring your
own Claim in which you seek damages against the Company, or in the event you
seek to recover against the Company in any Claim brought by a governmental
agency on your behalf, this release shall serve as a complete defense to such
Claims.

(d)                                 Notwithstanding any other provision of this
letter agreement to the contrary, by signing this letter agreement:

(i)                                     You agree that this letter agreement
constitutes a knowing and voluntary waiver of all rights or claims you may have
against any one or more of the Releasees, including, but not limited to, all
rights or claims arising under the Age Discrimination in Employment Act of
1967, as amended (“ADEA”), including, but not limited to all claims of age
discrimination in employment and all claims of retaliation in violation of the
ADEA from the beginning of time to the date you sign this letter agreement;

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(ii)                                  The Company advises you in writing to consult
with an attorney prior to signing this letter agreement;

(iii)                               You received this letter on May 5, 2006.
You represent and warrant that the Company gave you a period of forty-five (45)
calendar days in which to consider this letter agreement before signing it. If
you sign this letter agreement at any time prior to the end of the forty-five
(45) day period that the Company gave you in which to consider this letter
agreement, the early signing was a knowing and voluntary waiver of your right
to consider this letter agreement for forty-five (45) days, and was due to your
belief that you had ample time in which to consider and understand this letter
agreement, and in which to review this letter agreement with an attorney;

(iv)                              The Company and you agree that, for a period
of eight (8) calendar days following your signing of this letter
agreement, you have the right to revoke this letter agreement by written notice
to Mr. Laurence Birch, Chief Financial Officer and interim President and
Chief Executive Officer, Aksys Ltd., Two Marriott Drive Lincolnshire, IL 60069. The Company and you further agree that this
letter agreement shall not become effective or enforceable until the revocation
period of eight (8) calendar days has expired; and

(v)                                 Your acceptance of the monies paid by the
Company, as described in this letter agreement, at any time more than eight (8) calendar
days after your signing of this letter agreement will constitute an admission
by you that you did not revoke this letter agreement during the revocation
period of eight (8) calendar days, and will further constitute an
admission by you that this letter agreement has become effective and
enforceable. This letter agreement will become effective eight (8) calendar
days after it is signed by you (the “Effective Date”).

10.  Additional Agreements

(a)                                  You also agree not to disparage the Company,
or its past and present investors, directors, officers or employees, and to
keep all confidential and proprietary information about the past or present
business affairs of the Company confidential unless a prior written release
from the Company is obtained.

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(b)                                 You further acknowledge and agree that as of
the date hereof, you have returned to the Company any and all property,
tangible or intangible, relating to its business, which you possessed or had
control over at any time, including but not limited to company-provided credit
cards, building or office access cards, corporate identification card, keys,
computer equipment, manuals, files, documents, records, software, customer data
base and other data, and that you shall not retain any copies, compilations,
extracts, excerpts, summaries or other notes of any such manuals, files,
documents, records, software, customer data base or other data.

11.  Confidentiality of this
Agreement

The contents of this agreement, including but not limited to its
financial terms, are strictly confidential. By signing this agreement you agree
and represent that you will maintain the confidential nature of the agreement,
except (a) to legal counsel, tax and financial planners, and immediate
family who agree to keep it confidential; (b) as otherwise required by
law, in which case you shall notify the Company writing in advance of
disclosure; and (c) as necessary to enforce this agreement.

12.  No Transfer or Assignment

You acknowledge that you have neither made nor offered to make nor will
make any assignment or transfer any claims covered by the above release and
that you are the sole and absolute legal and equitable owner of any and all
thereof. You and the Company agree that no interest or right you have or any of
your beneficiaries has to receive payment or to receive benefits under this
letter agreement shall be subject in any manner to sale, transfer, assignment,
pledge, attachment, garnishment, or other alienation or encumbrance of any
kind, except as required by law. Nor may such interest or right to receive
payment or distribution be taken, voluntarily or involuntarily, for the
satisfaction of the obligations or debts of, or other claims against you or
your beneficiary, including for alimony, except to the extent required by law.

13.  No Admissions

This letter agreement shall not be construed as an admission of any
wrongdoing either by the Company, its affiliates, or its and their directors,
officers, agents and employees.

14.  No Other Agreement

This agreement contains the entire agreement between you and the
Company, and wholly supersedes any and all prior agreements or understanding
between you and the Company. You acknowledge that the terms and provisions of
this Agreement herein stated are the only consideration for your agreeing to
the terms of this Agreement; that no other promise or agreement of any kind has
been made to or with any person or entity whatsoever to cause the signing of
this Agreement; and that, in signing this Agreement, you do not rely and have
not relied upon any representation or statement made by any of the Releasees or
by any of the Releasees’ agents,

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representatives or attorneys with regard to the
subject matter, basis or effect of the Agreement or otherwise. No part of this
agreement may be changed except in writing, executed by both you and the
Company.

15.  Governing Law

This letter agreement shall be interpreted in accordance with the laws
of the State of Illinois. Whenever possible, each provision of this agreement
shall be interpreted in a manner as to be effective and valid under applicable
law.

16.  Construction

Each of the parties hereto has cooperated in the drafting and
preparation of this agreement. Hence, this agreement shall not be construed
against any party.

17.  Counterparts

This agreement may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and
the same agreement.

18.  Full Understanding of the
Agreement

You acknowledge that you have carefully read this Agreement; that you
fully understand the terms, conditions, and significance of this Agreement; and
that you have signed this Agreement voluntarily, knowingly, and of your own
free will.

Nancy, I appreciate the effort you have put into transitioning your
responsibilities and the professional manner in which you have conducted this
transition.

Please indicate your agreement by signing this agreement and returning
it to us on or before May 26, 2006.

Very truly yours,

/s/ Laurence P.Birch                                                            AGREED
TO AND ACCEPTED BY:

Laurence P. Birch                                                                 /s/ Nancy S. Schmelkin                       

Printed Name                                                                        Employee
Signature

President and CEO                                                               6/2/06                                                     

Aksys Ltd                                                                             Dated

 

 6Exhibit 10.1

As effective April 12, 2006

EATON VANCE
CORP.

1998 STOCK OPTION PLAN

RESTATEMENT NO. 7

1.    Definitions. As used in this Eaton Vance Corp. 1998 Stock
Option Plan the following terms shall have the following meaning:

Board means the Company’s Board
of Directors.

Code means the Internal
Revenue Code of 1986, as amended from time to time. References to any provision
of the Code shall be deemed to include successor provisions and regulations and
other guidance issued thereunder.

Committee means the Compensation
Committee of the Board, or such other Board committee as may be appointed by
the Board to administer the Plan pursuant to Section 5.

Company means Eaton Vance
Corp., a Maryland corporation, or any successor corporation.

Director Option means a nonqualified
stock option granted to a director pursuant to the formula plan set forth in Section 8.

Exchange Act means the Securities
Exchange Act of 1934, as amended from time to time. References to any provision
of the Exchange Act shall be deemed to include successor provisions thereto and
regulations and other guidance issued thereunder.

Grant Date means the date on which
an Option is granted.

Incentive Option means an Option that
satisfies the requirements of Section 422 of the Code.

Market Value means the closing price
on the New York Stock Exchange for the Shares for any date.

Nonqualified Option means an Option other
than an Incentive Option granted to an employee.

Option means an option to
purchase Shares granted under the Plan.

Option Agreement means an agreement
between the Company and an Optionee, setting forth the terms and conditions of
an Option.

Option Price means the price to be
paid by an Optionee upon exercise of an Option.

Optionee means a person eligible
to receive an Option to whom an Option shall have been granted under the Plan.

Plan means this 1998 Stock
Option Plan, as amended or restated from time to time.

 

Qualified Member means a member of the
Committee who is a “non-employee director” within the meaning of Rule 16b-3(b)(3) and
an “outside director” within the meaning of Treasury Regulation 1.162-27(e)(3) under
Code Section 162(m).

Rule 16b-3 means Rule 16b-3,
as from time to time in effect and applicable to the Plan and any Optionee,
promulgated by the Securities and Exchange Commission under Section 16 of
the Exchange Act.

Shares means shares of
Non-Voting Common Stock of the Company or such other securities as may be
substituted or resubstituted therefor pursuant to Section 4.

Subsidiary means a subsidiary of
the Company, as defined in Section 424(f) of the Code.

2.    Purpose. The purpose of the Plan is to advance the
interests of the Company by strengthening the ability of the Company and its
Subsidiaries to attract, retain and motivate directors and employees by
providing them with an opportunity to purchase Shares and thus participate in
the ownership of the Company, including the opportunity to share in any
appreciation in the value of such Shares. It is intended that the Plan will
strengthen the mutuality of interest between such persons and the stockholders
of the Company. Both Incentive Options and Nonqualified Options may be granted
under the Plan. This Plan is the successor to the Company’s 1995 Stock Option
Plan — Restatement No. 2.

3.    Effective Date. The Plan became effective on July 7,
1998, the date it was adopted by the Board and approved by the voting
stockholders of the Company. This Restatement No. 7 became effective on April 12,
2006, the date it was adopted by the Board and approved by the voting
stockholders of the Company.

4.    Stock Subject to the Plan; Adjustments.

(a)          Shares Reserved. Subject to adjustment as
hereinafter provided, the total number of Shares reserved for issuance in
connection with Options under the Plan shall be 35,000,000. No Option may be
granted if the number of shares to which such Option relates, when added to the
number of Shares previously issued under the Plan, exceeds the number of shares
reserved under this Section 4(a). Shares issued under the Plan shall be
counted against this limit in the manner specified in Section 4(b).

(b)           Manner of Counting Shares. If any Shares subject to
an Option are forfeited, canceled, exchanged, or surrendered or such Option is
settled in cash or otherwise terminates without a distribution of Shares to the
Participant, including (i) the number of Shares withheld in payment of any
Option Price or tax obligation relating to the exercise of such Option and (ii) the
number of Shares equal to the number surrendered in payment of any Option Price
or tax obligation relating to the exercise of such Option, such number of
Shares will again be available for Options under the Plan. The Committee may
make determinations and adopt regulations for the counting of Shares relating
to any Option to ensure appropriate counting, avoid double counting (in the
case of substitute Options), and provide for adjustments in any case in which
the number of Shares actually distributed differs from the number of Shares
previously counted in connection with such Option.

(c)          Type of Shares Distributable. Any Shares delivered
upon exercise of an Option may consist, in whole or in part, of authorized and
unissued Shares or Shares reacquired by the Company through purchase in the
open market or in private transactions.

(d)         Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Shares, or other property) which is unusual and non-recurring, or any
recapitalization, stock split, reverse split, reorganization, merger, consolidation,
spin-off, combination, repurchase or share exchange, or other similar corporate
transaction or event affects the Shares such that an adjustment is appropriate
in order to prevent dilution or enlargement of the rights of Optionees under
the Plan, then the Committee shall make such equitable changes or adjustments
as it deems appropriate and, in such manner as it may deem 

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equitable, adjust any or all of (i) the number
and kind of Shares which may thereafter be issued in connection with Options, (ii) the
number and kind of Shares issued or issuable in respect of outstanding Options
or, if deemed appropriate, make provisions for payment of cash or other
property with respect to any outstanding Option, (iii) the Option Price
relating to any Option, and (iv) the number and kind of Shares set forth
in Section 7(d) as the per-person limitation for any three calendar
years; provided, however, in each case that, with respect to Incentive Options,
such adjustment shall be made in accordance with Section 424 of the Code,
unless the Committee determines otherwise. In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and any criteria
and performance objectives or goals included in, Options in recognition of
unusual or non-recurring events (including events described in the preceding
sentence, as well as acquisitions and dispositions of assets or all or part of
businesses) affecting the Company or any Subsidiary or any business unit, or
the financial statements thereof, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations, or business
conditions or in view of the Committee’s assessment of the business strategy of
the Company, a Subsidiary, or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance of an
Optionee, and any other circumstances deemed relevant; provided that, unless
otherwise determined by the Committee, no such adjustment shall be made if and
to the extent that such adjustment would cause Options granted to employees who
are “covered employees” within the meaning of Code Section 162(m) to
fail to qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder.

5.             Administration.

(a)          Authority of the Committee. The Plan shall be
administered by the Committee. The Committee shall have full and final
authority and discretion to take the following actions, in each case subject to
and consistent with the provisions of the Plan:

(i)  to select employees
to whom Options may be granted;

(ii)  to determine the
type and number of Options to be granted to employees, the number of Shares to
which such an Option may relate, the terms and conditions of any Option granted
to an employee under the Plan (including the Option Price, any restriction or
condition, any schedule for lapse of restrictions or conditions relating to
transferability or forfeiture, exercisability, or settlement of such an Option,
and waivers or accelerations thereof, and waivers of performance conditions
relating to such an option, based in each case on such considerations as the
Committee shall determine), and all other matters to be determined in
connection with any Option granted to an employee;

(iii)  to determine
whether, to what extent, and under what circumstances an Option may be settled,
or the Option Price may be paid, in cash, Shares or other property, or an
Option may be canceled, forfeited, exchanged, or surrendered;

(iv)  to determine
whether, to what extent, and under what circumstances cash, Shares or other
property payable with respect to an Option will be deferred either
automatically, at the election of the Committee, or at the election of the
Optionee, and whether to create trusts and deposit Shares or other property
therein;

(v)  to prescribe the form
of each Option Agreement, which need not be identical for each Optionee;

(vi)  to adopt, amend,
suspend, waive, and rescind such rules and regulations and appoint such
agents as the Committee may deem necessary or advisable to administer the Plan;

(vii)  to correct any
defect or supply any omission or reconcile any inconsistency in the Plan and to
construe and interpret the Plan and any Option, rules and regulations,
Option Agreement, or other agreement or instrument hereunder; and

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(viii)  to make all other
decisions and determinations as may be required under the terms of the Plan or
as the Committee may deem necessary or advisable for the administration of the
Plan.

In its administration of the Plan, the Committee
shall not take any action which would result in a transaction involving a
Director Option failing to be exempt under Rule 16b-3(d). Other
provisions of the Plan notwithstanding, the Board may perform any function of
the Committee under the Plan, including for the purpose of ensuring that
transactions under the Plan by Optionees who are then subject to Section 16
of the Exchange Act in respect of the Company are exempt under Rule 16b-3.
In any case in which the Board is performing a function of the Committee under
the Plan, each reference to the Committee herein shall be deemed to refer to
the Board, except where the context otherwise requires.

(b)         Manner of Exercise of Committee Authority. At any
time that a member of the Committee is not a Qualified Member, any action of
the Committee relating to an Option to be granted to an employee who is then
subject to Section 16 of the Exchange Act in respect of the Company, or
relating to an Option intended to constitute “qualified performance-based compensation”
within the meaning of Code Section 162(m) and regulations thereunder,
may be taken either (i) by a subcommittee composed solely of two or more
Qualified Members, or (ii) by the Committee but with each such member who
is a not Qualified Member abstaining or recusing himself or herself from such
action, provided that, upon such abstention or recusal, the Committee remains
composed solely of two or more Qualified Members. Such action, authorized by
such a subcommittee or by the Committee upon the abstention or recusal of such
non-Qualified Member(s), shall be the action of the Committee for purposes of
the Plan. Any action of the Committee with respect to the Plan shall be final,
conclusive, and binding on all persons, including the Company, Subsidiaries,
Optionees, any person claiming any rights under the Plan from or through any
Optionee, and stockholders of the Company. The express grant of any specific
power to the Committee, and the taking of any action by the Committee, shall
not be construed as limiting any power or authority of the Committee. The
Committee may delegate to officers or managers of the Company or any Subsidiary
the authority, subject to such terms as the Committee shall determine, to
perform administrative functions and such other functions as the Committee may
determine, to the extent permitted under applicable law and, with respect to
any Optionee who is then subject to Section 16 of the Exchange Act in
respect of the Company, to the extent performance of such function will not result
in a subsequent transaction failing to be exempt under Rule 16b-3(d).

(c)          Limitation of Liability. Each member of the
Committee shall be entitled in good faith to rely or act upon any report or
other information furnished to him or her by any officer or other employee of
the Company or any Subsidiary, the Company’s independent certified public
accountants, or other professional retained by the Company to assist in the
administration of the Plan. No member of the Committee, nor any officer or
employee of the Company acting on behalf of the Committee, shall be personally
liable for any action, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Committee and any
officer or employee of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company with
respect to any such action, determination, or interpretation.

6.    Duration of the Plan. This Plan shall terminate ten years
from the original effective date hereof, unless terminated earlier pursuant to Section 12,
and no Options may be granted thereafter.

7.    Options for Employees.

(a)          Eligible Employees. Options may be granted to those
employees of the Company or of any of its Subsidiaries as are selected by the
Committee.

(b)         Restrictions on Incentive Options. Incentive Options
shall be subject to the following restrictions:

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(i)   Limitation on
Number of Shares. To the extent that the aggregate Market Value on the
Grant Date of the Shares with respect to which an Option that would otherwise
constitute an Incentive Option (when aggregated, if appropriate, with incentive
stock options granted before the Option under this Plan or any other plan
maintained by the Company or any Subsidiary of the Company) is exercisable for
the first time by the Optionee during any calendar year exceeds $100,000, the
Option shall be treated as a Nonqualified Option.

(ii)    10% Stockholder. If any Optionee to whom an Incentive
Option is granted is on the Grant Date the owner of stock (as determined under Section 424(d) of
the Code) possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, then the following
special provisions shall be applicable to that Incentive Option:

(A) The Option Price
per Share shall not be less than 110% of the Market Value on the Grant Date;
and

(B)  The Incentive
Option shall expire not more than five years after the Grant Date.

(c)          Price. Subject to the conditions on certain
Incentive Options in Section 7(b), the Option Price per Share payable upon
the exercise of each Incentive Option shall be not less than 100% of the Market
Value on the Grant Date. The Option Price per Share of stock payable upon
exercise of each Nonqualified Option shall be determined by the Committee,
provided that the Option Price shall not be less than 100% of the Market Value
on the Grant Date.

(d)         Limitation on Number of Shares to be Granted to Each
Optionee. Each Option Agreement shall specify the number of Shares to which
it pertains. No Optionee may receive, during any three calendar year period,
Options to purchase more than 7,200,000 Shares. If any Option granted to an
employee is canceled, the canceled Option continues to be counted against the
maximum number of Shares for which Options may be granted to that employee
under the Plan. If, after grant of an Option to an employee, the Option Price
is reduced, the transaction will be treated as a cancellation of the Option and
the grant of a new Option, and in such case both the Option that is deemed to
be canceled and the Option that is deemed to be granted reduce the maximum
number of Shares for which Options may be granted to that employee under the
Plan. The preceding two sentences apply only to calculating the maximum number
of Shares available to an Optionee during any three calendar year periods, and
shall not apply to or affect the manner of counting Shares pursuant to Section 4(b).

(e)          Exercise of Options. Subject to the terms and
conditions set forth in the Option Agreement, each Option shall be exercisable
for the full amount or for any part thereof and at such intervals or in such
installments as the Committee may determine at the time it grants the Option;
provided, however, that no Option shall be exercisable with respect to any
Shares later than ten years after the Grant Date.

8.    Formula Plan; Options for Directors. At the first Board
meeting following the first election to the Board of a person who was not,
within twelve months preceding election, either an officer of employee of the
Company or any Subsidiary, such person shall be granted a Director Option to
purchase such number of
Shares that, on the Grant Date, has a value under the Black-Scholes method of
$80,000 (using the methodology used by the Company in determining the value of
Options granted to employees). On the first
business day in November in each year, each director who is not an employee
of the Company and its Subsidiaries shall receive a Director Option to purchase
such number of Shares that, on the Grant Date, has a value under the
Black-Scholes method of $80,000 (using the methodology used by the Company in
determining the value of Options granted to employees). In the event that on any Grant Date there is not a sufficient number of
Shares available to implement fully the preceding sentences, then each such
director shall receive a pro rata portion of the Director Option contemplated
by the preceding sentences. The Option Price for each Director Option shall be
the Market Value on the Grant Date or, in the event there is no Market Value
available on the Grant Date, on the date next following the Grant Date for
which a Market Value is available. Each Director Option shall become
exercisable immediately on the Grant Date. No

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Director Option shall be exercisable later than ten
years after the Grant Date. It is intended that each Director Option
automatically granted pursuant to this Section 8 shall be made pursuant to
a formula plan as defined in Release No. 34-37260 of the Securities
and Exchange Commission (adopting restated Rule 16b-3).

9.    Terms and Conditions Applicable to All Options.

(a)          Non-Transferability. Except as otherwise expressly
provided in an Option Agreement, no Option shall be transferable by the
Optionee, other than by will or the laws of descent and distribution, and each
Option shall be exercisable, during the Optionee’s lifetime, only by him or her
(i.e. if the Option is exercised during the Optionee’s lifetime, it shall only
be exercisable by the Optionee).

(b)         Notice of Exercise and Payment. An Option shall be
exercisable only by delivery of a written notice to the Company’s Treasurer or
any other officer of the Company designated by the Committee to accept such
notices on its behalf, specifying the number of Shares for which it is
exercised. If the Shares are not at that time effectively registered under the
Securities Act of 1933, as amended, the Optionee shall include with such notice
a letter, in form and substance satisfactory to the Company, confirming that
the Shares are being purchased for the Optionee’s own account for investment
and not with a view to distribution. Payment shall be made in full at the time
the Option is exercised. Payment shall be made by (i) cash or check, (ii) delivery
and assignment to the Company of Shares having been owned by the Optionee for
such period as the Company’s Treasurer may determine and having a Market Value
as of the date of exercise equal to the exercise price, (iii) if approved
by the Committee, delivery of the Optionee’s promissory note for the exercise
price, or (iv) any combination of (i), (ii) or (iii) above.

(c)          No Rights to Options; No Stockholder Rights. No
employee shall have any claim to be granted an Option under the Plan, and there
is no obligation for uniformity of treatment of employees. No Option shall
confer upon the Optionee any rights as a stockholder or any claim to dividends
paid with respect to any Shares to which the Option relates unless and until
such Shares are duly issued to him or her in accordance with the terms of the
Option.

(d)         Cancellation and Rescission of Options. The Committee
may provide in any Option Agreement that, in the event an Optionee violates a
term of the Option Agreement or other agreement with or policy of the Company
or a Subsidiary, takes or omits to take actions that are deemed to be in
competition with the Company or its Subsidiaries, an unauthorized solicitation
of customers, suppliers, or employees of the Company or its Subsidiaries, or an
unauthorized disclosure or misuse of proprietary or confidential information of
the Company or its Subsidiaries, or takes or omits to take any other action as
may be specified in the Option Agreement, the Optionee shall be subject to
forfeiture of such Option or portion, if any, of the Option as may then remain
outstanding and also to forfeiture of any amounts of cash, Shares or other
property received by the Optionee upon exercise or settlement of such Option or
in connection with such Option during such period (as the Committee may provide
in the Option Agreement) prior to the occurrence which gives rise to the
forfeiture.

(e)          Options to Optionees Outside the United States. The
Committee may modify the terms of any Option under the Plan granted to an
Optionee who is, at the time of grant or during the term of the Option,
resident or primarily employed outside of the United States in any manner
deemed by the Committee to be necessary or appropriate in order that such
Option shall conform to laws, regulations, and customs of the country in which
the Optionee is then resident or primarily employed, or so that the value and
other benefits of the Option to the Optionee, as affected by foreign tax laws
and other restrictions applicable as a result of the Optionee’s residence or
employment abroad, shall be comparable to the value of such an Option to an
Optionee who is resident or primarily employed in the United States. An Option
may be modified under this Section 9(f) in a manner that is
inconsistent with the express terms of the Plan, so long as such modifications
will not contravene any applicable law or regulation.

10.  Termination of Options. Each Option shall terminate and may
no longer be exercised if the Optionee ceases to perform services for the
Company or a Subsidiary, in accordance with the following provisions:

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(i)           if the Optionee’s services shall have been terminated by
resignation or other voluntary action, or if such services shall have been
terminated involuntarily for cause, all of the Optionee’s Options shall
terminate and may no longer be exercised;

(ii)          if the Optionee’s services shall have been terminated for
any reason other than cause, resignation or other voluntary action before his
or her eligibility to retire, and before his or her disability or death, he or
she may at any time within a period of fifteen (15) months after such
termination of service exercise his or her Options to the extent that the
Options were exercisable on the date of termination of service;

(iii)         if the Optionee’s service shall have been terminated because
of disability within the meaning of Section 22(e)(3) of the Code, he
or she may at any time within a period of fifteen (15) months after such
termination of service exercise his or her Options to the extent that such
Options were exercisable on the date of termination of service; and

(iv)        if
the Optionee dies at a time when he or she might have exercised an Option, then
his or her estate, personal representative or beneficiary to whom it has been
transferred pursuant to Section 9(a) hereof may at any time within a
period of fifteen (15) months after the Optionee’s death exercise the Option to
the extent the Optionee might have exercised it at the time of death;

provided, however, that the Committee may, at its
sole discretion, provide specifically in an Option Agreement for such other
period of time (shorter or longer than as set forth above) during which an
Optionee may exercise an Option after termination of the Optionee’s services as
the Committee may approve, subject to the overriding limitation that no Option
may be exercised to any extent by anyone after the date of expiration of the
Option.

11.  Withholding Taxes; Delivery of Shares. The Company’s obligation
to deliver Shares upon exercise of an Option shall be subject to the Optionee’s
satisfaction of all applicable federal, state and local income and employment
tax withholding obligations. The Optionee may satisfy the obligations by
electing (a) to make a cash payment to the Company, or (b) to have
the Company withhold Shares with a value equal to the amount required to be
withheld, or (c) to deliver to the Company Shares having been owned by the
Optionee for such period as the Company’s Treasurer may determine and having a
value equal to the amount required to be withheld. The value of Shares to be
withheld or delivered shall be based on the Market Value on the date the amount
of tax to be withheld is to be determined. The Optionee’s election to have Shares
withheld for this purpose will be subject to the following restrictions: (1) the
election must be made prior to the date the amount of tax is to be determined, (2) the
election must be irrevocable, and (3) the election will be subject to the
disapproval of the Committee.

12.  Termination or Amendment of Plan. The Board may at any time
terminate the Plan or make such changes in or additions to the Plan as it deems
advisable without further action on the part of the shareholders of the
Company, provided:

(a)          that no such termination or amendment shall adversely
affect or impair any then outstanding Option without the consent of the
Optionee holding that Option; and

(b)         that any such amendment which: (i) increases the
maximum number of Shares subject to this Plan, or (ii) changes the class
of persons eligible to participate in this Plan, or (iii) materially
increases the benefits accruing to participants under this Plan, shall be
subject to approval by the voting stockholders of the Company within one year
from the effective date of such amendment and shall be null and void if such
approval is not obtained.

13.  Change of Control -
Automatic Vesting of Options. Notwithstanding anything to the contrary
herein, the Board or the Committee shall include in the Option Agreement for
each unvested Option granted under this Plan the following provision, and such
inclusion may be effected by incorporating this provision by reference to this Section 13:

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This Option shall be immediately exercisable and the Optionee shall
become eligible to purchase any and all shares covered by each Option at any
time or from time to time after the occurrence of a Change of Control of the
Company. A “Change of Control” shall mean:

(a)  The acquisition, other than
from the Company, 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 25% or more of either (i) the then
outstanding non-voting common stock of the Company (the “Non-Voting Stock”) or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Company Voting
Securities”); provided, that any acquisition by (x) the Company or
any of its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (y) any
Person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act, to file a statement on Schedule 13G with respect to its
beneficial ownership of Company Voting Securities, whether or not such Person
shall have filed a statement on Schedule 13G, unless such Person shall have
filed a statement on Schedule 13D with respect to beneficial ownership of 25%
or more of the Company Voting Securities, shall not constitute a Change of
Control; and provided, further, that the provisions of this subsection (a) shall
apply whether or not the Company Voting Securities or the Non-Voting Stock is
registered or required to be registered under the Exchange Act; or

(b)  Individuals who, as of the
date hereof, constitute the Company’s Board of Directors (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
that any individual becoming a director of the Company (“Director”) subsequent
to the date of the Option whose election or nomination for election by the
Company’s shareholders was approved by 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 is in
connection with an actual or threatened election contest relating to the
election of the Directors of the Company (as such terms are used in Rule 14a-11
of the Regulation 14A promulgated under the Exchange Act); or

(c)  Approval by the shareholders
of the Company of a reorganization, merger or consolidation (a “Business
Combination”), in each case with respect to which all or substantially all of
the individuals and entities who were the respective beneficial owners of the
Non-Voting Stock and of the Company Voting Securities immediately prior to such
Business Combination will not, following such Business Combination,
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding non-voting stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the corporation or other entity resulting from the Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Non-Voting Stock and Company Voting
Securities, as the case may be; or

(d)  Approval by the shareholders
of the Company of (i) a complete liquidation or dissolution of the
Company, or (ii) a sale or other disposition of all or substantially all
of the assets of the Company, or (iii) a sale or disposition of Eaton
Vance Management (or any successor thereto) or of all or substantially all of
the assets of Eaton Vance Management (or any successor thereto), or (iv) an
assignment by any direct or indirect investment adviser subsidiary of the
Company of investment advisory agreements pertaining to more than 50% of the
aggregate assets under management of all such subsidiaries of the Company, in
the case of (ii), (iii) or (iv) other than to a corporation or other
entity with respect to which, following such sale or disposition or assignment,
more than 60% of, respectively, the outstanding non-voting stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners of the Non-Voting Stock and Company
Voting Securities immediately prior to such sale, disposition or assignment in
substantially the same proportion as their ownership of the Non-Voting Stock
and Company Voting Securities, as the case may be, immediately prior to such
sale, disposition or assignment.

 8
 

 

Notwithstanding the foregoing, the following events shall not cause, or
be deemed to cause, and shall not constitute, or be deemed to constitute, a
Change of Control:

(1)          The acquisition,
holding or disposition of Company Voting Securities deposited under the Voting
Trust Agreement dated as of October 30, 1997, as amended, or of the voting
trust receipts issued therefor, or any change in the persons who are voting
trustees thereunder, or the acquisition, holding or disposition of Company
Voting Securities deposited under any subsequent replacement voting trust
agreement or of the voting trust receipts issued therefor, or any change in the
persons who are voting trustees under any such subsequent replacement voting
trust agreement; provided, that any such acquisition, disposition or change
shall have resulted solely by reason of the death, incapacity, retirement,
resignation, election or replacement of one or more voting trustees.

(2)          Any termination or
expiration of a voting trust agreement under which Company Voting Securities
have been deposited or the withdrawal therefrom of any Company Voting
Securities deposited thereunder, if all Company Voting Securities and/or the
voting trust receipts issued therefor continue to be held thereafter by the
same persons in the same amounts, or if contemporaneously there shall be a
Business Combination or change in the capitalization of the Company as
described in clause (3) below.

(3)          A Business
Combination or change in the capitalization of the Company pursuant to which
the holders of the Non-Voting Stock of the Company become holders of voting
securities of the Company or of the corporation or other entity resulting from
such Business Combination, in substantially the same proportion as their
ownership of Non-Voting Stock immediately prior to such Business Combination or
change in capitalization.

14.  General Provisions.

(a)          Compliance with
Legal and Exchange Requirements. The Plan, the granting and exercising of
Options thereunder, and the other obligations of the Company under the Plan and
any Option Agreement, shall be subject to all applicable federal and state
laws, rules and regulations, and to such approvals by any regulatory or
governmental agency as may be required. The Company, in its discretion, may
postpone the issuance or delivery of Shares under any Option until completion
of such stock exchange listing or registration or qualification of such Shares
or other required action under any state, federal or foreign law, rule or
regulation as the Company may consider appropriate, and may require any
Optionee to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Shares in
compliance with applicable laws, rules and regulations.

(b)         Compliance with Section 162(m) and
Rule 16b-3. If any provision of the Plan or any Option Agreement
relating to a “covered employee” or a person subject to Section 16 of the
Exchange Act does not comply or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder or Rule 16b-3, such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements.

(c)          No Right to
Continued Employment. Neither the Plan nor any action taken thereunder
shall be construed as giving any employee the right to be retained in the
employ of the Company or any of its Subsidiaries, nor shall it interfere in any
way with the right of the Company or any of its Subsidiaries to terminate any
employee’s employment at any time.

(d)         Taxes. The Company
or any Subsidiary is authorized to withhold from any payment relating to an
Option under the Plan, or any distribution of Shares, or any payroll or other
payment to an Optionee, amounts of withholding and other taxes due in
connection with any transaction involving an Option, and to take such other
action as the Committee may deem advisable to enable the Company and Optionees
to satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Option or exercise 

 9
 

 

thereof. This authority shall include authority to
withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of an Optionee’s tax obligations.

(e)          Nonexclusivity of
the Plan. Neither the adoption of the Plan by the Board nor its submission
to the voting stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including the granting of stock options
and other awards otherwise than under the Plan, and such arrangements may be
either applicable generally or only in specific cases.

(f)          Governing Law.
The validity, construction, and effect of the Plan, any rules and
regulations relating to the Plan, and any Option Agreement shall be determined
in accordance with the laws of the Commonwealth of Massachusetts, without
giving effect to principles of conflicts of laws, and applicable federal law.

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