EATON VANCE CORP (Form: 10-K, Received: 01/21/2004 14:23:56)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2003
Commission File Number 1-8100

EATON VANCE CORP.
(Exact name of Registrant as specified in its charter)

Maryland		04-2718215
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

255 State Street, Boston, Massachusetts		02109
(Address of principal executive offices)		(Zip Code)

(617) 482-8260
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Non-Voting Common Stock ($0.0078125 par value)		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
Non-Voting Common Stock par value $0.0078125 per share
Title of Class

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes x No o

Aggregate market value of Non-Voting Common Stock held by non-affiliates of the Registrant, based on the closing price of $29.80 on April 30, 2003 on the New York Stock Exchange was $1,669,112,419. Calculation of holdings by non-affiliates is based upon the assumption, for these purposes only, that executive officers, directors, and persons holding 5 percent or more of the registrant’s Non-Voting Common Stock are affiliates.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the close of the latest practicable date.


Class	Outstanding at October 31, 2003
Non-Voting Common Stock, $0.0078125 par value	68,250,464
Common Stock, $0.0078125 par value	154,880

Eaton Vance Corp.
Form 10-K
For the Fiscal Year Ended October 31, 2003
Index

Required Information		Page Number Reference

Part I
Item 1.	Business	3
Item 2.	Properties	11
Item 3.	Legal Proceedings	11
Item 4.	Submission of Matters to a Vote of Security Holders	11

Part II
Item 5.	Market Price of Dividends on Registrants’ Common Equity
	and Related Shareholder Matters	12
Item 6.	Selected Financial Data	13
Item 7.	Management’s Discussion and Analysis	14
Item 7A.	Quantitative and Qualitative Disclosures about
	Market Risk	28
Item 8.	Financial Statements and Supplementary Data	29
Item 9.	Changes in and Disagreements with Accountants and
	Financial Disclosures	56
Item 9A.	Controls and Procedures	56

Part III
Item 10.	Directors and Officers of the Registrant	57
Item 11.	Executive Compensation	60
Item 12.	Security Ownership of Certain Beneficial Owners and
	Management and Related Stockholder Matters	63
Item 13.	Certain Relationships and Related Transactions	65
Item 14.	Principal Accountant Fees and Services	66

Part IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on
	Form 8-K	67
Signatures		68

PART I

Item 1. Business

General

Eaton Vance Corp. (the “Company”) has been in the investment management business for almost eighty years, tracing its history to two Boston-based investment managers: Eaton & Howard, formed in 1924, and Vance, Sanders & Company, organized in 1934. The Company’s principal business is creating, marketing and managing investment funds and providing investment management services to institutions and individuals. As of October 31, 2003, the Company managed $75.0 billion in assets with investment objectives ranging from high current income to maximum long-term capital gain.

In fiscal 2001, the Company expanded its strategic focus to encompass two major potential growth areas: managing assets for institutions, including pension plans and endowments; and managing individual portfolios for higher-net-worth clients who want a more customized form of asset management than provided by mutual funds. In an effort to build a leadership position in the institutional and separately managed account business, the Company acquired 70 percent of Atlanta Capital Management, LLC (“Atlanta Capital”) and 80 percent of Fox Asset Management LLC (“Fox Asset Management”), two institutional investment management firms focusing, respectively, on growth and value investment styles. These strategic acquisitions, completed on September 30, 2001, complement the strengths of the Company and provide new opportunities to broaden the Company’s mix of asset management disciplines, clients and distribution channels.

In fiscal 2003, the Company acquired an 80 percent interest in Parametric Portfolio Associates (“Parametric”), an innovative investment management firm based in Seattle, Washington. Parametric offers two principal products: core investment portfolios that seek to outperform client-specified benchmarks on an after-tax basis through active tax management, and overlay portfolio management utilizing proprietary technology to implement and coordinate the investing activities of multi-manager or multi-style accounts in a tax-efficient way. The strategic acquisition of Parametric, completed on September 10, 2003, builds on the Company’s strong commitment to offering a comprehensive managed account capability and complements the investment management strengths of the Company’s previous acquisitions. With $5.3 billion in assets at acquisition date, Parametric has clients that include family offices, individual high-net-worth investors, financial intermediaries and large financial services organizations.

The Company operates in one business segment, namely as an investment adviser managing fund and separate account assets. The Company conducts its investment management business through its two wholly owned subsidiaries, Eaton Vance Management (“EVM”) and Boston Management and Research (“BMR”), and its three majority-owned subsidiaries, Atlanta Capital, Fox Asset Management and Parametric. All five entities are registered with the Securities and Exchange Commission (“SEC”) as investment advisers under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Eaton Vance Distributors, Inc. (“EVD”), a wholly owned broker/dealer registered under the Securities Exchange Act of 1934 (the “Exchange Act”), markets and sells the Eaton Vance funds. Eaton Vance Management (International) Limited, (“EVMI”), a wholly owned financial services company registered under the Financial Services and Market Act in the United Kingdom, markets and sells the Company’s investment products in Europe and certain other international markets. The Company is headquartered in Boston, Massachusetts, has offices in Atlanta, Georgia, Little Silver, New Jersey and Seattle, Washington and has sales representatives located throughout the United States.

Development of Business

The Company’s business strategy is focused primarily on providing investors with the innovative investment products necessary to address each major stage of their financial lives – creating and growing wealth, protecting and preserving wealth and distributing wealth. To that end, the Company has developed

investment expertise in targeted asset classes – tax-managed equity, municipal bond, bank loan, mortgage-backed security and high yield bond funds – and honed its ability to bring mutual fund and managed account products quickly to market as economic conditions and investor needs change.

The Company’s wealth management expertise is available to a wide range of individual and institutional investors through a variety of products and services designed to meet specific needs. The Company provides investment advisory or administration services to 195 funds, 1,648 separately managed individual and institutional accounts, and participates in more than 41 retail managed account broker/dealer programs. The following table shows fund and separate account assets for the dates indicated:

	Fund and Separate Account Assets At October 31,
(in millions)	2003		2002		2001		2000		1999

Long-term fund assets:

Equities	$	28,900	$	22,900	$	25,300	$	25,400	$	18,000

Floating-rate bank loan		9,500		7,700		9,600		10,100		10,000

Fixed income		17,800		13,300		10,100		9,500		9,600

Total long-term fund assets		56,200		43,900		45,000		45,000		37,600

Money market fund assets		400		900		1,100		1,000		500

Separate account assets		18,400		10,800		10,500		3,200		2,800

Total	$	75,000	$	55,600	$	56,600	$	49,200	$	40,900

Funds

Eaton Vance and its affiliates manage more than 80 portfolios, with a particular focus on the investment goals of wealthy investors. The Company is a recognized leader in tax-managed investing, having pioneered the first equity funds designed to minimize the impact of taxes on investment returns. Tax-managed investing addresses the roughly 50 percent of equity fund assets held by taxpaying investors outside of qualified retirement plans such as IRAs and 401(k)s. The Company now offers two families of mutual funds, one managed with tax considerations in mind for investors seeking after-tax returns, the second managed without regard to taxes, seeking pre-tax returns for qualified retirement plan clients and tax-free investors.

The Company began building its tax-managed equity fund family in the spring of 1996 with the introduction of Eaton Vance Tax-Managed Growth Fund 1.1, followed by the introduction of Eaton Vance Tax-Managed Small-Cap Growth Fund 1.1 in fiscal 1997 and Eaton Vance Tax-Managed International Growth Fund in fiscal 1998. In fiscal 2000, the Company introduced Eaton Vance Tax-Managed Value Fund and Eaton Vance Tax-Managed Multi-Cap Opportunity Fund, each focusing on maximizing long-term after-tax returns. In fiscal 2001, Eaton Vance Tax-Managed Growth Fund 1.2 and Eaton Vance Tax-Managed Small-Cap Growth Fund 1.2 were introduced, making use of an innovative structure to invest in the same portfolios as their respective predecessor funds while shielding new investors from potential tax liability for historical portfolio gains. In fiscal 2002, the Company capitalized on the investment strengths of its newly acquired subsidiaries and introduced Eaton Vance Tax-Managed Mid-Cap Core Fund, for which Atlanta Capital is the subadvisor, and Eaton Vance Tax-Managed Small-Cap Value Fund, for which Fox Asset Management is the subadvisor. The expanded lineup of tax-managed funds made possible by the acquisitions of Atlanta Capital and Fox Asset Management led to the creation of Eaton Vance Tax-Managed Equity Asset Allocation Fund,

an innovative new fund that invests in all seven tax-managed investment portfolios, providing investors with broad diversification, professional asset allocation and a consistent tax-managed investment approach.

In fiscal 2003, the Company further expanded its lineup of tax-managed equity funds to include Eaton Vance Tax-Advantaged Dividend Income Fund (a closed-end fund) and Eaton Vance Tax-Managed Dividend Income Fund (an open-end fund), both designed to take advantage of the lower tax rate on qualifying dividends resulting from the federal income tax law enacted in May of 2003. Eaton Vance Tax-Advantaged Dividend Income Fund, the Company’s first closed-end equity fund, raised $1.3 billion in the initial public offering of its common shares and an additional $0.8 billion in the offering of its preferred shares and exercise of the underwriters’ overallotment subsequent to the end of the fiscal year.

The Company’s retail tax-managed equity fund products are complemented by the Company’s line of privately offered equity funds designed to meet the diversification and tax-management needs of qualifying high-net-worth investors.

In addition to its retail and privately offered tax-managed equity funds, the Company offers a family of open-end and exchange-listed municipal bond funds that continue to be an important part of the Company’s tax-managed product offering. In August of 2002, the Company completed the successful offering of three new closed-end municipal bond funds, raising $2.5 billion in new assets. This offering was followed by the introduction of nine municipal bond closed-end funds in November of 2002, which raised $0.7 billion in their initial public offerings of common and preferred shares. At October 31, 2003, the Company’s tax-advantaged municipal bond fund lineup included eleven open-end and closed-end national funds and 56 open-end and closed-end state-specific municipal bond funds in 29 different states.

In addition to its tax-managed products, the Company offers a variety of taxable fixed-income funds, floating-rate bank loan funds and taxable equity funds. In fiscal 2003, the Company significantly expanded its taxable fixed-income product line with the launch of Eaton Vance Limited Duration Income Fund, a closed-end fund that invests in floating-rate bank loans, high-yield bonds and mortgage-backed securities. The initial public offerings of its common and preferred shares raised $3.1 billion in fiscal 2003. The Company also introduced Eaton Vance Low Duration Fund in fiscal 2003, an open-end fund that invests primarily in investment grade fixed-income securities.

Charitable Gift Programs

The Company expanded the scope of its high-net-worth investment products in fiscal 2000 to include The U.S. Charitable Gift Trust and its Pooled Income Funds, designed to simplify the process of donating to U.S. charities and to provide professional management of pools of donated assets. The U.S. Charitable Gift Trust is one of the first charities to use professional investment advisers to assist high net worth individuals with their philanthropic, estate and tax planning needs. The Pooled Income Funds, sponsored by the Trust, are similar to charitable remainder trusts, providing donors with income during their lifetimes and leaving the principal to the Gift Trust and designated charities upon their deaths. The Trust and its Pooled Income Funds encourage long-term philanthropy, while allowing individuals to avoid the high costs associated with setting up their own charitable foundations and charitable remainder trusts.

Managed Accounts

The Company continues to focus on expanding its presence in the managed accounts marketplace. The addition of Parametric gives the Company the ability to provide institutional, high-net-worth (“HNW”) and retail managed account clients with a broader range of investment products and asset allocation strategies. Parametric’s unique technological expertise, combined with the individual investment strengths of Atlanta Capital and Fox Asset Management in growth equity and value equity investing, respectively, complements the investment strengths of Eaton Vance and provides new opportunities to further broaden the Company’s mix of asset management disciplines, clients and distribution channels. The Company has a 15-person managed accounts marketing team, including a highly experienced sales force in the field calling on brokers

and consultants and now manages $3.6 billion in retail managed account assets and $14.7 billion in institutional and high-net-worth client assets as of October 31, 2003.

Investment Management and Administrative Activities

Portfolio managers employed by the Company make investment decisions for all but five of the Eaton Vance funds in accordance with each fund’s investment objectives and policies. Investment decisions for four international equity funds are made by Lloyd George Management (“LGM”), an independent investment management company based in Hong Kong in which the Company owns a 20 percent equity position. The portfolio managers of the Company and LGM jointly manage one international equity fund. OrbiMed Advisors LLC. (“OrbiMed”), an independent investment management company based in New York, makes investment decisions for Eaton Vance Worldwide Health Sciences Fund. The Company’s portfolio management staff has, on average, more than 19 years of experience in the securities industry. The Company’s investment advisory agreements for management services with each of the funds provide for fees ranging from 10 to 100 basis points of average net assets annually. For funds that are registered under the Investment Company Act of 1940, as amended (“Registered Funds”), a majority of the independent trustees (i.e., those unaffiliated with the management company) of these Registered Funds must approve the investment advisory agreements annually. The fund trustees generally may terminate these agreements upon 30 to 60 days notice without penalty. Registered Fund shareholders must approve any material amendments to the investment advisory agreements.

Investment counselors and separate account portfolio managers employed by the Company’s wholly-owned and majority-owned subsidiaries make decisions for the Company’s separate accounts. The Company’s investment counselors and separate account portfolio managers use the same types of information as fund portfolio managers, but tailor investment decisions to the needs of individual and institutional clients. The Company receives investment advisory fees for separate accounts on a quarterly basis based on the value of the assets managed on a particular date, such as the first or last calendar day of a quarter, or, in some instances, on the average net assets for the period. These fees generally range from 20 to 100 basis points of assets under management and are generally terminable upon 30 to 60 days notice without penalty.

The following table shows investment advisory and administration fees earned for the past five years ended October 31, 2003:

	Investment Advisory and Administration Fees Year Ended October 31,
	2003		2002		2001		2000		1999

	(in thousands)
Investment advisory fees —
Funds	$	237,309	$	225,783	$	226,249	$	204,926	$	173,079
Separate accounts		44,311		40,798		14,700		12,436		11,169
Administration fees — funds*		14,366		14,213		11,383		8,982		14,396

Total	$	295,986	$	280,794	$	252,332		226,344	$	198,644

* Administration fees decreased in fiscal 2000 primarily as a result of the change in fee structure associated with the implementation of Rule 12b-1 equivalent distribution plans by the bank loan interval funds on May 1, 1999.

Investment Advisory Agreements and Distribution Plans

The Company uses the Master/Feeder structure for most of its funds. Master/Feeder is a two-tiered arrangement in which funds (“Feeder Funds”) with substantially identical investment objectives pool their assets by investing in a common portfolio (“Master Fund”). Each Eaton Vance Master Fund (except funds managed by LGM or OrbiMed) has entered into an investment advisory agreement with EVM or BMR. Although the specific terms of these agreements vary, the basic terms of the agreements are similar. Pursuant to the agreements, EVM or BMR provides overall investment management services to each of the Master Funds, subject to the supervision of each fund’s Board of Trustees in accordance with each fund’s fundamental investment objectives and policies. In certain cases, Atlanta Capital and Fox Asset Management act as subadvisors to EVM and BMR.

EVM also serves as administrator or manager under an Administration Service Agreement or Management Contract (each an “Agreement”) to the funds (including those managed by LGM and OrbiMed). Under such Agreements EVM is responsible for managing the business affairs of these funds, subject to the oversight of each funds’ Board of Trustees. EVM’s services include recordkeeping, preparing and filing documents required to comply with federal and state securities laws, supervising the activities of the funds’ custodian and transfer agent, providing assistance in connection with the funds’ shareholder meetings and other administrative services, including furnishing office space and office facilities, equipment and personnel that may be necessary for managing and administering the business affairs of the funds. For the services provided under the Agreements, certain funds pay EVM a monthly fee calculated at an annual rate of up to 0.35% of average daily net assets. Each Agreement remains in full force and effect indefinitely, but only to the extent that the continuance of such Agreement is specifically approved at least annually by the fund’s Board of Trustees.

In addition, certain funds have adopted distribution plans, which, subject to applicable law, provide for reimbursement to the Company for the payment of applicable sales commissions to retail distribution firms and for distribution services through the payment of an ongoing distribution fee (i.e., a Rule 12b-1 fee). These distribution plans are implemented through distribution agreements between EVD and the funds. Although the specific terms of the agreements vary, the basic terms of the agreements are similar. Pursuant to the agreements, EVD acts as underwriter for the fund and distributes shares of the fund through unaffiliated dealers. Each distribution plan and agreement is initially approved and its subsequent continuance must be approved annually by the trustees of the respective funds, including a majority of the independent trustees.

Each fund bears all expenses associated with its operation and the issuance and redemption or repurchase of its securities, except for the compensation of trustees and officers of the fund who are employed by the Company. Under some circumstances, particularly in connection with the introduction of new funds, EVM or BMR may waive a portion of its management fee and pay for some expenses of the fund.

EVM, BMR, Atlanta Capital, Fox Asset Management or Parametric have entered into an investment advisory agreement for each separately managed account and retail managed account program, which sets forth the account’s investment objectives and fee schedule, and provides for management of assets in the account in accordance with the stated investment objectives. The Company’s separate account portfolio managers may assist clients in formulating investment strategies.

EVM has entered into an investment advisory and administrative agreement with The U.S. Charitable Gift Trust. In addition, The U.S. Charitable Gift Trust and its Pooled Income Funds have entered into distribution agreements with EVD that provide for reimbursement of the costs of fundraising and servicing donor accounts. EVD does not profit from the raising of contributions for the Gift Trust.

Marketing and Distribution of Fund Shares

The Company markets and distributes shares of continuously offered and closed-end funds through EVD. EVD sells fund shares through a retail network of national and regional broker/dealers, banks, insurance companies and financial planning firms. Although the firms in the Company’s retail distribution network have each entered into selling agreements with the Company, such agreements (which generally are terminable by either party) do not legally obligate the firms to sell any specific amount of the Company’s investment products. For the 2003, 2002 and 2001 calendar years, the five dealer firms responsible for the largest volume of fund sales accounted for approximately 38 percent, 35 percent, and 34 percent, respectively, of the Company’s fund sales volume. EVD currently maintains a sales force of 47 external wholesalers and 47 internal wholesalers. External and internal wholesalers work closely with investment professionals in the retail distribution network to assist in selling shares of funds.

The Company also offers its funds to investors without charging sales commissions or other transaction fees through fee-based registered investment advisors via various institutional programs both domestically and internationally.

EVD currently sells its Registered Funds with up to five separate pricing structures: 1) front-end load commission (“Class A”); 2) spread-load commission (“Class B”); 3) level-load commission (“Class C”); 4) modified spread-load commission (“Class D”); and 5) institutional (no-load) (“Class I”). For Class A shares, the shareholder pays the broker’s commission and EVD receives an underwriting commission of up to 75 basis points of the dollar value of the shares sold. Under certain conditions, the Company waives the sales load on Class A shares. In such cases, the shares are sold at net asset value. EVD pays a service fee to authorized firms after one year not to exceed 25 basis points of average net assets and may also pay a Rule 12b-1 fee not to exceed 50 basis points of average daily net assets.

For Class B and D shares, EVD pays a commission to the dealer at the time of sale and such payments are capitalized and amortized in the Company’s financial statements over a four- to six-year period. The shareholder pays a contingent deferred sales charge to EVD if he or she redeems shares within a four-, five- or six-year period from the date of purchase. EVD uses its own funds (which may be borrowed) to pay such commissions. EVD recovers the dealer commissions paid on behalf of the shareholder through distribution plan payments limited to an annual rate of 75 basis points of the average net assets of the fund or Class in accordance with a distribution plan adopted by the fund pursuant to Rule 12b-1 under the Investment Company Act of 1940. Like the investment advisory agreement, the distribution plan and related payments must be approved annually by a vote of the fund trustees, including a majority of the independent trustees. The SEC has taken the position that Rule 12b-1 would not permit a fund to continue making compensation payments to EVD after termination of the plan and that any continuance of such payments may subject the fund to legal action. These distribution plans are terminable at any time without notice or penalty. In addition, EVD pays a service fee to authorized firms after one year not to exceed 25 basis points of average net assets.

For Class C shares, the shareholder pays no front-end commissions and no contingent deferred sales charges on redemptions after the first year. EVD pays a commission and the first year’s service fees to the dealer at the time of sale. The fund makes monthly distribution plan payments to EVD similar to those for Class B shares, equal to 75 basis points of average net assets of the Class. EVD pays a service fee to the dealer after one year not to exceed 25 basis points of average net assets and a distribution fee to the dealer after one year not to exceed 75 basis points of average net assets. Offering level-load Class C shares is consistent with the efforts of many broker/dealers to rely less on transaction fees and more on continuing fees for servicing assets.

For Class I shares, a minimum investment of $250,000 or higher is required and the shareholder pays no sales charges. The introduction of institutional (“Class I”) shares has made a number of funds available to a broader group of financial intermediaries.

From time to time the Company sponsors unregistered equity funds that are privately placed by EVD, as placement agent, and by various sub-agents to whom EVD and the subscribing shareholders make sales commission payments. The privately placed equity funds are managed by EVM and BMR.

In fiscal 2002, the Company introduced the Eaton Vance Emerald Funds, a new family of funds for non-U.S. investors. The Emerald Funds are Undertakings for Collective Investments in Transferable Securities (“UCITS”) funds domiciled in Dublin, Ireland and are sold by certain dealer firms through EVMI to investors who are citizens of the European Union countries. The Company earns distribution, administration and advisory fees directly or indirectly from the Emerald Funds.

Reference is made to Note 17 of the Notes to Consolidated Financial Statements contained in Item 8 of this document for a description of the major customers that provided over 10 percent of the total revenue of the Company.

Competitive Conditions and Risk Factors

From time to time, information provided by the Company or information included in its filings with the Securities and Exchange Commission (“SEC”) (including this Annual Report on Form 10-K) may contain statements that are not historical facts, for this purpose referred to as “forward-looking statements.” The Company’s actual future results may differ significantly from those stated in any forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the factors discussed below.

The Company is subject to substantial competition in all aspects of its business. The Company’s ability to market investment products is highly dependent on access to the various distribution systems of national and regional securities dealer firms, which generally offer competing internally and externally managed investment products. Although the Company has historically been successful in maintaining access to these channels, there can be no assurance that it will continue to do so. The inability to have such access could have a material adverse effect on the Company’s business.

There are few barriers to entry in the investment management business. The Company’s funds and separate accounts compete against an ever-increasing number of investment products sold to the public by investment dealers, banks, insurance companies and others that sell tax-free or tax-advantaged investments, taxable income funds, equity funds and other investment products. Many institutions competing with the Company have greater resources than the Company. The Company competes with other providers of investment products on the basis of the products offered, the investment performance of such products, quality of service, fees charged, the level and type of financial intermediary compensation, the manner in which such products are marketed and distributed, and the services provided to investors.

The Company derives almost all of its revenue from investment adviser and administration fees and distribution income received from the Eaton Vance funds, other pooled investment vehicles and separate accounts. As a result, the Company is dependent upon management contracts, administration contracts, underwriting contracts or service contracts under which these fees and income are paid. If any of these contracts are terminated, not renewed, or amended to reduce fees, the Company’s financial results may be adversely affected.

The major sources of revenue for the Company (i.e., investment adviser, administration, distribution and service fees) are calculated as percentages of assets under management. A decline in securities prices or in the sale of investment products or an increase in fund redemptions generally would reduce fee income. Financial market declines or adverse changes in interest rates would generally negatively impact the level of the Company’s assets under management and consequently its revenue and net income. A recession or

other economic or political events could also adversely impact the Company’s revenues if it led to a decreased demand for products, a higher redemption rate, or a decline in securities prices. Like other businesses, the Company’s actual results could be affected by the loss of key employees through competition or retirement. The Company’s operations and actual results could also be affected by increased expenses due to such factors as greater competition for personnel, higher costs for distribution of mutual funds and other investment products, or costs for insurance and other services by outside providers, or by the disruption of services such as power, communications, information technology, fund transfer agency or fund administration.

The Company’s business is subject to substantial governmental regulation. Changes in legal, regulatory, accounting, tax and compliance requirements could have a significant effect on the Company’s operations and results, including but not limited to increased expenses and reduced investor interest in certain funds and other investment products offered by the Company. The Company continually monitors legislative, tax, regulatory, accounting, and compliance developments that could impact its business.

Regulation

EVM, BMR, Atlanta Capital, Fox Asset Management and Parametric are each registered with the SEC under the Advisers Act. The Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary duties, recordkeeping requirements, operational requirements and disclosure obligations. Most Eaton Vance funds are registered with the SEC under the Investment Company Act of 1940, as amended. Except for privately-offered funds exempt from registration, each U.S. fund is also required to make notice filings with all states where it is offered for sale. Virtually all aspects of the Company’s investment management business are subject to various federal and state laws and regulations. These laws and regulations are primarily intended to benefit shareholders of the funds and separate account investment clients and generally grant supervisory agencies and bodies broad administrative powers, including the power to limit or restrict the Company from carrying on its investment management business in the event that it fails to comply with such laws and regulations. In such event, the possible sanctions, which may be imposed, include the suspension of individual employees, business limitations on EVM, BMR, Atlanta Capital, Fox Asset Management or Parametric engaging in the investment management business for specified periods of time, the revocation of any such company’s registration as an investment adviser, and other censures or fines.

EVD is registered as a broker/dealer under the Securities Exchange Act of 1934 and is subject to regulation by the SEC, the National Association of Securities Dealers, Inc. (“NASD”) and other federal and state agencies. EVD is subject to the SEC’s net capital rule designed to enforce minimum standards regarding the general financial condition and liquidity of a broker/dealer. Under certain circumstances, this rule limits the ability of the Company to make withdrawals of capital and receive dividends from EVD. EVD’s regulatory net capital has consistently exceeded such minimum net capital requirements in fiscal 2003. The securities industry is one of the most highly regulated in the United States, and failure to comply with related laws and regulations can result in the revocation of broker/dealer licenses, the imposition of censures or fines and the suspension or expulsion from the securities business of a firm, its officers or employees.

EVMI was granted permission in March 2002 by the Financial Services Authority (“FSA”) to conduct a regulated business in the United Kingdom. EVMI’s primary business purpose is to distribute the Company’s investment products in Europe and certain other international markets. Under the FSA’s Financial Services and Markets Act, EVMI is subject to certain liquidity and capital requirements. Such capital requirements may limit the company’s ability to make withdrawals of capital from EVMI. In addition, failure to comply with such capital requirements could jeopardize EVMI’s approval to conduct business in the United Kingdom. There were no violations of the capital requirements in fiscal 2003.

The Company’s officers, directors and employees may from time to time own securities that are held by one or more of the Funds. The Company’s internal policies with respect to individual investments by investment

professionals require prior clearance of most types of transactions and reporting of all securities transactions, and restrict certain transactions to avoid the possibility of conflicts of interest.

Employees

On October 31, 2003, the Company and its subsidiaries had 616 full-time employees. On October 31, 2002, the comparable figure was 575.

Available information

The Company makes available free of charge its annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K as soon as reasonably practicable after such filing has been made with the SEC. Reports may be obtained through the Company’s website at eatonvance.com or by calling Investor Relations at 617-482-8260.

Item 2. Properties

The Company conducts its principal operations through leased offices located in Boston, Massachusetts, Atlanta, Georgia, Little Silver, New Jersey, Seattle, Washington and London, England. Management believes that the Company’s facilities are adequate to serve its currently anticipated business needs.

Item 3. Legal Proceedings

On October 15, 2001, a consolidated complaint was filed in the United States District Court for the District of Massachusetts against Eaton Vance Classic Senior Floating-Rate Fund (“Classic Fund”), Eaton Vance Prime Rate Reserves (“Prime Rate”), Eaton Vance Institutional Senior Floating-Rate Fund (“Institutional Fund”), Eaton Vance Advisers Senior Floating-Rate Fund (“Advisers Fund”) (collectively, the “Funds”), the trustees and certain officers of the Funds; Eaton Vance Management (“EVM”), the Funds’ administrator; Boston Management and Research (“BMR”), the Funds’ investment adviser; and the Company, the parent of EVM and BMR. The complaint, framed as a class action, alleges that for the period between May 25, 1998 and March 5, 2001, the Funds’ assets were incorrectly valued and certain matters were not properly disclosed, in violation of the federal securities laws. The complaint seeks unspecified damages. The Company and the other named defendants believe that the complaint is without merit and are vigorously contesting the lawsuit.

On December 16, 2003, The District Court issued a Memorandum and Order dismissing plaintiff’s claims against the Institutional Fund and the Advisers Fund, denying class certification as to Prime Rate, and granting class certification as to the Classic Fund, but only as to a class of investors who purchased shares pursuant to prospectuses dated April 1, 1998, November 2, 1998 and March 15, 2000.

On December 3, 2003, a complaint was filed in the United States District Court for the District of Massachusetts against Eaton Vance Distributors, Inc., a subsidiary of the Company, on behalf of Eaton Vance Tax-Managed Growth 1.1 (“Fund”) by Michelle Yameen, a shareholder owning approximately 613 Class B shares of the Fund. The complaint alleges that EVD violated Section 36(b) of the Investment Company Act of 1940 by charging the Fund excessive distribution fees. The complaint seeks injunctive relief and the award to the Fund of the amount of allegedly excessive distribution fees received by EVD during a one-year period preceding December 3, 2003. EVD and the Company believe that the complaint is without merit and are vigorously contesting the lawsuit.

Item 4. Submission of Matters to a Vote of Security Holders

On October 1, 2003, the holders of all of the outstanding Voting Common Stock, by unanimous written consent, approved an amendment to their Voting Trust Agreement to renew the Trust for an additional three-year term until October 31, 2006.

PART II

Item 5. Market Price of Dividends on the Registrants’ Common Equity and Related Stockholder Matters

The Company’s Voting Common Stock, $0.0078125 par value, is not publicly traded and is held by 11 Voting Trustees pursuant to the Voting Trust described in paragraph (A) of Item 12 hereof, which paragraph (A) is incorporated herein by reference.

The Company’s Non-Voting Common Stock, $0.0078125 par value, is traded on the New York Stock Exchange under the symbol EV. The approximate number of registered holders of record of the Company’s Non-Voting Common Stock at October 31, 2003 was 1,300. The high and low common stock prices and dividends per share were as follows:

	Fiscal 2003			Fiscal 2002

	High Price	Low Price	Dividend Per Share	High Price	Low Price	Dividend Per Share

Quarter Ended:
January 31	$32.29	$26.15	$0.0800	$40.48	$28.10	$0.0725
April 30	$30.00	$23.02	$0.0800	41.00	36.40	$0.0725
July 31	$35.80	$27.85	$0.1200	37.37	22.55	$0.0725
October 31	$35.84	$32.46	$0.1200	30.20	24.09	$0.0800

The following table sets forth certain information concerning equity compensation plans at October 31, 2003:

Equity Compensation Plan Information

Plan category	(a)(1) Number of securities to be issued upon the exercise of outstanding options, warrants and rights	(b) Weighted-average exercise price of outstanding options, warrants and rights	(c)(2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved
by security holders	8,052,688	$24.80	3,546,051
Equity compensation plans not
approved by security holders	—	—	—

Total	8,052,688	$24.80	3,546,051

(1)	The amounts appearing under the “Number of securities to be issued upon the exercise of outstanding options, warrants and rights” includes 8,052,688 shares related to the Company’s Stock Option Plan.

(2)	The amounts appearing under “Number of securities remaining available for future issuance under equity compensation plans” includes 2,849,189 shares related to the Company’s Stock Option Plan and 696,862 shares related to the Company’s Restricted Stock Plan.

Item 6. Selected Financial Data

Financial Highlights

	For the years ended October 31,
*(in thousands, except per share figures)*	2003	2002	2001	2000	1999


Income Statement Data:
Operating revenue	$523,133	$522,985	$502,559	$440,326	$354,264
Net income (1)	$106,123	$121,057	$116,020	$116,051	$15,798

Balance Sheet Data:
Total assets	$658,702	$616,619	$675,301	$432,989	$358,229
Long-term debt	$118,736	$124,118	$215,488	$21,429	$28,581
Shareholders' equity	$416,277	$372,302	$301,126	$254,950	$194,268

Per share data:
Basic earnings (1)	$1.54	$1.75	$1.69	$1.65	$0.73
Diluted earnings (1)	$1.51	$1.70	$1.60	$1.58	$0.70
Cash dividends declared	$0.40	$0.30	$0.25	$0.20	$0.16
Shareholders' equity	$6.09	$5.38	$4.39	$3.67	$2.76

(1) In October 1998, the Financial Accounting Standards Board (“FASB”) staff addressed the accounting for offering costs incurred in connection with the distribution of funds when the adviser does not receive both Rule 12b-1 fees and contingent deferred sales charges. In its announcement, the FASB staff concluded that such offering costs, including sales commissions paid, were to be considered start-up costs in accordance with American Institute of Certified Public Accountants Statement of Position (“SOP”) 98-5, “Reporting on the Costs of Start-Up Activities.” Accordingly, the FASB staff concluded offering costs should be expensed as incurred under the provisions of SOP 98-5. Prior to the FASB staff announcement, it had been the Company’s policy to capitalize and amortize these costs over a period not to exceed five years.

As a result, closed-end, interval and private fund sales commissions paid and capitalized prior to the Company’s adoption of SOP 98-5 were expensed as a cumulative effect of a change in accounting principle, as described in APB Opinion No. 20, “Accounting Changes.” The cumulative effect of the change in accounting principle upon adoption on November 1, 1998 was a charge to the Consolidated Statement of Income of $36.6 million, net of income taxes of $23.4 million.

In April of 1999, the bank loan interval funds received the necessary approvals to implement Rule 12b-1 equivalent distribution plans. Beginning May 1, 1999, with the implementation of these plans, the Company resumed capitalizing and amortizing sales commissions paid to broker/dealers for sales of these funds effective May 1, 1999, the beginning of the third fiscal quarter of 1999. Closed-end and bank loan interval fund sales commissions expensed from November 1, 1998 to April 30, 1999 totaled $71.3 million.

Item 7. Management’s Discussion and Analysis

This Item includes statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our expectations, intentions or strategies regarding the future. All statements, other than statements of historical facts included in this Form 10-K regarding our financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. Although we believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations reflected in such forward-looking statements will prove to have been correct or that we will take any actions that may presently be planned. Certain important factors that could cause actual results to differ materially from our expectations are disclosed in the “Competitive Conditions and Risk Factors” section of this Form 10-K. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such factors.

General

The Company’s principal business is creating, marketing and managing investment companies (“funds”) and providing investment management and counseling services to institutions and individuals. The Company distributes its funds through third-party broker/dealers, independent financial institutions and investment advisers.

The Company’s revenue is primarily derived from investment adviser, administration, distribution and service fees received from the Eaton Vance funds and investment adviser fees received from separate accounts. Fees paid to the Company are based primarily on the value of the investment portfolios managed by the Company and fluctuate with changes in the total value of the assets under management. Such fees are recognized over the period that these assets are managed by the Company. The Company’s major expenses are employee compensation, the amortization of deferred sales commissions and distribution and service fee expenses.

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to investments, deferred sales commissions, intangible assets, income taxes and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Assets Under Management

Assets under management of $75.0 billion on October 31, 2003 were 35 percent higher than the $55.6 billion reported a year earlier. The Company experienced asset growth in every asset category in 2003, reflecting recovering equity markets, successful closed-end fund offerings, a strategic acquisition and strong net sales of the Company’s open-end mutual funds. In fiscal 2002 total assets under management declined to $55.6 billion from $56.6 billion a year earlier, primarily due to the overall decline in equity markets and net redemptions in the floating-rate income asset category, partially offset by strong net sales in the fixed income asset category.

Equity fund assets represented 51 percent of total fund assets under management at October 31, 2003, consistent with October 31, 2002, and down from 55 percent at October 31, 2001. Fixed income fund assets represented 32 percent of total fund assets under management at October 31, 2003, up from 30 percent at October 31, 2002, and 24 percent at October 31, 2001. Floating-rate income fund assets represented 17 percent of total fund assets under management at October 31, 2003, consistent with October 31, 2002 and down from 21 percent at October 31, 2001. The shift in fund asset mix from equity fund assets to fixed income fund assets reflects investor response to the recent decline in equity markets. This trend may reverse as equity markets continue to recover. The following table summarizes ending assets under management by investment objective at October 31, 2003, 2002 and 2001:

Ending Assets Under Management by Investment Objective

	October 31,
*(in billions)*	2003	2002	2001	2003 vs. 2002	2002 vs. 2001
Equity funds	$28.9	$22.9	$25.3	26%	-9%
Fixed income funds	17.8	13.3	10.1	34%	32%
Floating-rate income funds	9.5	7.7	9.6	23%	-20%
Money market funds	0.4	0.9	1.1	-56%	-18%

Total funds	56.6	44.8	46.1	26%	-3%
Separate accounts	18.4	10.8	10.5	70%	3%

Total	$75.0	$55.6	$56.6	35%	-2%

The Company had positive net inflows in both long-term fund assets and separate accounts in each of the last three years. The following table summarizes the asset flows for each of the years ended October 31, 2003, 2002 and 2001:

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Asset Flows

	For the Fiscal Years Ended October 31,
*(in billions)*	2003		2002		2001		2003 vs. 2002	2002 vs. 2001
Equity fund assets — beginning	$22.9		$25.3		$25.4		-9%	-%
Sales/inflows	4.2		4.4		7.2		-5%	-39%
Redemptions/outflows	(2.8	)	(3.1	)	(2.0	)	-10%	55%
Exchanges	—		(0.2	)	(0.1	)	NM	NM
Market value change	3.9		(3.5	)	(5.8	)	NM	NM
Assets acquired	0.7		—		0.6		NM	NM

Equity fund assets — ending	$28.9		$22.9		$25.3		26%	-9%

Fixed income fund assets — beginning	$13.3		$10.1		$ 9.5		32%	7%
Sales/inflows	6.4		5.0		1.9		28%	163%
Redemptions/outflows	(2.2	)	(1.5	)	(1.3	)	47%	15%
Exchanges	(0.1	)	0.4		0.1		NM	NM
Market value change	0.4		(0.7	)	(0.1	)	NM	NM

Fixed income fund assets — ending	$17.8		$13.3		$10.1		34%	32%

Floating-rate fund assets — beginning	$ 7.7		$ 9.6		$10.1		-20%	-5%
Sales/inflows	3.1		1.0		2.9		210%	-66%
Redemptions/outflows	(1.5	)	(2.3	)	(2.7	)	-35%	-15%
Exchanges	—		(0.3	)	(0.3	)	NM	NM
Market value change	0.2		(0.3	)	(0.4	)	NM	NM

Floating-rate fund assets — ending	$ 9.5		$ 7.7		$ 9.6		23%	20%

Long-term fund assets — beginning	43.9		45.0		45.0		-2%	-%
Sales/inflows	13.7		10.4		12.0		32%	13%
Redemptions/outflows	(6.5	)	(6.9	)	(6.0	)	-6%	15%
Exchanges	(0.1	)	(0.1	)	(0.3	)	NM	NM
Market value change	4.5		(4.5	)	(6.3	)	NM	NM
Assets acquired	0.7		—		0.6		NM	NM

Long-term fund assets — ending	56.2		43.9		45.0		28%	-2%

Separate accounts — beginning	$10.8		$10.5		$ 3.2		3%	228%
Inflows — HNW and institutional	2.1		2.0		0.3		5%	567%
Outflows — HNW and institutional	(1.7	)	(1.1	)	—		55%	NM
Inflows — retail managed account	0.9		0.7		—		29%	NM
Outflows — retail managed account	(0.3	)	(0.1	)	—		200%	NM
Market value change	2.0		(1.1	)	(0.3	)	NM	NM
Assets acquired	4.6		—		6.9		NM	NM

Separate accounts — ending	$18.4		$10.8		$10.5		70%	3%

Money market fund assets — ending	0.4		0.9		1.1		-56%	-18%

Assets under management — ending	$75.0		$55.6		$56.6		35%	2%

Net inflows of long-term fund assets in fiscal 2003 were $7.2 billion compared to $3.5 billion last year and $6.0 billion in fiscal 2001. Closed-end fund offerings contributed significantly to net inflows in both fiscal 2003 and 2002, with $5.0 billion in closed-end fund assets added in fiscal 2003 and $2.5 billion added in fiscal 2002. Excluding closed-end fund offerings, other net inflows totaled $2.2 billion, $1.0 billion and $6.0

billion in fiscal 2003, 2002 and 2001, respectively. The increase in other net inflows in fiscal 2003 primarily reflects a 16 percent increase in open-end mutual fund sales and a 7 percent decline in open-end mutual fund redemptions, offset by a 48 percent decline in net inflows into privately offered equity funds. The decrease in other net inflows in fiscal 2002 primarily reflects a 16 percent decline in open-end mutual fund sales, a 10 percent increase in open-end mutual fund redemptions and a 43 percent decline in net inflows into privately offered equity funds. As a result of market value changes, long-term fund assets increased by $4.5 billion in fiscal 2003, following declines of $4.5 billion and $6.3 billion in fiscal 2002 and 2001, respectively.

Net inflows of separate account assets under management were $1.0 billion in fiscal 2003, down from $1.5 billion in fiscal 2002 and up from $0.3 billion in fiscal 2001. These net inflows are in addition to the assets gained in the acquisitions of Atlanta Capital Management Company, LLC (“Atlanta Capital”) and Fox Asset Management LLC in the fourth quarter of fiscal 2001, and Parametric Portfolio Associates (“Parametric”) in the fourth quarter of fiscal 2003. Net inflows in high-net-worth and institutional accounts in fiscal 2003 reflect the loss of certain high-net-worth (“HNW”) assets following the departure of a senior investment counselor at a wholly owned subsidiary, Eaton Vance Management (“EVM”), during the year. Net inflows in retail managed account assets in fiscal 2003 reflect the expansion of the Company’s retail managed account product line resulting from the acquisitions of Atlanta Capital, Fox Asset Management and Parametric and an increase in the number of managed account programs in which the Company participates. As a result of market value changes, separate account assets increased by $2.0 billion in fiscal 2003, following declines of $1.1 billion and $0.3 billion in fiscal 2002 and 2001, respectively.

The Company currently sells its sponsored mutual funds under four primary pricing structures: 1) front-end load commission (“Class A”); 2) spread-load commission (“Class B”); 3) level-load commission (“Class C”); and 4) institutional no-load (“Class I”). Under certain conditions, the Company waives the sales load on Class A shares. In such cases, the shares are sold at net asset value. The increase in ending assets under management in fiscal 2003 was primarily a result of growth in Class A, closed-end fund and separate account assets. The decline in ending assets under management in fiscal 2002 was primarily the result of declines in Class B, Class C and private fund assets under management. The following table summarizes ending assets under management by asset class for each of the years ended October 31, 2003, 2002 and 2001:

Ending Assets Under Management by Asset Class

	October 31,
(in billions)	2003	2002	2001	2003 vs. 2002	2002 vs. 2001
Class A	$ 8.2	$ 6.2	$ 6.2	32%	-%
Class B	13.0	12.8	14.5	2%	-12%
Class C	6.1	5.3	5.9	15%	-10%
Private funds	15.3	13.3	14.3	15%	-7%
Closed-end funds	9.1	4.0	1.6	128%	150%
Other	4.9	3.2	3.6	53%	-11%

Total fund assets	56.6	44.8	46.1	26%	-3%
Total separate account assets	18.4	10.8	10.5	70%	3%

Total	$75.0	$55.6	$56.6	35%	-2%

The average assets under management presented below represent a monthly average by asset class. With the exception of the Company’s separate account investment adviser fees, which are calculated as a percentage of either beginning or ending quarterly assets, the Company’s investment adviser, administration, distribution and service fees are calculated primarily as a percentage of average daily assets. This analysis may provide useful information in the analysis of the Company’s revenue, as well as distribution-related expenses tied to asset levels.

Average Assets Under Management by Asset Class *

	For the Fiscal Years Ended October 31,
(in billions)	2003	2002	2001	2003 vs. 2002	2002 vs. 2001
Class A	$ 6.9	$ 6.5	$ 6.1	6%	7%
Class B	12.7	13.9	15.0	-9%	-7%
Class C	5.6	5.8	6.1	-3%	-5%
Private funds	14.0	14.6	14.8	-4%	-1%
Closed-end funds	6.1	2.0	1.5	205%	33%
Other	3.4	3.7	2.5	-8%	48%

Total fund assets	48.7	46.5	46.0	5%	1%
Total separate account assets	12.5	11.0	3.6	14%	206%

Total	$61.2	$57.5	$49.6	6%	16%

*	Assets under management attributable to the acquisitions of Parametric on September 10, 2003 and Atlanta Capital and Fox Asset Management on September 30, 2001 are included on a weighted average basis for the period from their respective closing dates.

Results of Operations

Revenue

	For the Fiscal Years Ended October 31,
(in millions)	2003	2002	2001	2003 vs. 2002	2002 vs. 2001
Investment adviser and administration fees	$296,344	$280,794	$252,332	6%	11%
Distribution and underwriter fees	146,907	162,071	170,892	-9%	-5%
Service fees	74,605	77,833	77,777	-4%	-%
Other revenue	5,277	2,287	1,558	131%	47%

Total revenue	$523,133	$522,985	$502,559	-%	4%

Investment Adviser and Administration Fees

Investment adviser and administration fees are generally calculated under contractual agreements with the Company’s sponsored funds and separate accounts and are based upon a percentage of the market value of assets under management. Changes in the market value of managed assets can affect the amount of investment adviser and administration fees earned, while shifts in asset mix can affect the Company’s effective fee rate.

The increase in investment adviser and administration fees of 6 percent in fiscal 2003 can be attributed to a 6 percent increase in average assets under management. The acquisition of Parametric, which occurred on September 10, 2003, did not significantly affect either the Company’s revenue or effective fee rate in fiscal 2003.

The increase in investment adviser and administration fees of 11 percent in fiscal 2002 can be primarily attributed to the 16 percent increase in average assets under management, tempered by a 4 percent decrease in the Company’s effective fee rate. The decrease in the effective fee rate can be attributed to the lower average fee rates of the Atlanta Capital and Fox Asset Management assets acquired on September 30, 2001.

Distribution and Underwriter Fees

Distribution fees consist principally of distribution plan payments made under contractual agreements with the Company’s sponsored funds. Distribution plan payments are calculated as a percentage of average assets under management in specific share classes of the Company’s mutual funds (principally Class B and Class C) as well as certain private funds. These fees fluctuate with both the level of average assets under management and the relative mix of assets between share classes. Underwriter commissions are earned on the sale of shares of the Company’s sponsored funds on which investors pay a sales charge at the time of purchase (Class A share sales). Sales charges, and therefore underwriter commissions, are waived on sales to shareholders or intermediaries that exceed specified minimum amounts. Underwriter commissions fluctuate with both the level of Class A share sales and the mix of Class A shares offered with and without a sales charge.

Distribution and underwriter fees decreased by 9 percent in fiscal 2003, reflecting a 6 percent decrease in average Class B, Class C and private assets under management and an increase in Class A shares offered without a sales charge. The decrease in average assets under management in these share classes can be principally attributed to a gradual shift in asset mix from Class B assets under management to Class A assets under management and the overall decline in equity markets over the last two years.

Distribution and underwriter fees decreased by 5 percent in fiscal 2002, reflecting the 4 percent decrease in average Class B, C and private fund assets under management and an increase in Class A shares offered without a sales charge.

Service Fees

Service fees consist of service plan payments calculated under contractual agreements with the Company’s sponsored funds. These fees are calculated as a percent of average assets under management in specific share classes of the Company’s mutual funds (principally Classes A, B and C) as well as certain private funds.

Service fees decreased by 4 percent in fiscal 2003, reflecting a 4 percent decrease in average Class A, B, C and private fund assets under management. Service fees were essentially flat in fiscal 2002 compared to fiscal 2001, reflecting a 3 percent decrease in average assets under management subject to a service fee.

Other Revenue

Other revenue increased by 131 percent in fiscal 2003 and 47 percent in fiscal 2002, primarily as a result of an increase in shareholder service fees and an increase in interest income earned by a majority-owned mutual fund consolidated by the Company for the first time in fiscal 2003.

Expenses

	For the Fiscal Years Ended October 31,
(in millions)	2003	2002	2001	2003 vs. 2002	2002 vs. 2001
Compensation of officers and employees	$115,429	$105,331	$ 91,428	10%	15%
Amortization of deferred sales commissions	85,192	83,690	79,997	2%	5%
Service fee expense	64,285	63,852	60,524	1%	5%
Distribution expense	54,790	50,398	50,847	9%	-1%
Other expenses	40,293	35,791	28,870	13%	24%

Total expenses	$359,989	$339,062	$311,666	6%	9%

Compensation of officers and employees

Compensation expense increased by 10 percent in fiscal 2003 and by 15 percent in fiscal 2002. The increase in compensation expense in fiscal 2003 can be primarily attributed to an increase in incentive compensation associated with the increase in fund sales, driven primarily by the $5.0 billion in closed-end fund offerings in fiscal 2003, and increases in base salaries and benefits resulting from the acquisition of Parametric on September 10, 2003. Compensation expense in fiscal 2002 reflects incentive costs associated with $2.5 billion of closed-end fund offerings, and increases in base salaries, benefits and incentives resulting from the acquisitions of Atlanta Capital and Fox Asset Management on September 30, 2001, and the staffing of the Company’s retail managed account sales and marketing organization, which was largely completed in fiscal 2002.

Amortization of deferred sales commissions

Amortization of deferred sales commissions increased by 2 percent in fiscal 2003 and by 5 percent in fiscal 2002. Amortization expense is effected by ongoing sales of mutual fund Class B shares, Class C shares and equity fund private placements, and the residual effect of accounting changes mandated by the SEC in fiscal 1998 and 1999. For a nine-month period ending April 30, 1999, sales commissions for certain funds were required to be expensed rather than capitalized and deferred, extinguishing future amortization charges. Subsequent to April 30, 1999, and pursuant to the implementation of new distribution plans, commission payments on new sales of these funds were once again capitalized and amortized. The Company anticipates that the ongoing effect of these accounting changes will diminish over the next fiscal year. As noted above, the Company has experienced an overall shift in sales from Class B shares to Class A shares. As amortization expense is ultimately a function of the Company’s product mix, a shift from Class B sales to Class A sales may result in a reduction in amortization expense in the future.

Service fees

Service fees the Company receives from sponsored mutual funds are retained by the Company in the first year and paid to broker/dealers after the first year pursuant to third-party service arrangements. These fees are calculated as a percent of average assets under management in specific share classes of the Company’s mutual funds (principally Classes A, B and C) as well as certain private funds. Service fee expense increased by 1 percent in fiscal 2003 and 5 percent in fiscal 2002, reflecting increases in average long-term fund assets retained more than one year that are subject to service fees.

Distribution expense

Distribution expense consists primarily of payments made to distribution partners pursuant to third-party distribution arrangements (calculated as a percentage of average assets under management), commissions paid to broker/dealers on the sale of Class A shares at net asset value and other marketing expenses. Distribution expense increased by 9 percent in fiscal 2003, following a decrease of 1 percent in fiscal 2002, largely as a result of increases in average assets under management subject to third-party distribution arrangements and an increase in Class A shares sold at net asset value. The decrease in distribution expense in fiscal 2002 can be attributed to a decrease in other marketing expenses.

Other expenses

Other operating expenses consist primarily of travel, facilities, information technology, consulting, fund expenses assumed by the Company, communications and other corporate expenses, including the amortization of intangible assets. Other operating expenses increased by 13 percent in fiscal 2003, primarily as a result of increases in travel and fund expenses associated with the $5.0 billion in closed-end fund offerings completed this year. Other operating expenses increased by 24 percent in fiscal 2002, primarily as a result of increases in travel and fund expenses associated with the $2.5 billion in closed-end fund offerings completed last year and increases in amortization expense and facilities expense associated with the acquisitions of Atlanta Capital and Fox Asset Management in the fourth quarter of fiscal 2001.

Other Income and Expense

	For the Fiscal Years Ended October 31,
(in millions)	2003		2002		2001		2003 vs. 2002	2002 vs. 2001
Interest income	$ 4,848		$ 9,019		$ 6,765		-46%	33%
Interest expense	(5,761	)	(7,098	)	(2,209	)	-19%	221%
Gain (loss) on investments	2,346		1,344		(2,649	)	75%	151%
Foreign currency gain	18		8		—		125%	NA
Equity in net income of affiliates	263		389		967		-32%	-60%
Impairment loss on long-term investments	—		—		(15,101	)	NA	NA

Total other income (expense)	$ 1,714		$ 3,662		($ 12,227	)	-53%	130%

Interest income decreased 46 percent in fiscal 2003, following a 33 percent increase in interest income in fiscal 2002. The decrease in interest income in fiscal 2003 was due to the decrease in short-term interest rates and the Company’s investment in and consolidation of a sponsored mutual fund in fiscal 2003. The consolidated fund, which invests in short-term debt instruments, generated $1.0 million in interest income in fiscal 2003, which is classified as other revenue in the Company’s Consolidated Statements of Income. The increase in interest income in 2002 can be primarily attributed to the increase in average cash and cash equivalent balances maintained by the Company.

Interest expense decreased to $5.8 million in fiscal 2003 from $7.1 million a year ago, following a $4.9 million increase in interest expense in fiscal 2002. Fiscal 2003 interest expense reflects a decrease in average long-term debt balances, net of additional interest expense related to the 1.5% zero-coupon exchangeable senior notes issued by EVM. Note holders will receive incremental cash interest payments of 1.672 percent per year from November 13, 2002 to August 13, 2004. Fiscal 2002 interest expense reflects the issuance of EVM’s senior notes in the fourth quarter of fiscal 2001, the expensing of $2.1 million of previously capitalized debt offering costs associated with the repurchase of $87.0 million of these notes on August 14, 2002, and a one-time interest payment of $0.6 million made to remaining note holders on August 15, 2002.

In fiscal 2001, the Company recognized a $15.1 million impairment loss related to the Company’s minority equity investments in three collateralized debt obligation (“CDO”) entities whose collateral assets are managed by the Company. The impairment loss resulted from higher than forecasted default rates in the high-yield bond market and the effects of the higher default rates on the value of the Company’s equity investments in these CDO entities. The Company anticipates that it will continue to earn management fees from managing the assets in the collateral pools of these CDO entities.

Income Taxes

The Company’s effective tax rate was 35 percent during fiscal 2003, 2002 and 2001.

Net Income

	For the Years Ended October 31,
(in millions)	2003	2002	2001	2003 vs. 2002	2002 vs. 2001
Net income	$106,123	$121,057	$116,020	-12%	4%

Net income decreased by 12 percent in fiscal 2003, following an increase of 4 percent in fiscal 2002. The decrease in fiscal 2003 can be attributed to weak equity markets in the first half of the year, which significantly impacted average assets under management, and the impact of marketing costs associated with the $5.0 billion in closed-end fund offerings completed this year. The increase in fiscal 2002 reflects the 16 percent increase in average assets under management, tempered by the impact of marketing costs associated with the $2.5 billion in closed-end fund offerings completed last year.

Changes in Financial Condition and Liquidity and Capital Resources

The following table summarizes certain key financial data relating to the Company’s liquidity and capital resources as of October 31, 2003, 2002 and 2001:

	October 31,
(in millions)	2003		2002		2001		2003 vs. 2002	2002 vs. 2001
Balance sheet data:
Cash and cash equivalents	$138,328		$144,078		$115,681		-4%	25%
Short-term investments	104,484		43,886		95,028		138%	-54%
Long-term investments	36,940		39,982		36,704		-8%	9%
Deferred sales commissions	199,322		239,048		266,738		-17%	-10%
Current portion of long-term debt	7,143		7,143		7,143		-%	-%
Long-term debt	118,736		124,118		215,488		-4%	-42%
Deferred income taxes	33,203		50,531		73,878		-34%	-32%
Cash flow data:
Operating cash flows	$43,809		$134,111		$140,288		-67%	-4%
Investing cash flows	25,675		42,031		(177,445	)	-38%	NM
Financing cash flows	(75,296	)	(147,745	)	92,359		NM	NM

The Company’s financial condition is highly liquid, with a significant percentage of the Company’s assets represented by cash, cash equivalents and short-term investments. Short-term investments consist principally of short-term debt instruments and investments in the Company’s sponsored mutual funds. Long-term investments consist principally of seed investments in the Company’s sponsored mutual funds and minority equity investments in CDO entities.

Deferred sales commissions paid to broker/dealers in connection with the distribution of the Company’s Class B and Class C fund shares, as well as certain private funds, decreased by 17 percent in fiscal 2003 and 10 percent in fiscal 2002, primarily reflecting the decline in Class B share and private fund sales over the last two fiscal years. Deferred income taxes, which relate principally to deferred sales commissions, decreased by 34 percent in fiscal 2003 and 32 percent in fiscal 2002, reflecting a change in the treatment of deferred sales commissions for tax purposes. Prior to January 1, 2001, commission payments were deducted for tax purposes at the time of payment. Commission payments made subsequent to January 1, 2001 have been capitalized for tax purposes and deducted over their estimated useful lives. The change in the timing of the deduction of commission payments has had the effect of increasing current income tax payments and reducing deferred income taxes.

The following table details the Company’s future contractual obligations under its senior notes and operating lease arrangements:

Contractual Obligation	Payments due
(in millions)	Total	Less than 1 year	1-3 years	4-5 years	After 5 years
6.22% senior notes due 2004	$7.1	$7.1	—	—	—
Operating leases	$33.7	$6.7	$12.7	$11.3	$3.0

Excluded from the table above are Eaton Vance Management’s (“EVM’s”) zero-coupon exchangeable senior notes (“Notes”). On August 13, 2001, EVM issued the Notes at a principal amount of $314.0 million due August 13, 2031, resulting in gross proceeds of approximately $200.6 million. The net proceeds of the offering were approximately $195.5 million after payment of debt issuance costs. The Notes were issued in a private placement to qualified institutional buyers at an initial offering price of $638.70 per $1,000 principal amount at maturity. The discounted price reflects a yield to maturity of 1.5 percent per year. Upon certain events, each Note is exchangeable into 14.3657 shares of the Company’s non-voting common stock, subject to adjustment. EVM may redeem the Notes for cash on or after August 13, 2006, at their accreted value. At the option of Note holders, EVM may be required to repurchase the Notes at their accreted value on various dates beginning on the first, third and fifth anniversaries of the issue date and at five-year intervals thereafter until maturity. At the option of the Note holders, EVM may also be required to repurchase the Notes at their accreted value if the credit rating of the Notes is decreased by three or more rating subcategories below its initial rating by either Moody’s or Standard & Poor’s. Such repurchases can be paid in cash, shares of the Company’s non-voting common stock, or a combination of both. Although Note holders have the option to require EVM to repurchase Notes with an accreted value of up to $120.1 million on the next scheduled repurchase date, August 13, 2004, EVM does not expect to repurchase any of its zero-coupon exchangeable senior notes during the fiscal year ending October 31, 2004.

On August 9, 2002, EVM amended the terms of the Notes to permit Note holders, at their option, to require the repurchase of the Notes on November 13, 2002. EVM further amended the terms of the Notes to provide that each holder electing not to require the Company to repurchase their Notes on August 13, 2002 would receive a one-time cash payment equal to approximately 0.50 percent of each Note’s accreted value. On August 14, 2002, EVM repurchased for cash $87.0 million of the Notes ($134.1 million principal amount at maturity). On August 15, 2002, EVM made a one-time cash payment totaling $0.6 million to holders of the Notes as of the close of business on August 14, 2002. The Company expensed approximately $2.1 million of deferred debt offering costs in conjunction with this repurchase in the fourth quarter of fiscal 2002.

On November 12, 2002, EVM amended the terms of its Notes to provide that each holder electing not to require EVM to repurchase the holder’s Notes on November 13, 2002 would receive cash interest payments equal to 1.627 percent per year of each Note’s principal amount at maturity (approximately 2.5 percent of each notes accreted value) for a period of 21 months. With the exception of the first interest payment due on February 13, 2003, which was paid in arrears for the three-month period ending on that date, these interest payments are accrued over the six-month period prior to payment and are recorded in interest expense. No Notes were tendered for repurchase on November 13, 2002.

Holders of the Notes have the option to require EVM to repurchase the Notes on August 13, 2004. Such repurchase can be paid in shares of the Company’s non-voting common stock in lieu of cash at EVM’s discretion. As a result, the Notes have been classified as long-term in the Company’s Consolidated Balance Sheet at October 31, 2003.

In December 2001, EVM executed a revolving credit facility with several banks. This facility, which expires December 21, 2004, provides that EVM may borrow up to $170 million at LIBOR-based rates of interest that vary depending on the level of usage of the facility and credit ratings of the Notes. The agreement contains financial covenants with respect to leverage and interest coverage and requires EVM to pay an annual commitment fee on any unused portion. At October 31, 2003, EVM had no borrowings outstanding under its revolving credit facility.

Operating Cash Flows

Operating cash flows consist primarily of the operating results of the Company adjusted to reflect changes in current assets and liabilities, deferred sales commissions, deferred income taxes and investments classified as trading. Cash provided by operating activities totaled $43.8 million, $134.1 million and $140.3 million in fiscal 2003, 2002 and 2001, respectively. The decrease in cash provided by operating activities in fiscal 2003 is primarily a result of the consolidation of the Company’s investment in a sponsored mutual fund. The Company was required to consolidate its investment in Eaton Vance Short-term Income Fund (“EVSI”) in fiscal 2003 when it became the fund’s majority investor. Cash flows associated with the purchase and sale of trading securities included in operating cash flows primarily represent EVSI’s purchase and sale of short-term debt securities. Cash flows associated with the Company’s investments in sponsored mutual funds that are not consolidated are accounted for in cash flows from investing activities.

Capitalized sales commissions paid to financial intermediaries for the distribution of the Company’s Class B and Class C fund shares, as well as the Company’s equity fund private placements, decreased by $18.0 million in fiscal 2003 and $47.2 million in fiscal 2002 due to a decline in Class B share sales and equity fund private placements. Although the Company anticipates that the payment of capitalized sales commissions will continue to be a significant use of cash in the future, the payment of sales commissions will likely continue to decline if sales of Class B shares and equity fund private placements continue to decline. The amortization of deferred sales commissions and contingent deferred sales charges received will likely be similarly affected.

Investing Cash Flows

Investing activities consist primarily of the purchase and sale of investments in the Company’s sponsored mutual funds and the acquisition of majority-owned subsidiaries. Cash provided by (used for) investing activities totaled $25.7 million, $42.0 million and ($177.4) million in fiscal 2003, 2002 and 2001, respectively.

In fiscal 2001, the Company made two strategic acquisitions to expand the Company’s separately managed account business. On September 30, 2001, the Company acquired 70 percent of Atlanta Capital for an aggregate initial payment of $75.0 million, consisting of cash of $60.0 million and Eaton Vance Corp. non-voting common stock valued at $15.0 million. Atlanta Capital’s principals will continue to hold 30 percent of the equity of Atlanta Capital through December 31, 2004. Beginning in calendar 2005, Atlanta Capital’s principals will have the right to sell and the Company will have the right to purchase the remaining 30 percent of Atlanta Capital over a five-year period. The price for acquiring the remaining 30 percent of Atlanta Capital will be based on a multiple of earnings before taxes (a measure that is intended to approximate fair market value) in those years.

On September 30, 2001, the Company also acquired 80 percent of Fox Asset Management for an aggregate initial payment of $32.0 million, consisting of cash of $22.4 million and Eaton Vance Corp. non-voting common stock valued at $9.6 million. Additional payments in 2005 and 2006 of up to $30.0 million are contingent upon Fox Asset Management achieving certain financial performance criteria. Fox Asset Management’s principals will continue to hold 20 percent of the equity of Fox Asset Management through December 31, 2007. Beginning in calendar 2008, Fox Asset Management’s principals will have the right to sell and the Company will have the right to purchase the remaining 20 percent of Fox Asset Management over a four-year period. The price for acquiring the remaining 20 percent of Fox Asset Management will be based on a multiple of earnings before interest and taxes (a measure that is intended to approximate fair market value) in those years.

On September 10, 2003, the Company further expanded its separate account business by acquiring an 80 percent capital interest and an 81.2 percent profits interest in Parametric Portfolio Associates (“Parametric”) for an aggregate initial payment of $28.0 million in cash. Beginning in calendar 2005, certain sellers of Parametric will have the right to sell and the Company will have the right to purchase an additional 8.6 percent of the capital of Parametric over a three-year period. Beginning in calendar 2007,

certain sellers of Parametric will have the right to sell and the Company will have the right to purchase the remaining 11.4 percent of the capital of Parametric (which entitles the holder to the remaining 18.8 percent profits interest) over a six-year period. The price for acquiring the remaining capital and profits interests in Parametric will be based on a multiple of earnings before interest and taxes (a measure that is intended to approximate fair market value) in those years.

The Company anticipates that the purchase of the remaining minority interests in its majority-owned subsidiaries will likely be a significant use of cash in the future.

Financing Cash Flows

Financing cash flows primarily reflect the issuance and repayment of long-term debt, the issuance and repurchase of the Company’s non-voting common stock and the payment of dividends to the Company’s shareholders. Cash provided by (used for) financing activities totaled ($75.3) million, ($147.7) million and $92.4 million in fiscal 2003, 2002 and 2001, respectively.

The Company repaid $18.0 million, $144.1 million and $7.1 million in long-term debt in fiscal 2003, 2002, and 2001 respectively. Debt repayments in fiscal 2003 included a principal installment of $7.1 million on EVM’s 6.22 percent senior loan and the retirement of $10.8 million of debt carried by Parametric at the date of acquisition. Debt repayments in fiscal 2002 included a principal installment of $7.1 million on EVM’s 6.22 percent senior loan, the repurchase of $87.0 million at accreted value of EVM’s zero-coupon exchangeable notes (issued in August 2001), and the repayment of $50.0 million in short-term borrowings under EVM’s revolving credit facility. Debt repayments in fiscal 2001 consisted of a principal installment of $7.1 million on EVM’s 6.22 percent senior loan.

The Company repurchased a total of 1.4 million shares of its non-voting common stock for $44.9 million in fiscal 2003 under its authorized repurchase program and issued 565,000 shares of non-voting common stock in connection with the exercise of stock options and employee stock purchases for total proceeds of $9.4 million. The Company has authorization to purchase an additional 3.9 million shares under its present share repurchase authorization program and anticipates that future repurchases will continue to be a significant use of cash. The Company’s dividend was $0.40 per share in fiscal 2003 compared to $0.30 in fiscal 2002 and $0.25 in fiscal 2001. The Company increased its fiscal 2003 third quarter cash dividend by 50 percent to $0.12 per share in response to a decrease in the federal income tax rate on qualifying dividend income of individual taxpayers.

Off-Balance Sheet Arrangements

The Company does not invest in any off-balance sheet vehicles that provide financing, liquidity, market or credit risk support or engage in any leasing activities that expose the Company to any liability that is not reflected in the Consolidated Financial Statements.

Critical Accounting Policies

Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Deferred Sales Commissions

Sales commissions paid to broker/dealers in connection with the sale of shares of open-end funds, bank loan interval funds and private funds are generally capitalized and amortized over the period during which the shareholder is subject to a contingent deferred sales charge, none of which exceeds six years. Distribution plan payments received from these funds are recorded in revenue as earned. Contingent deferred sales charges and early withdrawal charges received by the Company from redeeming shareholders of open-end and bank loan interval funds reduce unamortized deferred sales commissions first, with any remaining amount recorded in income. Should the Company lose its ability to recover such

sales commissions through distribution plan payments and contingent deferred sales charges, the value of these assets would immediately decline, as would future cash flows. The Company periodically reviews the amortization period for deferred sales commission assets as events or changes in circumstances indicate that the carrying amount of deferred sales commission assets may not be recoverable over their amortization period and makes adjustments to the assets’ useful lives as required.

Goodwill and Intangible Assets

Identifiable intangible assets generally represent the cost of management contracts acquired. The Company periodically reviews identifiable intangibles for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Goodwill represents the excess of the cost of the Company’s investment in the net assets of acquired companies over the fair value of the underlying identifiable net assets at the dates of acquisition. Goodwill is not amortized but is tested at least annually for impairment by comparing the fair values of the companies acquired to their carrying amounts, including goodwill. If the carrying amounts of the companies exceed their respective fair values, additional impairment tests will be performed to measure the amount of the impairment loss, if any.

Deferred Income Taxes

Deferred income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts and tax bases of the Company’s assets and liabilities. Such deferred taxes relate principally to capitalized sales commissions paid to broker/dealers. Prior to January 1, 2001, these commissions were deducted as paid for tax purposes. Since January 1, 2001, sales commissions are deducted for income tax purposes over their estimated useful lives, consistent with guidelines established by the Internal Revenue Service, rather than at the time of payment. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing its taxes, changes in tax laws or the inability of the Company to meet the criteria for mutual fund state tax incentives may result in a change to the Company’s tax position and effective tax rate.

Investments in Collateralized Debt Obligation Entities

The Company accounts for its investments in collateralized debt obligation (“CDO”) entities under Emerging Issues Task Force (“EITF”) 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets.” The excess of future cash flows over the initial investment at the date of purchase is recognized as interest income over the life of the investment using the effective yield method. The Company reviews cash flow estimates throughout the life of each CDO investment pool to determine whether an impairment loss relating to its equity investments should be recognized. Cash flow estimates are based on the underlying pool of collateral securities and take into account the overall credit quality of the issuers of the collateral securities, the forecasted default rate of the collateral securities and the Company’s past experience in managing similar securities. If the updated estimate of future cash flows (taking into account both timing and amounts) is less than the last revised estimate, an impairment loss is recognized based on the excess of the carrying amount of the investment over its fair value. In periods of rising credit default rates and lower debt recovery rates, the carrying value of the Company’s investments in these CDO entities may be adversely affected by unfavorable changes in cash flow estimates and expected returns.

A CDO entity issues non-recourse debt securities, which are sold in a private offering by an underwriter to institutional and high-net-worth investors. The CDO debt securities issued by the CDO entity are secured by collateral in the form of high-yield bonds and/or floating-rate income instruments that the CDO entity purchases with proceeds from its issuance of non-recourse debt securities. The Company manages the collateral securities for a fee and, in most cases, is a minority investor in the equity interests of the CDO entity. An equity interest in a CDO entity is subordinated to all other interests in the CDO entity and entitles the investor to receive the residual cash flows, if any, from the CDO entity. As a result, the Company’s equity investment in a CDO entity is sensitive to changes in the credit quality of the issuers of the collateral securities including changes in the forecasted default rates and any declines in

anticipated recovery rates. The Company’s financial exposure to the CDOs it manages is limited to its equity interests in the CDO entities as reflected in the Company’s Consolidated Balance Sheets.

Loss Contingencies

The Company continuously reviews any investor, employee or vendor complaints and pending or threatened litigation. The likelihood that a loss contingency exists is evaluated under the criteria of SFAS No. 5, “Accounting for Contingencies,” through consultation with legal counsel and a loss contingency is recorded if the contingency is probable and reasonably estimable at the date of the financial statements. No losses of this nature have been recorded in the financial statements included in this report.

Accounting Developments

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities.” FIN No. 46 addresses reporting and disclosure requirements for Variable Interest Entities (“VIEs”) and defines a VIE as an entity that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN No. 46 requires consolidation of a VIE by the enterprise that absorbs a majority of the VIE’s expected losses. If no enterprise absorbs a majority of the expected losses, FIN No. 46 requires consolidation by the enterprise that receives a majority of the expected residual returns. The calculation of expected residual returns includes the expected variability in the entity’s net income or loss as well as all fees earned by the entity’s decision maker, thereby creating a bias in favor of the decision maker in the determination of who receives a majority of the expected residual returns. The consolidation and disclosure provisions of FIN No. 46 are effective immediately for VIEs created after January 31, 2003, and were originally effective for interim or annual reporting periods beginning after June 15, 2003 for VIEs created before February 1, 2003. Such transition provisions were subsequently amended so that the Company will not be required to apply FIN No. 46 until the first quarter of fiscal 2004, which ends on January 31, 2004.

The Company acts as collateral manager for six collateralized debt obligation entities (“CDO entities”) pursuant to collateral management agreements between the Company and each CDO entity. At October 31, 2003, combined assets under management in the collateral pools of all six of these CDO entities were approximately $2.0 billion. The Company has minority equity investments in three of these entities totaling $15.8 million at October 31, 2003, which represents the Company’s maximum exposure to loss over the remaining lives of the CDO entities.

In December 2003, the FASB issued FIN No. 46 (revised December 2003), which removed the bias in favor of the decision maker in the determination of who receives a majority of the expected residual return. As a result, management has concluded that the Company will not be required to consolidate any of the CDO entities for which it acts as collateral manager.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company is routinely subjected to different types of risk, including market risk. Market risk is the risk that the Company will incur losses due to adverse changes in equity prices, interest rates, credit risk, or currency exchange rates.

The Company’s primary exposure to equity price risk arises from its investments in sponsored equity funds. Equity price risk as it relates to these investments represents the potential future loss of value that would result from a decline in the fair values of the fund shares. The Company’s investments in sponsored equity funds totaled $9.4 million at October 31, 2003, and are carried at fair value on the Company’s Consolidated Balance Sheets.

The Company’s primary exposure to interest rate risk arises from its investment in fixed- and floating-rate income funds sponsored by the Company and short-term debt securities. The negative effect on the

Company’s pre-tax interest income of a 50 basis point decline in interest rates would be approximately $0.5 million based on fixed-income and floating-rate income investments of $105.5 million as of October 31, 2003. A 50 basis point decline in interest rates is a hypothetical scenario used to demonstrate potential risk and does not represent management’s view of future market changes. The Company is not exposed to interest rate risk in its debt instruments as all of the Company’s funded debt instruments carry fixed interest rates.

The Company’s primary exposure to credit risk arises from its minority equity interests in several CDO entities that are included in long-term investments in the Company’s Consolidated Balance Sheets. As a minority equity investor in a CDO entity, the Company is only entitled to a residual interest in the CDO entity, making these investments sensitive to the default rates of the underlying issuers of the high-yield bonds or floating-rate income instruments held by the CDO entity. The Company’s minority equity investments are subject to an impairment loss in the event that the cash flows generated by the collateral securities are not sufficient to allow equity holders to recover their investments. If there is a deterioration in the credit quality of the issuers underlying the collateral securities and a corresponding increase in the number of defaults, cash flows generated by the collateral securities may be adversely impacted and the Company may be unable to recover its investment. The Company’s total investment in minority equity interests in CDO entities is approximately $15.8 million at October 31, 2003, which represents the total value at risk with respect to such entities as of October 31, 2003.

The Company does not enter into foreign currency transactions for speculative purposes and currently has no material investments that would expose it to foreign currency exchange risk.

In evaluating market risk, it is also important to note that most of the Company’s revenue is based on the market value of assets under management. As noted in “Competitive Conditions and Risk Factors” in Item 1, declines of financial market values will negatively impact revenue and net income.

Item 8.

Financial Statements and Supplementary Data

Index to Consolidated Financial Statements and Supplementary Data
For the Fiscal Year Ended October 31, 2003, 2002 and 2001

Contents		Page number reference
Consolidated Financial Statements of Eaton Vance Corp.:
Consolidated Statements of Income for each of the three years in the period
ended October 31, 2003		30
Consolidated Balance Sheets as of October 31, 2003 and 2002		31
Consolidated Statements of Shareholders’ Equity and Comprehensive Income
for each of the three years in the period ended October 31, 2003		33
Consolidated Statements of Cash Flows for each of the three years in the
period ended October 31, 2003		35
Notes to Consolidated Financial Statements		36
Independent Auditors’ Report		55

All schedules have been omitted because they are not required, are not applicable or the information is otherwise shown in the consolidated financial statements or notes thereto.

Consolidated Statements of Income

	Years Ended October 31,
(in thousands, except per share figures)	2003		2002		2001

*Revenue:*
Investment adviser and administration fees	$ 296,344		$ 280,794		$ 252,332
Distribution and underwriter fees	146,907		162,071		170,892
Service fees	74,605		77,833		77,777
Other revenue	5,277		2,287		1,558

Total revenue	523,133		522,985		502,559


*Expenses:*
Compensation of officers and employees	115,429		105,331		91,428
Amortization of deferred sales commissions	85,192		83,690		79,997
Service fee expense	64,285		63,852		60,524
Distribution expense	54,790		50,398		50,847
Other expenses	40,293		35,791		28,870

Total expenses	359,989		339,062		311,666


Operating income	163,144		183,923		190,893

*Other Income (Expense):*
Interest income	4,848		9,019		6,765
Interest expense	(5,761	)	(7,098	)	(2,209	)
Gain (loss) on investments	2,346		1,344		(2,649	)
Foreign currency gain	18		8		—
Equity in net income of affiliates	263		389		967
Impairment loss on long-term investments	—		—		(15,101	)


Income before income taxes and minority interest	164,858		187,585		178,666

Income taxes	57,700		65,654		62,531

Minority interest, net of tax	1,035		874		115

Net income	$ 106,123		$ 121,057		$ 116,020


Earnings per share:
Basic	$ 1.54		$ 1.75		$ 1.69

Diluted	$ 1.51		$ 1.70		$ 1.60

See notes to consolidated financial statements.

Consolidated Balance Sheets

	October 31,
(in thousands)	2003	2002

ASSETS

*Current Assets:*
Cash and cash equivalents	$138,328	$144,078
Short-term investments	104,484	43,886
Investment adviser fees and other receivables	25,922	19,502
Other current assets	3,583	6,101

Total current assets	272,317	213,567


*Other Assets:*
Deferred sales commissions	199,322	239,048
Goodwill	88,879	69,467
Other intangible assets, net	46,193	37,296
Long-term investments	36,490	39,982
Equipment and leasehold improvements, net	12,411	13,897
Other assets	3,090	3,362

Total other assets	386,385	403,052

Total assets	$658,702	$616,619

See notes to consolidated financial statements.

Consolidated Balance Sheets

		October 31,
(in thousands, except share figures)	2003		2002

LIABILITIES AND SHAREHOLDERS' EQUITY

*Current Liabilities:*
Accrued compensation		$ 35,339		$ 31,899
Accounts payable and accrued expenses		23,822		16,324
Dividend payable		8,189		5,522
Current portion of long-term debt		7,143		7,143
Other current liabilities		8,302		7,382

Total current liabilities		82,795		68,270


*Long-term Liabilities:*
Long-term debt		118,736		124,118
Deferred income taxes		33,203		50,531

Total long-term liabilities		151,939		174,649

Total liabilities		234,734		242,919


Minority interest		7,691		1,398

Commitments and contingencies		—		—

*Shareholders' Equity:*
Common stock, par value $0.0078125 per share:
Authorized, 640,000 shares
Issued and outstanding, 154,880 shares		1		1
Non-voting common stock, par value $0.0078125 per share:
Authorized, 95,360,000 shares
Issued and outstanding, 68,250,464 and 69,102,459 shares, respectively		533		540
Notes receivable from stock option exercises		(2,995	)	(3,530	)
Deferred compensation		(1,000	)	(2,100	)
Accumulated other comprehensive income		1,245		2,585
Retained earnings		418,493		374,806

Total shareholders’ equity		416,277		372,302

Total liabilities and shareholders’ equity		$ 658,702		$ 616,619

See notes to consolidated financial statements.

Consolidated Statements of Shareholders’ Equity and Comprehensive Income

(in thousands)	Shares		Common Stock	Non-voting Common Stock		Additional Paid-In Capital		Notes Receivable From Stock Option Exercises

Balance, October 31, 2000	69,544		$1	$ 542		$ —		$(2,485	)
Net income	—		—	—		—		—
Other comprehensive income:
Unrealized losses on investments, net of tax	—		—	—		—		—
Total comprehensive income
Dividends declared ($0.2525 per share)	—		—	—		—		—
Issuance of non-voting common stock:
On exercise of stock options	918		—	7		5,184		(995	)
Under employee stock purchase plan	59		—	1		1,219		—
Under employee incentive plan	97		—	1		2,345		—
Under restricted stock plan	12		—	—		300		—
For acquisitions	801		—	6		24,593		—
Tax benefit of stock option exercises	—		—	—		1,611		—
Repurchase of non-voting common stock	(2,814	)	—	(22	)	(35,252	)	—
Principal repayments	—		—	—		—		839
Compensation expense related to restricted stock issuanc	—		—	—		—		—

Balance, October 31, 2001	68,617		1	535		—		(2,641	)
Net income	—		—	—		—		—
Other comprehensive income:
Unrealized losses on investments, net of tax	—		—	—		—		—
Foreign currency translation adjustments	—		—	—		—		—
Total comprehensive income
Dividends declared ($0.2975 per share)	—		—	—		—		—
Issuance of non-voting common stock:
On exercise of stock options	2,109		—	16		15,659		(1,498	)
Under employee stock purchase plan	70		—	1		1,795		—
Under employee incentive plan	67		—	1		1,942		—
Tax benefit of stock option exercises	—		—	—		4,787		—
Repurchase of non-voting common stock	(1,606	)	—	(13	)	(24,183	)	—
Principal repayments	—		—	—		—		609
Compensation expense related to restricted stock issuanc	—		—	—		—		—

Balance, October 31, 2002	69,257		1	540		—		(3,530	)
Net income	—		—	—		—		—
Other comprehensive income:
Unrealized losses on investments, net of tax	—		—	—		—		—
Foreign currency translation adjustments	—		—	—		—		—
Total comprehensive income
Dividends declared ($0.4000 per share)	—		—	—		—		—
Issuance of non-voting common stock:
On exercise of stock options	424		—	3		5,753		(219	)
Under employee stock purchase plan	81		—	1		2,099		—
Under employee incentive plan	60		—	—		1,581		—
Tax benefit of stock option exercises	—		—	—		487		—
Repurchase of non-voting common stock	(1,417	)	—	(11	)	(9,920	)	—
Principal repayments	—		—	—		—		754
Compensation expense related to restricted stock issuanc	—		—	—		—		—

Balance, October 31, 2003	68,405		$1	$ 533		$ —		$(2,995	)

See notes to consolidated financial statements.

Consolidated Statements of Shareholders’ Equity and Comprehensive Income

(in thousands)	Deferred Compensation		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Shareholders’ Equity		Comprehensiave Income (Loss)

Balance, October 31, 2000	$ (4,000	)	$ 5,193		$ 255,699		$ 254,950
Net income	—		—		116,020		116,020		$ 116,020
Other comprehensive income:
Unrealized losses on investments, net of tax	—		(295	)	—		(295	)	(295	)
Total comprehensive income									$ 115,725
Dividends declared ($0.2525 per share)	—		—		(17,361	)	(17,361	)
Issuance of non-voting common stock:
On exercise of stock options	—		—		—		4,196
Under employee stock purchase plan	—		—		—		1,220
Under employee incentive plan	—		—		—		2,346
Under restricted stock plan	(300	)	—		—		—
For acquisitions	—		—		—		24,599
Tax benefit of stock option exercises	—		—		—		1,611
Repurchase of non-voting common stock	—		—		(52,825	)	(88,099	)
Principal repayments	—		—		—		839
Compensation expense related to restricted stock issuance	1,100		—		—		1,100

Balance, October 31, 2001	(3,200	)	4,898		301,533		301,126
Net income	—		—		121,057		121,057		$ 121,057
Other comprehensive income:
Unrealized losses on investments, net of tax	—		(2,314	)	—		(2,314	)	(2,314	)
Foreign currency translation adjustments	—		1		—		1		1
Total comprehensive income									$ 118,744
Dividends declared ($0.2975 per share)	—		—		(20,604	)	(20,604	)
Issuance of non-voting common stock:
On exercise of stock options	—		—		—		14,177
Under employee stock purchase plan	—		—		—		1,796
Under employee incentive plan	—		—		—		1,943
Tax benefit of stock option exercises	—		—		—		4,787
Repurchase of non-voting common stock	—		—		(27,180	)	(51,376	)
Principal repayments	—		—		—		609
Compensation expense related to restricted stock issuance	1,100		—		—		1,100

Balance, October 31, 2002	(2,100	)	2,585		374,806		372,302
Net income	—		—		106,123		106,123		$ 106,123
Other comprehensive income:
Unrealized losses on investments, net of tax	—		(1,381	)	—		(1,381	)	(1,381	)
Foreign currency translation adjustments	—		41		—		41		41
Total comprehensive income									$ 104,783
Dividends declared ($0.4000 per share)	—		—		(27,499	)	(27,499	)
Issuance of non-voting common stock:
On exercise of stock options	—		—		—		5,537
Under employee stock purchase plan	—		—		—		2,100
Under employee incentive plan	—		—		—		1,581
Tax benefit of stock option exercises	—		—		—		487
Repurchase of non-voting common stock	—		—		(34,937	)	(44,868	)
Principal repayments	—		—		—		754
Compensation expense related to restricted stock issuance	1,100		—		—		1,100

Balance, October 31, 2003	$ (1,000	)	$ 1,245		$ 418,493		$ 416,277

See notes to consolidated financial statements.

Consolidated Statements of Cash Flow

	Years Ended October 31,
(in thousands)	2003		2002		2001

Cash and cash equivalents, beginning of year	$ 144,078		$ 115,681		$ 60,479
*Cash Flows From Operating Activities:*
Net income	106,123		121,057		116,020
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment loss on long-term investments	—		—		15,101
(Gain) loss on investments	(2,039	)	(1,343	)	2,844
Equity in net income of affiliates	(263	)	(389	)	(967	)
Dividend received from affiliate	394		375		1,688
Minority interest	1,593		1,344		177
Interest on long-term debt	2,100		5,262		650
Deferred income taxes	(16,234	)	(22,307	)	(20,785	)
Tax benefit of stock option exercises	487		5,797		869
Compensation related to restricted stock issuance	1,100		1,100		1,100
Depreciation and other amortization	5,468		5,110		2,602
Amortization of deferred sales commissions	85,192		83,690		79,997
Payment of capitalized sales commissions	(69,949	)	(87,925	)	(135,118	)
Contingent deferred sales charges received	24,483		31,925		27,340
Proceeds from sale of trading investments	43,487		1,038		40,900
Purchase of trading investments	(146,923	)	—		(1,333	)
Changes in assets and liabilities:
Investment adviser fees and other receivables	(4,039	)	3,057		(8,199	)
Other current assets	2,315		(2,613	)	3,872
Other assets	1,262		5,074		(468	)
Accrued compensation	2,325		(6,459	)	4,338
Accounts payable and accrued expenses	7,121		(4,555	)	3,987
Other current liabilities	(194	)	(5,127	)	5,673

Net cash provided by operating activities	43,809		134,111		140,288

*Cash Flows From Investing Activities:*
Additions to equipment and leasehold improvements	(1,090	)	(2,096	)	(2,862	)
Net increase (decrease) in notes and receivables from affiliates	535		(889	)	(154	)
Proceeds from sale of real estate	—		—		1,196
Acquisitions of subsidiaries, net of cash acquired	(16,689	)	—		(81,361	)
Purchase of management contracts	(1,925	)	—		—
Proceeds from sale of available-for-sale investments	54,960		103,351		38,053
Purchase of available-for-sale investments	(10,116	)	(58,335	)	(132,317	)

Net cash provided by (used for) investing activities	25,675		42,031		(177,445	)

*Cash Flows From Financing Activities:*
Proceeds from issuance of short-term debt	—		50,000		—
Proceeds from issuance of long-term debt	—		—		200,552
Long-term debt issuance costs	—		(720	)	(5,069	)
Distributions to minority shareholders	(992	)	(911	)	—
Repayment of debt	(17,975	)	(144,115	)	(7,143	)
Proceeds from issuance of non-voting common stock	9,438		19,414		8,756
Repurchase of non-voting common stock	(44,868	)	(51,376	)	(88,099	)
Dividends paid	(24,832	)	(20,037	)	(16,638	)
Proceeds from the issuance of mutual fund subsidiary’s capital stock	22,000		—		—
Redemption of mutual fund subsidiary’s capital stock	(18,067	)	—		—

Net cash provided by (used for) financing activities	(75,296	)	(147,745	)	92,359

Foreign currency translation adjustment	62		—		—

Net increase (decrease) in cash and cash equivalents	(5,750	)	28,397		55,202

Cash and cash equivalents, end of year	$ 138,328		$ 144,078		$ 115,681

Supplemental Cash Flow Information:
Interest paid	$ 3,101		$ 1,892		$ 1,606

Income taxes paid	$ 70,183		$ 90,266		$ 76,453

See notes to consolidated financial statements.

Notes to Consolidated Financial Statements

1.	Summary of Significant Accounting Policies

Business and Organization

Eaton Vance Corp. and its subsidiaries (“the Company”) provide investment advisory and distribution services to mutual funds and other investment funds, and investment management services to individual high-net-worth investors, family offices and institutional clients. Revenue is largely dependent on the total value and composition of assets under management, which include sponsored funds and other investment portfolios. Accordingly, fluctuations in financial markets and in the composition of assets under management impact revenue and the results of operations.

Principles of Consolidation

The consolidated financial statements include the accounts of Eaton Vance Corp. and its wholly and majority owned subsidiaries. The equity method of accounting is used for investments in affiliates in which the Company’s ownership ranges from 20 to 50 percent. The Company consolidates all investments in affiliates in which the Company’s ownership exceeds 50 percent. The Company provides for minority interests in consolidated companies for which the Company’s ownership is less than 100 percent. All material intercompany accounts and transactions have been eliminated.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Segment Information

Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related Information,” establishes disclosure requirements relating to operating segments in annual and interim financial statements. Management has determined that the Company operates in one business segment, namely as an investment adviser managing funds and separate accounts.

Accounting Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes to the consolidated financial statements. Changes in these estimates may affect amounts reported in future periods.

Cash Equivalents

Cash equivalents consist principally of highly liquid investments in sponsored money market mutual funds, which are readily convertible to cash.

Investments

Marketable securities classified as available-for-sale consist primarily of investments in sponsored funds and are carried at fair value based on quoted market prices. Unrealized holding gains or losses are reported net of tax as a separate component of accumulated other comprehensive income until realized. Realized gains or losses are reflected as a component of gain (loss) on investments. The average cost method is used to determine the realized gain or loss on securities sold.

Marketable securities classified as trading consist primarily of investments in short-term debt instruments and sponsored funds and are carried at fair value based on quoted market prices. Net unrealized holding gains or losses, as well as realized gains or losses, are reflected as a component of other income. The average cost method is used to determine the realized gain or loss on securities sold except for those securities held by the Company’s mutual fund subsidiary, which uses the first-in-first-out method to determine the realized gain or loss on securities sold.

The Company evaluates the carrying value of marketable securities for impairment on a quarterly basis. In its impairment analysis, the Company takes into consideration numerous criteria, including the duration and extent of any decline in fair value. If the decline in value is determined to be other than temporary, the carrying value of the security is written down to fair value through net income.

Investments in the equity of collateralized debt obligation entities are carried at fair value based on discounted cash flows. The excess of future cash flows over the initial investment at the date of purchase is recognized as interest income over the life of the investment using the effective yield method. The Company reviews cash flow estimates throughout the life of each collateralized debt obligation entity. If the updated estimate of future cash flows (taking into account both timing and amounts) is less than the last revised estimate, an impairment loss is recognized based on the excess of the carrying amount of the investment over its fair value.

Certain other investments are carried at the lower of cost or management’s estimate of net realizable value owing primarily to restrictions relative to resale of the investments.

Deferred Sales Commissions

Sales commissions paid to brokers and dealers in connection with the sale of shares of open-end and bank loan interval funds are generally capitalized and amortized over the period in which the shareholder is subject to a contingent deferred sales charge or early withdrawal charge, which does not exceed six years. Distribution plan payments received from these funds are recorded in income as earned. Contingent deferred sales charges and early withdrawal charges received by the Company from redeeming shareholders of open-end and bank loan interval funds, respectively, reduce unamortized deferred sales commissions first, with any remaining amount recorded in income.

The Company evaluates the carrying value of its deferred sales commission assets for impairment on a quarterly basis. In its impairment analysis, the Company compares the carrying value of the deferred sales commission asset to the undiscounted cash flows expected to be generated by the asset over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to fair value based on discounted cash flows. Impairment adjustments are recognized in operating income as a component of amortization of deferred sales commissions.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost of the Company’s investment in the net assets of acquired companies over the fair value of the underlying identifiable net assets at the dates of acquisition. Goodwill is not amortized, but is tested at least annually for impairment.

Identifiable intangible assets generally represent the cost of client relationships and management contracts acquired. Identifiable intangible assets with indefinite useful lives are not amortized, but are tested at least annually for impairment. Identifiable intangible assets with discrete useful lives are amortized on a straight-line basis over their weighted average lives, and are also tested annually for impairment.

Equipment and Leasehold Improvements

Equipment and other fixed assets are recorded at cost and depreciated on a straight-line basis over their estimated useful lives, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease.

Debt Issuance Costs

Deferred debt issuance costs are amortized on a straight-line basis over the related term of the debt and are included in other assets.

Revenue Recognition

Investment adviser, administration, distribution and service fees for the funds and investment adviser fees for separate accounts managed by the Company are recognized as the services are performed. Such fees are primarily based on predetermined percentages of the market values of the assets under management. With the exception of the Company’s separate account investment adviser fees, which are calculated as a percentage of either beginning or ending quarterly net assets, the Company’s investment adviser, administration, distribution and service fees are calculated principally as a percentage of average daily net assets. The Company may waive certain fees for investment and administration services at its discretion. Investment adviser and administration fees are recorded net of any subadvisory arrangements based on the terms of those arrangements. Distribution and service fees are recorded gross of any third-party distribution and service arrangements; the expenses associated with these third-party distribution and service arrangements are recorded in distribution and service fee expense, respectively.

Sales of shares of investment companies in connection with the Company’s activities as principal underwriter are accounted for on a settlement date basis, which approximates trade date basis, with the related commission income and expense recorded on a trade date basis.

Interest income is accrued as earned.

Income Taxes

Earnings Per Share

Basic earnings per share are based on the weighted-average number of common shares outstanding during each period less non-vested restricted stock. Diluted earnings per share are based on basic shares as determined above plus the incremental shares that would be issued upon the assumed exercise of in-the-money stock options and non-vested restricted stock using the treasury stock method.

Stock-Based Compensation

SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” encourages entities to use a fair value-based method in accounting for employee stock-based compensation plans but allows entities to apply the intrinsic value-based method prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for

Stock Issued to Employees.” Entities that elect to apply the intrinsic value-based method must disclose pro forma net income and earnings per share as if the fair value-based method had been applied for all awards in measuring compensation costs.

The Company continues to use the intrinsic value method as described in APB Opinion No. 25. At October 31, 2003, the Company has four stock-based compensation plans, which are described more fully in Note 9. Had compensation cost for the Company’s stock-based compensation plans been determined consistent with the fair value method as described in SFAS No. 123, the Company’s net income and earnings per share for the years ended October 31, 2003, 2002 and 2001 would have been reduced to the following pro forma amounts:

(in thousands, except per share figures)	2003		2002		2001

Net income as reported	$ 106,123		$ 121,057		$ 116,020
Add: Stock-based employee compensation
expense included in reported net income,
net of related tax effects	715		715		715
Deduct: Total stock-based employee
compensation expense determined under
fair value-based method for all awards,
net of related tax effects	(12,028	)	(10,815	)	(7,546	)

Pro forma net income	$ 94,810		$ 110,957		$ 109,189

Earnings per share:
Basic – as reported	$ 1.54		$ 1.75		$ 1.69

Basic – pro forma	$ 1.38		$ 1.60		$ 1.59

Diluted – as reported	$ 1.51		$ 1.70		$ 1.60

Diluted – pro forma	$ 1.35		$ 1.55		$ 1.51

For purposes of pro forma disclosure, the estimated fair value of each option grant is amortized to expense ratably over the vesting period of the option. See Note 9 for assumptions as to dividend yield, volatility, risk-free interest rate and the expected life of options used in determining fair value.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at current exchange rates as of the end of the accounting period. Related revenue and expenses are translated at average exchange rates in effect during the accounting period. Net translation exchange gains and losses are excluded from income and recorded in accumulated other comprehensive income. Foreign currency transaction gains and losses are reflected in income currently.

Comprehensive Income

The Company reports all changes in comprehensive income in the Consolidated Statements of Shareholders’ Equity and Comprehensive Income. Comprehensive income includes net income, unrealized gains and losses on securities classified as available-for-sale (net of tax) and foreign currency translation adjustments (net of tax).

2.	Accounting Developments

In December 2003, the FASB issued FIN No. 46 (revised December 2003), which, removed the bias in favor of the decision maker in the determination of who receives a majority of the expected residual return. As a result, management has concluded that the Company will not be required to consolidate any of the CDO entities for which it acts as collateral manager.

3.	Acquisitions

In the last three fiscal years, the Company has acquired three institutional investment management firms in an effort to expand the Company’s managed account and institutional business.

On September 30, 2001, the Company acquired 70 percent of Atlanta Capital Management Company, LLC (“Atlanta Capital”) for an aggregate initial payment of $75.0 million, consisting of cash of $60.0 million and Eaton Vance Corp. non-voting common stock valued at $15.0 million. The value of the 479,359 shares of non-voting common stock issued in conjunction with the acquisition was determined based on the average market price of the Company’s non-voting common stock over the 20-day period prior to September 30, 2001. Atlanta Capital’s principals will continue to hold 30 percent of the equity of Atlanta Capital through December 31, 2004. Beginning in calendar 2005, Atlanta Capital’s principals will have the right to sell and the Company will have the right to purchase the remaining 30 percent of Atlanta Capital over a five-year period. The price for acquiring the remaining 30 percent of Atlanta Capital will be based on a multiple of earnings before taxes (a measure that is intended to approximate fair market value) in those years. Any additional payments made will be treated as additional purchase price for accounting purposes.

On September 30, 2001, the Company also acquired 80 percent of Fox Asset Management for an aggregate initial payment of $32.0 million, consisting of cash of $22.4 million and Eaton Vance Corp. non-voting common stock valued at $9.6 million. The value of the 321,544 shares of non-voting common stock issued in conjunction with the acquisition was determined based on the average market price of the Company’s non-voting common stock over the 10-day period prior to September 30, 2001. Additional

payments to Fox Asset Management’s principals in 2005 and 2006 of up to $30.0 million are contingent upon Fox Asset Management achieving certain financial performance criteria. Fox Asset Management’s principals will continue to hold 20 percent of the equity of Fox Asset Management through December 31, 2007. Beginning in calendar 2008, Fox Asset Management’s principals will have the right to sell and the Company will have the right to purchase the remaining 20 percent of Fox Asset Management over a four-year period. The price for acquiring the remaining 20 percent of Fox Asset Management will be based on a multiple of earnings before interest and taxes (a measure that is intended to approximate fair market value) in those years. Any additional payments made will be treated as additional purchase price for accounting purposes.

On September 10, 2003, the Company acquired an 80 percent capital interest and an 81.2 percent profits interest in Parametric Portfolio Associates (“Parametric”) for an aggregate initial payment of $28.0 million in cash. Beginning in calendar 2005, certain sellers of Parametric will have the right to sell and the Company will have the right to purchase an additional 8.6 percent of the capital of Parametric over a three-year period. Beginning in calendar 2007, certain sellers of Parametric will have the right to sell and the Company will have the right to purchase the remaining 11.4 percent of the capital of Parametric (which entitles the holder to the remaining 18.8 percent profits interest) over a six-year period. The price for acquiring the remaining capital and profits interests in Parametric will be based on a multiple of earnings before interest and taxes (a measure that is intended to approximate fair market value) in those years. Any additional payments made will be treated as additional purchase price for accounting purposes.

The acquisitions of Atlanta Capital, Fox Asset Management and Parametric were accounted for using the purchase method of accounting and, accordingly, the excess of purchase price, including acquisition costs, over the fair value of the net assets acquired resulted in goodwill of $50.4 million, $19.1 million and $19.4 million, respectively. Net assets acquired included $24.7 million, $13.4 million and $9.1 million of other intangible assets for Atlanta Capital, Fox Asset Management and Parametric, respectively, which consisted of client relationships and technology acquired. These assets are being amortized on a straight-line basis over their weighted average estimated useful lives of approximately 19 years. Goodwill and intangible assets acquired in conjunction with the Atlanta Capital and Fox Asset Management transactions are deductible for tax purposes; goodwill and intangible assets acquired in conjunction with the Parametric transaction are not.

These financial statements include the operating results of Atlanta Capital and Fox Asset Management from September 30, 2001, and Parametric from September 10, 2003, their respective dates of acquisition. Pro forma results of operations for these acquisitions have not been presented because the results of operations would not have been materially different from those reported in the accompanying consolidated statements of income.

Condensed balance sheets disclosing the amount of each major asset and liability category attributable to the acquired entities at acquisition date have not been provided as the net assets of the acquired entities, excluding goodwill and intangible assets, are not material to the consolidated financial statements of the Company.

4.	Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the year ended October 31, 2003 and 2002 are as follows:


(in thousands)	2003	2002

Balance, beginning of period	$69,467	$69,212
Adjustments to goodwill	19,412	255

Balance, end of period	$88,879	$69,467

The adjustment to goodwill in fiscal 2003 reflects the acquisition of Parametric; the adjustment to goodwill in fiscal 2002 reflects additional direct costs recognized in conjunction with the acquisitions of Atlanta Capital and Fox Asset Management, which were completed in fiscal 2001.

The following is a summary of other intangible assets at October 31, 2003, and 2002:

2003
(dollars in thousands)	Weighted Average Amortization Period (in Years)	Gross Carrying Amount	Accumulated Amortization

Amortized intangible assets:
Client relationships and technology acquired	16.9	$49,185	$4,303
Non-amortized intangible assets:
Mutual fund management contract acquired	—	1,311	—

Total		$50,496	$4,303

2004
(dollars in thousands)	Weighted Average Amortization Period (in Years)	Gross Carrying Amount	Accumulated Amortization

Amortized intangible assets:
Client relationships acquired	18.2	$38,140	$2,155
Non-amortized intangible assets:
Mutual fund management contract acquired	—	1,311	—

Total		$39,451	$2,155

Additions to amortized intangible assets of $11.0 million during the twelve months ended October 31, 2003 reflect management contracts acquired by one of the Company’s majority owned subsidiaries and the management contracts and technology acquired in conjunction with the Company’s purchase of an 80 percent capital interest in Parametric.

Amortization expense was $2.1 million, $2.0 million and $0.2 million for the years ended October 31, 2003, 2002 and 2001, respectively. Estimated amortization expense for the next five years is as follows:

Year Ending October 31,		Estimated Amortization Expense

(in thousands)
2004		$3,017
2005		$3,089
2006		$3,089
2007		$2,724
2008		$2,469

Operating results adjusted to exclude amortization expense related to goodwill and intangible assets that are no longer being amortized and equity method goodwill have not been presented for the year ending October 31, 2001 because the results of operations, as reported in the accompanying consolidated statements of income, would not have been materially different.

5.	Investments

The following is a summary of investments at October 31, 2003 and 2002:

(in thousands)	2003	2002

Short-term investments:
Sponsored funds	$ 1,355	$43,886
Short-term debt securities	103,129	—

Total	$104,484	$43,886

Long-term investments:
Sponsored funds	$ 12,948	$18,826
Collateralized debt obligation entities	15,766	13,228
Investment in affiliates	6,857	7,009
Other investments	919	919

Total	$ 36,490	$39,982

Investments in sponsored funds and short-term debt securities

The following is a summary of the cost and fair value of investments in sponsored funds and short-term debt instruments as of October 31, 2003, and 2002:


		Gross Unrealized
2003
(in thousands)	Cost	Gains	Losses		Fair Value
Sponsored funds:
Short-term	$ 1,106	$ 249	$ —		$ 1,355
Long-term	11,308	1,721	(81	)	12,948
Short-term debt securities	103,265	35	(171	)	103,129

Total	$115,679	$2,005	($ 252	)	$117,432


		Gross Unrealized
2002
(in thousands)	Cost	Gains	Losses		Fair Value

Sponsored funds:
Short-term	$ 43,657	$ 229	$ —		$ 43,886
Long-term	15,033	4,598	(805	)	18,826

Total	$ 58,690	$4,827	$(805	)	$ 62,712

Gross unrealized gains and losses on investments in sponsored funds, which are classified as available-for-sale, have been excluded from earnings and reported as a component of Accumulated other comprehensive income, net of deferred taxes. Gross unrealized gains and losses on short-term debt instruments, which are classified as trading, have been reported in income currently as a component of other income.

The following is a summary of the Company’s realized gains and (losses) upon disposition of sponsored funds and short-term debt instruments for the years ended October 31, 2003, 2002 and 2001:


(in thousands)	2003		2002		2001

Gains	$ 4,572		$ 1,888		$ —
Losses	(2,199	)	(544	)	(2,423	)

Net realized gain (loss)	$ 2,373		$ 1,344		$(2,423	)

Investments in collateralized debt obligation entities

The Company provides investment management services for, and has made investments in a number of CDO entities. The Company’s minority equity ownership interests in the CDO entities are reported at fair value. The Company earns investment management fees, including subordinated management fees in some cases, for managing the collateral for the CDOs, as well as incentive fees that are contingent on certain performance conditions. At October 31, 2003, combined assets under management in the collateral pools of these CDO entities were approximately $2.0 billion, and the Company’s maximum exposure to loss as a result of its investments in the equity of CDO entities was approximately $15.8 million, which is reflected in the Company’s Consolidated Balance Sheet at October 31, 2003. Investors in CDOs have no recourse against the Company for any losses sustained in the CDO structure. As explained in Note 2, management has concluded that the Company will not have to consolidate any of the CDO entities in which it has a minority equity investment.

The carrying value of $15.8 million and $13.2 million at October 31, 2003 and 2002, respectively, for the Company’s minority equity ownership interests in CDO entities is their estimated fair value. In fiscal 2001, the Company recognized a pre-tax impairment loss of $15.1 million related to these investments. The impairment loss resulted from higher than forecasted default rates in the high-yield bond market and the effects of the higher default rates on the value of the Company’s investments in these collateralized debt obligation funds.

Investment in affiliates

The Company has a 20 percent equity interest in Lloyd George Management (BVI) Limited (“LGM”), an independent investment management company based in Hong Kong that manages or co-manages several international funds sponsored by the Company. The Company’s investment in LGM was $6.6 million and $6.8 million at October 31, 2003 and 2002, respectively. At October 31, 2003, the Company’s investment exceeded its share of the underlying net assets of LGM by $4.6 million. Amortization of this excess was discontinued on November 1, 2001, as a result of the adoption of SFAS No. 142. The Company reviews its investment in LGM annually for impairment pursuant to APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.”

A subsidiary of the Company invests in certain investment limited partnerships in which the subsidiary is a general partner. The investments are recorded on the equity method of accounting owing to the subsidiary’s general partner role. The subsidiary’s investment in these partnerships was $0.2 million at both October 31, 2003, and 2002.

Other investments

Included in other investments are certain investments carried at cost, amounting to $0.9 million at both October 31, 2003, and 2002. Management believes that the fair value of these investments approximates their carrying value.

6.	Equipment and Leasehold Improvements

The following is a summary of equipment and leasehold improvements at October 31, 2003 and 2002:

(in thousands)	2003		2002

Equipment	$ 18,081		$ 15,756
Leasehold improvements	9,770		9,508

Subtotal	27,851		25,264
Less: Accumulated depreciation and amortization	(15,440	)	(11,367	)

Equipment and leasehold improvements, net	$ 12,411		$ 13,897

7.	Long-term Debt

The following is a summary of long-term debt at October 31, 2003 and 2002:

	2003				2002
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value

6.22% senior notes due 2004	$ 7,143		$ 7,323		$ 14,286		$ 14,924
1.5% zero-coupon exchangeable
senior notes due 2031	118,736		122,485		116,975		116,753

Total	125,879		129,808		131,261		131,677
Less: current maturities	(7,143	)	(7,323	)	(7,143	)	(7,532	)

Total long-term debt	$ 118,736		$ 122,485		$ 124,118		$ 124,145

6.22% Senior Notes

The Company has 6.22% senior notes due March 2004, with a remaining balance of $7.1 million at October 31, 2003. The notes may be prepaid in part or in full at any time. Certain covenants in the purchase agreement require the Company to maintain specific levels of cash flow and net income; other covenants restrict additional investment and indebtedness of the Company. At October 31, 2003, the Company was in compliance with all covenants.

The senior notes have been fair valued by discounting future cash flows using a market interest rate available for debt with similar terms and remaining maturity.

Zero-coupon Exchangeable Senior Notes

On August 13, 2001, the Company’s operating subsidiary, Eaton Vance Management (“EVM”), issued zero-coupon exchangeable senior notes (“Notes”) with a principal amount of $314.0 million due August 13, 2031, resulting in gross proceeds of approximately $200.6 million. The net proceeds of the offering were approximately $195.5 million after payment of debt issuance costs. The Notes were issued in a private placement to qualified institutional buyers at an initial offering price of $638.70 per $1,000 principal amount at maturity. The discounted price reflects a yield to maturity of 1.5 percent per year. Upon certain events, each Note is exchangeable into 14.3657 shares of the Company’s non-voting common stock, subject to adjustment. EVM may redeem the Notes for cash on or after August 13, 2006, at their accreted value. At the option of Note holders, EVM may be required to repurchase the Notes at their accreted value on various dates beginning on the first, third and fifth anniversaries of the issue date and at five year intervals thereafter until maturity. At the option of the Note holders, EVM may also be required to repurchase the Notes at

their accreted value if the credit rating of the Notes is decreased by three or more rating subcategories below its initial rating by either Moody’s or Standard & Poor’s. Such repurchases can be paid in cash, shares of the Company’s non-voting common stock or a combination of both.

On August 9, 2002, EVM amended the terms of the Notes to permit the Note holders, at their option, to require the repurchase of the Notes on November 13, 2002. EVM further amended the terms of the Notes to provide that each holder electing not to require EVM to repurchase the holder’s Notes on August 13, 2002, would receive a one-time cash payment equal to 0.50 percent of each Note’s accreted value. On August 14, 2002, EVM repurchased for cash $87.0 million of the Notes at accreted value ($134.1 million principal amount at maturity). On August 15, 2002, EVM made a one-time cash interest payment totaling $0.6 million to holders of the Notes as of the close of business on August 14, 2002.

The Company expensed approximately $2.1 million of deferred debt issuance costs in conjunction with the repurchase of Notes on August 14, 2002.

On November 12, 2002, EVM further amended the terms of the Notes to provide that each holder electing not to require EVM to repurchase the holder’s Notes on November 13, 2002, would receive incremental cash interest payments equal to 1.627 percent per year of each Note’s principal amount at maturity for a period of 21 months. With the exception of the first interest payment due on February 13, 2003, which was paid in arrears for the three-month period ending on that date, these interest payments are accrued over the six-month period prior to payment and are recorded in interest expense. No Notes were tendered for repurchase on November 13, 2002. Holders of the Notes have the option to require EVM to repurchase the Notes on August 13, 2004. The Notes have been classified as a long-term liability given EVM’s ability to repurchase the Notes with stock in lieu of cash at its discretion.

The Notes have been valued by discounting future cash flows using a market interest rate available for debt with similar terms and remaining maturity.

Corporate Credit Facility

In December 2001, EVM executed a revolving credit facility with several banks. This facility, which expires December 21, 2004, provides that EVM may borrow up to $170.0 million at market rates of interest that vary depending on level of usage of the facility and credit ratings of the Notes. The agreement contains financial covenants with respect to leverage and interest coverage and requires EVM to pay an annual commitment fee on any unused portion. At October 31, 2003, EVM had no borrowings outstanding under its revolving credit facility.

8.	Commitments and Contingencies

In the normal course of business, the Company enters into agreements that include indemnities in favor of third parties, such as engagement letters with advisors and consultants, information technology agreements, distribution agreements and service agreements. The Company has also agreed to indemnify its directors and certain of its officers and employees in accordance with the Company’s by-laws. Certain agreements do not contain any limits on the Company’s liability and, therefore, it is not possible to estimate the Company’s potential liability under these indemnities. In certain cases, the Company has recourse against third parties with respect to these indemnities. Further, the Company maintains insurance policies that may provide coverage against certain claims under these indemnities.

The Company and its subsidiaries are subject to various legal proceedings. In the opinion of management, after discussions with legal counsel, the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial condition or results of operations of the Company.

The Company leases certain office space and equipment under noncancelable operating leases. Rent expense under these leases in 2003, 2002 and 2001 amounted to $5.6 million, $5.2 million and $4.6 million, respectively. Future minimum lease commitments are as follows:

Year Ending October 31,		Amount

(in thousands)
2004		$ 6,748
2005		6,652
2006		5,998
2007		5,653
2008		5,685
2009 – thereafter		2,960

Total		$33,696

9.	Stock Plans

Stock Option Plan

The Company has a Stock Option Plan (“the 1998 Plan”) administered by the Option Committee of the Board of Directors under which options to purchase shares of the Company’s non-voting common stock may be granted to all eligible employees and independent directors of the Company. No stock options may be granted under the plan with an exercise price of less than the fair market value of the stock at the time the stock option is granted. The options expire five to ten years from the date of grant and vest over a five-year period as stipulated in each grant. The 1998 Plan contains provisions that, in the event of a change in control of the Company, may accelerate the vesting of awards. A total of 12.0 million shares have been reserved for issuance under the 1998 Plan. Through October 31, 2003, 9.2 million shares have been issued pursuant to this plan.

Stock option transactions under the 1998 Plan and predecessor plans are summarized as follows:

	2003			2002			2001

	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price

(share figures in thousands)

Options outstanding, beginning
of period	6,127		$22.18	6,453		$15.42	5,395		$10.04
Granted	2,609		29.36	1,881		28.88	2,009		25.44
Exercised	(424	)	13.58	(2,109	)	7.43	(918	)	5.66
Forfeited/Expired	(259	)	27.01	(98	)	22.81	(33	)	18.14

Options outstanding, end
of period	8,053		$24.80	6,127		$22.18	6,453		$15.42

Options exercisable, end of period	2,463		$19.31	1,531		$16.09	2,701		$ 8.64

Outstanding options to purchase shares of non-voting common stock issued under the 1998 Plan and predecessor plans are summarized as follows:

	Options Outstanding			Options Exercisable

Range of Exercise Prices	Share Outstanding as of 10/31/03	Weighted Average Remaining Contractual Life	Weighted Average Remaining Price	Shares Exercisable as of 10/31/03	Weighted Average Exercise Price

(share figures in thousands)
$10.06 – $11.47	935	3.0	$11.43	856	$11.43
$17.19 – $18.91	954	5.9	17.22	506	17.21
$21.16 – $24.03	50	6.3	21.67	30	21.65
$24.53 – $28.13	1,559	7.0	24.63	615	24.59
$28.67 – $32.01	4,380	8.5	29.02	441	28.97
$33.16 – $35.65	161	9.4	34.27	11	34.91
$37.09 – $40.32	14	8.2	37.56	4	37.75

	8,053	7.3	$24.80	2,463	$19.31

In November 2003, the Company granted options for the purchase of an additional 2.4 million shares under the 1998 Plan at prices ranging from $35.02 to $38.52.

The weighted average fair value of options granted on the date of grant using the Black-Scholes option pricing model was as follows:

	2003	2002	2001

Weighted average fair value of options
granted	$ 10.75	$ 10.83	$ 11.62

*Assumptions:*

Dividend yield	1.38%	1.11%	1.03%
Volatility	30%	30%	33%
Risk-free interest rate	4.2%	4.0%	4.7%
Expected life of options	8 years	8 years	10 years

Restricted Stock Plan

The Company has a Restricted Stock Plan administered by the Compensation Committee of the Board of Directors under which restricted stock may be granted to key employees. Shares of the Company’s non-voting common stock granted under the plan are subject to restrictions on transferability and carry the risk of forfeiture, based in each case on such considerations as the Compensation Committee shall determine. Unless the Compensation Committee determines otherwise, restricted stock that is still subject to restrictions upon termination of employment shall be forfeited. Restrictions on shares granted lapse in three to seven years from date of grant. A total of 1,000,000 shares have been reserved under the plan.

In fiscal 2001, 12,228 shares were issued pursuant to the plan at a weighted average grant date fair value of $24.53 per share. No such shares were issued in fiscal 2003 or 2002. Because these shares are contingently forfeitable, compensation expense is recorded over the forfeiture period. The Company recorded compensation expense of $1.1 million for each of the years ended October 31, 2003, 2002, and 2001 relating to shares issued in fiscal 2001 and prior years.

Employee Stock Purchase Plan

A total of 4.5 million shares of the Company’s non-voting common stock have been reserved for issuance under the Employee Stock Purchase Plan. The plan qualifies under Section 423 of the United States Internal Revenue Code and permits eligible employees to direct up to 15 percent of their salaries to a maximum of $12,500 toward the purchase of Eaton Vance Corp. non-voting common stock at the lower of 90 percent of the market price of the non-voting common stock at the beginning or at the end of each six-month offering period. Through October 31, 2003, 3.4 million shares have been issued pursuant to this plan. No compensation expense has been recorded for the discounted purchase price because the Company’s plan qualifies under Section 423.

Incentive Plan-Stock Alternative

A total of 2.4 million shares of the Company’s non-voting common stock have been reserved for issuance under the Incentive Plan-Stock Alternative, a plan that qualifies under Section 423 of the United States Internal Revenue Code. The plan permits employees and officers to direct up to half of their monthly and annual incentive bonuses toward the purchase of non-voting common stock at 90 percent of the average market price of the stock for the five days subsequent to the end of the six-month offering period. Through October 31, 2003, 1.1 million shares have been issued pursuant to this plan. No compensation expense has been recorded for the discounted purchase price because the plan qualifies under Section 423.

Stock Option Income Deferral Plan

The Company has established an unfunded, non-qualified Stock Option Income Deferral Plan. The Plan is intended to permit key employees to defer recognition of income upon exercise of non-qualified stock options previously granted by the Company. As of October 31, 2003, 658,377 options have been exercised and placed in trust with the Company.

Employee Loan Program

The Company has established an Employee Loan Program under which a program maximum of $10.0 million is available for loans to officers (other than executive officers) and other key employees of the Company for purposes of financing the exercise of employee stock options. Loans are written for a seven-year period, at varying fixed interest rates (currently ranging from 2.8 percent to 7.1 percent), are payable in annual installments commencing with the third year in which the loan is outstanding, and are collateralized by the stock issued upon exercise of the option. The Company ceased making new loans under a previous loan program to directors or executive officers in conformity with a federal law effective July 30, 2002. Loans outstanding under this program are reflected as notes receivable from stock option exercises in shareholders’ equity and amounted to $3.0 million and $3.5 million at October 31, 2003 and 2002, respectively.

The fair value of loans receivable has been determined by discounting expected future cash flows using management’s estimates of current market interest rates for such receivables. The fair value of these receivables approximates their carrying value (see Note 15).

10.

Employee Benefit Plans

Profit Sharing Retirement Plans

The Company has two profit sharing retirement plans for the benefit of substantially all employees. The Company has contributed $6.0 million, $5.6 million and $4.0 million, for the years ended October 31, 2003, 2002, and 2001, respectively, representing 15 percent of eligible compensation for each of the three years.

Savings Plan and Trust

The Company has a Savings Plan and Trust that is qualified under Section 401 of the Internal Revenue Code. All full-time employees who have met certain age and length of service requirements are eligible to participate in the plan. This plan allows participating employees to make elective deferrals up to the plan’s annual limitations. The Company then matches each participant’s contribution on a dollar-for-dollar basis up to a maximum of $1,040. The Company’s expense under the plan was $0.5 million, $0.4 million and $0.3 million for each of the years ended October 31, 2003, 2002, and 2001, respectively.

Supplemental Profit Sharing Plan

The Company has an unfunded, non-qualified Supplemental Profit Sharing Plan whereby certain key employees of the Company may receive profit sharing contributions in excess of the amounts allowed under the profit sharing retirement plans. No employee may receive combined contributions in excess of $30,000 related to the Profit Sharing Retirement Plans and the Supplemental Profit Sharing Plan. The Company’s expense under the supplemental plan for each of the years ended October 31, 2003, 2002, and 2001 was $94,000, $47,000 and $2,000, respectively.

11.

Common Stock

All outstanding shares of the Company’s voting common stock are deposited in a voting trust, the trustees of which have unrestricted voting rights with respect to the voting common stock. The trustees of the voting trust are all officers of the Company. Non-voting common shares do not have voting rights under any circumstances.

On October 22, 2003, the Company’s Board of Directors authorized the purchase by the Company of up to 4.0 million shares of the Company’s non-voting common stock. Through October 31, 2003, 0.1 million shares have been acquired under this authorization. An additional 1.3 million shares were purchased in fiscal 2003 under a previous authorization. Shares repurchased by the Company are constructively retired.

12.

Income Taxes

The provision for income taxes for the years ended October 31, 2003, 2002 and 2001 consists of the following:

(in thousands)	2003		2002		2001

Current:
Federal	$ 69,575		$ 82,912		$ 78,241
State	4,359		5,049		5,075
Deferred:
Federal	(14,750	)	(18,679	)	(16,484	)
State	(1,484	)	(3,628	)	(4,301	)

Total	$ 57,700		$ 65,654		$ 62,531

(in thousands)	2003	2002

Deferred tax assets:
Capital loss carryforward	$ 2,914	$ —
Deferred rent	879	852
Differences between book and tax bases of investments	988	5,404
Other	1,274	1,004

Total deferred tax asset	$ 6,055	$ 7,260

Deferred tax liabilities:
Deferred sales commissions	$30,604	$51,380
Accretion on zero-coupon exchangeable notes	2,758	1,593
Differences between book and tax bases of goodwill
and intangibles	4,357	2,095
Differences between book and tax bases of property	694	829
Unrealized net holding gains on investments	732	1,479

Total deferred tax liability	$39,145	$57,376

Net deferred tax liability	$33,090	$50,116

Deferred tax assets and liabilities are reflected on the Company’s Consolidated Balance Sheets at October 31, 2003 and 2002 as follows:

(in thousands)	2003		2002

Net current deferred tax asset	$ 113		$ 415
Net non-current deferred tax liability	(33,203	)	(50,531	)

Net deferred tax liability	($33,090	)	($50,116	)

The Company’s effective tax rate was 35 percent in fiscal 2003, 2002 and 2001, respectively. In 2003, 2002 and 2001, there is no difference between the statutory federal tax rate and the effective tax rate primarily due to mutual fund industry state tax incentives.

The exercise of non-qualified stock options resulted in a reduction of taxes payable of approximately $0.5 million, $4.8 million and $1.6 million for the years ended October 31, 2003, 2002 and 2001, respectively. Such benefit has been reflected in equity.

The Company has recorded a deferred income tax asset of $2.9 million as of October 31, 2003 reflecting the future tax benefit of approximately $7.5 million in federal and state capital loss carryforwards, which will expire in fiscal 2008. The Company believes that all of the deferred income tax assets will be realized. As a result, no reserve has been established.

The Massachusetts Department of Revenue (“MDOR”) examined the tax returns for the Company and its subsidiaries for the fiscal years 1993 through 1995. In connection with this examination, the MDOR assessed additional taxes and interest of $5.8 million. Massachusetts general laws required the Company to pay the assessment in advance while the Company contested the assessment. The Company recovered the $5.8 million, plus interest of $2.1 million in fiscal 2002, which was recorded as interest income.

13.

Comprehensive Income

Total comprehensive income is reported in the Consolidated Statements of Shareholders’ Equity and Comprehensive Income and is composed of net income and other comprehensive income (loss), net of tax.

The components of other comprehensive income (loss) at October 31, 2003, 2002, and 2001 are as follows:

(in thousands)	Gross Amount		Tax (Expense) or Benefit		Net Amount

2003
Unrealized gains (losses) on investments	($2,149	)	$ 768		($1,381	)
Foreign currency translation adjustments	62		(21	)	41

Other comprehensive income (loss)	($2,087	)	$ 747		($1,340	)

2003
Unrealized gains (losses) on investments	($3,641	)	$ 1,327		($2,314	)
Foreign currency translation adjustments	2		(1	)	1

Other comprehensive income (loss)	($3,639	)	$ 1,326		($2,313	)

2001
Unrealized gains (losses) on investments	($ 532	)	$ 237		($ 295	)

Other comprehensive income (loss)	($ 532	)	$ 237		($ 295	)

During the years ended October 31, 2003, 2002, and 2001, the Company reclassified gains and (losses) of $2.7 million, $0.9 million and ($1.6) million, respectively, from other comprehensive income to net income as gains and losses were realized upon the sale of available-for-sale securities.

Accumulated other comprehensive income is reported in the Consolidated Statements of Shareholders’ Equity and Comprehensive Income. The components of accumulated other comprehensive income at October 31, 2003, and 2002 are as follows:

(in thousands)	2003	2002

Unrealized gains (losses) on investments, net of tax	$1,203	$2,584
Foreign currency translation adjustments, net of tax	42	1

Total	$1,245	$2,585

14.

Earnings Per Share

The following table provides a reconciliation of net income and common shares used in the basic and diluted earnings per share computations for the years ended October 31, 2003, 2002 and 2001:


(in thousands, except per share data)	2003	2002	2001

Net income	$106,123	$121,057	$116,020

Weighted-average shares outstanding – basic	68,916	69,151	68,750
Incremental common shares from stock options
and restricted stock awards	1,459	2,261	3,566

Weighted-average shares outstanding – diluted	70,375	71,412	72,316

Earnings per share:
Basic	$ 1.54	$ 1.75	$ 1.69

Diluted	$ 1.51	$ 1.70	$ 1.60

The Company uses the treasury stock method to account for the dilutive effect of unexercised stock options and unvested restricted stock in diluted earnings per share. Antidilutive incremental common shares related to stock options excluded from the computation of earnings per share were 105,000, 45,000 and 4,000 for the years ended October 31, 2003, 2002 and 2001, respectively.

15.

Fair Value of Financial Instruments

The following is a summary of the carrying amounts and estimated fair values of the Company’s financial instruments as of October 31, 2003 and 2002:

	2003		2002
(in thousands)	Carrying Value	Fair Value	Carrying Value	Fair Value

Investments:
Sponsored funds	$ 14,303	$ 14,303	$ 62,712	$ 62,712
Short-term debt securities	103,129	103,129	—	—
Collateralized debt obligation entities	15,766	15,766	13,228	13,228
Other investments	7,776	7,776	7,928	7,928

Total	$140,974	$140,974	$ 83,868	$ 83,868

Notes receivable from stock option
exercises	$ 2,995	$ 2,995	$ 3,530	$ 3,530

Long-term debt	$118,736	$122,485	$124,118	$124,145

Assumptions used in the determination of fair value have been described in Notes 5, 7 and 9.

16.

Regulatory Requirements

Eaton Vance Distributors, Inc., a wholly owned subsidiary of the Company and principal underwriter of the Eaton Vance Funds, is subject to the Securities and Exchange Commission uniform net capital rule (Rule 15c3-1), which requires the maintenance of minimum net capital. For purposes of this rule, the subsidiary had net capital of $20.5 million, which exceeds its minimum net capital requirement of $0.9 million at October 31, 2003. The ratio of aggregate indebtedness to net capital at October 31, 2003 was .63-to-1.

17.

Concentration of Credit Risk and Significant Relationships

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains cash and cash equivalents with various financial institutions. Cash deposits maintained at a financial institution may exceed the federally insured limit.

The portfolios and related funds that provided over 10 percent of the total revenue of the Company are as follows:

(dollar figures in thousands)	2003		2002		2001

Tax-Managed Growth Portfolio and related funds:
Investment adviser and administration fees,
underwriting commissions, distribution
plan payments, contingent deferred sales
charges and service fees	$ 161,544		$ 180,244		$ 188,484
Percent of revenue	30.9	%	34.5	%	37.5	%

Senior Debt Portfolio and related funds:
Investment adviser and administration fees,
distribution fees, early withdrawal
charges and service fees	$ 45,519		$ 65,885		$ 93,181
Percent of revenue	8.7	%	12.6	%	18.5	%

18.

Comparative Quarterly Financial Information (Unaudited)

	2003

(in thousands, except per share figures)	First Quarter	Second Quarter	Third Quarter	Forth Quarter	Full Year

Total revenue	$124,934	$120,876	$133,904	$143,419	$523,133
Operating income	$ 38,388	$ 38,616	$ 40,872	$ 45,268	$163,144
Net income	$ 25,909	$ 25,014	$ 26,527	$ 28,673	$106,123
Earnings per share:
Basic	$ 0.37	$ 0.36	$ 0.39	$ 0.42	$ 1.54
Diluted	$ 0.37	$ 0.36	$ 0.38	$ 0.41	$ 1.51

	2002

(in thousands, except per share figures)	First Quarter	Second Quarter	Third Quarter	Forth Quarter	Full Year

Total revenue	$135,670	$132,824	$130,673	$123,818	$522,985
Operating income	$ 49,518	$ 49,926	$ 46,406	$ 38,073	$183,923
Net income	$ 33,193	$ 32,835	$ 31,181	$ 23,848	$121,057
Earnings per share:
Basic	$ 0.48	$ 0.47	$ 0.45	$ 0.35	$ 1.75
Diluted	$ 0.46	$ 0.46	$ 0.44	$ 0.34	$ 1.70

Independent Auditors’ Report

To the Board of Directors and Shareholders of Eaton Vance Corp.:

We have audited the accompanying consolidated balance sheets of Eaton Vance Corp. and its subsidiaries as of October 31, 2003 and 2002, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for each of the three years in the period ended October 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Eaton Vance Corp. and its subsidiaries as of October 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2003 in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
December 12, 2003

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of October 31, 2003, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. Disclosure controls and procedures are the controls and other procedures that the Company designed to ensure that it records, processes, summarizes and reports in a timely manner the information it must disclose in reports that it files with or submits to the SEC. The Company’s Chief Executive Officer and Chief Financial Officer participated in this evaluation. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the date of their evaluation, the Company’s disclosure controls and procedures were effective.

There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

Item 10. Directors and Executive Officers of the Registrant

The following table sets forth the name, age and positions of each of the Company’s directors and executive officers at October 31, 2003:

Name	Age	Position


James B. Hawkes	61	Chairman of the Board, President and Chief Executive Officer
John G.L. Cabot	68	Director
Leo I. Higdon, Jr.	57	Director
John M. Nelson	72	Director
Vincent M. O’Reilly	65	Director
Ralph Z. Sorenson	70	Director
Thomas E. Faust Jr.	45	Director, Executive Vice President and Chief Investment Officer
Jeffrey P. Beale	47	Vice President and Chief Administrative Officer
Alan R. Dynner	63	Vice President, Secretary and Chief Legal Officer
Laurie G. Hylton	37	Vice President and Chief Accounting Officer
William M. Steul	61	Vice President, Treasurer and Chief Financial Officer
Wharton P. Whitaker	58	Vice President and Chief Sales and Marketing Officer

Eaton Vance Corp. was founded as a holding company by Eaton & Howard, Vance Sanders, Inc. in February 1981. Eaton & Howard, Vance Sanders, Inc. (renamed Eaton Vance Management, Inc. in June 1984 and reorganized as Eaton Vance Management in October 1990) was formed at the time of the acquisition of Eaton & Howard, Incorporated by Vance, Sanders & Company, Inc. on May 1, 1979. In this Item 10, the absence of a corporate name indicates that, depending on the dates involved, the executive held the indicated titles in a firm in the chain of Vance, Sanders & Company, Inc., Eaton & Howard, Vance Sanders Inc., or Eaton Vance Corp. In general, the following officers hold their positions for a period of one year or until their successors are duly chosen or elected.

Mr. Hawkes was elected President and Chief Executive Officer in October 1996 and Chairman of the Board in October 1997. He was Executive Vice President of the Company from January 1990 to October 1996 and a Vice President of the Company from June 1975 to January 1990. He has been a Director since January 1982. Mr. Hawkes serves as Chairman of the Executive Committee and as a member of the Nominating and Governance Committees established by the Company’s Board of Directors. He is also Chairman of the Company’s Management Committee. Mr. Hawkes is an officer, trustee or director of all the registered investment companies for which Eaton Vance Management or Boston Management and Research acts as investment adviser.

Mr. Cabot has served as a Director of the Company since March 1989. He is Chairman of the Nominating Committee and serves as a member of the Audit and Governance Committees established by the Company’s Board of Directors. Mr. Cabot is also a Director of Cabot Corporation and Cabot Oil and Gas Corporation.

Mr. Higdon has served as a Director of the Company since January 2000. He serves as a member of the Compensation, Option, and Governance Committees established by the Company’s Board of Directors. Mr. Higdon has served as the President of the College of Charleston since September of 2001. Prior to joining the College of Charleston, he served as the President of Babson College and as Dean of Business Administration at the Darden Graduate School of Business Administration at the University of Virginia. Mr. Higdon is also a Director of Crompton Corporation and Newmont Mining.

Mr. Nelson has served as a Director of the Company since January 1998. He is Chairman of the Governance Committee and serves as a member of the Compensation, Option and Nominating Committees established by the Company's Board of Directors. Mr. Nelson is a Director of BNS Corporation and Commerce Holdings Inc.

Mr. O’Reilly has served as a Director of the Company since April 1998. He is Chairman of the Audit Committee and serves as a member of the Executive, Nominating and Governance Committees established by the Company's Board of Directors. Mr. O’Reilly serves as a faculty member at the Carroll Graduate School of Management at Boston College. He was formerly a partner of Coopers and Lybrand. Mr. O'Reilly serves as a Director of the Neiman Marcus Group and Teradyne, Inc.

Dr. Sorenson has served as a Director of the Company since March 1989. He is Chairman of both the Compensation and Option Committees and serves as a member of the Audit and Governance Committees established by the Company's Board of Directors. Dr. Sorenson serves as Managing General Partner of the Sorenson Limited Partnership, a venture investment partnership, and is President Emeritus of Babson College and Professor Emeritus of the University of Colorado. Dr. Sorenson also serves as a Director of Whole Foods Market, Inc.

Mr. Faust was elected a Director of the Company in January 2002 and has been Chief Investment Officer and Executive Vice President since January 2000. He served as head of the Company’s equity investment group from February 1995 to October 2001 and was a Vice President of the Company from December 1987 to January 2000. Mr. Faust serves as a member of the Executive and Governance Committees established by the Company’s Board of Directors and as a member of the Company’s Management Committee.

Mr. Beale has been a Vice President of the Company since June 1998 and the Chief Administrative Officer of the Company since November 1999. Prior to joining the Company, he was a Senior Vice President of Putnam Investments from December 1997 to June 1998. Mr. Beale was a Vice President of the Company from May 1992 to December 1997. Mr. Beale is a member of the Company’s Management Committee.

Mr. Dynner has been Vice President and Chief Legal Officer of the Company since November 1996 and Secretary of the Company since January 2000. Prior to joining the Company, Mr. Dynner was a senior partner with the law firm of Kirkpatrick & Lockhart LLP in its New York and Washington, D.C. offices. Mr. Dynner is a member of the Company’s Management Committee. He is an officer of all the registered investment companies for which Eaton Vance Management or Boston Management and Research acts as investment adviser.

Ms. Hylton has been a Vice President of the Company since June 1994 and Chief Accounting Officer since October 1997. She was the Internal Auditor of the Company from June 1994 to October 1997.

Mr. Steul has been Vice President, Treasurer and Chief Financial Officer of the Company since December 1994. Mr. Steul is a member of the Company’s Management Committee.

Mr. Whitaker has been Vice President and Chief Sales and Marketing Officer of the Company since January 2002, and has been the President of Eaton Vance Distributors, Inc., since November 1991. He was Executive Vice President and National Sales Director of Eaton Vance Distributors, Inc., from June 1987 to October 1991. Mr. Whitaker is a member of the Company’s Management Committee.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and Directors and persons who own more than ten percent of a registered class of the Company’s equity securities to file forms reporting their affiliation with the Company and reports of ownership and changes in ownership of the Company’s equity securities with the Securities and Exchange Commission and the New York Stock Exchange. These persons and entities are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the best of Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company, during fiscal 2003 all Section 16(a) filing requirements applicable to such individuals were complied with for fiscal 2003.

Code of Ethics

The Company has adopted a Code of Ethics that applies to the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer and complies with the criteria provided in SEC rules. The Code of Ethics is available by calling Investor Relations at 617-482-8260.

Audit Committee

The Audit Committee assists the Company’s Board of Directors in its over sight of the quality and integrity of the accounting, audit and reporting practices of the Company. The Audit Committee’s role includes discussing with management the Company’s processes to manage business and financial risk and for compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee is responsible for the appointment, replacement, compensation and oversight of the independent auditor engaged to prepare or issue audit reports on the financial statements of the Company. The Audit Committee relies on the expertise and knowledge of management, the internal auditor, and the independent auditor in carrying out its oversight responsibilities. The specific responsibilities in carrying out the Audit Committee’s oversight role are delineated in the Audit Committee Charter, which is attached as Exhibit 99.2 to this Form 10-K.

The Audit Committee of the Board of Directors consists of John G.L. Cabot, Vincent M. O’Reilly and Ralph Z. Sorenson. Vincent M. O’Reilly serves as Chairman. Each member of the audit committee is independent as defined under the New York Stock Exchange rules. The Board of Directors had determined that each Audit Committee member has sufficient knowledge in financial and accounting matters to serve on the Committee and that each member is an “audit committee financial expert” as defined by SEC rules.

Item 11. Executive Compensation

(A) Summary Compensation Table

The following table sets forth certain information concerning the compensation for each of the last three fiscal years of the Chief Executive Officer of the Company and the four other most highly compensated executive officers of the Company (hereafter referred to in this document as the “named executive officers”).

					Long Term Compensation

		Annual Compensation			Awards
				Other Annual Compen- sation (1)
Name and Principal Position	Year	Salary	Bonus	Other Annual Compen- sation (1)	Restricted Stock Award (2)	Securities Underlying Options	All Other Compen- sation (3)

		($)	($)	($)	($)	($)	($)

James B. Hawkes	2003	600,000	2,300,000	5,633	—	196,200	30,000
President and Chief	2002	600,000	2,300,000	6,578	—	173,600	30,000
Executive Officer	2001	602,000	3,125,000	4,090	—	160,000	30,000

Thomas E. Faust Jr.	2003	400,000	2,070,000	28,622	—	157,000	31,040
Executive Vice	2002	407,000	2,070,000	29,579	—	138,900	30,000
President and Chief	2001	407,000	2,812,500	38,348	—	125,000	30,000
Investment Officer

Alan R. Dynner	2003	280,000	475,000	5,633	—	39,200	31,040
Vice President and	2002	280,000	450,000	6,579	—	34,700	30,000
Chief Legal Officer	2001	280,000	610,000	7,174	—	30,000	30,000

William M. Steul	2003	280,000	450,000	—	—	39,200	31,040
Vice President and	2002	280,000	450,000	—	—	34,700	30,000
Chief Financial Officer	2001	280,000	610,000	6,203	—	30,000	30,000

Wharton P. Whitaker	2003	263,000	1,482,551	5,633	—	39,200	31,040
Vice President and	2002	263,000	1,170,155	5,192	—	34,700	30,000
Chief Sales and	2001	263,000	1,161,104	7,184	—	30,000	30,000
Marketing Officer

(1)

The amounts appearing under “Other Annual Compensation” represent the discount on the purchase of the Company’s stock under the Company’s Employee Stock Purchase Plan and Incentive Plan-Stock Alternative.

(2)

Mr. Faust had aggregate restricted stock holdings of 32,002 shares with a market value of $1,115,945 at October 31, 2003. Shares vest over five to seven years from the date of grant. The Company expects 32,002 shares to vest over the next two years. Dividends are paid on restricted stock awards.

(3)

The amounts appearing under “All Other Compensation” represent contributions by the Company to the Company’s profit sharing plans, supplemental profit sharing and 401(k) Plans.

(B) Option Grants in Last Fiscal Year

The following table summarizes stock option grants during 2003 to the named executive officers:

	Number of Securities Underlying Options Granted	Percentage of Total Options Granted to Employees in Fiscal Year		Exercise Price ($/Share)	Expiration Date
						Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (1)
Name						5% ($)	10% ($)

James B. Hawkes	192,764	7.4	%	$29.10	11/1/2012	3,527,742	8,939,991
	3,436	0.1	%	$32.01	11/1/2007	17,626	51,045
Thomas E. Faust Jr.	153,564	5.9	%	$29.10	11/1/2012	2,810,349	7,121,977
	3,436	0.1	%	$32.01	11/1/2007	17,626	51,045
Alan R. Dynner	35,764	1.4	%	$29.10	11/1/2012	654,511	1,658,659
	3,436	0.1	%	$32.01	11/1/2007	17,626	51,045
William M. Steul	35,764	1.4	%	$29.10	11/1/2012	654,511	1,658,659
	3,436	0.1	%	$32.01	11/1/2007	17,626	51,045
Wharton P. Whitaker	35,764	1.4	%	$29.10	11/1/2012	654,511	1,658,659
	3,436	0.1	%	$32.01	11/1/2007	17,626	51,045

(1)

Amounts calculated using 5 percent and 10 percent assumed annual rates of stock price appreciation represent hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. Actual gains, if any, on stock option exercises will depend on the future performance of the Company’s stock and the dates on which the options are exercised.

(C) Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The following table summarizes stock options exercised during 2003 and stock options held as of October 31, 2003 by the named executive officers.

	Shares Acquired on Exercise	Value Realized	Number of Securities Underlying Unexercised Options at Fiscal Year End		Value of Unexercised In- the-Money Options at Fiscal Year End (1)

Name	(#)	($)	Exercisable (#)	Un- exercisable (#)	Exercisable ($)	Un- exercisable ($)

James B. Hawkes	8,710	197,493	286,530	474,560	4,951,565	3,719,262
Thomas E. Faust Jr	77,510	1,582,350	181,590	370,600	2,934,293	2,819,894
Alan R. Dynner	—	—	68,230	105,670	1,218,283	971,469
William M. Steul	8,710	178,130	56,720	105,670	948,820	971,469
Wharton P. Whitaker	11,510	235,163	56,720	105,670	948,820	971,469

(1)

Based on the fair market value of the Company’s Non-Voting Common stock on October 31, 2003 ($34.88) as reported on the New York Stock Exchange, less the option exercise price.

(D) Compensation of Directors

Directors not otherwise employed by the Company receive a retainer of $7,500 per quarter, $1,500 per Directors’ meeting, and $1,000 per committee meeting. Directors serving as Chairmen of the Audit and Compensation Committees receive an additional retainer of $500 per quarter. During the fiscal year ended October 31, 2003, John M. Nelson, Jr., Leo Higdon, John G.L. Cabot, Ralph Z. Sorenson and Vincent M. O’Reilly received $37,000, $38,500, $42,500, $45,500, and $51,500, respectively. In addition, each Director was granted options for 6,000 shares.

(E) Compensation Committee Interlocks and Insider Participation

There are no compensation committee interlocks or insider participation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(A) Common Stock

All outstanding shares of the Company’s Voting Common Stock, $0.0078125 par value (which is the only class of the Company’s stock having voting rights) are deposited in a Voting Trust, of which the Voting Trustees were (as of October 31, 2003), James B. Hawkes, Thomas E. Faust Jr., Alan R. Dynner, William M. Steul, Wharton P. Whitaker, Thomas J. Fetter, Duncan W. Richardson, Jeffery P. Beale, Scott H. Page, Payson F. Swaffield, and Michael W. Weilheimer. The Voting Trust has a term that expires on October 31, 2006. The Voting Trustees have unrestricted voting rights to elect the Company’s directors. At October 31, 2003, the Company had outstanding 154,880 shares of Voting Common Stock. Inasmuch as the eleven Voting Trustees of the Voting Trust have unrestricted voting rights with respect to the Voting Common Stock (except that the Voting Trust Agreement provides that the Voting Trustees shall not vote such Stock in favor of the sale, mortgage or pledge of all or substantially all of the Company’s assets or for any change in the capital structure or powers of the Company or in connection with a merger, consolidation, reorganization or dissolution of the Company or the termination of the Voting Trust or the addition of a Voting Trustee or of the removal of a Voting Trustee by the other Voting Trustees or the renewal of the term of the Voting Trust without the written consent of the holders of Voting Trust Receipts representing at least a majority of such Stock subject at the time to the Voting Trust Agreement), they may be deemed to be the beneficial owners of all of the Company’s outstanding Voting Common Stock by virtue of Rule 13d-3(a)(1) under the Securities Exchange Act of 1934. The Voting Trust Agreement provides that the Voting Trustees shall act by a majority if there are six or more Voting Trustees; otherwise they shall act unanimously except as otherwise provided in the Voting Trust Agreement. The address of the Voting Trustees is 255 State Street, Boston, Massachusetts 02109.

The following table sets forth the beneficial owners at October 31, 2003, of the Voting Trust Receipts issued under said Voting Trust Agreement, which Receipts cover the aggregate of 154,880 shares of the Voting Common Stock then outstanding:

Title of Class	Name	Number of Shares of Voting Common Stock Covered by Receipts		% of Class

Voting Common Stock	James B. Hawkes		37,120	24	%
Voting Common Stock	Thomas E. Faust Jr.		27,906	18	%
Voting Common Stock	Alan R. Dynner		18,558	12	%
Voting Common Stock	William M. Steul		18,558	12	%
Voting Common Stock	Wharton P. Whitaker		18,558	12	%
Voting Common Stock	Thomas J. Fetter		7,746	5	%
Voting Common Stock	Duncan W. Richardson		7,746	5	%
Voting Common Stock	Jeffrey P. Beale		4,672	3	%
Voting Common Stock	Scott H. Page		4,672	3	%
Voting Common Stock	Payson F. Swaffield		4,672	3	%
Voting Common Stock	Michael W. Weilheimer		4,672	3	%

Messrs. Hawkes and Faust are officers and Directors of the Company and Voting Trustees of the Voting Trust; Messrs. Beale, Dynner, Steul and Whitaker are all officers of the Company and Voting Trustees of the Voting Trust; Messrs. Fetter, Richardson, Page, Swaffield and Weilheimer are officers of Eaton Vance Management and Voting Trustees of the Voting Trust. No transfer of any kind of the Voting Trust Receipts issued under the Voting Trust may be made at any time unless they have first been offered to the Company at book value. In the event of the death or termination of employment with the Company or a subsidiary of a holder of the Voting Trust Receipts, the shares represented by such Voting Trust Receipts must be offered to the Company at book value. Similar restrictions exist with respect to the Voting Common Stock, all shares of which are deposited and held of record in the Voting Trust.

(B) Non-Voting Common Stock

The Articles of Incorporation of the Company provide that its Non-Voting Common Stock, $0.0078125 par value, shall have no voting rights under any circumstances whatsoever. As of October 31, 2003, the officers and Directors of the Company, as a group, beneficially owned 5,988,969 shares of such Non-Voting Common Stock (including, as noted, unexercised options to purchase such stock and any shares held in the trust of the Stock Option Income Deferral Plan) or 8.54% percent of the 68,250,464 shares then outstanding plus 1,201,637 shares subject to options exercisable within 60 days and 658,377 held in the trust of the Stock Option Income Deferral Plan based solely upon information furnished by the officers and Directors.

The following table sets forth the beneficial ownership of the Company’s Non-Voting Common Stock (including, as noted unexercised options to purchase such stock by (i) each person known by the Company to own beneficially more than 5 percent of the outstanding shares of Non-Voting Common Stock, (ii) each Director of the Company, and (iii) each of the named executive officers of the Company (as defined in Item 11, “Executive Compensation”) as of October 31, 2003 (such investment power being sole unless otherwise indicated):

Title of Class	Beneficial Owners	Amount of Beneficial Ownership (a)		Percentage of Class (b)

Non-Voting Common Stock	Landon T. Clay	8,560,423		12.54
Non-Voting Common Stock	James B. Hawkes	2,903,432	(c)(d)(f)	4.23
Non-Voting Common Stock	Thomas E. Faust Jr.	1,086,737	(c)(f)	1.59
Non-Voting Common Stock	Wharton P. Whitaker	773,790	(c)(f)	1.13
Non-Voting Common Stock	William M. Steul	360,188	(c)(f)	0.53
Non-Voting Common Stock	Alan R. Dynner	285,792	(c)	0.42
Non-Voting Common Stock	John G.L. Cabot	218,160	(c)(e)	0.32
Non-Voting Common Stock	Ralph Z. Sorenson	88,992	(c)	0.13
Non-Voting Common Stock	John M. Nelson	24,600	(c)	0.04
Non-Voting Common Stock	Vincent M. O’Reilly	11,875	(c)	0.02
Non-Voting Common Stock	Leo I. Higdon	11,391	(c)	0.02

(a)

Based solely upon information furnished by the individuals.

(b)

Based on 68,250,464 outstanding shares plus options exercisable within 60 days of 417,130 for Mr. Hawkes, 282,410 for Mr. Faust, 103,720 for Mr. Dynner, 92,210 for Mr. Whitaker, 92,210 for Mr. Steul, 16,600 for Mr. Nelson, Mr. Cabot, and Mr. Sorenson, 10,638 for Mr. O’Reilly, and 9,391 for Mr. Higdon.

(c)

Includes shares subject to options exercisable within 60 days granted to, but not exercised by, each named executive officer above.

(d)

Includes 93,160 shares owned by Mr. Hawkes' spouse and 61,349 shares held by Mr. Hawkes' daughter.

(e)

Includes 32,000 shares held in a family limited partnership.

(f)

Includes shares held in the trust of the Stock Option Income Deferral Plan of 474,611 shares for Mr. Hawkes, 111,540 shares for Mr. Faust, 41,151 shares for Mr. Steul, and 31,075 shares for Mr. Whitaker.

Item 13. Certain Relationships and Related Transactions

(C) Indebtedness of Management

The Company has established an Employee Loan Program under which a maximum of $10 million is available to officers (other than executive officers) and other key employees of the Company for purposes of financing the exercise of stock options for shares of the Company’s Non-Voting Common Stock. Loans are written for a seven-year period, at varying fixed interest rates (currently ranging from 2.8 percent to 7.1 percent), are payable in annual installments commencing with the third year in which the loan is outstanding and are collateralized by stock issued upon exercise of the option. The Company ceased making new loans under a previous loan program to executive officers and Directors in conformity with a federal law effective July 30, 2002. Loans outstanding under this program amounted to $3.0 million at October 31, 2003.

The following table sets forth the executive officers and Directors of the Company who were indebted to the Company under the foregoing loan program at any time since November 1, 2002, in an aggregate amount in excess of $60,000:

	Largest Amount of Loans Outstanding Since 11/1/2002	Loans Outstanding as of 10/31/03	Rate of Interest Charged on Loans as of 12/31/2002

Alan Dynner	$499,865	$499,865	4.96% - 4.98%	(1)
James B. Hawkes	$361,330	$326,081	4.83% - 6.77%	(2)
Laurie G. Hylton	$102,688	$102,688	4.30% - 5.21%	(3)
Jeffrey P. Beale	$ 86,016	$ 86,016	4.30%

(1)

4.96% interest payable on $399,940 principal amount and 4.98% interest payable on $99,925 principal amount.

(2)

6.77% interest payable on $70,000 principal amount, 4.83% interest payable on $174,798 principal amount, 6.47% interest payable on $58,266 principal amount, and 6.32% interest payable on $58,266 principal amount.

(3)

5.21% interest payable on $31,313 principal amount and 4.30% interest payable on $71,375 principal amount.

Item 14. Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table presents fees for the professional audit services rendered by Deloitte & Touche LLP for the audit of the Company’s annual financial statements for the years ended October 31, 2003 and 2002 and fees billed for other services rendered by Deloitte and Touche LLP during those periods.


Year ended October 31,	2003	2002

Audit fees	$517,000	$469,000
Audit-related fees ⁽¹⁾	155,000	217,000
Tax fees ⁽²⁾	316,000	101,000
All other fees ⁽³⁾	—	57,000

Total	$988,000	$844,000

(1)

Audit-related fees consist of assurance and related services that are reasonably related to the performance of the audit of the Company’s financial statements. The category includes fees related to the performance of audits and attest services not required by statute or regulation, audits of the Company’s benefit plans, due diligence related to acquisitions, agreed-upon procedures, and accounting consultations regarding the application of generally accepted accounting principals to proposed transactions.

(2)

Tax fees consist of the aggregate fees billed for professional service rendered by Deloitte & Touche LLP for tax compliance, tax advice, and tax planning (domestic and international).

(3)

Other fees consist primarily of the aggregate fees billed for professional services rendered by Deloitte & Touche LLP related to a business continuity engagement.

Beginning in fiscal 2003, the Audit Committee reviews all audit and non-audit related fees at least annually. The Audit Committee pre-approved all audit and non-audit related services in fiscal 2003. The Audit Committee had concluded that the provision of the non-audit services listed above is compatible with maintaining the independence of Deloitte & Touche LLP.

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(A) Exhibits and Financial Statement Schedules

The consolidated financial statements of Eaton Vance Corp. and independent auditors report are included under Item 8 of this Annual Report on Form 10-K.

The list of exhibits required by Item 601 of Regulation S-K is set forth in the Exhibit Index on pages 69 through 73 and is incorporated herein by reference.

(B) Reports on Form 8-K

The Company filed a Form 8-K with the SEC on August 20, 2003, regarding the Company’s press release of its results of operations for the quarter ended October 31, 2003.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Eaton Vance Corp. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EATON VANCE CORP.
	/s/	James B. Hawkes James B. Hawkes Chairman, Director and Chief Executive Officer January 21, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Eaton Vance Corp. and in the capacities and on the dates indicated:

/s/ James B. Hawkes	Chairman, Director and	January 21, 2004
James B. Hawkes	Principal Executive Officer

/s/ William M. Steul	Chief Financial Officer	January 21, 2004
William M. Steul

/s/ Laurie G. Hylton	Chief Accounting Officer	January 21, 2004
Laurie G. Hylton

/s/ John G.L. Cabot	Director	January 21, 2004
John G.L. Cabot

/s/ Thomas E. Faust Jr.	Director	January 21, 2004
Thomas E. Faust Jr.

/s/ Leo I. Higdon	Director	January 21, 2004
Leo I. Higdon

/s/ Vincent M. O’Reilly	Director	January 21, 2004
Vincent M. O’Reilly

/s/ Ralph Z. Sorenson	Director	January 21, 2004
Ralph Z. Sorenson

EXHIBIT INDEX

Each Exhibit is listed in this index according to the number assigned to it in the exhibit table set forth in Item 601 of Regulation S-K. The following Exhibits are filed as a part of this Report or incorporated herein by reference pursuant to Rule 12b-32 under the Securities Exchange Act of 1934:

Exhibit No.

Description

2.1

Copy of the Unit Purchase Agreement, dated as of July 25, 2001, among Eaton Vance Acquisitions, a Massachusetts Business Trust, and Fox Asset Management, Inc., a New Jersey corporation, and Messrs. J. Peter Skirkanich, James P. O’Mealia, George C. Pierdes, John R. Sampson and Phillip R. Sloan has been filed as Exhibit 2.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

2.2

Copy of Amendment No. 1 of the Unit Purchase Agreement, dated as of July 25, 2001, among Eaton Vance Acquisitions, a Massachusetts Business Trust, Saucon I, Inc., a New Jersey corporation formerly named Fox Asset Management, Inc., Saucon III, a Delaware limited liability company, Saucon IV, a Delaware limited liability company, and Messrs. J. Peter Skirkanich, James P. O’Mealia, George C. Pierdes, John R. Sampson and Phillip R. Sloan has been filed as Exhibit 2.2 to the Form 8-K A filed on October 19, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

2.3

Copy of the Unit Purchase Agreement, dated as of August 2, 2001, among Eaton Vance Acquisitions, a Massachusetts Business Trust, Atlanta Capital Management Company LLC, and each of Daniel W. Boone III, Gregory L. Coleman, Jerry D. Devore, William Hackney, III, Marilyn Robinson Irvin, Dallas L. Lundy, Walter F. Reames, Jr. and Christopher A. Reynolds has been filed as Exhibit 2.3 to the Form 8-K A filed on October 19, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

2.4

Copy of the Stock Purchase Agreement, dated as of June 4, 2003, among Eaton Vance Acquisitions, a Massachusetts Business Trust, and PPA Acquisition, LLC, a Delaware limited liability company, PPA Acquisition Corp., a Delaware corporation doing business under the name of “Parametric Portfolio Associates” and Brian Langstraat and David Stein has been filed as Exhibit 2.4 (filed herewith).

2.5

Copy of The First Amendment to the Stock Purchase Agreement, dated as of September 10, 2003, among Eaton Vance Acquisitions, a Massachusetts Business Trust, and PPA Acquisition, LLC, a Delaware limited liability company, PPA Acquisition Corp., a Delaware corporation doing business under the name of “Parametric Portfolio Associates” and Brian Langstraat and David Stein has been filed as Exhibit 2.4 (filed herewith).

2.6

Copy of the Second Amendment to the Stock Purchase Agreement, dated as of September 10, 2003, among Eaton Vance Acquisitions, a Massachusetts Business Trust, and PPA Acquisition, LLC, a Delaware limited liability company, PPA Acquisition Corp., a Delaware corporation doing business under the name of “Parametric Portfolio Associates” and Brian Langstraat and David Stein has been filed as Exhibit 2.4 (filed herewith).

Exhibit

No. Description

3.1	The Company’s Amended Articles of Incorporation are filed as Exhibit 3.1 to the Company’s registration statement on Form 8-B dated February 4, 1981, filed pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 (S.E.C. File No. 1-8100) and are incorporated herein by reference.

3.2	The Company’s By-Laws are filed as Exhibit 3.2 to the Company’s registration statement of Form 8-B dated February 4, 1981, filed pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 (S.E.C. File No. 1-8100) and are incorporated herein by reference.

3.3	Copy of the Company’s Articles of Amendment effective at the close of business on November 22, 1983, has been filed as Exhibit 3.3 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1983, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

3.4	Copy of the Company’s Articles of Amendment effective at the close of business on February 25, 1986 has been filed as Exhibit 3.4 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1986, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

3.5	Copy of the Company’s Articles of Amendment effective at the close of business on July 7, 1998 has been filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 1998, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

3.6	Copy of the Company’s Articles of Amendment effective at the close of business on October 11, 2000 has been filed as Exhibit 3.6 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 2000 (S.E.C. File No. 1-8100) and is incorporated herein by reference.

4.1

The rights of the holders of the Company’s Common Stock, par value $0.0078125 per share, and Non-Voting Common Stock, par value $0.0078125 per share, are described in the Company’s Amended Articles of Incorporation (particularly Articles Sixth, Seventh and Ninth thereof) and the Company’s By-Laws (particularly Article II thereof). See Exhibits 3.1 through 3.6 above as incorporated herein by reference.

4.2	Copy of the Indenture between Eaton Vance Management and The Chase Manhattan Bank, as Trustee, dated as of August 13, 2001 has been filed as Exhibit 4.1 to the Form S-3 filed on November 9, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

4.3	Copy of the First Supplemental Indenture between Eaton Vance Management and The Chase Manhattan Bank, as Trustee, dated as of August 9, 2002 has been filed as Exhibit 4.1 to the Form 8-K filed on August 9, 2002, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

4.4	Copy of the Second Supplemental Indenture between Eaton Vance Management and The Chase Manhattan Bank, as Trustee, dated as of November 13, 2002 has been filed as Exhibit 4.1 to the Form 8-K filed on November 12, 2002, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

Exhibit No.

Description

9.1	Copy of the Voting Trust Agreement made as of October 30, 1997 has been filed as Exhibit 9.1 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1997, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.1

Copy of 1995 Executive Loan Program relating to financing or refinancing the exercise of options by key directors, officers, and employees adopted by the Company’s Directors on October 12, 1995, has been filed as Exhibit 10.2 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1995, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.2

Copy of the Eaton Vance Corp. Supplemental Profit Sharing Plan adopted by the Company’s Directors on October 9, 1996, has been filed as Exhibit 10.12 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1996, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.3

Copy of 1995 Stock Option Plan-Restatement No. 2 as adopted by the Eaton Vance Corp. Board of Directors on October 30, 1997 has been filed as Exhibit 10.16 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1997, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.4	Copy of 1998 Stock Option Plan as adopted by the Eaton Vance Corp. Board of Directors on July 9, 1998 has been filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended July 31, 1998 (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.5

Copy of Eaton Vance Corp. Executive Performance-Based Compensation Plan as adopted by the Eaton Vance Corp. Board of Directors on July 9, 1998 has been filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended July 31, 1998 (S.E.C. File No. 1-8100), and is incorporated herein by reference.

10.6

Copy of 1998 Executive Loan Program relating to financing or refinancing the exercise of options by key directors, officers, and employees adopted by the Eaton Vance Corp. Directors on October 15, 1998 has been filed as Exhibit 10.21 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1999 (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.7	Copy of 1999 Restricted Stock Plan as adopted by the Eaton Vance Corp. Board of Directors on October 13, 1999 has been filed as Exhibit 10.21 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1999 (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.8

Copy of Amendment No. 1 to the Eaton Vance Corp. Executive Performance-Based Compensation Plan as adopted by the Eaton Vance Corp. Board of Directors on October 11, 2000 has been filed as Exhibit 10.16 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 2000 (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.9

Copy of the restated Eaton Vance Corp. Supplemental Profit Sharing Plan as adopted by the Eaton Vance Corp. Board of Directors on October 11, 2000 has been filed as Exhibit 10.17 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 2000 (S.E.C. File No. 1-8100) and is incorporated herein by reference.

Exhibit No.

Description

10.10

Copy of Stock Option Income Deferral Plan as adopted by the Eaton Vance Corp. Board of Directors on April 18, 2001 has been filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended April 30, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.11

Copy of 1986 Employee Stock Purchase Plan – Restatement No. 9 as adopted by the Eaton Vance Corp. Board of Directors on July 11, 2001 has been filed as Exhibit 10.19 to the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended July 31, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.12

Copy of 1992 Incentive Plan – Stock Alternative – Restatement No. 5 as adopted by the Eaton Vance Corp. Board of Directors on July 11, 2001 has been filed as Exhibit 10.19 to the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended July 31, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.13

Copy of 1998 Stock Option Plan – Restatement No. 3 as adopted by the Eaton Vance Corp. Board of Directors on December 12, 2001 has been filed as Exhibit 10.22 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.14

Copy of the Credit Agreement, dated December 21, 2001, between Eaton Vance Management as borrower, Citicorp USA, Inc. as syndication agent and JP Morgan Chase Bank, as administrative agent has been filed as Exhibit 10.23 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 2001, (S.E.C. File No. 1-8100) and is incorporated herein by reference.

10.15

Copy of 1998 Executive Loan Program relating to financing or refinancing the exercise of options by employees revised by the Eaton Vance Corp. Directors on July 9, 2003 has been filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2003 (S.E.C. File No. 1-8100) and is incorporated herein by reference.

21.1	List of the Company’s Subsidiaries as of October 31, 2002 (filed herewith).

23.1	Independent Auditors’ Consent (filed herewith).

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

99.1	List of Eaton Vance Corp. Open Registration Statements (filed herewith).

99.2	Copy of the Audit Committee Charter (filed herewith).

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

by and among

PPA ACQUISITION CORP.

PPA ACQUISITION, L.L.C.

EATON VANCE ACQUISITIONS

and

THE OTHER PERSONS PARTY HERETO

Dated as of June 4, 2003

TABLE OF CONTENTS

			Page

1	Closing; Purchase Price, Holdback and Adjustments		2
	1.1	Sale and Purchase of PPA Stock	2
	1.2	Delivery of Purchase Price and Net Working Capital Adjustment	2
	1.3	Class C Contribution	2
	1.4	Closing	2
	1.5	Client Consents Adjustment	3
	1.6	Post-Closing Adjustment	4
	1.7	Disputes as to Purchase Price Adjustments	5
	1.8	Holdback	5

2	Representations and Warranties of Seller and the Members		6
	2.1	Power and Authority	6
	2.2	Title, Capitalization, etc.	7
	2.3	No Conflicts, etc.	7
	2.4	Corporate Status	8
	2.5	Investments and Subsidiaries; Transfer of Assets	8
	2.6	Financial Statements	8
	2.7	Regulatory Documents	9
	2.8	Indeligible Persons	9
	2.9	Investment Contracts and Clients	9
	2.10	Wrap-Fee Programs	10
	2.11	Fund Related Issues	10
	2.12	Investment Company Advisory Agreements	11
	2.13	Undisclosed Liabilities, etc.	11
	2.14	Absence of Changes	11
	2.15	Tax Matters	13
	2.16	Assets	14
	2.17	Real Property	14
	2.18	Contracts	15
	2.19	Intellectual Property	16
	2.20	Insurance	17
	2.21	Litigation	17
	2.22	Compliance with Laws and Instruments; Consents	17
	2.23	Environmental Matters	18
	2.24	Affiliate Transactions	18
	2.25	Employees, Labor Matters, etc.	19
	2.26	Employee Benefit Plans and Related Matters; ERISA	19
	2.27	Accounts Receivable	21
	2.28	Bank Accounts	21
	2.29	Brokers, Finders, etc.	21
	2.30	Disclosure	21


3	Representations and Warranties of Buyers		22
	3.1	Status; Authorization, etc.	22
	3.2	No Conflicts, etc.	22
	3.3	Brokers, Finders, etc.	22
	3.4	Purchase for Investment	22
	3.5	Statutory Disqualification	22
	3.6	Satisfaction of Conditions in Section 15(f) of the 1940 Act	23
	3.7	Litigation	23
	3.8	Disclosure	23

4	Covenants of Seller, the Company and the Members		23
	4.1	Conduct of Business	23
	4.2	No Solicitation	25
	4.3	Access and Information	25
	4.4	Subsequent Financial Statements and Reports; Filings	26
	4.5	Public Announcements	26
	4.6	Further Actions	26
	4.7	Further Assurances	27
	4.8	Client Consents	27
	4.9	Use of Parametric Name	27
	4.10	Updating of Schedules	28

5	Covenants of Buyer		28
	5.1	Public Announcements	28
	5.2	Further Actions	28
	5.3	Section 15(f) of the 1940 Act	28
	5.4	Updating of Schedules	29

6	Certain Additional Covenants		29
	6.1	Taxes	29
	6.2	Transitional Arrangements	30
	6.3	Eaton Vance Stock Options	30
	6.4	Board and Shareholder Approvals; SEC Filings	30
	6.5	Certain Matters Relating to Seller	31
	6.6	Post-Closing Benefits	32

7	Conditions Precedent		32
	7.1	Conditions to Obligations of Each Party	32
	7.2	Conditions to Obligations of Buyer	32
	7.3	Conditions to Obligations of Seller, the Company and the Members	35

8	Termination		36
	8.1	Termination	36
	8.2	Effect of Termination	37

9	Indemnification		37
	9.1	Indemnification by Seller and the Members	37
	9.2	Indemnification by Buyer	41
	9.3	Indemnification Procedures	41
	9.4	Survival of Representations and Warranties, etc.	43
	9.5	Other	43


10	Definitions		44
	10.1	Terms Generally	44
	10.2	Certain Terms	44

11	Miscellaneous		55
	11.1	Expenses	55
	11.2	Notices	56
	11.3	Governing Law, etc.	57
	11.4	Members’ Representative	58
	11.5	Binding Effect	58
	11.6	Assignment	58
	11.7	No Third Party Beneficiaries	58
	11.8	Amendment; Waivers, etc.	58
	11.9	Specific Performance	59
	11.10	Entire Agreement	59
	11.11	Confidentiality	59
	11.12	Business Trusts	59
	11.13	Severability	60
	11.14	Headings	60
	11.15	Counterparts	60


	EXHIBITS:

	EXHIBIT A Form of Certificate of Conversion
	EXHIBIT B Form of Certificate of Formation
	EXHIBIT C List of 2003 Option Grantees
	EXHIBIT D Form of Stock Option Agreement
	EXHIBIT E List of Employment Agreement Designees
	EXHIBIT F Form of Employment Agreement
	EXHIBIT G List of Restrictive Covenant Agreement Designees
	EXHIBIT H Form of Restrictive Covenant Agreement
	EXHIBIT I Form of Perkin Coie Opinion
	EXHIBIT J Forms of Opinions of Counsel to Buyer
	EXHIBIT K Certain Clients
	EXHIBIT L Form of Company Operating Agreement
	EXHIBIT M Form of Pledge Agreement
	EXHIBIT N Pro Rata Shares of Members
	EXHIBIT O Form of Post-Conversion Consent

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of June 4, 2003, is made by and among Eaton Vance Acquisitions, a Massachusetts business trust (“Buyer”), PPA Acquisition, L.L.C., a Delaware limited liability company (“Seller”), PPA Acquisition Corp., a Delaware corporation doing business under the name “Parametric Portfolio Associates” (together with the resulting entity of the Conversion (as defined below), the “Company”), and each of Brian Langstraat and David M. Stein (the “Members”). Certain terms used in this Agreement are defined in Section 10.

WITNESSETH:

WHEREAS, Seller owns beneficially and of record all of the issued and outstanding shares of the common stock of the Company (the “PPA Stock”), which constitute all of the issued and outstanding capital stock of the Company;

WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, 640 shares of PPA Stock, constituting in the aggregate 80.0% of the capital stock of the Company (the “Purchased PPA Stock”), on the terms and conditions and for the consideration described in this Agreement, with the result that Seller would retain 160 shares of PPA Stock, constituting in the aggregate 20.0% of the capital stock of the Company (the “Retained PPA Stock”) (such purchase and sale, the “Share Purchase”);

WHEREAS, it is contemplated by this Agreement that, immediately subsequent to the Share Purchase and pursuant to Section 266 of the General Corporation Law of the State of Delaware (the “DGCL”) and Section 18-214 of the Limited Liability Company Act of the State of Delaware (the “DLLCA”) and to Certificates of Conversion and Formation in the forms attached as Exhibits A and B hereto (the “Conversion Certificates”), the Company will convert from a Delaware corporation into a Delaware limited liability company named “Parametric Portfolio Associates LLC” (the “Conversion”);

WHEREAS, as a result of the Conversion, the outstanding capital stock of the Company shall be converted into an aggregate of (a) 432,177 Class A Units of economic interest in the Company (as described in the Company Operating Agreement, the “Class A Units”), constituting in the aggregate 43.2177% of the aggregate capital interests in the Company and having no rights of participation in distributions of operating profits of the Company and (b) 567,823 Class B Units of capital interest in the Company (as described in the Company Operating Agreement, the “Class B Units”), constituting in the aggregate 56.7823% of the aggregate capital interests in the Company and, on issuance, entitling the holders to all distributions of operating profits, subject to the terms and conditions of this Agreement and the Company Operating Agreement (including the subsequent issuance of the Class C Units);

WHEREAS, as a result of the foregoing conversion of the capital stock of the Company into Class A Units and Class B Units as contemplated by the Conversion Certificates, (a) immediately subsequent to the Conversion, Buyer shall hold 345,741.6 Class A Units and 454,258.4 Class B Units, constituting in the aggregate 80% of each of the Class A Unit and of the Class B Units, and (b) immediately subsequent to the Conversion, Seller shall hold 86,435.4 Class A Units (the “Retained Class A Units”) and 113,564.6 Class B Units (the “Retained Class B Units”, and together with the Retained Class A Units, the “Retained Units”), constituting in the aggregate 20% of each of the Class A Units and of the Class B Units;

WHEREAS, it is contemplated by this Agreement that immediately subsequent to the Conversion, Buyer will contribute the Class C Contribution to the Company (the gross proceeds of which shall be applied to or reserved for application to repayment, subsequent to Closing, of the Permitted Debt), in consideration of which the Company shall issue to Buyer 36,244 Class C Units (the “Class C

Units”) having an aggregate liquidation preference equal to the aggregate amount of the Class C Contribution and entitling Buyer to 6% of all distributions of operating profits of the Company (such contribution and issuance, the “Class C Issuance”); and

WHEREAS, it is the parties’ intent that each of the foregoing transactions be conditioned and contingent upon the occurrence of each of the others, notwithstanding the formal sequence of events described above.

NOW, THEREFORE, in consideration of the mutual promises, covenants, representations and warranties made herein and of the mutual benefits to be derived herefrom, the parties hereto agree as follows:

Closing; Purchase Price, Holdback and Adjustments.

1.1 Sale and Purchase of PPA Stock. Subject to the terms and conditions hereof, at the Closing Buyer shall purchase from Seller, and Seller shall sell to Buyer, the Purchased PPA Stock, constituting in the aggregate 80% of the capital stock of the Company. The purchase price for the Purchased PPA Stock shall consist of a cash payment to Seller in an amount equal to the result obtained by subtracting (a) the sum of (i) the amount of the Class C Contribution plus (ii) all fees, costs and expenses incurred or to be incurred by Buyer in connection with the Transaction Insurance, including without limitation, all premiums paid or payable in respect of the full six-year term thereof and the Insurer’s due diligence fees and expenses (in the aggregate, the “Transaction Insurance Costs” (provided, however, that if Buyer purchases Transaction Insurance with an aggregate limit of coverage in excess of $7,000,000, then the premium included in the Transaction Insurance Costs shall be deemed to be the lesser of (x) the premium paid or payable in respect of the full six-year term thereof for the Transaction Insurance actually purchased and (y) $300,000)), from (b) $27,974,000.00 (such result, the “Purchase Price”), subject to the Holdback and Purchase Price Adjustments as provided in Sections 1.5, 1.6, 1.7 and 1.8.

1.2 Delivery of Purchase Price and Net Working Capital Adjustment. Buyer shall deliver the Purchase Price and the Class C Contribution in cash at Closing (as reduced by the amount of the Holdback pursuant to Section 1.8) by wire transfer of immediately available funds. Seller shall deliver the excess, if any, of the Net Working Capital Adjustment (if any) to be paid to Buyer over the Net Working Capital Holdback within five (5) business days after the Net Working Capital Adjustment is finally determined pursuant to Section 1.6.

1.3 Class C Contribution. At the Closing, the Company shall issue the Class C Units to Buyer in consideration of Buyer’s delivery to the Company of the Class C Contribution.

1.4 Closing. The closing of the sale and purchase of the Purchased PPA Stock and of the other Contemplated Transactions (the “Closing”) shall take place at the offices of Kirkpatrick & Lockhart LLP, 75 State Street, Boston, Massachusetts, at 10:00 a.m. on the third business day following the satisfaction (or written waiver) of the conditions precedent set forth in Section 7 of this Agreement, or at such other place, date and time as the parties hereto may agree in writing (the “Closing Date”). At the Closing, the following shall occur:

(a) Seller shall deliver to Buyer, free and clear of any Liens, the Purchased PPA Stock, together with one or more certificates representing all of the Purchased PPA Stock, duly endorsed in blank or accompanied by appropriate instruments of transfer duly executed in blank, and bearing or accompanied by all requisite transfer stamps;

(b) Buyer shall pay the Purchase Price to Seller for the Purchased PPA Stock so delivered by Seller by wire transfer of immediately available funds to the account by Seller designated in writing at least two (2) business days prior to the Closing Date;

(c) The Conversion shall occur in accordance with the terms of the DLLCA, the DGCL and the Conversion Certificates, and the Company, Buyer and Seller shall execute and deliver an operating agreement in the form of the Company Operating Agreement, with the result, inter alia, that each then outstanding share of PPA Stock will be converted into 540.22125 Class A Units and 709.77875 Class B Units;

(d) Buyer shall contribute the Class C Contribution to the Company by wire transfer of immediately available funds to the account of the Company designated in writing at least two (2) business days prior to the Closing Date; and

(e) The Company shall issue and deliver to Buyer the Class C Units, free and clear of any Liens, together with a certificate representing the same.

The events described in paragraphs (a) and (b) preceding shall take place simultaneously with each other and immediately prior to the Conversion, which shall be immediately followed by the events described in paragraphs (d) and (e) preceding; provided, however, that all of the foregoing shall together constitute the Closing and no such event shall be deemed to have occurred unless all shall have occurred.

1.5 Client Consents Adjustment. (a) Seller represents and warrants that Schedule 1.5 sets forth a complete and accurate list of its Signing Date Clients, together with the Signing Date Fee Revenues attributable to each. The Aggregate Signing Date Fee Revenues reflected on Schedule 1.5 are $11,275,579. If, at Closing, the Company shall have received Client Consents from Signing Date Clients representing aggregate Signing Date Fee Revenues that are less than 95% of Signing Date Fee Revenues, then at Closing an amount (the “Client Consents Holdback”) shall be retained by Buyer, and not then paid over to Seller, equal to the excess of (i) $27,974,000.00 over (ii) the product of (x) $27,974,000.00 times (y) a fraction, the numerator of which is the aggregate Signing Date Fee Revenues represented by Signing Date Clients from whom Client Consents have then been received and the denominator of which is an amount equal to 95% of Aggregate Signing Date Fee Revenues.

(b) Seller shall, not later than the close of business on the second business day preceding the scheduled Closing Date, deliver to Buyer a certificate (the “Closing Client Consents Certificate”) setting forth a list of all Signing Date Clients from whom Client Consents have been received and the amount of the Client Consents Holdback, if any, associated therewith, together with supporting calculations and such additional supporting documentation as Buyer may request. If Buyer disagrees with Seller’s proposed amount for the Client Consents Holdback, Buyer shall provide Seller with written notice of such disagreement (the “Client Consents Holdback Notice”), setting forth Buyer’s determination as to the proper amount of the Client Consents Holdback. Buyer shall then reduce the Purchase Price at Closing by the amount of the Client Consents Holdback set forth in the Client Consents Holdback Notice.

(c) Seller shall have an additional 60 day period after Closing in which it shall use all commercially reasonable efforts to obtain, and Buyer shall cooperate with Seller in soliciting, Client Consents from all remaining Clients. If, on the 61 ^st day following the Closing Date, the Company shall have received Client Consents from Signing Date Clients representing aggregate Signing Date Fee Revenues that are less than 95% of Signing Date Fee Revenues, then the Purchase Price shall be reduced by an equal to the excess of (i) $27,974,000.00 over (ii) the product of (x) $27,974,000.00 times (y) a fraction, the numerator of which is the aggregate Signing Date Fee Revenues represented by Signing Date Clients from whom Client Consents have then been received and the denominator of which is an amount equal to 95% of Aggregate Signing Date Fee Revenues (such adjustment, the “Client Consents

Adjustment”). The Client Consents Adjustment shall be paid by offset against the Client Consents Holdback. Buyer shall provide Seller with notice of the amount of the Client Consents Adjustment as promptly as is practicable after such 61 ^st day following Closing, but in any event within 90 days of the Closing Date, together with such supporting calculations as are reasonably necessary to confirm the amount thereof (the “Client Consents Adjustment Notice”). Contemporaneously with the delivery of the Client Consents Adjustment Notice, Buyer shall deliver to Seller the amount of the Client Consents Holdback remaining, if any, after giving effect to the Client Consents Adjustment and any further rights of setoff permitted to Buyer hereunder against the same, by wire transfer of immediately available funds to such accounts as shall be designated by Seller in writing at least three (3) business days prior to the 61st day following the Closing Date.

(d) Any disputes as to the Client Consents Adjustment shall be resolved, and the amount of the Client Consents Adjustment finally determined, in accordance with Section 1.7.

1.6 Post-Closing Adjustment. (a) Buyer shall deliver to Seller, within 60 days after the Closing Date, a balance sheet of the Company as of the Closing Date (including the accounts receivable schedule described below and attached thereto, the “Closing Date Balance Sheet”). The Closing Date Balance Sheet shall be prepared in accordance with GAAP and, to the extent compatible with GAAP, in a manner consistent with the Balance Sheet; provided, that (i) all liabilities of the Company shall be fully reflected on an accrual basis on the Closing Date Balance Sheet (including, without limitation, (x) accrual of all employee bonuses, deferred compensation or other obligations, (y) accrual of a current liability in an amount corresponding to pre-paid services and (z) accrual of all appropriate reserves), (ii) the Closing Date Balance Sheet shall not give effect to any write-up of the value of intangible assets that may be required or permitted under GAAP in connection with the consummation of the Contemplated Transactions, (iii) the Closing Date Balance Sheet shall give effect to the transactions contemplated by the Contribution Agreement, but not to the issuance and purchase of the Class C Units, and (iv) the accounts receivable schedule included in the Closing Date Balance Sheet shall separately identify the amount of each account receivable and the portions thereof that are in respect of services billed in advance and services billed in arrears. Seller and the Members shall cooperate with Buyer and the Company in the preparation of the Closing Date Balance Sheet.

(b) The Purchase Price shall be reduced, dollar for dollar, by the amount of the excess, if any, of (x) the sum of (i) the total liabilities of the Company shown on the Closing Date Balance Sheet (including, subject to paragraph (d) below, accrual of the full amount of the tax liabilities of the Company arising out of the Contemplated Transactions) less the amount of the Permitted Debt plus (ii) the Target Adjusted Working Capital, over (y) the aggregate cash, Cash Equivalents, pre-paid expenses and accounts receivable of the Company shown on the Closing Date Balance Sheet. The amount obtained by subtracting clause (x)(i) in the preceding sentence as reflected on the Closing Date Balance Sheet from clause (y) in the preceding sentence as reflected on the Closing Date Balance Sheet is referred to in this Agreement as the “Closing Date Adjusted Working Capital”. Any adjustment of the Purchase Price pursuant to this Section 1.6 is referred to in this Agreement as a “Net Working Capital Adjustment”, and together with the Client Consents Adjustment, the “Purchase Price Adjustments.” The Net Working Capital Adjustment, if any, to be paid by Seller to Buyer shall be paid first by offset against the Net Working Capital Holdback and, if in excess thereof, as provided in Section 1.2 above.

(c) Any disputes as to the Net Working Capital Adjustment shall be resolved, and the amount of the Net Working Capital Adjustment finally determined, in accordance with Section 1.7.

(d) For purposes of determining the tax liabilities of the Company arising out of the Contemplated Transactions and reported on the Closing Date Balance Sheet, the parties agree that the Conversion shall be treated as a liquidation of a corporation and distribution of the assets of the same to its shareholders in accordance with Section 332 of the Code, and that the aggregate value of the Class A

and Class B Units deemed distributed by the Company to Buyer and Seller in connection with the conversion shall equal 125% of the Purchase Price.

(e) Seller and the Members shall cause the Company to have a balance of cash and Cash Equivalents at Closing of at least $500,000.

(f) Seller, Buyer and the Company agree that any amounts received from the State of Washington in refund of any overpayment of Washington state excise taxes disclosed on Schedule 2.15(c) hereof shall be distributed by the Company (net of (i) all costs and expenses of the Company incurred or accrued after the date hereof in the pursuit of such refund claim and (ii) any Taxes paid or payable by the Company and/or Buyer as a result of the receipt of such refund) to Seller, and that notwithstanding any provision of the Company Operating Agreement to the contrary all items of income and loss associated with such refund shall be allocated solely to Seller.

1.7 Disputes as to Purchase Price Adjustments. Unless Seller delivers to Buyer, within 20 calendar days after the delivery of the Client Consents Adjustment Notice or the Closing Balance Sheet, as the case may be, written notice of Seller’s disagreement therewith, such Client Consents Adjustment Notice or Closing Balance Sheet, as the case may be, shall be conclusive and binding on the parties for purposes of calculating the corresponding Purchase Price Adjustment. Any notice delivered by Seller pursuant to the preceding sentence must state with specificity the reasons for Seller’s disagreement and identify the items and amounts in dispute. If Buyer and Seller do not agree upon the respective Purchase Price Adjustment within 30 days after delivery of such notice of disagreement by Seller, then Buyer and Seller shall promptly engage the Boston, Massachusetts office of the accounting firm of Ernst & Young LLP or another firm of independent accountants agreed upon by Buyer and Seller (the “Independent Accountants”) to resolve the dispute. The engagement agreement with the Independent Accountants shall require the Independent Accountants to resolve the dispute within 90 days of the engagement. Absent fraud or manifest error, the Independent Accountants’ decision shall be final, binding and conclusive upon the parties hereto. Buyer, on the one hand, and Seller, on the other, shall share equally the fees and expenses of the Independent Accountants.

1.8 Holdback. (a) Subject to Section 1.8(b) below, the aggregate amount of the Purchase Price which shall be retained by Buyer and not paid over to Seller at Closing (such aggregate amount, the “Holdback”) shall be equal to the sum of the following:

(i) the Client Consents Holdback;

(ii) $210,000 (the “Net Working Capital Holdback”);

(iii) $500,000 (the “Primary Holdback”); and

(iv) $500,000 (the “Umbrella Holdback” and, together with the Primary Holdback, the “Indemnity Holdback”).

The Client Consents Holdback, if any, remaining after reduction by setoff in respect of the amount of the Client Consents Adjustment as finally determined pursuant to Section 1.7, shall be delivered to Seller by wire transfer of immediately available funds to an account designated by Seller within three business days of such final determination. The Net Working Capital Holdback, if any, remaining after reduction by setoff in respect of the amount of the Net Working Capital Adjustment as finally determined pursuant to Section 1.7, shall be delivered to Seller by wire transfer of immediately available funds to an account designated by Seller within three business days of such final determination. Demands by Buyer Indemnitees for indemnification under Section 9.1 hereof may be offset by Buyer against the Indemnity Holdback in accordance with the priorities set forth in Section 9.1(c) hereof. The amount of the Indemnity Holdback, if any, remaining after all exercises of the rights of setoff described in Section 9.1(c)

shall be delivered to Seller by wire transfer of immediately available funds to an account designated by Seller within 30 days of the second anniversary of the Closing Date; provided, however, that Buyer may continue to retain some or all of the Indemnity Holdback as security for unresolved Losses and/or claims that were the subject of Notices of Claim delivered as provided in Section 9.4 on or before the date that is 30 days after the second anniversary of the Closing Date, to be subject to setoff against Losses arising out of the matters that are the subject of such Notices of Claim and the remaining retained amount of the Indemnity Holdback to be released when and as such Losses and setoffs are finally determined.

(b) Notwithstanding Section 1.8(a) above, Buyer may, in its sole discretion after review of the financial statements and, if other than natural persons, Organizational Documents of such members or Affiliates, waive the requirement of all or any portion of the Indemnity Holdbacks provided that one or more members of Seller, or Affiliates of such members, jointly and severally guarantee to Buyer, by written agreement in form and substance acceptable to Buyer in its sole discretion, payment of the amounts, if any, that are required to be paid pursuant to Section 9.1(c)(i) and 9.1(c)(iii) that otherwise would have been satisfied with the waived portion of the Indemnity Holdbacks.

2 Representations and Warranties of Seller and the Members. Seller and the Members represent and warrant to Buyer as follows, as of the date hereof and as of the Closing Date:

2.1 Power and Authority. (a) Seller. Seller has full limited liability company power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is designated a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Ancillary Agreements to which Seller is designated a party, the performance of Seller’s obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all requisite limited liability company action of the managers of Seller and as of Closing will have been duly authorized by all requisite limited liability company action of the members of Seller, including the unanimous approval of the Contemplated Transactions by all members of Seller in accordance with all applicable Law and the waiver by such members of all appraisal, dissenters’ or comparable rights as members of Seller. Seller has duly executed and delivered this Agreement and on the Closing Date will have duly executed and delivered the Ancillary Agreements to which it is designated a party. This Agreement constitutes, and each such Ancillary Agreement when so executed and delivered by Seller will constitute, the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its respective terms.

(b) The Company. The Company, both as of the date hereof and as of the Closing Date but before giving effect to the Conversion, has full corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is designated a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, and as of the Closing Date after giving effect to the Conversion (and assuming due execution and delivery by EVA of the Company Operating Agreement and by the initial EVA Managers (as designated therein) and EVA of a unanimous written consent of members and managers in substantially the form attached as Exhibit O hereto (the “Post-Conversion Consent”)) will have full limited liability company power and authority to execute and deliver the Ancillary Agreements to which it is designated a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Ancillary Agreements to which the Company is designated a party, the performance of the Company’s obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, have been (or, in the case of the Conversion and Class C Issuance, as of Closing will have been) duly authorized by all requisite corporate action of the Company. The Company has duly executed and delivered this Agreement and on the Closing Date will have duly executed and delivered the Ancillary Agreements to which it is designated a party. This Agreement constitutes, and each such Ancillary Agreement when so

executed and delivered by the Company will constitute, the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its respective terms.

(c) Members. Each Member has full power, capacity and authority to execute and deliver this Agreement and the Ancillary Agreements to which he or she is designated party, to perform his or her obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. Each Member has duly executed and delivered this Agreement and on the Closing Date will have duly executed and delivered the Ancillary Agreements to which he or she is designated a party. This Agreement constitutes, and each such Ancillary Agreement when so executed and delivered by such Member will constitute, the legal, valid and binding obligation of each Member enforceable against such Member in accordance with its respective terms. Each Member represents and warrants that no litigation, dispute or controversy exists between such Member and any other Member in respect of Seller, the Company or any ownership therein.

2.2 Title, Capitalization, etc. (a) Title. Seller owns, beneficially and of record, all of the PPA Stock, free and clear of any Liens other than (a) restrictions on transfer imposed by the Certificate of Incorporation and Bylaws of the Company, (b) applicable restrictions on the transferability of unregistered stock imposed by Federal and state securities laws, and (c) Liens in favor of Buyer created by this Agreement. Upon the delivery of and payment for the Purchased PPA Stock at the Closing as provided for in this Agreement, Buyer will acquire good and valid title to all the Purchased PPA Stock so purchased, free and clear of any Lien other than (a) restrictions on transfer imposed by the Certificate of Incorporation and Bylaws of the Company, (b) applicable restrictions on the transferability of unregistered stock imposed by Federal and state securities laws, and (c) restrictions on transferability created by this Agreement and the Ancillary Agreements.

(b) Authorized Capital Stock of the Company. Schedule 2.2(b) contains a complete and correct description, both as of the date hereof and as of the Closing Date but before giving effect to the Conversion, of the authorized and issued and outstanding capital stock of the Company, of which only the PPA Stock is outstanding. All shares of the PPA Stock, both as of the date hereof and as of the Closing Date but before giving effect to the Conversion, are duly authorized, validly issued, fully paid and nonassessable, and, as of the date hereof and immediately prior to the Share Purchase, are owned beneficially and of record by Seller as set forth on Schedule 2.2(b).

(c) No Equity Rights. There are no preemptive or similar rights on the part of any holders of any class of securities of the Company. Except for this Agreement and the Ancillary Agreements, no subscriptions, options, warrants, conversion or other rights, agreements, commitments, arrangements or understandings of any kind obligating Seller, the Company, any Member or any other Person, contingently or otherwise, to issue or sell, or cause to be issued or sold, any PPA Stock or any other equity interests of the Company, or any securities convertible into or exchangeable for any such PPA Stock or other equity interests in the Company, are outstanding, and no authorization therefor has been given. Except for this Agreement and the Ancillary Documents, there are no outstanding contractual or other rights or obligations to or of the Company, any Member or any other Person to repurchase, redeem or otherwise acquire any outstanding PPA Stock or other equity interests of the Company.

2.3 No Conflicts, etc. The execution, delivery and performance of this Agreement and the Ancillary Agreements by Seller, the Company and the members of Seller (including each Member), and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with, contravene, result in a violation or breach of or default under (with or without the giving of notice or the lapse of time or both), create in any other Person a right or claim of termination, amendment, or require modification, acceleration or cancellation of, or result in the creation of any Lien (or any obligation to create any Lien) upon any of the properties or assets of the Company, under, (a) assuming that all Consents expressly required to be made or obtained under this Agreement between the date hereof and Closing pursuant to Sections 4.4, 4.6(b), 4.8, 6.4 and 7.2(c) have been so made or obtained as of

Closing, any Law applicable to the Company or any of their respective properties or assets, (b) assuming receipt between the date hereof and Closing of the shareholder, member and board approvals set forth on Schedule 2.3, any provision of any of the Organizational Documents of the Company or Seller, or (c) assuming that all Consents set forth on Schedule 2.18(b) are made or obtained prior to Closing, any Contract, or any other agreement or instrument to which Seller, the Company or any Member is a party or by which any of their respective properties or assets may be bound.

2.4 Corporate Status. (a) Organization. The Company is as of the date hereof and will be as of the Closing Date immediately prior to the Conversion, a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has full corporate power and authority to conduct its business and to own or lease and to operate its properties as and in the places where such business is conducted and such properties are owned, leased or operated. Upon the Conversion becoming effective, the Company will be a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, and has full corporate power and authority to conduct its business and to own or lease and to operate its properties as and in the places where such business is conducted and such properties are owned, leased or operated.

(b) Qualification. The Company is duly qualified or licensed to do business and in good standing in each of the jurisdictions specified in Schedule 2.4(b), which includes each jurisdiction in which the nature of its business or the properties owned or leased by it makes such qualification or licensing necessary.

(c) Organizational Documents. Seller has delivered to Buyer complete and correct copies of the Organizational Documents of the Company, as amended, modified or waived through and in effect on the date hereof. Each of such Organizational Documents is in full force and effect as of the date hereof and will be in full force and effect on the Closing Date until the Conversion, upon the occurrence of which the Organizational Documents of the Company shall be the Conversion Certificates and the Company Operating Agreement. The Company is not in violation of any of the provisions of such Organizational Documents. The minute books of the Company, which have heretofore been made available to Buyer, correctly reflect (i) all actions taken by its stockholders that such stockholders were required by applicable Law to take, (ii) all actions taken by the directors of the Company that the board of directors of the Company was required by applicable Law to take and (iii) all other actions taken by the stockholders and directors of the Company.

2.5 Investments and Subsidiaries; Transfer of Assets. (a) Investments and Subsidiaries. The Company does not own and never has owned, directly or indirectly, any shares of capital stock or other securities of, or interest in, any other Person, except (i) in investment advisory accounts managed by the Company for third persons and (ii) as set forth on Schedule 2.5(a).

(b) Transfer of Assets. No dissenter's or other comparable rights are exercisable by any Member or other person in respect of the Contemplated Transactions.

2.6 Financial Statements. (a) Seller has delivered to Buyer complete and correct copies of the Financial Statements.

(b) The Financial Statements are complete and correct in all material respects, have been derived from the accounting books and records of the Company, and have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods presented in the Financial Statements except as may be indicated in the notes thereto and subject, in the case of interim unaudited Financial Statements, only to normal recurring year-end adjustments.

(c) The balance sheets included in the Financial Statements present fairly the financial position of the Company as at the respective dates thereof, and the statements of income, statements of stockholders’ equity and statements of cash flows included in such Financial Statements present fairly the results of operations and cash flows of the Company for the respective periods indicated.

2.7 Regulatory Documents. (a) Each of the Company and Seller has timely filed all forms, reports, notices, registration statements and supplements thereto, advertising or marketing materials and all other documents, together with any amendments required to be made with respect thereto (except any nonmaterial amendments that may be required as a result of the Conversion), that were requested or required to be filed with any Governmental Authority, including the SEC or any Self Regulatory Organization (collectively, the “Regulatory Documents”), and has timely paid all fees and assessments due and payable in connection therewith.

(b) The Company and each of its officers and employees which is or who are required to be registered, if so required by the nature of their business, are and have been (and the Company and each such of its officers and employees as of the Closing Date will be and have been) duly registered (i) as an investment adviser under the Advisers Act and under applicable state statutes, (ii) as an investment adviser representative (as defined in the Advisers Act) under applicable state statutes, (iii) as a broker-dealer under the Exchange Act and under applicable state statutes, (iv) as a commodities trading adviser, commodity pool operator, futures commission merchant and/or introducing broker under the Commodity Exchange Act and under applicable state statutes, and (v) with all other applicable Governmental Authorities (including Self Regulatory Organizations), where any such registration is necessary in order for the Company to conduct its business in accordance with applicable Law. Schedule 2.7(b) lists the Governmental Authorities (including Self Regulatory Organizations) with which the Company is registered and the capacity in which it is registered. Each such registration is in full force and effect. Seller has made available to Buyer a true, complete and correct copy of all registration forms filed by the Company or to be filed by the Company to accomplish the registrations listed on Schedule 2.7(b).

(c) The Regulatory Documents of the Company and Seller comply and have complied with the requirements of all applicable Laws (including the Exchange Act, the Securities Act, the 1940 Act and the Advisers Act and all rules and regulations thereunder, including the rules and regulations of all Self Regulating Organizations) applicable to such Regulatory Documents, and none of the Regulatory Documents of either the Company or Seller, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

2.8 Ineligible Persons. Neither the Company nor Seller, nor any "affiliated person" (as defined in the 1940 Act) thereof, is ineligible pursuant to Section 9(a) or 9(b) of the 1940 Act to serve as an investment adviser (or in any other capacity contemplated by the 1940 Act) to a registered investment company. Neither the Company nor Seller, nor any “associated person” (as defined in the Advisers Act) thereof, is ineligible pursuant to Section 203 of the Advisers Act to serve as an investment adviser or as an associated person to a registered investment adviser. Neither the Company nor Seller, nor any “associated person” (as defined in the Exchange Act) thereof, is ineligible pursuant to Section 15(b) of the Exchange Act to serve as a broker dealer or as an associated person to a registered broker-dealer.

2.9 Investment Contracts and Clients. (a) Schedule 1.5 sets forth a true, complete and correct list that identifies each investment advisory client of the Company as of the date hereof, and shows for each client and as of the date hereof, the name, fee arrangements and net assets under management. Each client so listed is being properly served by the Company in accordance with the terms

of the Advisory Agreement with respect to such client. The Company has properly administered all accounts for which it acts as an investment adviser or in a similar capacity, in accordance with the terms of the Contracts relating thereto, the Advisers Act and all applicable Laws.

(b) To Seller's Knowledge, no material controversy or disagreement exists between the Company and any customer of the Business.

(c) The Company has adopted a formal code of ethics and a written policy regarding insider trading and front running, a true, complete and correct copy of which has been made available to Buyer. Such code of ethics and written policy comply in all material respects with Section 17(j) and Rule 17j-1 under the 1940 Act and Section 204A of the Advisers Act, respectively. The policies of the Company with respect to avoiding conflicts of interest are as set forth in the Form ADV of the Company. As of the date of this Agreement, to Seller’s Knowledge, there have been no violations or allegations of violations of such policies or the conflict of interest policies that have occurred or been made.

(d) Neither the Company nor any other person “associated” (as defined under the Advisers Act) with it, has for a period not less than five years prior to the date hereof been convicted of any crime or is or has been subject to any disqualification that would be a basis for denial, suspension or revocation of registration of an investment adviser under Section 203(e) of the Advisers Act and, to Seller’s Knowledge, there is no reasonable basis for, or proceeding or investigation, whether formal or informal, or whether preliminary or otherwise, that would reasonably be expected to become the basis for, any such disqualification, denial, suspension or revocation.

(e) The Company has not paid a cash fee, directly or indirectly, to any person who, directly or indirectly, solicits any client or prospective client for, or refers any client or prospective client to, the Company.

(f) There are no obligations or requirements to refund or return any amounts or funds paid, payable or to be paid under any Advisory Agreement.

(g) The Company has not incurred and will not incur any Loss as a result of any failure or alleged failure to be AIMR compliant.

2.10 Wrap-Fee Programs. All “wrap-fee” programs of the Company are and have been conducted in full compliance with Rule 3a-4 under the 1940 Act and all other applicable Law, including all disclosure and delivery requirements applicable to such programs. All disclosure documents and Advisory Agreements relating to the “wrap fee” programs for which the Company serves as an adviser, sponsor or portfolio manager are set forth in Schedule 2.10, which identifies the program sponsors and underlying clients in respect of each “wrap fee” program sponsored by a third-party.

2.11 Fund Related Issues. (a) Other than as a subadviser to the Funds, the Company has not acted as sponsor or adviser to any registered investment company (as defined under the 1940 Act). Each Fund is identified on Schedule 2.11(a). The Company has operated and managed each Fund in compliance with the 1940 Act and its investment objectives, policies, and descriptions, including without limitation those set forth in such Fund’s prospectus or statement of additional information of such Fund.

(b) The materials supplied by the Company (other than any materials provided by Buyer or its Affiliates describing Buyer and its Affiliates that are included therein) to each Fund Board in connection with the approvals described in Section 6.4 of this Agreement will provide all information necessary in order to satisfy the requirements of Section 15 of the 1940 Act, and such materials and information (other than any materials and information provided by Buyer or its Affiliates describing or in respect of Buyer or any of its Affiliates that are included therein) will be complete in all respects and will

not contain any untrue statement of a material fact or omit therefrom a material fact required to be stated therein or necessary to make the statements therein not false or misleading.

(c) Except for the approval of the Contemplated Transactions by each Fund Board prior to Closing and the mailing of an information statement to each Fund shareholder subsequent to Closing describing the Contemplated Transactions, no other Consents are required in order to cause each Advisory Agreement between the Company and the Funds to remain in full force and effect after giving effect to the deemed assignment of the same at Closing. Seller has provided to Buyer true and complete copies of (a) each exemptive order applicable to the subadvisory Contracts of each registered Fund and (b) the Organization Documents of each unregistered Fund and any Consents given thereunder with respect to the retention and termination of subadvisors to such Fund.

2.12 Investment Company Advisory Agreements. Each Advisory Agreement between the Company and any Fund has been duly approved at all times in compliance in all material respects with Section 15 of the 1940 Act and all other applicable Laws. Each such Advisory Agreement has been performed by the Company in accordance with the 1940 Act and all other applicable Laws.

2.13 Undisclosed Liabilities, etc. The Company has no liabilities or obligations of any nature, whether known, unknown, absolute, accrued, contingent or otherwise and whether due or to become due, except (a) as and to the extent disclosed or reserved against in the Balance Sheet or specifically disclosed in the notes thereto and (b) for liabilities and obligations that (i) were incurred after the date of the Balance Sheet in the ordinary course of business and, if incurred after the date hereof, are not prohibited by this Agreement and (ii) individually and in the aggregate, would not reasonably be expected to be material to the Company or to have or result in a Material Adverse Effect. Since the date of the Balance Sheet, there has not occurred or come to exist any Material Adverse Effect or any event, occurrence, fact, condition, change, development or effect that, individually or in the aggregate, would reasonably be expected to become or result in a Material Adverse Effect.

2.14 Absence of Changes. Since the date of the Balance Sheet, except as specifically permitted after the date hereof pursuant to Section 4.1, the Company has not:

(a) declared, set aside, made or paid any dividend or other distribution in respect of their capital stock or other equity interests, or otherwise purchased or redeemed, directly or indirectly, any shares of their capital stock or other equity interests;

(b) issued or sold any shares of any class of their capital stock or other equity interests, or any securities convertible into or exchangeable for any such shares or interests, or issued, sold, granted or entered into any subscriptions, options, warrants, conversion or other rights, agreements, commitments, arrangements or understandings of any kind, contingently or otherwise, to purchase or otherwise acquire any such shares or interests or any securities convertible into or exchangeable for any such shares or interests;

(c) incurred any indebtedness for borrowed money, issued or sold any debt securities or prepaid any debt (including, without limitation, any borrowings from or prepayments to the Company) except for borrowings and repayments in the ordinary course of business;

(d) except as set forth in Schedule 2.14, (ii) mortgaged, pledged or otherwise subjected to any Lien, any of its Real Property or other properties or assets, tangible or intangible, except for Permitted Liens in the ordinary course of business;

(e) forgiven, cancelled, compromised, waived or released any debts, claims or rights, except for debts, claims and rights against Persons (excluding Seller, the Company and the members of

Seller (including the Members) and any Affiliate of any of them) that were forgiven, cancelled, compromised, waived or released in the ordinary course of business;

(f) except as set forth in Schedule 2.14, modified any existing Contract (excluding modifications of immaterial terms (for purposes of illustration, the updating of addresses for notices) that do not, in the aggregate, materially modify such Contract, it being understood that any modifications of fees, term, performances due, or other comparable terms shall in any event be deemed material) or proposed to any Client any modification or amendment to an Advisory Agreement, or entered into (x) any agreement, commitment or other transaction, other than agreements entered into in the ordinary course of business and involving an expenditure of less than $10,000 in each case and $25,000 in the aggregate, or (y) any agreement or commitment that, pursuant to its terms, is not cancelable without penalty on less than 30 days’ notice;

(g) except as set forth in Schedule 2.14, paid any bonus to any officer, director, employee, sales representative, agent or consultant, or granted to any officer, director, employee, sales representative, agent or consultant any other increase in compensation in any form, excluding ordinary course increases in base salary of not more than $10,000 and sales commissions in accordance with the terms of the commission plans set forth on Schedule 2.14;

(h) except as set forth in Schedule 2.14, entered into, adopted or amended any employment, consulting, retention, change-in-control, collective bargaining, bonus or other incentive compensation, profit-sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other employment, compensation or benefit plan, policy, agreement, trust, fund or arrangement for the benefit of any officer, director, employee, sales representative, agent, consultant or Affiliate (whether or not legally binding), excluding modifications of immaterial terms (for purposes of illustration, the updating of addresses for notices) that do not, in the aggregate, materially modify such plan, policy, agreement, trust, fund or arrangement, it being understood that any modifications of fees, term, performances due, or other comparable terms shall in any event be deemed material;

(i) suffered any damage, destruction or loss (whether or not covered by insurance), or any strike or other employment-related problem, or any change in relations with or any loss of a supplier, customer or employee, that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect;

(j) amended any of its Organizational Documents;

(k) changed in any respect its accounting practices, policies or principles;

(l) incurred, assumed, guaranteed or otherwise become directly or indirectly liable with respect to any liability or obligation in excess of $10,000 in each case or $25,000 in the aggregate at any one time outstanding (whether absolute, accrued, contingent or otherwise and whether direct or indirect, or as guarantor or otherwise with respect to any liability or obligation of any other Person);

(m) transferred or granted any rights or licenses under, or entered into any settlement regarding the infringement of, Company Intellectual Property, entered into any licensing or similar agreements or arrangements, or received notice of alleged infringement of or conflict with any rights to Intellectual Property of any Person;

(n) sold any assets with a value in excess of $10,000 in each case or $25,000 in the aggregate, other than inventory in the ordinary course of business;

(o) made any material changes in policies or practices relating to selling practices, returns, discounts or other terms of sale or accounting therefor or in policies of employment; or

(p) taken any action or omitted to take any action that would reasonably be expected to result in the occurrence of any of the foregoing.

2.15 Tax Matters. (a) Except as set forth on Schedule 2.15(a), (i) all Tax Returns relating to the Company or the business or assets thereof that were required to be filed have been duly and timely filed and are correct and complete in all material respects, (ii) all Taxes of the Company (whether or not shown on any Tax Return) that are due and payable prior to or as of the Closing Date by the Company have been paid and (iii) the Company is not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has been made by a Taxing authority of a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to taxation in that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any asset of the Company.

(b) The unpaid Taxes of the Company (i) did not, as of the date of the most recent Financial Statements, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the balance sheet included in such Financial Statements (rather than in any notes thereto); and (ii) will not exceed that reserve as adjusted for operations and transactions through the Closing Date (including the consummation of the Contemplated Transactions), as determined in part pursuant to Section 1.6(c).

(c) Except as set forth on Schedule 2.15(c), there has been no material claim or dispute (other than a claim or dispute that has been finally settled) concerning any liability for Taxes of the Company asserted, raised or threatened by any taxing authority and, to Seller’s Knowledge, no circumstances exist to form the basis for such a claim or dispute.

(d) Except as set forth on Schedule 2.15(d), no Tax Returns of the Company have been or are currently the subject of audit or examination, nor has the Company been notified of any request for an audit or examination, and Seller has delivered to Buyer correct and complete copies of all examination reports, and statements of deficiencies relating to Taxes that were filed, assessed against, or agreed to by the Company.

(e) The Company has not (i) waived any statute of limitations with respect to Taxes, (ii) agreed to any extension of the time period for Tax assessment or collection or (iii) executed or filed any power of attorney with respect to Taxes, which waiver, agreement or power of attorney is currently in force.

(f) The Company has not filed a consent under Code Section 341(f) concerning collapsible corporations. The Company is not a party to any agreement, contract, or plan that has resulted or would result, separately or in the aggregate, in the payment of any “excess parachute payment” within the meaning of Code Section 280G (or any corresponding provision of state, local or foreign Tax law). The Company has not been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii).

(g) The Company has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

(h) Except as set forth on Schedule 2.15(h), neither the Company (or any successor thereto or transferee of the assets thereof) nor the Company will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion

thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii) “closing agreement” as described in Code Section 7121 (or any corresponding provision or similar provision of state, local or foreign Tax law) executed on or prior to the Closing Date; (iii) intercompany transactions or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign Tax law) arising prior to or on the Closing Date; (iv) installment sale or open transaction disposition made prior to Closing; or (v) prepaid amount received on or prior to the Closing Date.

(i) Except for the covenants as to indemnification set forth in this Agreement, the Company is not nor has it been (i) party to or bound by or has any obligation under any Tax allocation, sharing, indemnity or similar agreement or arrangement or (ii) a member of any group of companies filing a consolidated, combined or unitary Income Tax Return. The Company has no liability for the Taxes of any person or entity under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law) as a transferee, successor, by contract or otherwise.

2.16 Assets. The Company owns, or otherwise has full, exclusive, sufficient and legally enforceable rights to use (and after the Contribution Transaction the Company will own or have the aforedescribed rights to use), all of the properties and assets (real, personal or mixed, tangible or intangible), used or held for use in connection with, necessary for the conduct of, or otherwise material to, the Business (the “Assets”). The Company has good, valid and marketable title to, or in the case of leased property has good and valid leasehold interests in (and after the Contribution Transaction the Company will have the aforedescribed title or leasehold interests in), all Assets, including but not limited to all such Assets reflected in the Balance Sheet or acquired since the date thereof (except as may be disposed of in the ordinary course of business after the date hereof and in accordance with this Agreement), in each case free and clear of any Lien, except Permitted Liens. The Company has maintained all tangible Assets in good repair, working order and operating condition subject only to ordinary wear and tear, and all such tangible Assets are fully adequate and suitable for the purposes for which they are presently being used. Seller has set forth on Schedules 2.16 and 2.17(b) a list of all tangible Assets, including but not limited to buildings, machinery, equipment and motor vehicles, and identifies the location of such Assets.

2.17 Real Property. (a) No Owned Real Property. The Company does not and has never owned, nor held any other interest in, any real property other than its leasehold interest under the Fairview Lease.

(b) Leases. The Fairview Lease is the sole Lease to which the Company is party. Seller has delivered to Buyer correct and complete copies of the Fairview Lease (including all amendments thereto and assignments and consents given thereunder). The Fairview Lease has been duly assigned to the Company, including the receipt from and giving to the landlord thereunder of all required Consents. The Fairview Lease is legal, valid, binding, in full force and effect and enforceable against each party thereto, except to the extent that any failure to be so enforceable, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect or materially impair the ability of the Company to perform its obligations hereunder and under the Ancillary Agreements. The Company is not in default, violation or breach in any respect under the Fairview Lease, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would reasonably be expected to constitute a default, violation or breach in any respect under the Fairview Lease. The Fairview Lease grants the tenant under the Fairview Lease the exclusive right to use and occupy the premises and rights demised and intended to be demised thereunder. The Company has good and valid title to the leasehold estate under the Fairview Lease free and clear of any Liens other than Permitted Liens. The Company enjoys peaceful and undisturbed possession of the real property that is the subject of the Fairview Lease (the “Fairview Property”).

interests in real property held by the Company, and constitutes all of the fee and leasehold interests in real property used or held for use in connection with, necessary for the conduct of, or otherwise material to, the Business.

(d) No Proceedings. To Seller's Knowledge, there are no proceedings in eminent domain or other similar proceedings pending or threatened affecting any portion of the Fairview Property. There exists no writ, injunction, decree, order or judgment outstanding, nor any Litigation, pending or, to Seller’s Knowledge, threatened, relating to the ownership, lease, use, occupancy or operation by the Company of the Fairview Property.

(e) Current Use. To Seller's Knowledge, the use and operation of the Fairview Property in the conduct of the Business does not violate in any material respect any instrument of record or agreement affecting Fairview Property. There is no violation by the Company or, to Seller’s Knowledge, by any other Person of any covenant, condition, restriction, easement or agreement or order of any Governmental Authority that affects the Fairview Property or the ownership, operation, use or occupancy thereof. No damage or destruction has occurred with respect to Fairview Property that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect.

(f) Compliance with Real Property Laws. To Seller's Knowledge, the Fairview Property is in full compliance with all applicable building, zoning, subdivision and other land use and similar Laws affecting the Fairview Property (collectively, the “Real Property Laws”), and the Company has not received any written notice of violation or claimed violation of any Real Property Law. To Seller’s Knowledge, there is no pending or anticipated change in any Real Property Law that would reasonably be expected to have or result in a Material Adverse Effect or a material adverse effect upon the ownership, alteration, use, occupancy or operation of the Fairview Property or any portion thereof. To Seller’s Knowledge, no current use by the Company of the Fairview Property is dependent on a nonconforming use or other Governmental Approval, the absence of which would materially limit the use of any of the properties or assets in the Business.

(g) Real Property Consents. Except as set forth in Schedule 2.17(g), the execution, delivery and performance of this Agreement and the Ancillary Agreements by the Company, and the consummation of the transactions contemplated hereby and thereby, do not and will not require the Consent of any Person pursuant to the Fairview Lease or, to Seller’s Knowledge, any instrument of record or other agreement affecting the Fairview Property. Except as set forth in Schedule 2.17(g), the enforceability of the Fairview Lease will not be affected in any manner by the execution, delivery or performance of this Agreement or any Ancillary Agreement and the Fairview Lease does not contain any change in control provision or other terms or conditions that will become applicable or inapplicable as a result of the consummation of the Contemplated Transactions and the Ancillary Agreements.

2.18 Contracts. (a) Disclosure. Schedule 2.18(a) contains a complete and correct list, as of the date hereof, of all Contracts. The Company has delivered to Buyer complete and correct copies of all written Contracts, and accurate descriptions of all material terms of all oral Contracts, set forth or required to be set forth in Schedule 2.18(a).

(b) Enforceability. All Contracts are legal, valid, binding, in full force and effect and enforceable against each party thereto, except to the extent that any failure to be enforceable, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect or to materially impair the ability of the Company to perform its obligations hereunder and under the Ancillary Agreements. Except (i) as set forth in Schedule 2.18(b) and (ii) for the existing default under the debt coverage covenants of the Business Loan Agreement, dated as of April 10, 2001 (the “Senior Debt Agreement”), by and between the Company (f/k/a PPA Corporation I) and The Commerce Bank of Washington (the “Senior Lender”), which default has been waived by the Senior Lender in respect of the 2001 and 2002 fiscal years of the Company, there does not exist under any Contract any violation, breach or event of default, or event or condition that, after notice or lapse of time or both, would constitute a violation, breach

or event of default thereunder, on the part of either the Company or, to Seller’s Knowledge, any other Person. Except as set forth in Schedule 2.18(b), the enforceability of all Contracts will not be affected in any manner by the execution, delivery or performance of this Agreement, and no Contract contains any change in control or other terms or conditions that will become applicable or inapplicable as a result of the consummation of the Contemplated Transactions.

(c) Permitted Debt. All Contracts relating to the Permitted Debt permit the prepayment by the Company of the outstanding principal amount of and accrued but unpaid interest upon such Permitted Debt at or immediately subsequent to Closing without the incurrence of prepayment penalties or other penalties, fees, expenses or costs. As of the date hereof and as of Closing, the aggregate amounts owed in respect of each item of Permitted Debt do not and shall not exceed the amounts set forth in the definition of Permitted Debt in Section 10.2 hereof. Assuming prepayment of the Permitted Debt at or immediately subsequent to Closing, the Company has and shall incur no liability as a result of any violation of the debt coverage ratios in the Senior Debt Agreement in respect of fiscal year 2003.

2.19 Intellectual Property. (a) Disclosure. Schedule 2.19(a) sets forth a complete and correct list of all Intellectual Property that is owned by the Company (the “Owned Intellectual Property”).

(b) Title. The Company owns or has the right to use all of the Intellectual Property used or held for use in connection with, necessary for the conduct of, or otherwise material to, the Business (the “Company Intellectual Property”) except as set forth in Schedule 2.19(b). The Company has the full and exclusive right to use the Company Intellectual Property for the life thereof for any purpose in connection with the Business, free from (i) any Liens (except for Permitted Liens incurred in the ordinary course of business) and (ii) any requirement of any past, present or future royalty payments, license fees, charges or other payments, or conditions or restrictions whatsoever, except as set forth in Schedule 2.19(b). After giving effect to the Conversion, the Company shall own or have licensed to it all the Company Intellectual Property, in each case free from Liens (except for Permitted Liens incurred in the ordinary course of business) and on the same terms and conditions as in effect prior to the Closing, except as otherwise disclosed in Schedule 2.19(b).

(c) Licensing and Similar Arrangements. Schedule 2.19(c) sets forth all written or oral agreements and arrangements (i) pursuant to which the Company has licensed Intellectual Property to, or the use of Intellectual Property is otherwise permitted (through non-assertion, settlement or similar agreements or otherwise) with respect to, any other Person, and (ii) pursuant to which the Company has had Intellectual Property licensed to it, or has otherwise been permitted to use Intellectual Property (through non-assertion, settlement or similar agreements or otherwise). All of the agreements and arrangements set forth or required to be set forth in Schedule 2.19(c): (i) are in full force and effect and enforceable in accordance with their terms, and no default exists or is threatened thereunder by the Company, or, to Seller’s Knowledge, by any other Person, that would reasonably be expected to have or to result in a Material Adverse Effect, or that would reasonably be expected to materially impair the ability of the Company to perform its respective obligations hereunder and under the Ancillary Agreements, (ii) license or permit that which they purport to license or permit, (iii) are free and clear of all Liens (except for Permitted Liens incurred in the ordinary course of business), and (iv) do not contain any change in control or other terms or conditions that will become applicable or inapplicable as a result of the consummation of the Contemplated Transactions. Seller has delivered to Buyer complete and correct copies of all licenses and arrangements (including amendments, supplements, waivers and other modifications) set forth or required to be set forth in Schedule 2.19(c). All royalties, license fees, charges and other amounts payable by, on behalf of, to or for the account of the Company in respect of any Intellectual Property are reflected in the Financial Statements.

(d) No Infringement. To Seller’s Knowledge, the conduct of the Business does not infringe or otherwise conflict with any rights of any Person in respect of any Intellectual Property. To

Seller’s Knowledge, none of the Company Intellectual Property is being infringed or otherwise used or available for use by any Person without a license or permission from the Company.

(e) No Intellectual Property Litigation. No claim or demand of any Person has been made or, to Seller's Knowledge, threatened, nor is there any Litigation that is pending or, to Seller’s Knowledge, threatened, that (i) challenges the rights of the Company in respect of any Company Intellectual Property, (ii) asserts that the Company is infringing or otherwise in conflict with, or is (except as set forth in Schedule 2.19(e)), required to pay any royalty, license fee, charge or other amount with regard to, any Intellectual Property, or (iii) claims that any default exists under any agreement or arrangement set forth or required to be set forth in Schedule 2.19(e). None of the Company Intellectual Property is subject to any outstanding order, ruling, decree, judgment or stipulation by or with any court, tribunal, arbitrator or other Governmental Authority, or has been the subject of any Litigation within the last ten years, whether or not resolved in favor of the Company.

(f) Due Registration, Etc. The Owned Intellectual Property has been duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office, the United States Copyright Office or other filing offices, domestic or foreign, to the extent necessary to ensure full protection under any applicable Law, and such registrations, filings, issuances and other actions remain in full force and effect. The Company has taken all necessary actions to ensure full protection of the Company Intellectual Property (including maintaining the secrecy of all confidential Intellectual Property) under any applicable Law.

2.20 Insurance. Schedule 2.20 contains a complete and correct list and summary description of all insurance policies maintained (at present or at any time in the past) by or on behalf of the Company. Seller has delivered to Buyer complete and correct copies of all such policies together with all riders and amendments thereto. Such policies are in full force and effect, and all premiums due thereon have been paid. The Company has complied in all material respects with the terms and provisions of such policies. The insurance coverage provided by such policies is adequate and suitable for the Business, and is on such terms (including without limitation as to deductibles and self-insured retentions), covers such risks, contains such deductibles and retentions, and is in such amounts, as the insurance customarily carried by comparable companies of established reputation similarly situated and carrying on the same or similar business. The Company has taken, and will take between the date hereof and Closing, all commercially reasonable actions to cause each policy that is scheduled to expire within 90 days of the date hereof to be renewed on or prior to such expiration date on substantially the same terms (including premiums) as currently in effect. No insurer has given to the Company any notice of intent not to renew, and to Seller’s Knowledge no fact, event or conditions exists that would reasonably be expected to prevent such renewal or give the insurer cause not to renew. Neither Seller nor any Member is named as the insured or beneficiary of any insurance policy relating to casualties or losses of the Business.

2.21 Litigation. Set forth on Schedule 2.21 is a description of each Litigation pending or, to Seller's Knowledge, threatened by or against, or, to Seller's Knowledge, affecting, the Company or any of its properties or assets. No Litigation set forth on Schedule 2.21, individually or in the aggregate, would reasonably be expected to impair the ability of the Company to perform its obligations hereunder or under any Ancillary Agreement, or to have or result in a Material Adverse Effect (in each case, if adversely determined, and without regard to whether the defense thereof or liability in respect thereof is covered by policies of insurance or any indemnity, contribution, cost sharing or similar agreement or arrangement by or with any other Person). There are no outstanding orders, judgments, decrees or injunctions issued by any Governmental Authority against the Company, or that would reasonably be expected to in any way adversely affect the Business or to have or result in a Material Adverse Effect.

2.22 Compliance with Laws and Instruments; Consents.

(a) Compliance. (i) The Company is not and has not been in conflict with or in violation or breach of or default under (and there exists no event that, with notice or passage of time or both, would constitute a conflict, violation, breach or default with, of or under) (x) any Law applicable to it or any of its properties, assets, operations or business, (y) any provision of its Organizational Documents, or (z) any Contract, or any other agreement or instrument to which it is party or by which it or any of its properties or assets is bound or affected, and (ii) the Company has not received any written notice of, nor otherwise to Seller’s Knowledge is there, any claim alleging any such conflict, violation, breach or default.

(b) Consents. (i) Except as specified in Schedule 2.22(b)(i), no Governmental Approval or other Consent is required to be obtained or made by the Company in connection with the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby.

(ii) Schedule 2.22(b)(ii) contains a complete and correct list of all Governmental Approvals and other Consents necessary for, or otherwise material to, the conduct of the Business. Except as set forth in Schedule 2.22(b)(ii), all such Governmental Approvals and other Consents have been duly obtained and are held by the Company and are in full force and effect. The Company is and at all times has been in compliance with all Governmental Approvals and other Consents held by either. There is no Litigation pending or, to Seller’s Knowledge, threatened, that would reasonably be expected to result in the revocation, cancellation, suspension or modification or nonrenewal of any Governmental Approval or Consent set forth on Schedule 2.22(b)(ii). The Company has not been notified that any such Governmental Approval or Consent will be modified, suspended, cancelled modified or cannot be renewed in the ordinary course of business; and there is no reasonable basis for any such revocation, cancellation, suspension, modification or nonrenewal. Except as set forth in Schedule 2.22(b)(ii), the execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby do not and will not violate any such Governmental Approval or Consent, or result in any revocation, cancellation, suspension, modification or nonrenewal thereof.

2.23 Environmental Matters. To Seller's Knowledge, neither the conduct nor operation of the Company nor any condition of any property presently or previously owned, leased or operated by it (including, without limitation, in a fiduciary or agency capacity), or on which its holds a Lien, violates or violated Environmental Laws and no condition has existed or event has occurred with respect to it or any such property that, with notice or the passage of time, or both, is reasonably likely to result in any liability of it, the Company, Buyer, or any affiliate of any of them, under Environmental Laws. The Company has not received any written notice from any Person that the Company or the operation or condition of any property ever owned, leased, operated, or held as collateral or in a fiduciary capacity by it was in violation of or otherwise are alleged to have liability under any Environmental Law, including, but not limited to, responsibility (or potential responsibility) for the cleanup or other remediation of any Hazardous Materials at, on, beneath, or originating from any such property.

2.24 Affiliate Transactions. (a) Schedule 2.24(a) contains a complete and correct list of all Contracts, transfers of assets or liabilities or other commitments or transactions, whether or not entered into in the ordinary course of business, to or by which the Company, on the one hand, and Seller or any Member or any of their Affiliates (other than the Company), on the other hand, are or have been a party or otherwise bound or affected. Except as disclosed in Schedule 2.24(a), each Contract, transfer of assets or liabilities or other commitment or transaction set forth or required to be set forth in Schedule 2.24(a) was on terms and conditions as favorable to the Company as would have been obtainable by it at the time in a comparable arm’s-length transaction with a Person other than the Company or any of its Affiliates.

(b) Except as set forth in Schedule 2.24(b), no stockholder, officer, director or employee of the Company, nor, to Seller's Knowledge, any family member, relative or Affiliate of any

such stockholder, officer, director or employee, (i) owns, directly or indirectly, and whether on an individual, joint or other basis (but excluding the ownership of the PPA Stock by Seller and the ownership by the members of Seller of the outstanding membership interests of Seller), any interest in (x) any property or asset, real or personal, tangible or intangible, used in or held for use in connection with or pertaining to the Business, or (y) any Person, that is a supplier, customer or competitor of the Company (excluding for all purposes of this clause (i) the ownership of less than 1% of the outstanding capital stock or other equity interests of any Person whose securities are publicly traded) (ii) serves as an officer, director or employee of any Person that is or, as of the Closing Date, will be a supplier, customer or competitor of the Company or (iii) has received any loans from or is otherwise a debtor of, or made any loans to or is otherwise a creditor of the Company.

2.25 Employees, Labor Matters, etc. The Company is not a party to or bound by any collective bargaining agreement, and there are no labor unions or other organizations representing, purporting to represent or attempting to represent any employees employed by the Company. There has not occurred or, to Seller’s Knowledge, been threatened any strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to any employees of the Company. There are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition pending or, to Seller’s Knowledge, threatened with respect to any employee of the Company. The Company has complied with all applicable Laws pertaining to the employment or termination of employment of their respective employees, including, without limitation, all such Laws relating to labor relations, equal employment opportunities, fair employment practices, prohibited discrimination or distinction and other similar employment activities, except for any failure so to comply that, individually and in the aggregate, would not reasonably be expected to result in any material liability or obligation on the part of the Company or Buyer or any of their Affiliates, or have or result in a Material Adverse Effect.

2.26 Employee Benefit Plans and Related Matters; ERISA.

(a) Employee Benefit Plans. Schedule 2.26(a) sets forth a complete and correct list of each “employee benefit plan”, as such term is defined in Section 3(3) of ERISA, and each bonus, incentive or deferred compensation, severance, termination, retention, change of control, stock option, stock appreciation, stock purchase, phantom stock or other equity-based, performance or other employee or retiree benefit or compensation plan, program, arrangement, agreement, policy or understanding, whether written or unwritten, that provides or may provide benefits or compensation in respect of any employee or former employee of the Company or the beneficiaries or dependents of any such employee or former employee (collectively, the “Employees”) or under which any Employee is or may become eligible to participate or derive a benefit and that is or has been maintained or established by the Company, the shareholders of the Company or any other trade or business, whether or not incorporated, which, together with the Company, is or would have been at any date of determination occurring within the preceding six years, treated as a single employer under Section 414 of the Code (such other trades and businesses hereinafter referred to as the “Related Persons”), or to which the Company, the shareholders of the Company, or any Related Person contributes or is or has been obligated or required to contribute (collectively, the “Plans”). With respect to each such Plan, the Company has provided Buyer complete and correct copies of: (i) such Plan, if written, or a description of such Plan if not written, and (ii) to the extent applicable to such Plan, all trust agreements, insurance contracts or other funding arrangements, the two most recent actuarial and trust reports, the two most recent Forms 5500 required to have been filed with the Department of Labor and all schedules thereto, the most recent IRS determination letter, all current summary plan descriptions, all material communications received from or sent to the IRS, the Pension Benefit Guaranty Corporation or the Department of Labor (including a written description of any oral communication), any actuarial study of any post-employment life or medical benefits provided under any such Plan, if any, statements or other communications regarding withdrawal or other multiemployer plan liabilities, if any, and all amendments and modifications to any such document. None of the Company, Seller and the Members has communicated to any Employee any intention or commitment to

modify any Plan or to establish or implement any other employee or retiree benefit or compensation plan or arrangement.

(b) Qualification. Each Plan intended to be qualified under Section 401(a) of the Code, and the trust (if any) forming a part thereof, has received a favorable determination letter from the IRS as to its qualification under the Code and to the effect that each such trust is exempt from taxation under Section 501(a) of the Code or has remaining a period of time under applicable law in which to apply to the IRS for such letter, and, except for legislative changes that will require each Plan to be updated and resubmitted to the IRS for approval, nothing has occurred since the date of such determination letter that would reasonably be expected to adversely affect such qualification or tax-exempt status.

(i) Neither the Seller nor the Company, nor any Related Person, maintains or contributes to, and has never maintained or contributed to, a Plan that is subject to Title IV of ERISA.

(ii) Neither Seller nor the Company, nor any Related Person, has incurred (either directly or indirectly, including as a result of an indemnification obligation) any material liability under or pursuant to Title I or IV of ERISA or the penalty, excise Tax or joint and several liability provisions of the Code relating to employee benefit plans and no event, transaction or condition has occurred or exists that would reasonably be expected to result in any such liability to Seller, the Company, or any such Related Person or, following the Closing, Buyer or any of its Affiliates. All contributions and premiums required to have been paid on or prior to the Closing Date by the Company, Seller or any Related Person to any employee benefit plan (within the meaning of Section 3(3) of ERISA) (including each Plan) under the terms of any such plan or its related trust, insurance contract or other funding arrangement, or pursuant to any applicable Law or collective bargaining agreement (including ERISA and the Code) have been paid within the time prescribed by any such plan, agreement or applicable Law.

(iii) Each of the Plans has been operated and administered in all respects in compliance with its terms, all applicable Laws and all applicable collective bargaining agreements, except for any failure so to comply that, individually and in the aggregate, would not reasonably be expected to result in a material liability or obligation on the part of the Company, Seller, or Buyer or any of its Affiliates, or have or result in a Material Adverse Effect. There are no material pending or, to Seller’s Knowledge, threatened claims by or on behalf of any of the Plans, by any Employee or otherwise involving any such Plan or the assets of any Plan (other than routine claims for benefits, all of which have been fully reserved for on the regularly prepared balance sheets of the Company).

(iv) No Plan is a "multiple employer plan" within the meaning of Section 4063 or 4064 of ERISA.

(v) Each Plan that is subject to the minimum funding standards of ERISA or the Code satisfies such standards under Sections 412 and 302 of the Code and ERISA, respectively, and no such Plan has incurred an “accumulated funding deficiency” within the meaning of such sections, whether or not waived.

(vi) No Employee is or will become entitled to post-employment benefits of any kind by reason of employment by the Company, including, without limitation, death or medical benefits (whether or not insured), other than (A) coverage mandated by Section 4980B of the Code, (B) retirement benefits payable under any Plan qualified under Section 401(a) of the Code or (C) deferred compensation accrued as a liability on the Closing Date Balance Sheet. The consummation of the Contemplated Transactions will not (X) result in an increase in the amount of compensation or benefits or the acceleration of the vesting or timing of payment of any compensation or benefits payable to or in respect

of any Employee; (Y) result in or satisfy a condition to the payment of compensation that would, in combination with any other payment, result in an “excess parachute payment” within the meaning of Section 280G(b) of the Code; or (Z) constitute or involve a prohibited transaction as defined under ERISA or the Code, or a breach of fiduciary duty under Title I of ERISA.

(vii) The Company (including any Affiliate thereof) has at all times (A) properly classified its workers as employees and independent contractors under IRS regulations; (B) properly withheld and paid over to the IRS all applicable employment taxes and other required payments; and (C) provided benefits under each Plan to all eligible persons in accordance with the provisions of the applicable Plan.

(viii) No prohibited transaction as defined under ERISA or the Code or breach of fiduciary duty under Title I of ERISA has occurred with respect to any Plan or with respect to the Company, Seller or any Related Person.

(ix) No partial termination (as defined under Section 411(d)(3) of the Code) of any Plan has occurred or is reasonably likely to occur.

2.27 Accounts Receivable. Seller has delivered or caused to be delivered to Buyer a complete and accurate aging of all accounts receivable of the Company as of the end of each monthly period since the date of the Balance Sheet. No account receivable of the Company reflected on the Balance Sheet and no account receivable arising after the date of the Balance Sheet and reflected on the books of the Company is uncollectable or subject to counterclaim or offset, except to the extent reserved against thereon. All accounts receivable reflected on the Balance Sheet or on such books have been generated in the ordinary course of business and reflect a bona fide obligation for the payment of goods or services provided by the Company. All allowances, rebates and cash discounts to customers of the Company are as shown on its books and records and in no event exceed one percent of receivables to which they relate.

2.28 Bank Accounts. Schedule 2.28 sets forth a complete and correct list containing the names set forth of each bank in which the Company has an account or safe deposit or lock box, the account or box number, as the case may be, and the name of every person authorized to draw thereon or having access thereto.

2.29 Brokers, Finders, etc. Except for the retention of the Person set forth on Schedule 2.29, the fees and expenses of which will be borne by Seller, all negotiations relating to this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby have been carried on without the participation of any Person acting on behalf of Seller, the Company or the Members in such a manner as to, and the transactions contemplated hereby and thereby will not otherwise, give rise to any valid claim against Seller, the Company, any Member or Buyer for any brokerage, financial advisory, investment banker or finder’s commission, fee or similar compensation, or for any bonus payable to any officer, director, employee, agent or representative of or consultant or adviser to Seller, the Company, or the Member upon consummation of the transactions contemplated hereby or thereby.

2.30 Disclosure. This Agreement and each Ancillary Agreement, and each certificate or other instrument or document required by the terms hereof or thereof to be furnished by or on behalf of Seller, the Company or any Member to Buyer or any agent or representative of Buyer, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein in light of the circumstances under which they were made, not misleading. None of Seller, the Company and the Members knows of any fact that would reasonably be expected to have or result in, a Material Adverse Effect.

3 Representations and Warranties of Buyer. Buyer represents and warrants to Seller and the Members as follows, as of the date hereof and as of the Closing Date:

3.1 Status; Authorization, etc. Buyer is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, and has full business trust power and authority to conduct its business and to own or lease and to operate its properties as and in the places where such business is conducted and such properties are owned, leased or operated. Buyer has full power and authority to execute and deliver this Agreement and the Ancillary Agreements to which Buyer shall be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Ancillary Agreements to which Buyer shall be a party, the performance of its obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all requisite action of Buyer. Buyer has duly executed and delivered this Agreement and on the Closing Date will have duly executed and delivered the Ancillary Agreements to which it shall be a party. This Agreement constitutes, and each such Ancillary Agreement when so executed and delivered by Buyer will constitute, the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its respective terms.

3.2 No Conflicts, etc. The execution, delivery and performance by Buyer of this Agreement and the Ancillary Agreements to which Buyer is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with, contravene, result in a violation or breach of or default under (with or without the giving of notice or the lapse of time, or both), create in any other Person a right or claim of termination, amendment, modification, acceleration or cancellation of, or result in or require the creation of any Lien (or any obligation to create any Lien) on any of the properties or assets of Buyer under (a) any Law applicable to Buyer or any of its properties or assets, (b) any provision of any of the Organizational Documents of Buyer, or (c) any contract, agreement, instrument, obligation, offer, commitment, arrangement or understanding, written or oral, to which Buyer is a party or by which its properties or assets may be bound.

3.3 Brokers, Finders, etc. Except for the retention of the Person set forth on Schedule 3.3, the fees and expenses of which will be borne by Buyer, all negotiations relating to this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby have been carried on without the participation of any Person acting on behalf of Buyer or any of its Affiliates in such manner as to, and the transactions contemplated hereby and thereby will not otherwise, give rise to any valid claim against Seller, the Company, any Member or Buyer for any brokerage, financial advisory, investment banker or finder’s commission, fee or similar compensation, or for any bonus payable to any officer, director, employee, agent or representative of or consultant or adviser to Buyer upon consummation of the transactions contemplated hereby or thereby.

3.4 Purchase for Investment. Buyer is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act and is purchasing the Purchased PPA Stock solely for investment, with no present intention to resell the Purchased PPA Stock. Buyer hereby acknowledges that the Purchased PPA Stock has not been registered pursuant to the Securities Act, and may not be transferred in the absence of such registration or an exemption therefrom under such Act.

3.5 Statutory Disqualification. (a) Neither Buyer nor any “affiliated person” thereof, as defined in the 1940 Act, (i) is ineligible pursuant to Section 9(a) of the 1940 Act to serve as an investment adviser to or principal underwriter of a registered investment company or (ii) has engaged or is currently engaging in any of the conduct specified in Section 9(b) of the 1940 Act;

(b) Neither Buyer nor any “associated person” of Buyer, as defined in the Advisers Act, is subject to any disqualification that, upon the consummation of the transactions

contemplated hereby, would be a basis for censure, denial, suspension or revocation of registration of Buyer as an investment adviser under Section 203(e) of the Advisers Act and there is no reasonable basis for, or proceeding or investigation, whether formal or informal, or whether preliminary or otherwise, that is reasonably likely to form the basis for, any such disqualification, denial, suspension or revocation; and

(c) Neither Buyer nor any “associated person” of Buyer (i) is subject to a “statutory disqualification,” as such terms are defined in the Exchange Act, or (ii) is subject to a disqualification that, upon the consummation of the transactions contemplated hereby, would be a basis for censure, limitations on the activities, functions or operations of, or suspension or revocation of the registration of Buyer as broker-dealer, municipal securities dealer, government securities broker or government securities dealer under Section 15, Section 15B or Section 15C of the Exchange Act and there is no reasonable basis for, or proceeding or investigation, whether formal or informal, or whether preliminary or otherwise, that is reasonably likely to form the basis for, any such censure, limitations, suspension or revocation. No fact relating to Buyer or any “control affiliate” thereof, as defined in Form BD, requires any response in the affirmative to any question in Item 11 of Form BD.

3.6 Satisfaction of Conditions in Section 15(f) of the 1940 Act. Buyer does not have any express or implied understanding, arrangement or intention to impose an “unfair burden” within the meaning of Section 15(f) of the 1940 Act on any Fund or successor thereto as a result of the transactions contemplated herein.

3.7 Litigation. There is no writ, injunction, decree order, judgment outstanding, nor any Litigation pending or involving or, to Buyer’s knowledge, threatened against Buyer or any Affiliate of Buyer that questions the validity of this Agreement, any Ancillary Agreement or any action taken or to be taken by Buyer or its Affiliates to consummate the Contemplated Transactions.

3.8 Disclosure. This Agreement and each Ancillary Agreement, and each certificate or other instrument or document required by the terms hereof or thereof to be furnished by or on behalf of Buyer to Seller, the Company or any Member or any agent or representative of Seller, the Company or any Member, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein in light of the circumstances under which they were made, not misleading. Except as set forth in Parent’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed in respect of periods beginning on or after October 31, 2001, Buyer does not know of any fact that would reasonably be expected to have or result in a Buyer Material Adverse Effect.

4 Covenants of Seller, the Company and the Members.

4.1 Conduct of Business. On and after the date hereof to the Closing Date, except as expressly required by this Agreement or the Contribution Agreement or as otherwise expressly consented to by Buyer in writing, the Company shall (and Seller and the Members shall cause the Company to):

(a) carry on the business of the Company in, and only in, the ordinary course of business, in substantially the same manner as heretofore conducted, and use all reasonable efforts to preserve the value of Business and to preserve intact its present business organization, keep available the services of its present officers and significant employees, and preserve its relationships with customers, suppliers and others having business dealings with it, to the end that its goodwill and going business shall be in all material respects unimpaired following the Closing;

(b) (i) not declare dividends or distributions (except as contemplated by Section 1.6(f)) on, or redeem, repurchase, adjust, split, combine or reclassify any shares of the capital stock of the Company (other than dividends that are paid prior to Closing by the Company to Seller as the sole shareholder of the Company, provided that such dividends must neither result nor be reasonably expected

to result in the Closing Balance Sheet reflecting (x) Closing Date Adjusted Working Capital of less than the Target Adjusted Working Capital) or (y) cash and Cash Equivalents at Closing of less than $500,000, (ii) not increase any obligations of the Company with respect to Indebtedness, repay any loans or other amounts outstanding to Seller or any of its Affiliates, make capital expenditures in excess of $10,000 in any case or $25,000 in the aggregate, pay any bonuses or advances against salaries except as set forth on Schedule 4.1(b)(ii), prepay any accounts payable, delay payment of any trade payables other than in the ordinary course of business, or make any other cash payments other than in the ordinary course of business other that the scheduled profit-sharing payments set forth on Schedule 4.1(b)(ii);

(c) maintain all of the tangible Assets and all other tangible properties and assets owned, leased, occupied, operated or used by the Company in good repair, working order and operating condition subject only to ordinary wear and tear;

(d) not transfer, assign, mortgage, pledge, hypothecate, grant any security interest in, or otherwise subject to any other Lien, any of the assets of the Company;

(e) use all reasonable efforts to keep in full force and effect insurance comparable in amount and scope of coverage to insurance now carried by the Company, including, without limitation, those policies set forth on Schedule 2.20;

(f) pay accounts payable and other obligations, when they become due and payable, in the ordinary course of business of the Company;

(g) perform in all material respects all of the obligations under any Contracts, agreements or other instruments relating to or affecting any of the properties and assets (including the Assets) of the Company or the Business;

(h) not enter into or assume any Contract, or, enter into or permit any amendment, supplement, waiver or other modification in respect thereof, except for such Contracts and amendments, supplements, waivers and modifications thereof that, individually and in the aggregate, are not material to the Company and that are entered into, assumed or permitted in the ordinary course of business;

(i) maintain the books of account and records of the Company in the usual, regular and ordinary manner consistent with past policies and practice and not change any of the accounting principles, practices, methods or policies (including but not limited to any reserving methods, practices or policies) employed by the Company as of the date of the Balance Sheet, other than as may be required by GAAP;

(j) comply in all material respects with all Laws applicable to the Company or any of its properties, assets or business;

(k) not compromise, settle, grant any waiver or release relating to or otherwise adjust any Litigation affecting Seller or the Company;

(l) not cause or permit any amendment, supplement, waiver or modification to or of any of the Company, Seller, and the Company’s Organizational Documents;

(m) use all reasonable efforts to maintain the good standing of the Company in its state of organization and in the jurisdictions in which it is qualified to do business as a foreign corporation and to maintain all Governmental Approvals and other Consents necessary for, or otherwise material to, the Business;

(n) not merge or consolidate with, or agree to merge or consolidate with, or purchase substantially all of the assets of, or otherwise acquire, any business, business organization or division thereof, or any other Person;

(o) not take any action or omit to take any action, which action or omission would reasonably be expected to result in a breach of any of the representations and warranties set forth in Section 2;

(p) not take any action reasonably likely to have a Material Adverse Affect on the Company and promptly advise Buyer in writing of any event, occurrence, fact, condition, change, development or effect that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect or a breach of this Section 4.1;

(q) not make or change any material tax election, change any annual tax accounting period, adopt or change any method of tax accounting, file any amended Tax Return, enter into any material closing agreement, settle any material Tax claim or assessment, surrender or compromise any right to claim a material Tax refund, consent to any extension or waiver of the limitations period applicable to any material Tax claim or assessment, in each case, other than any of the foregoing actions that are not material and which are taken in the ordinary and usual course of business consistent with past practice;

(r) not, except as required by applicable Law, (i) implement or adopt any material change in its interest rate and other risk management policies, procedures or practices; (ii) fail in any material respect to follow its existing policies or practices with respect to managing Client Accounts; or (iii) otherwise fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk; and

(s) not agree or otherwise commit to do any of the foregoing activities that it has agreed not to do under the terms of this Section 4.1.

4.2 No Solicitation. During the term of this Agreement, Seller, the Company and the Members shall not, and shall cause each other, each Representative of any of them, the Company and each other Member not to, (a) directly or indirectly solicit or encourage any inquiries or proposals for, or enter into or continue any discussions with respect to, the acquisition by any Person (other than Buyer, Parent and its subsidiaries) of any PPA Stock or any other securities of the Company, or all or substantially all of the Business or of the assets of the Company (an “Acquisition Transaction”), or (b) furnish or permit to be furnished any non-public information concerning the Company or their business and operations to any Person (other than Buyer and its Representatives), other than information furnished in the ordinary course of business. Seller shall promptly notify Buyer of any inquiry or proposal received by Seller, the Company, any Member or any Representative of any of them with respect to any such Acquisition Transaction. Seller, the Company and the Members shall immediately cease and cause to be terminated any existing activities, discussions or negotiations, whether involving the Company, themselves or any Representative, with any Person other than Buyer in respect of any Acquisition Transaction.

4.3 Access and Information. Seller, the Company and the Members shall, and shall cause each other and each Representative of any of them to, give Buyer, its Representatives, and all prospective brokers and carriers in respect of the Transaction Insurance and their Representatives, full access during reasonable business hours to all of such Person’s respective properties, assets, books, contracts, commitments, reports and records relating to the Company, and furnish to them all such documents, records and information with respect to the properties, assets and business of the Company and copies of any work papers relating thereto as Buyer shall from time to time reasonably request. In addition, Seller, the Company and the Members shall, and shall cause each other and each Representative

of any of them to, permit Buyer, its Representatives, and all prospective brokers and carriers in respect of the Transaction Insurance and their Representatives, reasonable access during reasonable business hours to the Company and, upon prior notice by Buyer to Seller, to its lenders, customers and suppliers, other Persons with whom the Company does or has done business, and other Representatives or other personnel of the Company, as may be necessary or otherwise reasonably requested by Buyer, its Representatives, and all prospective brokers and carriers in respect of the Transaction Insurance and their Representatives, in connection with their review of the properties, assets and business of the Company and the above-mentioned documents, records and information. Seller, the Company and the Members shall, and shall cause each other and each Representative of any of them to, keep Buyer generally informed as to the affairs of the Business. Buyer shall in all events be afforded prior notice of and full access to all interviews, visits, materials and other information afforded or made available by the Company, Seller and the Members and their respective Representatives to brokers and prospective carriers in respect of the Transaction Insurance and the Representatives of the same.

4.4 Subsequent Financial Statements and Reports; Filings. (a) Subsequent Financial Statements and Reports. From the date hereof to and including the Closing Date, Seller shall (i) provide to Buyer a report, promptly after the last day of each month, of aggregate assets under management as of such day and of the aggregate annualized revenues represented by clients and customers who have consented to the Contemplated Transactions as of such day and have not terminated their relationships with the Company and (ii) timely prepare, and promptly deliver to Buyer, monthly financial statements, to be in scope and detail consistent with such monthly financial statements as have been historically distributed to the Company’s senior management and as previously delivered to Buyer. Each such financial statement shall present fairly the financial position, assets and liabilities of the Company as at the date thereof and the results of its operations and its cash flows for the period then ended, in accordance with accounting policies and procedures consistent with those historically used by the Company in the preparation of such monthly financial statements.

(b) Governmental Filings. From the date hereof to and including the Closing Date, Seller, the Company and the Members shall timely file, or cause to be timely filed, and concurrently deliver to Buyer, copies of each registration, report, statement, notice or other filing requested or required to be filed by Seller or the Company with the SEC or any other Governmental Authority under the Exchange Act, the Securities Act or any other applicable Law. All such registrations, reports, statements, notices and other filings shall comply with applicable Law. As of their respective dates, none of such registrations, reports, statements, notices or other filings shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(c) Form ADV of the Company. Seller and the Members shall assist Buyer and the Company in filing, promptly after Closing (i) an amendment to the Company’s investment adviser registration on Form ADV with the SEC and any state securities commissions on behalf of the Company reflecting the Contemplated Transactions and any other material changes to the Form ADV as required; and (ii) any other schedules or filings in connection therewith as required by the SEC or applicable securities laws.

4.5 Public Announcements. Except as required by applicable Law, Seller, the Company and the Members shall not (and shall cause each other and each Representative of any of them not to) make any public announcement in respect of this Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby without the prior written consent of Buyer.

4.6 Further Actions. (a) Seller, the Company and the Members shall use all reasonable efforts to take or cause to be taken all actions, and to do or cause to be done all other things, necessary, proper or advisable in order for each to fulfill and perform its obligations in respect of this

Agreement and the Ancillary Agreements to which it is a party, or otherwise to consummate and make effective the transactions contemplated hereby and thereby.

(b) Seller, the Company and the Members shall (i) make, or cause to be made, all filings and submissions (including but not limited to under the HSR Act) required under any Law applicable to any of them, and give such reasonable undertakings as may be required in connection therewith, and (ii) use all reasonable efforts to obtain or make, or cause to be obtained or made, all Governmental Approvals and Consents necessary to be obtained or made by the Company and Seller, in each case in connection with this Agreement or the Ancillary Agreements or the consummation of the Contemplated Transactions.

(c) Seller, the Company and the Members shall coordinate and cooperate with Buyer in exchanging such information and supplying such reasonable assistance as may be reasonably requested by Buyer in connection with the filings and other actions contemplated by Section 5.2.

(d) At all times prior to the Closing Date, Seller, the Company and the Members shall promptly notify Buyer in writing of any fact, condition, event or occurrence that would reasonably be expected to result in the failure of any of the conditions contained in Sections 7.1 and 7.2 to be satisfied, promptly upon becoming aware of the same.

4.7 Further Assurances. Following the Closing Date, Seller and the Members shall, from time to time, execute and deliver and cause to be executed and delivered such additional instruments, documents, conveyances or assurances and take such other actions as shall be necessary, or otherwise reasonably be requested by Buyer, to confirm and assure the rights and obligations provided for in this Agreement and the Ancillary Agreements and render effective the consummation of the transactions contemplated hereby and thereby, or otherwise to carry out the intent and purposes of this Agreement (which include the transfer to Buyer of the ownership and intended related benefits of the business of the Company).

4.8 Client Consents. As promptly as practicable after the execution of this Agreement, the Company shall cause each Client of the Business or sponsor of wrap fee programs for which the Company serves as investment adviser to be informed of the Contemplated Transactions and shall request that the Client or sponsor provide the respective Client or sponsor consent to the Contemplated Transactions. In order to be treated as a Client Consent received for purposes of Sections 1.5, 7.2(n) and 8.1(c), a consent under this Section 4.8 must (i) if a Client Consent described in clause (a) of the definition thereof, be given in writing by the respective Client or customer and received, (ii) if a Client Consent described in clause (b) of the definition thereof, be given in writing by the respective Client or customer and received, (iii) if a Client Consent described in clause (c) of the definition thereof, be executed in writing by the respective Client and received, and (iv) if a Client Consent described in clause (d) of the definition thereof, have had the requisite period since notice pass without objection, in each case prior to the applicable dates set forth in such sections. In addition, in order to be treated as a Client Consent received for purposes of Sections 1.5, 7.2(n) and 8.1(c), a consent under this Section 4.8 (a) of a sponsor of a wrap fee program must include a representation from each such sponsor that the underlying clients thereof have consented to the Contemplated Transactions in a manner consistent with the respective Advisory Agreements and the conditions described in the preceding sentence, and (b) of a Fund must have been preceded by the Fund Board (and, if applicable, shareholder) approvals required under this Agreement and obtained in accordance with Section 6.4. Seller shall cause the Company to deliver a Test Date Certificate to Buyer no later than 10 a.m. Eastern time on the Monday immediately following each Test Date.

4.9 Use of Parametric Name. At or prior to Closing, Seller shall change its name to a name that has, in Buyer’s judgment, no confusing similarity to “Parametric Portfolio Associates” or any derivative or acronym thereof, including the acronym “PPA”.

4.10 Updating of Schedules. Seller shall have the right to update and supplement its Schedules to this Agreement at any time prior to the Closing in respect of changes that occur or matters that arise or are discovered after the date hereof. Such updates to Seller’s schedules shall not be deemed to affect the conditions of Buyer to closing set forth in Section 7, the rights of termination of Buyer set forth in Section 8 or the rights of the Buyer Indemnitees to indemnification set forth in Section 9. Any updates to the Seller’s schedules shall be promptly communicated to the brokers and prospective or actual carriers in respect of the Transaction Insurance.

5 Covenants of Buyer.

5.1 Public Announcements. Prior to the Closing, except as required by any applicable Law (including, without limitation, the filing of a Current Report on Form 8-K in respect of the execution of this Agreement and the filing of this Agreement as an exhibit to such Current Report or a subsequent periodic report) after prior notice to Seller, Buyer shall not, and shall not permit any of its Affiliates to, make any public announcement in respect of this Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby without the prior written consent of Seller.

5.2 Further Actions. (a) Buyer shall use all reasonable efforts to take or cause to be taken all actions, and to do or cause to be done all other things, necessary, proper or advisable in order for Buyer to fulfill and perform its obligations in respect of this Agreement and the Ancillary Agreements to which it is a party, or otherwise to consummate and make effective the Contemplated Transactions.

(b) Buyer shall, as promptly as practicable, (i) make, or cause to be made, all filings and submissions (including but not limited to such filings, if any, as may be required under the HSR Act) required under any Law applicable to Buyer, and give such reasonable undertakings as may be required in connection therewith, and (ii) use all reasonable efforts to obtain or make, or cause to be obtained or made, all Governmental Approvals and Consents necessary to be obtained or made by Buyer, in each case in connection with this Agreement or the Ancillary Agreements or the consummation of the Contemplated Transactions.

(c) Buyer shall coordinate and cooperate with Seller in exchanging such information and supplying such reasonable assistance as may be reasonably requested by Seller, the Company or the Members in connection with (a) the filings and other actions contemplated by Section 4.6 and (b) the solicitation of Client Consents by the Company.

(d) At all times prior to the Closing Date, Buyer shall promptly notify Seller in writing of any fact, condition, event or occurrence that would reasonably be expected to result in the failure of any of the conditions contained in Sections 7.1 and 7.3 to be satisfied, promptly upon becoming aware of the same.

5.3 Section 15(f) of the 1940 Act. (a) Buyer acknowledges that each of Seller, the Company and the Members have entered into this Agreement in reliance upon their belief that the Contemplated Transactions qualify for the benefits and protections provided by Section 15(f) of the 1940 Act. Buyer will not take, and will use all reasonable efforts to cause its Affiliates not to take, any action not contemplated by this Agreement that would have the effect, directly or indirectly, of causing the requirements of any of the provisions of Section 15(f) of the 1940 Act not to be met in respect of this Agreement and the transactions contemplated hereunder. In that regard, Buyer will conduct its business and will use all reasonable efforts to cause each of its Affiliates to conduct its business, so as to enable, insofar as within the control of Buyer or its Affiliates (it being expressly acknowledged that the Company is not, and neither Buyer nor the Company upon consummation of the Closing will be, the primary advisor or sponsor of any Fund) (i) for a period of three years after the Closing, at least 75% of the members of the board of each Fund not to be (A) “interested persons” of the investment adviser of the

Funds after the Closing, or (B) “interested persons” of the Company, and (ii) for a period of two years after the Closing, there will not be imposed on the Funds an “unfair burden” as a result of the transactions contemplated hereby, or any terms, conditions or understandings applicable thereto; provided, however, that if Buyer or any of its Affiliates will have obtained an order from the SEC exempting it from the provisions of Section 15(f), while still maintaining the “safe harbor” provided by Section 15(f), then this covenant will be deemed to be modified to the extent necessary to permit Buyer and its Affiliates to act in a manner consistent with such SEC exemptive order.

(b) For a period of three years from the Closing, Buyer will not, and will use its reasonable best efforts to cause its Affiliates not to, voluntarily engage in any transaction that would constitute an “assignment” of the investment advisory agreements between Buyer or any Affiliate of Buyer and the Funds (or the successors thereto), without first obtaining a covenant in all material respects the same as that contained in this Section 5.3.

(c) The terms used in quotations in this Section 5.3 will have the meanings set forth in Sections 2(a)(4), 2(a)(19) and 15(f) of the 1940 Act.

5.4 Updating of Schedules. Buyer shall have the right to update and supplement its Schedules to this Agreement at any time prior to the Closing in respect of changes that occur or matters that arise or are discovered after the date hereof. Such updates to Buyer’s schedules shall not be deemed to affect the conditions of Seller, the Company and the Members to closing set forth in Section 7, the rights of termination of Seller, the Company and the Members set forth in Section 8 or the rights of the Seller Indemnitees to indemnification set forth in Section 9. Any updates to Buyer’s schedules shall be promptly communicated to the brokers and prospective or actual carriers in respect of the Transaction Insurance.

6 Certain Additional Covenants.

6.1 Taxes. (a) Tax Indemnification. Subject to the limitations set forth in Section 9.1(b) and the priorities set forth in Section 9.1(c), Seller and the Members shall jointly and severally indemnify Buyer and the Company (the “Tax Indemnitees”) and hold them harmless from and against (i) all Taxes (or the nonpayment thereof) of the Company for all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any Taxable period that includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”); (ii) any and all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company (or any predecessor thereof) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or foreign law or regulation; and (iii) any and all Taxes of any person imposed on the Company as a transferee or successor, by contract or pursuant to any law, rule or regulation, which Taxes relate to an event or transaction occurring before the Closing; provided, however, that in the case of clauses (i), (ii) and (iii) above, Seller and the Members shall be liable only to the extent that such Taxes are in excess of the amount, if any, reserved for such Taxes (excluding any reserve for deferred Taxes established to reflect timing differences between book and tax income) on the face of the Closing Date Balance Sheet (rather than in any notes thereto) and taken into account in determining the Net Working Capital Adjustment. For purposes of the preceding sentence and in accordance with the agreement set forth in Section 1.6(d) with respect to the tax treatment of the Conversion, the reserve for Taxes on the Closing Date Balance Sheet shall be deemed to include any Taxes recognized by the Company relating solely to the deemed distribution to Buyer of Class A Units and Class B Units. Seller and Members shall reimburse Buyer for any Taxes of the Company which are the responsibility of Seller pursuant to this Section 6.1(a) within 15 business days after payment of such Taxes by Buyer or the Company.

(b) Tax Return Preparation. Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company which are filed after the Closing Date. Buyer shall

permit Seller to review and comment on each such Tax Return described in the preceding sentence prior to filing and shall make such revisions to such Tax returns as are reasonably requested by Seller.

(c) Cooperation. Buyer, Seller, the Company and the Members shall cooperate with respect to the filing of Tax Returns pursuant to this Section 6.1, and any Tax audit or administrative or court proceeding relating to Taxes for any Pre-Closing Tax Period, provided, that such cooperation shall not unreasonably interfere with the conduct of the business of the parties.

(d) Transaction-Related Taxes. All sales and transfer Taxes (including stock transfer Taxes, if any) and any fees and other charges related thereto incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by Seller and the Members.

(e) Terminate Tax Sharing Agreements. Seller shall cause all Tax sharing agreements or similar agreements with respect to or involving the Company to be terminated as of the Closing Date and, after the Closing Date, the Company shall not be bound thereby or have any liability thereunder.

6.2 Transitional Arrangements. Promptly following the execution of this Agreement, representatives of Seller and the Members shall, at the request of Buyer, meet with representatives of Buyer, at such times as may be reasonable, to coordinate the transition of the Business as contemplated by this Agreement and to coordinate the handling of such other matters as Seller, Members and Buyer consider appropriate.

6.3 Eaton Vance Stock Options. At Closing, Buyer shall use its best efforts to cause Parent to grant to each person set forth on Exhibit C attached hereto, subject to the terms and conditions of the Eaton Vance 1998 Stock Option Plan and to a Stock Option Agreement in substantially the form of Exhibit D attached hereto, the option to purchase shares of Eaton Vance Common Stock from Parent at an exercise price equal to the closing price of Eaton Vance Common Stock on the NYSE on the Closing Date (or, if the NYSE is not open for trading on the Closing Date, the trading date immediately following the Closing Date) (each, a “2003 Option”). Each 2003 Option shall vest in 20% increments on each of the first five anniversaries of the Closing Date, and shall expire on the tenth anniversary of the Closing Date. To the greatest extent legally permissible, the options granted to each person pursuant to this Section shall be incentive stock options. The aggregate number of shares of Eaton Vance Common Stock to be subject to the 2003 Options shall equal $4,000,000 divided by the closing price of Eaton Vance Common Stock on the NYSE on the Closing Date, and shall be allocated among the persons listed on Exhibit C attached hereto in accordance with the percentages set forth next to the name of each.

6.4 Board and Shareholder Approvals; SEC Filings. (a) In connection with any Fund Shareholder Approval required to be obtained under the 1940 Act and/or the respective Advisory Agreement, Seller and the Company shall use all commercially reasonable efforts to (i) solicit the approval of each Fund Board, in accordance with the requirements of the 1940 Act, with respect to the Advisory Agreement pertaining to such Fund and (ii) cause each Fund to prepare, file and distribute any necessary proxy statements, as soon as reasonably practicable after the date of this Agreement. In connection with such Fund Board solicitations and proxy statements, Seller, the Company, the Members and Buyer shall cooperate with each other and with the boards of directors, trustees or comparable governing bodies of each Fund to obtain or transmit the same, including providing such information as may be reasonably requested for consideration by the respective Fund Boards and for inclusion in such proxy statements (or, if no proxy statement is required, in any information statement to be mailed to the shareholders of a Fund).

(b) Prior to the earlier of the Closing Date or the termination of this Agreement, Seller, the Company, the Members and Buyer shall cooperate with each other and each shall endeavor in good faith to cause each Fund to file supplements, revised prospectuses or post-effective amendments to

that Fund’s registration statement on Form N-1A or S-6, as appropriate, which supplements, revised prospectuses or amendments shall reflect changes as necessary in that Fund’s affairs as a consequence of the Contemplated Transactions, and shall cooperate with one another in causing each Fund to prepare and make any other filing necessary to satisfy disclosure requirements to enable the public distribution of the shares of beneficial interest of that Fund to continue unabated after the Closing.

(c) Seller, the Company and each Member covenant that any information or data provided by any of them that describes Seller, the Company, the Funds or their Affiliates or any of their business operations or plans (i) to each Fund Board in connection with the approvals described in this Section or (ii) for inclusion in any filings with the SEC or the NASD or any other regulatory body after the date of this Agreement (which will include all information with respect to changes in the Funds’ affairs as a consequence of the transactions pursuant to this Agreement) will not contain, at the time any such information is provided to the Fund Boards or such filings become effective or are furnished to the Funds’ shareholders or to the SEC or the NASD or any other regulatory body, any untrue statement of material fact or omit to state any material fact required to be stated therein, or necessary in order to make the statements made therein not misleading in the light of the circumstances under which they are made.

(d) Buyer covenants that any information or data provided by it that describes Buyer or its Affiliates (i) to each Fund Board in connection with the approvals described in this Section or (ii) for inclusion in any filings with the SEC or the NASD or any other regulatory body after the date of this Agreement (which will include all information with respect to changes in the Funds’ affairs as a consequence of the transactions pursuant to this Agreement) will not contain, at the time any such information is provided to the Fund Boards or such filings become effective or are furnished to the Funds’ shareholders or to the SEC or the NASD or any other regulatory body, any untrue statement of material fact or omit to state any material fact required to be stated therein, or necessary in order to make the statements made therein not misleading in the light of the circumstances under which they are made.

(e) All costs and expenses relating to filings on behalf of the Funds or solicitations of the shareholders of the Funds, including, but not limited to legal, printing, and mailing expenses, not paid by the Funds shall be paid by Seller and the Members.

6.5 Certain Matters Relating to Seller. Subject to and except as required to satisfy the condition to Closing set forth in Section 7.2(v), the PPA Acquisition, L.L.C. Limited Liability Company Agreement, dated April 10, 2001 (together with any amendments thereto permitted by this Section 6.5 and as required by Section 7.2(v), the “Seller Operating Agreement”), a true and correct copy of which has been provided to Buyer, shall not be amended without the prior written consent of Buyer, which shall not be unreasonably withheld except in respect of those matters described in Section 7.2(v) in respect of which Buyer’s consent right is not to be limited by such reasonableness standard. Seller expressly acknowledges and agrees that the foregoing covenant and consent rights are intended for the protection of Buyer and its Affiliates both at and subsequent to Closing, and shall survive Closing until such time as Seller shall no longer hold any equity interest in the Company (including any possibility of retransfer of Units pursuant to Section 9.1(d)). Seller and the Members shall not enter into any agreement among Seller and the members of Seller, or any of them, covering matters similar to those that are the subject of the Seller Operating Agreement without the prior written consent of Buyer, which shall not be unreasonably withheld. Seller shall not issue any units of its economic interests or other interests in Seller, and will cause its members and other equity holders not to transfer any units of its economic interests or other interests in Seller, to any person without the prior written consent of Buyer, which (subject to any rights and agreements set forth in any other written agreement between Seller and Buyer) shall not be unreasonably withheld if such person is either (a) Seller itself in a redemption permitted by the terms of the Seller Operating Agreement and that is not restricted by any other written agreement to which Seller and Buyer are party or (b) an employee of the Company. After Closing, Seller shall not have any assets, business or activities other than (a) the holding and distribution to its members of the

proceeds of the Share Purchase and (b) the holding of the Retained Units and the distribution to its members of the proceeds of any permitted dispositions thereof.

6.6 Post-Closing Benefits. After the Closing, Buyer shall offer employee benefits of the type made available under the Plans or normally made available to similarly situated employees of Buyer’s and Parent’s other United States businesses, including Parent’s 401(k) Plan and other benefit plans (the “Buyer Plans”). Eligibility and vesting shall be determined on substantially the same criteria as applied to similarly situated employees of Buyer and Parent, except as otherwise restricted by Law and the terms of the Buyer Plans, and credit shall be given for the time period of service with the Company prior to the Closing when determining eligibility and vesting under the Buyer Plans; provided that any benefits will begin to accrue only after the Closing.

7 Conditions Precedent.

7.1 Conditions to Obligations of Each Party. The obligations of Seller, the Company, the Members and Buyer to consummate the Contemplated Transactions shall be subject to the fulfillment on or prior to the Closing Date of the following conditions:

(a) No Injunction, etc. Consummation of the Contemplated Transactions shall not have been restrained, enjoined or otherwise prohibited or made illegal by any applicable Law, including any order, injunction, decree or judgment of any court or other Governmental Authority; and no such Law that would have such an effect shall have been promulgated, entered, issued or determined by any court or other Governmental Authority to be applicable to this Agreement or the Ancillary Agreements. No action or proceeding shall be pending or threatened by any Governmental Authority or other Person on the Closing Date before any court or other Governmental Authority to restrain, enjoin or otherwise prevent the consummation of the Contemplated Transactions, or to recover any material damages or obtain other material relief as a result of such transactions, or that otherwise relates to the application of any such Law.

7.2 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the Contemplated Transactions shall be subject to the fulfillment on or prior to the Closing Date of the following additional conditions, which Seller, the Company and the Members agree to use reasonable efforts to cause to be fulfilled:

(a) Representations, Performance. (i) The representations and warranties of Seller and the Members contained in Section 2 or in any Ancillary Agreement (i) shall be true and correct in all material respects at and as of the date hereof (or, if later, the date of such Ancillary Agreement), and (ii) shall be repeated and shall be true and correct in all material respects on and as of the Closing Date with the same effect as though made on and as of the Closing Date.

(ii) Seller, the Company and the Members shall have in all material respects duly performed and complied with all agreements, covenants and conditions required by this Agreement or any Ancillary Agreement to be performed or complied with by Seller, the Company and the Members prior to or on the Closing Date.

(iii) Seller and the Members shall have delivered to Buyer a certificate, dated the Closing Date and executed by an authorized officer of Seller and each Member, to the effect set forth above in this Section 7.2(a).

(b) Delivery of Purchased PPA Stock and Company Units. At the Closing, (i) Seller shall have delivered to Buyer all of the certificates for the Purchased PPA Stock as provided in Section 1.4(a), and, against surrender by Buyer thereof, the Company shall have delivered to Buyer certificates representing the Class A Units and Class B Units into which such Purchased PPA Stock was

converted in the Conversion, and (ii) the Company shall have delivered to Buyer a certificate representing the Class C Units.

(c) Consents. All Governmental Approvals and Consents required to be made or obtained by Seller or the Company in connection with the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby shall have been made or obtained, except for Consents (other than Governmental Approvals) the failure of which to be made or obtained, individually and in the aggregate, would not reasonably be expected to have or to result in a Material Adverse Effect or to materially impair the ability of Seller or any Member to perform its respective obligations hereunder and under the Ancillary Agreements or the ability of Buyer, following the Closing, to continue to conduct the Business. Complete and correct copies of all such Governmental Approvals and Consents shall have been delivered to Buyer.

(d) Licenses. The Company shall have received complete, fully-executed licenses in form and substance satisfactory to Buyer, in respect of all Intellectual Property under licenses specified or required to be specified in Schedules 2.19(b) and 2.19(c).

(e) Resignation of Directors. All directors, managers and officers of the Company whose retention in such positions is not provided for through the Employment Agreements and whose resignations shall have been requested by Buyer not less than five (5) days prior to the Closing Date shall have submitted their resignations or been removed from office effective as of the Closing Date.

(f) FIRPTA Certificate. Seller shall have delivered to Buyer a certificate, as contemplated under and meeting the requirements of Section 1.1445-2(b)(2)(i) of the Treasury Regulations, to the effect that the Company is not a foreign person within the meaning of the Code and applicable Treasury Regulations.

(g) Conversion Certificates. The Company shall have duly approved, executed and filed the Conversion Certificates with the Secretary of State of the State of Delaware.

(h) Employment Agreements. Each Person designated on Exhibit E attached hereto shall have executed and delivered their respective Employment Agreement with the Company and a designated wholly-owned subsidiary of Buyer in substantially the form of the Employment Agreement attached as Exhibit F hereto (collectively, the “Employment Agreements”).

(i) Stock Option Agreements. Each Person designated on Exhibits C hereto shall have executed and delivered his or her respective Stock Option Agreement.

(j) Company Operating Agreement. Seller shall have executed and delivered the Company Operating Agreement.

(k) Restrictive Covenant Agreements. Seller and each other Person designated on Exhibit G shall have executed and delivered a Restrictive Covenant Agreement in substantially the form attached as Exhibit H hereto (collectively, the “Restrictive Covenant Agreements”).

(l) Ancillary Agreements. Each other Ancillary Agreement shall have been executed and delivered by Seller, the Company and each Member designated a party thereto, and shall be satisfactory in form and substance to Buyer in its reasonable judgment.

(m) Opinion of Counsel. Buyer shall have received an opinion, addressed to it and dated the Closing Date, from Perkins Coie as to the matters set forth in Exhibit I hereto and otherwise in form and substance reasonably satisfactory to Buyer, and subject to such qualifications, exceptions and

modifications thereto as may be reasonably requested by such counsel in connection with its customary procedures in respect of the authorization and delivery of third-party opinions.

(n) Client Consents. The Company shall have received Client Consents from Signing Date Clients that represent Annualized Fee Revenues that are equal to or greater than 80% of the Aggregate Signing Date Fee Revenues.

(o) Real Estate Matters. Buyer shall have received a written acknowledgement by the landlord under the Fairview Lease affirming its consent to the Contemplated Transactions as required thereunder, that no default exists and is continuing thereunder, and as to such other matters as may be reasonably requested by Buyer.

(p) Due Diligence; Corporate and Other Proceedings. Buyer shall have completed to its satisfaction its business and legal due diligence investigation of the Company (including, without limitation, review of all documents and information referenced in or relevant to the matters set forth in the Company Disclosure Schedules) and shall be satisfied in its sole discretion with the results of such investigation. All corporate, limited liability company and other proceedings of Seller and the Company in connection with the Contemplated Transactions, and all documents and instruments incident thereto, shall be satisfactory in form and substance to Buyer and its counsel in their reasonable judgment, and Buyer and its counsel shall have received all such documents and instruments, or copies thereof, certified if requested, as may be reasonably requested.

(q) Transaction Insurance. (i) An insurer acceptable to Buyer shall have issued to Buyer, for Buyer’s benefit, a policy of representations and warranty insurance covering all of Seller’s representations and warranties in this Agreement other than the representations in Section 2.23 hereof, with a retention of $500,000 and an aggregate limit of at least $7,000,000 and a term expiring on the sixth anniversary of the Closing Date, expressly providing that the Insurer is not subrogated to the rights of Buyer or any other Buyer Indemnitee hereunder, and upon such other terms and conditions and subject to such other limitations as Buyer shall deem acceptable to it in its sole and unqualified discretion (such policy, the “Transaction Insurance”), (ii) such Transaction Insurance shall be in full force and effect, and (iii) no fact, event or circumstance shall exist that might give rise to such Transaction Insurance being terminated or becoming rescindable or unavailable, in whole or in part, to Buyer in respect of a breach of any of Seller’s representations or warranties herein other than the representations in Section 2.23.

(r) Pledge Agreement. Seller shall have executed and delivered the Pledge Agreement.

(s) Payoff Letters. Seller shall have provided to Buyer letters, in form and substance reasonably satisfactory to Buyer, from each creditor under the Permitted Debt as to the aggregate amounts owed by Seller under each item of Permitted Debt as of the Closing Date, providing wire instructions in respect thereof, and confirming that payment of such amount on the Closing Date will extinguish all obligations of the Company thereunder.

(t) UCC Termination Statements. The Commerce Bank of Washington, N.A. shall have committed in writing to execute and file, within 20 business days of the Closing Date and contingent upon the prepayment of the outstanding principal and accrued but unpaid interest under the Senior Loan Agreement, UCC termination statements in respect of the collateral securing such amounts due.

(u) Post-Conversion Consent. Seller and each of the initial PPA Managers (as designated in the Company Operating Agreement) shall have executed and delivered the Post-Conversion Consent.

(v) Seller Operating Agreement. Seller and its members shall, after consultation with and subject to the prior written consent of Buyer, which shall not except as described below be unreasonably withheld, have amended and restated the Seller Operating Agreement in such form and with such provisions as are reasonably acceptable to Buyer or as may be reasonably requested by Buyer in order to conform such Seller Operating Agreement to the intent of this Agreement, the Ancillary Agreements and the Contemplated Transactions; it being acknowledged and agreed that:

(i) Buyer may withhold its consent in its sole discretion in respect of any provision or matter that may have an adverse tax or accounting impact on the Company, Buyer, Parent or any of Parent’s subsidiaries;

(ii) Buyer may withhold its consent in its sole discretion in respect of any provision relating to the transfer or issuance of membership, equity or phantom interests by Seller or any member thereof to any person; provided, however, that Buyer’s consent to such transfer provisions shall be subject to the aforementioned reasonableness standard in respect of (a) provisions permitting transfers of Common Units (as defined in the Seller Operating Agreement) solely for estate planning purposes to such member’s spouse, lineal descendents, trust, testimentary trust, or other entity formed for such purposes for the benefit of such member, such member’s spouse and/or such member’s lineal descendents, and (b) transfers of Preferred Units (as defined in the Seller Operating Agreement) to any Affiliate of a holder, subject to joint guarantee by the transferee with the transferor of any guarantee to which Buyer may have consented pursuant to Section 1.8(b); and

(iii) Buyer may withhold its consent in respect of any amendment of the Seller Operating Agreement that does not provide, as a term thereof, that any future amendment or restatement of the Seller Operating Agreement shall be subject to the consent rights set forth in this Section 7.2(v) until such time as Seller shall no longer hold any equity interest in the Company (including any possibility of retransfer of Units pursuant to Section 9.1(d)).

(w) Insurance Policies. Each insurance policy of the Company set forth on Schedule 2.20 shall remain in full force and effect or, if the term thereof was to expire between the date hereof and Closing, shall have been renewed and reissued on substantially the same terms (including premiums) as in effect as of the date hereof, or on such other terms as shall be satisfactory to Buyer in its sole discretion.

7.3 Conditions to Obligations of Seller, the Company and the Members.

The obligation of Seller, the Company and the Members to consummate the transactions contemplated hereby shall be subject to the fulfillment, on or prior to the Closing Date, of the following additional conditions, which Buyer agrees to use reasonable efforts to cause to be fulfilled:

(a) Representations, Performance, etc. (i) The representations and warranties of Buyer contained in Section 3 or in any Ancillary Agreement (x) shall be true and correct in all material respects at and as of the date hereof (or, if later, the date of such Ancillary Agreement) and (y) shall be repeated and shall be true and correct in all material respects on and as of the Closing Date with the same effect as though made on and as of the Closing Date.

(ii) Buyer shall have in all material respects duly performed and complied with all agreements, covenants and conditions required by this Agreement and the Ancillary Agreements to be performed or complied with by them prior to or on the Closing Date.

(iii) Buyer shall have delivered to Seller a certificate dated the Closing Date and signed by an authorized officer of Buyer to the effect set forth above in this Section 7.3(a).

(b) Corporate Proceedings. All trust proceedings of Buyer and EVM and corporate proceedings of Parent in connection with the Contemplated Transactions, and all documents and instruments incident thereto, shall be satisfactory in form and substance to Seller and their counsel in their reasonable judgment, and Seller and their counsel shall have received all such documents and instruments, or copies thereof, certified if requested, as may be reasonably requested.

(c) Employment Agreements. Buyer or a wholly-owned subsidiary of thereof shall have executed and delivered the Employment Agreements.

(d) Stock Option Agreements. Parent shall have executed and delivered the Stock Option Agreements.

(e) Company Operating Agreement. Buyer shall have executed and delivered the Company Operating Agreement.

(f) Ancillary Agreements. Each other Ancillary Agreement shall have been executed and delivered by Buyer and shall be satisfactory in form and substance to Seller in its reasonable judgment.

(g) Purchase Price. Buyer shall have delivered to Seller the Purchase Price and the Class C Contribution by wire transfer of immediately available funds as provided in Section 1.4(b).

(h) Opinion of Counsel. Seller shall have received opinions, addressed to it and the Members and dated the Closing Date, from Kirkpatrick & Lockhart LLP and the general counsel of Parent, as to the matters respectively set forth in Exhibits J-1 and J-2. hereto and otherwise in form and substance reasonably satisfactory to Seller, and subject to such qualifications, exceptions and modifications thereto as may be reasonably requested by such counsels in connection with their customary procedures in respect of the authorization and delivery of third-party opinions.

(i) Post-Conversion Consent. Buyer and each of the initial EVA Managers (as designated in the Company Operating Agreement) shall have executed and delivered the Post-Conversion Consent.

8 Termination.

8.1 Termination. This Agreement may be terminated at any time prior to the Closing Date:

(a) By the written agreement of Buyer and Seller;

(b) By Seller or Buyer by written notice to the other party after 5:00 p.m. Eastern time on August 31, 2003, if the transactions contemplated hereby shall not have been consummated pursuant hereto, unless (i) such date is extended by the mutual written consent of Seller and Buyer or (ii) the failure to consummate the transactions contemplated hereby by such date shall be due to the breach by the terminating party of any of its representations, warranties or covenants in this Agreement or any Ancillary Agreement;

(c) By Buyer if the aggregate Annualized Fee Revenues as set forth on any Test Date Certificate are less than 80% of the Aggregate Signing Date Fee Revenues; or

(d) By either Buyer or Seller by written notice to the other party if:

(i) the representations and warranties of the other party shall not be true and correct in all material respects at and as of the date when made, or shall not be true and correct in all material respects as of the Closing Date as though made on and as of such date (provided, that if any such breach is capable of being cured it shall not be grounds for termination hereunder unless it shall not have been cured within ten days following notice of such breach),

(ii) the other party shall (and the terminating party shall not) have failed to perform and comply with, in all material respects, all agreements, covenants and conditions hereby required to have been performed or complied with by such party prior to the time of such termination, and such failure shall not have been cured within fifteen days following notice of such failure, or

(iii) any event shall at any time occur or exist that otherwise shall have made it impossible to satisfy, prior to the time and date set forth in Section 8.1(b) above, a condition precedent to the terminating party’s obligations to consummate the Contemplated Transactions, unless the occurrence or existence of such event, fact or condition shall be due to the failure of the terminating party to perform or comply with any of the agreements, covenants or conditions hereof to be performed or complied with by such party prior to the Closing.

8.2 Effect of Termination. In the event of the termination of this Agreement pursuant to the provisions of Section 8.1, this Agreement shall become void and have no effect, without any obligation or liability to any Person in respect hereof or of the transactions contemplated hereby on the part of any party hereto, or any of its directors, officers, Representatives, stockholders, members or Affiliates, except for the obligations specified in Sections 11.1 and 11.11 and except for any liability resulting from such party’s willful or intentional material breach of this Agreement.

9 Indemnification.

9.1 Indemnification by Seller and the Members. (a) Subject to the limitations set forth in Section 9.1(b) and the priorities set forth in Section 9.1(c), Seller and the Members (and, if Closing shall not have occurred, the Company) jointly and severally covenant and agree to defend, indemnify and hold harmless each of Buyer and its Affiliates (including, after Closing, the Company) and their respective officers, directors, employees, agents, advisers and representatives, other than the Members (collectively, the “Buyer Indemnitees”) from and against, and pay or reimburse Buyer Indemnitees for, any and all claims, demands, liabilities, obligations, losses, fines, costs, expenses, royalties, Litigation, deficiencies or damages (whether absolute, accrued, conditional or otherwise and whether or not resulting from third party claims), including interest and penalties with respect thereto and out-of-pocket expenses and reasonable attorneys’ and accountants’ fees and expenses incurred in the investigation or defense of any of the same or in asserting, preserving or enforcing any of their respective rights hereunder (collectively, “Losses”), resulting from or arising out of:

(i) any inaccuracy (determined in accordance with the second paragraph of this Section 9.1(a)) of any representation or warranty when made or deemed made by Seller, the Company or any Member herein or under any of the Ancillary Documents or in connection herewith or therewith;

(ii) any failure of Seller, the Company or any Member to perform any covenant or agreement hereunder or under any of the Ancillary Documents or fulfill any other obligation in respect hereof or thereof;

(iii) any expenses, costs or other liabilities to be borne by Seller and the Members under Section 11.1(b) or 11.1(c);

(iv) any Client Consent described in clause (d) of the definition thereof; and

(v) any dispute between or among the past, current and future members of Seller (including the Members) and Seller, or any of them, whether in respect of the interpretation or application of the provisions of this Agreement, any Ancillary Agreement or the operating agreement of Seller or otherwise.

For purposes of this Section 9.1(a), any inaccuracy in any representation and warranty shall be determined without regard to any materiality qualification, or any qualification or requirement that a matter be or not be “reasonably expected” to occur, contained in or otherwise applicable to such representation or warranty, which qualification or requirement limits the scope of such representation and warranty and, giving effect thereto, renders such representation or warranty accurate.

In the event that a Loss may be the subject of indemnification under both this Section 9.1 and Section 6.1, the Buyer Indemnitees shall not be entitled to recover in the aggregate under such Sections more than the aggregate amount of the respective Taxes and other related Loss(es) for which recovery is sought hereunder and/or thereunder, subject to the further limitations and priorities set forth in Sections 9.1(b) and 9.1(c).

If a Client with respect to any account for which a Client Consent was obtained as described in clause (d) of the definition thereof terminates such account and gives as reason for such termination any alleged failure of such Client to have consented to the Contemplated Transactions, then the minimum Loss applicable shall be deemed to be the amount by which the Purchase Price would have been reduced if such Client Consent had not been obtained.

(b) Except for inaccuracies in the representations and warranties contained in Sections 2.1, 2.2, and 2.4, Seller and the Members (and, if Closing shall not have occurred, the Company) shall not be required to indemnify Buyer Indemnitees with respect to any Demand for indemnification pursuant to clauses (i) or (ii) of Section 9.1(a) or Section 6.1, unless and until the aggregate amount of all Demands against Seller and the Members (and, if Closing shall not have occurred, the Company) under this Section 9.1 and Section 6.1 exceeds $150,000 (the “Threshold”), and, upon such Threshold being exceeded, Seller and the Members shall be obligated to indemnify for the full amount of all such Losses, including the amount up to the Threshold. In no event shall Seller and the Members (and, if Closing shall not have occurred, the Company) be required to pay in excess of an aggregate of $14,000,000 (such aggregate amount, the “Cap”) in respect of their indemnification obligations under this Section 9.1 and Section 6.1; and provided, that in no event shall any Member be required to pay to Buyer an amount greater than such Member’s Pro Rata Share of the Aggregate Member Cap.

(c) Payment of each Demand for indemnification under Sections 6.1 and/or 9.1(a) shall be paid to Buyer or on behalf of Buyer as Buyer may direct (for its account and/or the account of one or more Buyer Indemnitees, as the case may be) in the following order and priority of source, and subject to Section 9.1(d):

(i) first, subject to the Threshold as provided in Section 9.1(b), by offset against the remaining amount of the Primary Holdback;

(ii) second, by offset against the remaining amount of the Umbrella Holdback;

(iii) third, by the Members as provided in this Section 9.1 until the aggregate amount paid under this clause (iii) in respect of all claims equals $500,000;

(iv) fourth, by Seller as provided in this Section 9.1 until the amount paid in respect of such claim equals the lesser of (x) the aggregate remaining amount of such claim and (y) the aggregate value of all Retained Class A Units not previously sold or forfeited by Seller to

Buyer (such valuation to be determined in accordance with the Pledge Agreement), with the payment obligation under this clause (iv) to be secured by the Pledge Agreement;

(v) fifth, by Seller as provided in this Section 9.1 until the amount paid in respect of such claim equals the lesser of (x) the aggregate remaining amount of such claim and (y) the aggregate value of all Retained Class B Units not previously sold or forfeited by Seller to Buyer (such valuation to be determined in accordance with the Pledge Agreement), with the payment obligation under this clause (v) to be secured by the Pledge Agreement;

(vi) sixth, by the Members as provided in this Section 9.1, subject to the Cap and the proviso to the final sentence of Section 9.1(b); and

(vii) seventh, by Seller as provided in this Section 9.1, subject to the Cap.

In respect of each source of recovery above, Buyer may exercise its rights under the next source of recovery in order (x) if, after Buyer delivered a Demand to the respective Indemnifying Parties, payment of the full amount claimed in the Demand is denied or is not made within 30 calendar days of delivery of such Demand, or (y) immediately if the aggregate amount claimed in such Demand exceeds the aggregate dollar limits placed on such source of recovery.

(d) On or before any Buyer Indemnitee delivers to Seller and the Members a Demand, Buyer shall have made an Insurance Claim, provided, however, that such Insurance Claim shall not be required if (x) the Loss that is the subject of such Demand is below the deductible amount of the Transaction Insurance and an Insurance Claim is not required under the express terms of the Transaction Insurance for such Loss to be set off against such deductible, or (y) such Loss, in Buyer’s reasonable judgment after consultation with Seller, is excluded from coverage by the terms of the Transaction Insurance (other than solely by reason of the deductible amount thereunder) or (z) the aggregate limit of coverage under the Transaction Insurance has been exceeded or the term of the Transaction Insurance has expired. After such Insurance Claim has been delivered to the Insurer (or without the making of an Insurance Claim if it is not required as aforesaid), the Buyer Indemnitees may deliver to Seller and the Members a Demand and may:

(i) immediately exercise the rights of offset under clause (i) of Section 9.1(c);

(ii) immediately exercise the rights of offset under clause (ii) of Section 9.1(c) if and solely to the extent that the remaining deductible amount under the Transaction Insurance exceeds the remaining amount of the Primary Holdback;

(iii) immediately exercise the rights of offset and indemnification under clauses (ii) through (vii) of Section 9.1(c) (subject to the order of priority set forth therein and the final sentence thereof) if and solely to the extent that the aggregate amount of the Loss that is the subject of such Demand (after giving effect to the rights of offset permitted under clauses (i) and (ii) of this Section 9.1(d)) exceeds the remaining aggregate coverage limit under the Transaction Insurance (assuming for purposes of such determination that all previously made but as yet unresolved Insurance Claims have been paid in full by the Insurer);

(iv) immediately exercise the rights of offset and indemnification under clauses (ii) through (vii) of Section 9.1(c) (subject to the order of priority set forth therein and the final sentence thereof) to the extent that the Loss that is the subject of such Demand, in Buyer’s reasonable judgment after consultation with Seller, is excluded in whole or in part from coverage by the terms of the Transaction Insurance; and

(v) exercise all other rights of offset and indemnification under clauses (ii) through (vii) of Section 9.1(c) (subject to the order of priority set forth therein and the final sentence thereof) upon the earlier of :

(w) notice by the Insurer to Buyer of denial or exclusion, in whole or in part, of such Insurance Claim (including any Losses relating to the defense of any claim or litigation relating to the subject matter of such Insurance Claim), to the extent of such denial or exclusion;

(x) the aggregate limits under the Transaction Insurance having been exceeded, to the extent of such excess;

(y) the 46th day after delivery to the Insurer of Buyer's Insurance Claim (or of any supplement, modification or amendment thereto) (or, if the express terms of the Transaction Insurance state that the Insurer shall have a set number of days that is greater than 45 in which to respond to such Insurance Claim, the next business day following such stated number of days having elapsed) (A) where the Loss that is the subject of such Demand does not result from a third party claim, if the Insurer has not given to Buyer a satisfactory written evaluation of the Insurance Claim in respect thereof or (b) where the Loss that is the subject of such Demand does result from a third party claim, if the Insurer has not provided to Buyer a substantive response (whether by Insurer’s participation in such defense or otherwise) to such Insurance Claim; and

(z) the making of payment by the Insurer in respect of a Loss that is the subject of an Insurance Claim if such payment is less than the amount of such Loss, to the extent of such shortfall.

In the event that the Insurer denies or excludes, in whole or in part, coverage for any Loss and if Buyer, after consultation with Seller, reasonably believes that a court would find that the Transaction Insurance covers such Loss, then Buyer shall continue to use its commercially reasonable efforts to seek such payment by the Insurer notwithstanding its prior recourse to the rights of offset and indemnification provided for in this Section 9.1; provided, that nothing herein shall require Buyer to commence or engage in litigation with the Insurer relating to coverage of such Loss under the Transaction Insurance. In the event that the Insurer ultimately pays such previously denied or excluded claim, then the amount so recovered by Buyer shall be applied:

(A) first, subject to the limitations, priorities and procedures set forth in this Section 9.1, to offset the unpaid amount of any outstanding Demands that are the subject of clauses (iii) through (vii) of Section 9.1(c);

(B) second, to refund to the respective Indemnifying Parties amounts paid to Buyer under clauses (vi) and (vii) of Section 9.1(c), in that order, to the extent such amounts would not have been paid if such recovered amount had been paid by the Insurer prior to Buyer seeking recourse under such clauses;

(C) third, to refund to the respective Indemnifying Parties amounts paid to Buyer under clause (v) of Section 9.1(c) to the extent such amounts would not have been paid if such recovered amount had been paid by the Insurer prior to Buyer seeking recourse under such clause; provided, that if Class B Units were forfeited to Buyer pursuant to the Pledge Agreement as a result of Seller’s full or partial default under such clause, such Class B Units shall to the extent of such forfeiture be retransferred to Seller, in lieu of such application of the recovered amount, and valued at the value previously determined in such forfeiture pursuant to the Pledge Agreement; provided, further, that such delivery may be subject to separate agreement between Seller and Buyer as to the treatment thereof; and provided, further, that amounts received by Buyer in distribution on any such retransferred Class B Units shall be delivered to Seller and corresponding adjustments made to the capital accounts of Seller and Buyer under the Company

Operating Agreement; it being acknowledged, for the avoidance of doubt, that insofar as Class B Units are retransferred to Seller, Buyer may retain and shall not be required to apply under the following clauses of this Section 9.1(d) the corresponding portion of the recovered amount;

(D) fourth, to refund to the respective Indemnifying Parties amounts paid to Buyer under clause (iv) of Section 9.1(c) to the extent such amounts would not have been paid if such recovered amount had been paid by the Insurer prior to Buyer seeking recourse under such clause; provided, that if Class A Units were forfeited to Buyer pursuant to the Pledge Agreement as a result of Seller’s full or partial default under such clause, such Class A Units shall to the extent of such forfeiture be retransferred to Seller, in lieu of such application of the recovered amount, and valued at the value previously determined in such forfeiture pursuant to the Pledge Agreement; provided, further, that such delivery may be subject to separate agreement between Seller and Buyer as to the treatment thereof; and provided, further, that amounts received by Buyer in distribution on any such retransferred Class A Units shall be delivered to Seller and corresponding adjustments made to the capital accounts of Seller and Buyer under the Company Operating Agreement; it being acknowledged, for the avoidance of doubt, that, insofar as Class A Units are retransferred to Seller, Buyer may retain and shall not be required to apply under the following clauses of this Section 9.1(d) the corresponding portion of the recovered amount;

(E) fifth, to refund to the respective Indemnifying Parties amounts paid to Buyer under clause (iii) of Section 9.1(c) to the extent such amounts would not have been paid if such recovered amount had been paid by the Insurer prior to Buyer seeking recourse under such clause; and

(F) sixth, to restore amounts offset under clause (ii) of Section 9.1(c) to the extent such amounts would not have been offset if such recovered amount had been paid by the Insurer prior to Buyer seeking recourse under such clause.

9.2 Indemnification by Buyer. (a) Subject to the limitations set forth in Section 9.2(b), Buyer covenants and agrees to defend, indemnify and hold harmless Seller and its officers, directors, employees, agents, advisers and representatives (and, if the Closing shall not have occurred, the Company and its officers, directors, employees, agents, advisers and representatives) (collectively, the “Seller Indemnitees”) from and against any and all Losses resulting from or arising out of (i) any inaccuracy (determined in accordance with the final sentence of this Section 9.2(a)) in any representation or warranty made by Buyer herein or under any of the Ancillary Agreements or in connection herewith or therewith; or (ii) any failure of Buyer to perform any covenant or agreement hereunder or under any Ancillary Agreement or fulfill any other obligation in respect hereof or thereof. For purposes of this Section 9.2(a), any inaccuracy in any representation and warranty shall be determined without regard to any materiality qualification, or any qualification or requirement that a matter be or not be “reasonably expected” to occur, contained in or otherwise applicable to such representation or warranty, which qualification or requirement limits the scope of such representation and warranty and, giving effect thereto, renders such representation or warranty accurate.

(b) Except for inaccuracies in the representations and warranties contained in Section 3.1, Buyer shall not be required to indemnify the Seller Indemnitees with respect to any claim for indemnification pursuant to clauses (i) or (ii) of Section 9.2(a), unless and until the aggregate amount of claims against Buyer under this Section 9.2 exceeds the Threshold, and, upon such Threshold being exceeded, Buyer shall be obligated to indemnify for the full amount of all such Losses, including the amount up to the Threshold. In no event shall Buyer be required to pay in excess of the Cap in respect of its indemnification obligations under this Section 9.2.

9.3 Indemnification Procedures. (a) In the case of any claim asserted by a third party against a party entitled to indemnification under this Agreement (the “Indemnified Party”), the

Indemnified Party shall deliver a Notice of Claim to the party required to provide indemnification (the “Indemnifying Party”) within a reasonable time after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and, if the Indemnified Party is a Buyer Indemnitee, Buyer shall provide to the Indemnifying Parties copies of such notices to the Insurer (“Insurer Notices”) as may be required to be delivered by Buyer to the Insurer by the terms of the Transaction Insurance. All procedures and agreements set forth in this Section 9.3 shall be subject to the terms and conditions of the Transaction Insurance, which shall control where in conflict with any provision of this Section 9.3. The Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any such claim or any litigation resulting therefrom, provided, that (i) counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party, and the Indemnified Party may participate in such defense at such Indemnified Party’s expense, and (ii) the failure of any Indemnified Party to deliver a Notice of Claim as provided herein or an Insurer Notice shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except to the extent that such failure results in a lack of actual notice to the Indemnifying Party or Insurer, as the case may be, and such Indemnifying Party is materially prejudiced as a result of such failure to deliver such Notice of Claim or Insurer Notice; and provided further, however, that (x) where the Indemnifying Parties are Seller and/or the Members, such defense may be assumed or participated in only by a single counsel on behalf of all such Indemnifying Parties and in such cases any actions to be taken by an “Indemnifying Party” hereunder must be taken by Seller and the Members jointly, and (y) such defense may be jointly assumed or participated in by Seller and the Members only where their maximum liability for indemnification in respect of such claim, after giving effect to any coverage that may be available under the Transaction Insurance, is at least (A) 50% in the case of assumption, or (B) 33% in the case of participation, of the maximum aggregate amount of such claim (assuming for purposes of such calculation that such litigation were to be finally determined in favor of such third party claimant), and then only to the extent that Seller’s assumption or participation in such defense is permitted by the Insurer under the Transaction Insurance. Except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation. In the event that the Indemnified Party shall in good faith determine that the conduct of the defense of any claim subject to indemnification hereunder or any proposed settlement of any such claim by the Indemnifying Party might be expected to affect adversely the Indemnified Party’s Tax liability, or that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or any litigation relating thereto, or control by the Indemnified Party shall be required under or in connection with or shall be desirable in order to maximize coverage under the Transaction Insurance, the Indemnified Party shall have the right to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost (insofar as not as such costs are not covered by the Transaction Insurance) of the Indemnifying Party, provided, however, that the Indemnifying Party will not be required to pay the fees and disbursements of more than one counsel for all Indemnified Parties in any jurisdiction in any single action or proceeding; and provided, further, that if the Indemnified Party does so take over and assume control, (i) subject to clauses (x) and (y) of the second sentence of this Section 9.3 (a), the Indemnifying Party shall be entitled to participate in the defense of such claim (at the Indemnifying Party’s expense) and (ii) the Indemnified Party shall not settle such claim or litigation without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld; provided, that (a) a settlement required by the Insurer shall not require the consent of Seller or any Member and (b) the reasonableness of the withholding of consent by Seller shall be determined in part by reference to the relative percentages of the claim in question that are reasonably expected, if such claim or litigation is finally determined in favor of the third party claimant, to be respectively (i) covered by the Transaction Insurance, (ii) paid by the Seller and/or the Members pursuant to this Section 9, or (iii) within the deductible amount of the Transaction Insurance and/or exceed the Cap. In the event that the Indemnifying Party does not accept

the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or demand, and shall be entitled to settle or agree to pay in full such claim or demand; provided, however, that except with the prior written consent of the Indemnifying Party, such Indemnified Party shall not consent to entry of any judgment nor enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnifying Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnifying Party of a release from all liability with respect to such claim or litigation. In any event, Seller and Buyer shall cooperate with each other and, to the extent applicable, the Insurer in the defense of any claim or litigation subject to this Section 9 and, subject to applicable attorney-client privileges unless otherwise specifically waived in writing, the records of each of Buyer and Seller shall be available to the other with respect to such defense.

(b) In the case of any Loss (other than a Loss resulting from a third party claim referred to in clause (a) of this Section 9.3) asserted to have been incurred by any Indemnified Party, such Indemnified Party shall deliver a Notice of Claim to the Indemnifying Party or Parties within a reasonable time after such Indemnified Party ascertains such Loss.

9.4 Survival of Representations and Warranties, etc. All Notices of Claim for indemnification under Section 6.1, clause (i) of Section 9.1(a) or clause (i) of Section 9.2(a) with respect to the representations, warranties and covenants contained herein must be delivered on or prior to the date that is 30 days after the termination of the respective survival periods set forth in this Section 9.4, and all lawsuits with respect to Losses referred to in such Notices of Claim must be brought within the proper periods as specified by the applicable statutes of limitations. The representations, warranties and covenants contained in this Agreement shall survive the execution and delivery of this Agreement, any examination by or on behalf of the parties hereto and the completion of the transactions contemplated herein, but only to the extent specified below:

(a) except as set forth in clause (b) below, the representations and warranties contained in Section 2 and Section 3 shall survive for a period ending on the second anniversary of the Closing Date;

(b) the representations and warranties of Seller and the Members contained in Sections 2.1, 2.2 and 2.4 shall survive indefinitely;

(c) the representations and warranties of Seller and the Members contained in Sections 2.15, 2.23, and 2.26 shall survive for so long as any statue of limitations applicable to the respective representation or warranty remains open; and

(d) the covenants and agreements contained in this Agreement that contemplate performance after the Closing shall survive the Closing and shall continue until all obligations with respect thereto shall have been performed or satisfied or shall have been terminated in accordance with their terms; provided, however, that the covenants in Section 6.1 shall survive for so long as any statue of limitations applicable to the respective Tax remains open.

9.5 Other. (a) The provisions of this Section 9 shall in no way limit, supersede or otherwise affect the rights of any party under Sections 1.5, 1.6 and 1.8, and nothing contained in Sections 1.5, 1.6 and 1.8 relating to an adjustment to the Purchase Price shall limit, supersede or otherwise affect the rights of any party under this Section 9; provided, that no party shall be entitled to be compensated more than once for the same Loss.

(b) The remedies of indemnification and specific performance provided for in this Section 9 and in Sections 6.1 and 11.9 shall be the sole and exclusive remedy of the parties hereto after the Closing for any breach of this Agreement; provided, that nothing herein shall limit in any way any

such party’s remedies in respect of fraud or intentional misrepresentation or omission by the other party in connection herewith or with any Ancillary Agreement or the transactions contemplated hereby or thereby or any party’s right to seek injunctive relief.

10 Definitions.

10.1 Terms Generally. The words “hereby”, “herein”, “hereof”, “hereunder” and words of similar import refer to this Agreement as a whole (including any Exhibits and Schedules hereto) and not merely to the specific section, paragraph or clause in which such word appears. All references herein to Sections, Exhibits and Schedules shall be deemed references to Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The definitions given for terms in this Section 10 and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Except as otherwise expressly provided herein, all references to “dollars” or “$” shall be deemed references to the lawful money of the United States of America.

10.2 Certain Terms. Whenever used in this Agreement (including in the Schedules), the following terms shall have the respective meanings given to them below or in the Sections indicated below:

1940 Act : the Investment Company Act of 1940, as amended.

2003 Option : as defined in Section 6.3.

Acquisition Transaction : as defined in Section 4.2.

Advisers Act : the Investment Advisers Act of 1940, as amended.

Advisory Agreement : each Contract relating to the provisions of investment management or investment advisory services by the Company or Seller to any Person, including any subadvisory, “wrap fee” or similar agreement.

Affiliate : of a Person means a Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the first Person, including but not limited to a Subsidiary of the first Person, a Person of which the first Person is a Subsidiary, or another Subsidiary of a Person of which the first Person is also a Subsidiary. “Control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise.

Aggregate Member Cap : the total amount of the Purchase Price distributed or distributable by Seller to the Members, it being acknowledged and agreed that as of the date hereof such amount is expected, assuming Permitted Debt of approximately $11,000,000 and no Purchase Price Adjustments, to be approximately $1,500,000 as determined pursuant to the Seller Operating Agreement; provided, however, that in no event shall the Aggregate Member Cap be deemed to be less than $500,000. An authorized officer of Seller shall deliver to Buyer at Closing, and from time to time thereafter as may be reasonably requested by Buyer, a certificate attesting as to the amount of the Aggregate Member Cap and attaching such supporting data as Buyer may reasonably request.

Aggregate Signing Date Fee Revenues : the aggregate Signing Date Fee Revenues of all Signing Date Clients.

Agreement : this Stock Purchase Agreement, including the Exhibits and Schedules hereto and the Guarantee affixed hereto.

Ancillary Agreements : the Stock Option Agreements, the Company Operating Agreement, the Contribution Agreement, the Employment Agreements, the Restrictive Covenant Agreements and other agreements necessary to consummate the Contemplated Transactions.

Annualized Fee Revenues : in respect of any client of the Company as of a given date of determination, the total annualized investment advisory and sub-advisory fees of the Company from such client, determined by multiplying the Assets under Management for such client at such date by the Applicable Annualization Rate.

Applicable Annualization Rate : the applicable annual fee schedule or rate for a client under such client's Advisory Agreements with the Company as of a given date of determination (excluding any performance-based fees).

Assets : as defined in Section 2.16.

Assets under Management : in respect of any client as of a given date, the aggregate value as of the close of trading on such date (or, if not a business day on which the NYSE is open for trading, the trading day last preceding such date of determination) of the assets under management by the Company pursuant to its Advisory Agreement(s) with such client.

Balance Sheet : the audited balance sheet of Seller as of December 31, 2002, included in the Financial Statements.

Business : the business and operations of the Company as previously or currently conducted.

Buyer : as defined in the first paragraph of this Agreement.

Buyer Indemnitees : as defined in Section 9.1(a).

Buyer Material Adverse Effect : any (a) event, occurrence, fact, condition, change, development or effect that is or would reasonably be expected to be materially adverse to the business, operations, prospects, results of operations, condition (financial or otherwise), properties (including intangible properties), assets (including intangible assets) or liabilities of the Company or (b) material impairment of the ability of Buyer to perform its respective obligations hereunder or under the Ancillary Agreements or of EVM to perform the Guarantee, excluding, for purposes of clause (a) but not clause (b) hereof, (x) changes in the United States securities markets or segments thereof generally that do not affect Parent, EVM or Buyer or their respective businesses materially differently from their effects on asset management businesses generally, (y) changes in the general economic, business or financial activities or conditions in the United States, and (z) changes in the asset management industry generally that do not affect Parent, EVM or Buyer or their respective businesses materially differently from their effects on asset management businesses generally.

Buyer Plans : as defined in Section 6.6.

Cap : as defined in Section 9.1(b).

Cash Equivalents : (a) obligations issued or unconditionally guaranteed by the United States of America or any agency thereof

or obligations issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, (b) commercial paper with a maturity of less than one hundred-eighty (180) days or less issued by a corporation organized under the laws of any state of the United States of America or the District of Columbia and rated at least A-2 by Standard and Poor’s Corporation or at least P-2 by Moody’s Investors Service, Inc., (c) time deposits with, and certificates of deposits and banker’s acceptances issued by, any bank having capital surplus and undivided profits of not less than $100,000,000 and maturing not more than one hundred-eighty (180) days from the date of creation thereof, (d) repurchase agreements that are secured by a perfected security interest in an obligation described in clause (a) and are with a bank described in clause (c), and (e) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Standard and Poor’s Corporation or Moody’s Investors Service, Inc.

CERCLA : the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. § 9601 et seq.

Class A Units : as defined in the recitals to this Agreement.

Class B Units : as defined in the recitals to this Agreement.

Class C Contribution : a cash amount equal to the aggregate amount of the Permitted Debt at Closing.

Class C Issuance : as defined in the recitals to this Agreement.

Class C Units : as defined in the recitals to this Agreement.

Client : any Person (including any Fund) whose account is managed and advised pursuant to an Advisory Agreement.

Client Consent : (a) in respect of any Client other than a Client account subject to ERISA, the written consent of such Client to the Contemplated Transactions, in a form to be prepared by Seller and subject to the prior review and written consent of Buyer, not to be unreasonably withheld,

(b) in respect of any Client account that is subject to ERISA, the written consent of such Client to the Contemplated Transactions, in substantially the form described in the previous clause (a) but containing such additional language in respect of the reappointment of the Company as an ERISA fiduciary as Buyer may reasonably request;

(c) in respect of any Client, the entry by such Client into a new Advisory Agreement with the Company to be effective on or prior to the Closing Date and in form and substance satisfactory to Buyer; or

(d) solely in respect of the Clients listed on Exhibit K hereto (but only if such Client account is not subject to ERISA), the failure of such Client to object to the assignment or deemed assignment of such Client’s Advisory Agreement in connection with the Contemplated Transactions within 45 days of the first written notice of the Contemplated Transactions, in form and substance acceptable to Buyer in its reasonable discretion, having been transmitted to such Client, provided that the Company mail to such Client on or immediately following the Closing Date notice of the consummation of the Closing, and provided further that the first such notice shall in any event request that such Client execute and return a form of consent as specified in clauses (a) and (b) preceding. In addition to the notices specified above, Buyer and Seller shall consult in good faith as to such other notices and communications as may be commercially reasonable in the solicitation of affirmative written consents of the Clients subject to this clause (d).

Client Consents Adjustment : as defined in Section 1.5(c).

Client Consents Adjustment Notice : as defined in Section 1.5(c).

Client Consents Holdback : as defined in Section 1.5(a).

Client Consents Holdback Notice : as defined in Section 1.5(b).

Closing : as defined in Section 1.4.

Closing Client Consents Certificate : as defined in Section 1.5(b).

Closing Date : as defined in Section 1.4.

Closing Date Balance Sheet : as defined in Section 1.6(a).

Closing Date Adjusted Working Capital : as defined in Section 1.6(b).

Closing Fee Revenues : the Annualized Fee Revenues determined as of the Test Date for all Signing Date Clients that have consented to the Contemplated Transactions in accordance with Section 4.8 as of the Test Date.

Code : the Internal Revenue Code of 1986, as amended.

Company : as defined in the preamble to this Agreement.

Company's Accountants : the Company's independent public accountants, Moss Adams LLP.

Company Disclosure Schedules : the disclosure schedules by the company attached to this Agreement.

Company Intellectual Property : as defined in Section 2.19(b).

Company Operating Agreement : the Operating Agreement of the Company in the form attached as Exhibit L.

Consent : any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, certificate, exemption, order, registration, declaration, filing, report or notice of, with or to any Person.

Contemplated Transactions : the transactions contemplated by this Agreement and the Ancillary Agreements, including, without limitation, the Share Purchase, the Contribution Transaction, the Liquidation and the Class C Issuance.

Contract : all loan agreements, indentures, letters of credit (including related letter of credit applications and reimbursement obligations), mortgages, security agreements, pledge agreements, deeds of trust, bonds, notes, guarantees, surety obligations, warranties, licenses, franchises, permits, powers of attorney, purchase orders, leases, and other agreements, contracts, instruments, obligations, offers, commitments, arrangements and understandings, written or oral, to which the Company is a party or by which they or any of their properties or assets are bound or, to Seller’s Knowledge, affected, in each

case as amended, supplemented, waived or otherwise modified, that are of the types listed in clauses (a) through (p) below:

(a) leases, subleases, licenses, occupancy agreements, permits, franchises, insurance policies, agreements, Governmental Approvals and other Contracts concerning or relating to the Fairview Property;

(b) employment, consulting, severance, agency, bonus, compensation, or other trusts, funds and other Contracts (other than the Plans) relating to or for the benefit of current, future or former employees, officers, directors, sales representatives, distributors, dealers, agents, independent contractors or consultants (whether or not legally binding), including sales agency or distributorship agreements or arrangements for the sale of any of the products or services of any member of the Company;

(c) loan agreements, indentures, letters of credit (including related letter of credit applications and reimbursement obligations), mortgages, security agreements, pledge agreements, deeds of trust, bonds, notes, guarantees, instruments and other contracts relating to the borrowing of money or obtaining of or extension of credit;

(d) licenses, licensing arrangements and other Contracts providing in whole or in part for the use of, or limiting the use of, any Intellectual Property;

(e) finder’s Contracts;

(f) joint venture, partnership and similar Contracts involving a sharing of profits or expenses;

(g) stock purchase agreements, asset purchase agreements and other acquisition or divestiture agreements, including but not limited to any agreements relating to the acquisition, lease or disposition of the Company, any material assets or properties (other than sales of inventory made in the ordinary course of business), any business, or any capital stock of or other interest in any Person by Seller, the Company, or the Members, within the last ten years, or involving continuing indemnity or other obligations;

(h) Contracts prohibiting or materially restricting the ability of the Company to conduct the Business, to engage in any business or operate in any geographical area or to compete with any Person;

(i) orders and other Contracts for the purchase or sale of materials, supplies, products or services, involving aggregate payments in excess of $10,000 in each case or $25,000 in the aggregate;

(j) orders and other Contracts with or for the direct or indirect benefit of the Company or any Affiliate of the Company (other the Company) (whether or not legally binding);

(k) Contracts providing for future payments that are conditioned, in whole or in part, on a change in control of the Company;

(l) powers of attorney, except routine powers of attorney relating to representation before governmental agencies or given in connection with qualification to conduct business in another jurisdiction;

(m) Contracts not entered into in the ordinary course of business;

(n) Contract or series of related Contracts with respect to which the aggregate amount that would reasonably expected to be paid or received thereunder in the future exceeds $10,000 per annum or an aggregate of $25,000 under the term of the Contract;

(o) Advisory Agreements; and

(p) Contracts that are or are reasonably likely to be material to the business, operations, results of operations, condition (financial or otherwise), assets or properties of the Company.

Conversion : as defined in the recitals to this Agreement.

Conversion Certificates : Certificates of Conversion and Formation in substantially the forms attached as Exhibits A and B respectively hereto.

Demand : a written demand by an Indemnified Party to one or more Indemnifying Parties for the payment of indemnification in respect of a Loss. In respect of Losses that do not arise from a third-party claim, the Notice of Claim shall constitute the Indemnified Party’s Demand. In the case of Losses arising out of third party claims, Losses may be the subject of one or more Demands as such Losses are incurred.

DGCL : as defined in the recitals to this Agreement.

DLLCA : as defined in the recitals to this Agreement.

Eaton Vance Common Stock : the Non-Voting Common Stock, par value $0.0078125 per share, of Parent.

Employees : as defined in Section 2.26(a).

Employment Agreements : as defined in Section 7.2(h).

Environmental Laws : all Laws relating to the protection of the environment, to human health and safety, or to any Environmental Activity, including, without limitation, (a) CERCLA, the Resource Conservation and Recovery Act, and the Occupational Safety and Health Act, (b) all other requirements pertaining to reporting, licensing, permitting, investigation or remediation of emissions, discharges, Releases or threatened Releases of Hazardous Materials into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, sale, treatment, receipt, storage, disposal, transport or handling of Hazardous Materials, and (c) all other requirements pertaining to the protection of the health and safety of employees or the public.

ERISA : the Employee Retirement Income Security Act of 1974, as amended.

EVM : Eaton Vance Management, a Massachusetts business trust.

Exchange Act : the Securities Exchange Act of 1934, as amended.

Fairview Lease : the Office Building Lease, dated as of October 19, 2000, by and between Parametric Portfolio Associates, a Delaware general partnership, and 1151 Fairview Associates LLC, a Washington limited liability company.

Fairview Property : as defined in Section 2.17(b).

Financial Statements : the financial statements of the Company as at and for years ended December 31, 2002 and 2001, and as at the end of and for each fiscal quarter ending after the date of the Balance Sheet and prior to the Closing Date, together with reports on such year-end statements by the Company’s Accountants, including in each case a balance sheet, a statement of income, a statement of stockholders’ equity and a statement of cash flows, and accompanying notes.

Funds : each registered investment company (as defined in the 1940 Act) or series or portfolio thereof for which Seller acts as subadvisor pursuant to an Advisory Agreement set forth on Schedule 2.18(a).

Fund Board : the board of directors or trustees (or equivalent governing body) of each Fund.

Fund Shareholder Approvals : the approval by the shareholders of each Fund of the Contemplated Transactions, insofar as required under applicable Law or the Organizational Documents of such Fund.

GAAP : as defined in Section 2.6(b).

Guarantee : the Guarantee of EVM affixed hereto.

Governmental Approval : any Consent of, with or to any Governmental Authority.

Governmental Authority : any government; any state or other political subdivision thereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof; any court, tribunal or arbitrator; and any Self-Regulatory Organization.

Hazardous Materials : any substance that: (a) is or contains asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum or petroleum-derived substances or wastes, radon gas or related materials; (b) requires investigation, removal or remediation under any Environmental Law, or is defined, listed or identified as a “hazardous waste” or “hazardous substance” thereunder; or (c) is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by any Governmental Authority or Environmental Law.

Holdback : as defined in Section 1.8.

Income Tax : any Tax computed in whole or in part based on or by reference to net income and any alternative minimum, accumulated earnings or personal holding company Tax (including all interest and penalties thereon and additions thereto).

Income Tax Return : any return, report, declaration, form, claim for refund or information return or statement relating to Income Taxes, including any schedule or attachment thereto, and including any amendment thereof.

Indebtedness : as applied to any Person, means, without duplication, (a) all indebtedness for borrowed money, (b) all obligations evidenced by a note, bond, debenture, letter of credit, draft or similar instrument, (c) that portion of obligations with respect to capital leases that is properly classified as a liability on a balance sheet in conformity with GAAP, (d) notes payable and drafts accepted representing extensions of credit, (e) any obligation owed for all or any part of the deferred purchase price of property or services, which purchase price is due more than six months from the date of incurrence of

the obligation in respect thereof, and (f) all indebtedness and obligations of the types described in the foregoing clauses (a) through (e) to the extent secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person.

Indemnified Party : as defined in Section 9.3.

Indemnifying Party : as defined in Section 9.3.

Indemnity Holdback : as defined in Section 1.8.

Independent Accountants : as defined in Section 1.7.

Insurance Claim : a claim for coverage delivered by Buyer to the Insurer in respect of a Loss or claim that is the subject of a Notice of Claim.

Insurer : the insurer under the Transaction Insurance.

Intellectual Property : United States and foreign trademarks, service marks, trade names, trade dress, copyrights, and similar rights including, without limitation, registrations and applications to register or renew the registration of any of the foregoing United States and foreign letters patent and patent applications, and inventions, processes, designs, formulae, algorithms, trade secrets, know-how, computer software, data and documentation, proprietary information (including, without limitation, ideas, manufacturing, development and production techniques, drawing, specifications, designs, proposals, financial and accounting data, business and marketing plans, customer and supplier lists and related information), and all similar intellectual property rights, tangible embodiments of any of the foregoing (in any medium including electronic media), and licenses of any of the foregoing.

IRS : the Internal Revenue Service.

knowledge : with respect to any natural person, such person's actual knowledge (including knowledge deemed held pursuant to the following sentence of this definition) and, with respect to any other Person, the actual knowledge of its executive officers and directors (or, if none, persons of comparable responsibility with respect to such Person) (including knowledge deemed held pursuant to the following sentence of this definition). Any officer or director or Person with comparable responsibility will be deemed to have actual knowledge of a particular fact, circumstance, event or other matter if a reasonable officer, director or Person with comparable responsibility who holds a comparable position in a similarly situated company in the asset management industry would have had knowledge of such a fact, circumstance, event or other matter had it occurred in or with respect to such a company and had such officer, director or Person made commercially reasonable inquiry in respect thereof.

Law : all applicable provisions of all (a) constitutions, treaties, statutes, laws (including the common law), codes, rules, regulations, ordinances or orders of any Governmental Authority, (b) Governmental Approvals and (c) orders, decisions, injunctions, judgments, awards and decrees of or agreements with any Governmental Authority.

Leased Real Property : all interests leased pursuant to the Leases.

Leases : the real property leases, subleases, licenses and occupancy agreements pursuant to which the Company is the lessee, sublessee, licensee, user or occupant of real property used in or held for use in connection with, necessary for the conduct of, or otherwise material to, the Business.

Lien : any mortgage, pledge, deed of trust, hypothecation, right of others, claim, security interest, encumbrance, burden, title defect, title retention agreement, lease, sublease, occupancy agreement, easement, covenant, condition, encroachment, voting trust agreement, interest, option, right of first offer, negotiation or refusal, proxy, lien, charge or other restrictions or limitations of any nature whatsoever, including but not limited to such Liens as may arise under any Contract.

Litigation : any action, cause of action, claim, demand, suit, proceeding, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, by or before any court, tribunal, arbitrator or other Governmental Authority.

Losses : as defined in Section 9.1(a).

Material Adverse Effect : any (a) event, occurrence, fact, condition, change, development or effect that is or would reasonably be expected to be materially adverse to the business, operations, prospects, results of operations, condition (financial or otherwise), properties (including intangible properties), assets (including intangible assets) or liabilities of the Company or (b) material impairment of the ability of Seller, the Company or any Member to perform its respective obligations hereunder or under the Ancillary Agreements, excluding, for purposes of clause (a) but not clause (b) hereof, (x) changes in the United States securities markets or segments thereof generally that do not affect the Company or its business materially differently from their effects on asset management businesses generally, (y) changes in the general economic, business or financial activities or conditions in the United States, and (z) changes in the asset management industry generally that do not affect the Company or its business materially differently from their effects on asset management businesses generally.

material respects : for purposes of Sections 7.2(a), 7.3(a), and 8.1(d), the phrase “all material respects” shall mean: all respects (in the case of any representation or warranty containing any materiality qualification), and all material respects (in the case of any representation or warranty without any materiality qualification).

Member : each holder, whether of record, beneficially or both, of the economic units of Seller.

Members : as defined in the first paragraph of this Agreement.

Members' Representative : as defined in Section 11.4.

NASD : the National Association of Securities Dealers, Inc.

Net Working Capital Adjustment : as defined in Section 1.6(b).

Net Working Capital Holdback : as defined in Section 1.8.

Notice of Claim : written notice from an Indemnified Party to one or more Indemnifying Parties setting forth (a) in the case of Losses other than Losses arising from third party claims referred to in clause (a) of Section 9.3, the asserted Loss and the reasons why such Loss is asserted to be indemnified hereunder, and (b) in the case of third party claims referred to in clause (a) of Section 9.3, setting forth the nature of such third party claim.

NYSE : the New York Stock Exchange, Inc.

ordinary course of business : the usual, regular and ordinary course of business of the Company consistent with the past custom and practice thereof.

Organizational Documents : as to any Person, its certificate or articles of incorporation, by-laws and other organizational documents.

Owned Intellectual Property : as defined in Section 2.19(a).

Parent : Eaton Vance Corp., a Maryland corporation.

Permitted Debt : the following debts, obligations and liabilities of the Company: (a) the outstanding principal amount of and accrued but unpaid interest under the Senior Loan Agreement, in an aggregate amount of not greater than $4,590,000; (b) the outstanding principal amount of and accrued but unpaid interest under the Subordinated Note dated December 31, 2001 of PPA Acquisition Corp. I d.b.a. Parametric Portfolio Associates in favor of PIMCO Advisors L.P., in an aggregate amount of not greater than $1,518,212; (c) the outstanding principal amount of and accrued but unpaid interest under the Subordinated Note dated December 31, 2002 of PPA Acquisition Corp. I d.b.a. Parametric Portfolio Associates in favor of PIMCO Advisors L.P., in an aggregate amount of not greater than $2,824,147; and (d) the outstanding principal amount of and accrued but unpaid interest under the Working Capital Note dated June 15, 2001 of Parametric Portfolio Associates in favor of PIMCO Advisors L.P., in an aggregate amount of not greater than $1,900,000.

Permitted Liens : (a) Liens reserved against in the Balance Sheet, to the extent so reserved, (b) Liens for Taxes not yet due and payable, and (c) those Liens, if any, that (i) secure obligations of less than $10,000 individually or $50,000 in the aggregate and (ii) individually and in the aggregate with all other Permitted Liens, do not and would not reasonably be expected to materially detract from the value of any of the property or assets of the Company, or to materially interfere with the use thereof as currently used or contemplated to be used, or to otherwise have or result in a Material Adverse Effect.

Person : any natural person, firm, partnership, association, corporation, company, trust, business trust, Governmental Authority or other entity.

Plans : as defined in Section 2.26(a).

Pledge Agreement : the Pledge and Security Agreement between Seller and Buyer in the form attached as Exhibit M hereto.

Post-Conversion Consent : as defined in Section 2.1(b).

PPA Stock : as defined in the recitals to this Agreement.

Pre-Closing Tax Period : as defined in Section 6.1(a).

Primary Holdback : as defined in Section 1.8.

Pro Rata Share : as applied in respect of a Member and a given amount, the result obtained by multiplying the percentage set forth next to such Member's name on Exhibit N hereto (expressed as a decimal fraction) by such amount.

Purchase Price : as defined in Section 1.1.

Purchase Price Adjustments : as defined in Section 1.6(b).

Purchased PPA Stock : as defined in the recitals to this Agreement.

Real Property Laws : as defined in Section 2.17(f).

Regulatory Documents : as defined in Section 2.7(a).

Related Persons : as defined in Section 2.26(a).

Release : any releasing, disposing, discharging, injecting, spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping, dispersal, leeching, migration, transporting, placing and the like, including without limitation, the moving of any materials through, into or upon, any land, soil, surface water, ground water or air, or otherwise entering into the environment.

Representatives : as to any Person, its accountants, counsel, consultants (including actuarial, environmental and industry consultants), officers, directors, employees, agents and other advisers and representatives.

Restrictive Covenant Agreement : as defined in Section 7.2(k).

Retained PPA Stock : as defined in recitals to this Agreement.

Retained Class A Units : as defined in the recitals to this Agreement.

Retained Class B Units : as defined in the recitals to this Agreement.

Retained Units : as defined in the recitals to this Agreement.

SEC : the Securities and Exchange Commission.

Securities Act : the Securities Act of 1933, as amended.

Self Regulatory Organization : the New York Stock Exchange, Inc. and other self-regulatory organizations in the securities or commodities field, including, without limitation, the National Futures Association, the National Association of Securities Dealers, Inc. and NASD Regulation, Inc.

Seller : as defined in the first paragraph of this Agreement.

Seller Indemnitees : as defined in Section 9.2(a).

Seller Operating Agreement : as defined in Section 6.5.

Seller's Knowledge : the knowledge of Seller, the Company or any Member.

Senior Debt Agreement : as defined in Section 2.18(b).

Senior Lender : as defined in Section 2.18(b).

Share Purchase : as defined in the recitals to this Agreement.

Signing Date Clients : any Client of the Company as of the date of this Agreement.

Signing Date Fee Revenues : in respect of any Signing Date Client, the Annualized Fee Revenues of the Company under such Client's Advisory Agreement as of the close of business on the trading day last preceding the date of this Agreement.

Stock Option Agreement : the stock option agreement attached in substantially the form of Exhibit D hereto.

Subsidiaries : each corporation or other Person in which a Person owns or controls, directly or indirectly, capital stock or other equity interests representing more than 50% of the outstanding voting stock or other equity interests.

Target Adjusted Working Capital : $2,100,000.

Tax : any federal, state, local or foreign income, alternative or add-on minimum accumulated earnings, personal holding company, franchise, capital stock, profits, windfall profits, gross receipts, sales, use, value added, transfer, registration, stamp, premium, excise, customs duties, severance, environmental (including taxes under Section 59A of the Code), real property, personal property, ad valorem, occupancy, license, occupation, employment, payroll, social security (or similar), disability, unemployment, workers’ compensation, withholding, estimated or other similar tax, duty, fee, assessment or other governmental charge or deficiencies thereof (including all interest and penalties thereon and additions thereto).

Tax Indemnitees : as defined in Section 6.1(a).

Tax Return : any return, report, declaration, form, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

Test Date : the final trading day of each week, beginning with the seventh full week after the date of this Agreement and continuing through the Closing or termination of this Agreement in accordance with its terms.

Test Date Certificate : a certificate, to be executed by an authorized officer of the Company and delivered to Buyer no later than 10 a.m. Eastern time on the Monday immediately following each Test Date, listing each Signing Date Client from whom a Client Consent has been duly received as of such Test Date, the Annualized Fee Revenues of such Signing Date Client determined as of such Test Date, and the aggregate Annualized Fee Revenues of all Signing Date Clients so listed.

Threshold : as defined in Section 9.1(b).

Transaction Insurance : as defined in Section 7.2(q).

Transaction Insurance Costs : as defined in Section 1.1.

Treasury Regulations : the regulations prescribed under the Code.

Umbrella Holdback : as defined in Section 1.8.

Units : the Class A Units, the Class B Units and the Class C Units, constituting all of the outstanding units of economic interest in the Company.

11 Miscellaneous.

11.1 Expenses. (a) Except as set forth below in this Section 11.1 or as otherwise specifically provided for in this Agreement, Seller and the Members, on the one hand, and Buyer, on the other hand, shall bear their respective expenses, costs and fees (including attorneys’, financial advisers’, investment bankers’, auditors’ and financing commitment fees) in connection with the transactions

contemplated hereby, including the preparation, execution and delivery of this Agreement and compliance herewith, whether or not the transactions contemplated hereby shall be consummated.

(b) Seller and the Members shall bear the expenses, costs and fees (including attorneys’, financial advisers’, investment bankers’, auditors’ and financing commitment fees) of the Company incurred, accrued or accruable, prior to Closing, in connection with the transactions contemplated hereby, including the preparation, execution and delivery of this Agreement and compliance herewith, whether or not the transactions contemplated hereby shall be consummated.

(c) Seller and the Members shall be responsible for, and neither Buyer nor the Company shall bear, any Taxes that relate directly to the purchase and sale of the Purchased PPA Stock pursuant to this Agreement (including, without limitation, applicable transfer Taxes, gains Taxes and Income Taxes resulting directly from such sale of the Purchased PPA Stock), except as may specifically be provided to the contrary in this Agreement.

(d) If this Agreement is terminated in accordance with its terms, the Company, Seller and the Members shall be responsible for, and Buyer shall not bear, responsibility for any and all Transaction Insurance Costs, including any break-up or similar fees assessable by the insurance carrier in respect thereof.

11.2 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) mailed, certified or registered mail with postage prepaid, (c) sent by next-day or overnight mail or delivery or (d) sent by telecopy or telegram, as follows:

(i)

if to Buyer (or, after Closing, to the Company),

Eaton Vance Corp.
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
Facsimile: (617) 598-0432
Telephone: (617) 598-8180
Attention: Chief Legal Officer

with a copy to:
Kirkpatrick & Lockhart LLP
535 Smithfield Street
Pittsburgh, PA 15222
Facsimile: (412) 355-6501
Telephone: (412) 355-6500
Attention: Robert P. Zinn, Esq.

(ii)

if to Seller, the Company or Members (or, prior to Closing, the Company),

Parametric Portfolio Associates
1151 Fairview Avenue N.
Seattle, Washington 98109-4142
Telephone: (206) 694-5575
Facsimile: (206) 694-4192
Attention: Brian Langstraat

with a copy to:

Perkins Coie LLP
1201 Third Street, Suite 4800
Seattle, Washington 98101
Telephone: (206) 583-8888
Attention: Steven R. Yentzer, Esq.

or, in each case, at such other address as may be specified in writing to the other parties hereto.

All such notices, requests, demands, waivers and other communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the seventh business day after the mailing thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, (z) if by telecopy or telegram, on the next day following the day on which such telecopy or telegram was sent, provided that a copy is also sent by certified or registered mail.

11.3 Governing Law, etc. (a) This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of New York, without giving effect to the conflict of laws rules thereof (other than Section 5-1401 and 5-1402 of the General Obligations Law of the State of New York).

(b) The parties hereby agree that, in the event of any dispute (other than a dispute in respect of which provisions for resolution are otherwise set forth in this Agreement), they will meet and attempt to resolve such dispute within ten (10) days after a party gives a notice of dispute to one other party or parties. If for any reason they do not agree on a resolution, then each party will consider whether alternative dispute resolution (including, without limitation, arbitration) would be appropriate for the resolution of such dispute. Alternative dispute resolution shall be adopted only if all parties agree in writing, such decision to be made by each party in its sole discretion. This Section 11.3(b) shall not affect or be deemed to require any delay in the ability of any party to seek injunctive relief in respect of any dispute arising under this Agreement.

(c) The parties hereby irrevocably submit to the jurisdiction of the courts of the Commonwealth of Massachusetts and the Federal courts of the United States of America located in the City of Boston in the Commonwealth of Massachusetts solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby. Each of the parties irrevocably agrees that all claims in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby, or with respect to any such action or proceeding, shall be heard and determined in such a Massachusetts or Federal court, and that such jurisdiction of such courts with respect thereto shall be exclusive, except solely to the extent that all such courts lawfully decline to exercise such jurisdiction. Each of the parties hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document or in respect of any such transaction, that it is not subject to such jurisdiction. Each of the parties hereby waive, and agree not to assert, to the maximum extent permitted by law, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document or in respect of any such transaction, that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 11.2 or in such other manner as may be permitted by law, shall be valid and sufficient service thereof. The parties agree that in any action, suit or proceeding for the interpretation or enforcement hereof, the costs of the prevailing party (including reasonable attorney’s fees and costs) will be paid by the other party.

11.4 Members’ Representative. Each Member hereby irrevocably appoints Seller (herein called the “Members’ Representative”) as the agent and attorney-in-fact respectively of each such Member to take any action required or permitted to be taken by such Member under the terms of this Agreement, including without limiting the generality of the foregoing, the right to receive and pay funds on behalf of such Member, to waive, modify or amend any of the terms of this Agreement in any respect, whether or not material, and to settle indemnification claims or any disputed matters arising under this Agreement or any agreement executed in connection herewith. Each Member agrees to be bound by any and all actions taken by the Members’ Representative on his or its behalf. All obligations of Buyer to make any delivery or payment to any or all Members shall be satisfied by the making of such delivery or payment to the Members’ Representative, who shall be solely responsible for further delivery or payment to the respective Members. The Members agree jointly and severally to indemnify the Members’ Representative from and against and in respect of any and all liabilities, damages, claims, costs, and expenses, including but not limited to attorneys’ fees, arising out of or due to any action by them as the Members’ Representative and any and all actions, proceedings, demands, assessments, or judgments, costs, and expenses incidental thereto, except to the extent that the same result from bad faith or gross negligence on the part of the Members’ Representative. Buyer shall be entitled to rely exclusively and completely upon any communications given by the Members’ Representative on behalf of any Member, and shall not be liable for any action taken or not taken in reliance upon the Members’ Representative nor have any duty to inquire as to whether the Members’ Representative has received any consent of the Members (or any of them) described in this Section. Buyer shall be entitled to disregard any notices or communications given or made by the Members unless given or made through the Members’ Representative. The power of attorney granted by each Member to the Members’ Representative hereunder is irrevocable and coupled with an interest. Notwithstanding the appointment of the Members’ Representative hereunder, Buyer may require the written concurrence of Seller and any or all Members to any action taken hereunder.

11.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns.

11.6 Assignment. This Agreement shall not be assignable or otherwise transferable by any party hereto without the prior written consent of the other parties hereto and any purported assignment in violation of this Section 11.6 shall be null and void; provided, that Buyer may assign this Agreement to any Subsidiary or Affiliate of Buyer, or to any lender to Buyer or any Subsidiary or Affiliate thereof, as security for obligations to such lender, and provided, further, that no assignment to any such Subsidiary, Affiliate or lender shall in any way affect Buyer’s obligations or liabilities under this Agreement, nor release EVM from the Guarantee.

11.7 No Third Party Beneficiaries. Except as provided in Section 9 with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their respective heirs, successors and permitted assigns.

11.8 Amendment; Waivers, etc. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party against whom enforcement of the amendment, modification, discharge or waiver is sought (or, as provided in Section 11.4 above, by the Members’ Representative). Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and remedies herein provided are cumulative and none is exclusive of

any other, or (except as provided in Section 9.5(b)) of any rights or remedies that any party may otherwise have at law or in equity. The rights and remedies of any party based upon, arising out of or otherwise in respect of any inaccuracy or breach of any representation, warranty, covenant or agreement or failure to fulfill any condition shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement as to which there is no inaccuracy or breach. The representations and warranties of the Company, Seller and the Members shall not be affected or deemed waived by reason of any investigation made by or on behalf of Buyer (including but not limited to by any of its Representatives) or by reason of the fact that Buyer or any of such Representatives should have known that any such representation or warranty is or might be inaccurate.

11.9 Specific Performance. The parties to this Agreement acknowledge that it may be impossible to measure in money any damages that a party would incur if any term, covenant or condition contained in this Agreement were not performed in accordance with its terms and agree that each of the parties hereto shall be entitled to obtain and injunction to require specific performance of, and prevent any violation of the terms of, this Agreement, in additional to any other remedy hereunder. In any such action specifically to enforce any provision of this Agreement, each party hereby waives any claim or defense therein that an adequate remedy at law or in damages exists.

11.10 Entire Agreement. This Agreement (including the Exhibits and Schedules hereto and the Guarantee) and the Ancillary Agreements (when executed and delivered) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

11.11 Confidentiality. From and after the date hereof, each party shall maintain in confidence, and each party shall cause its agents, representatives and Affiliates to maintain in confidence, and no party shall use to the detriment or competitive disadvantage of another party or Affiliate, any information obtained in confidence from another party in connection with this Agreement or the Contemplated Transactions. The foregoing covenants shall not apply (a) with respect to information that is already known to a party or to others not bound by a duty of confidentiality or such information that becomes publicly available through no fault of such party, (b) to the extent necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the Contemplated Transactions, and (c) to the extent required under applicable law, including reporting the Contemplated Transactions on Tax Returns and disclosure requirements applicable to Parent under the Federal securities laws and the rules and regulations issued thereunder. If the Contemplated Transactions are not consummated, each party shall return or destroy as much of confidential information received from the other as the other party may reasonably request.

Notwithstanding any contrary provision that may be contained herein, any party to this Agreement (and each employee, representative, or other agent of any such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of this Agreement and all Contemplated Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure; provided, however, that the foregoing shall not serve to authorize the disclosure of such information to the extent such information is subject to restrictions reasonably necessary to comply with applicable securities laws, and provided, further, that the foregoing shall not serve to authorize the disclosure of the identity of any party or any confidential business information of any party to the extent the disclosure of such identity or information is not related or relevant to the tax treatment and tax structure of the transactions contemplated by this Agreement.

11.12 Business Trusts. Seller, the Company and each Member expressly acknowledge that each of Buyer and EVM is a business trust and that the respective Declaration of Trust of each limits the personal liability of its shareholders, trustees, officers and employees. Seller, the Company and each Member hereby agree that each shall look solely to the trust property of Buyer for the satisfaction of claims and obligations of any nature arising out of this Agreement or otherwise in connection with the affairs of Buyer, and it shall not seek redress or satisfaction for such claims or obligations from any shareholder, trustee, officer, or employee of Buyer. Seller, the Company and each

Member hereby agree that each shall look solely to the trust property of EVM for the satisfaction of claims and obligations of any nature arising out of the Guarantee or otherwise in connection with the affairs of EVM, and it shall not seek redress or satisfaction for such claims or obligations from any shareholder, trustee, officer, or employee of EVM.

11.13 Severability. If any provision, including any phrase, sentence, clause, section or subsection, of this Agreement is invalid, inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering such provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision herein contained invalid, inoperative, or unenforceable to any extent whatsoever.

11.14 Headings. The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.

11.15 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

	PPA ACQUISITION CORP., a Delaware corporation

	By:		/s/ Brian Langstraat
			Name: Brian Langstraat Title: Chief Executive Officer

	PPA ACQUISITION, L.L.C., a Delaware limited liability company

	By:		/s/ Brian Langstraat
			Name: Brian Langstraat Title: Chief Executive Officer

	EATON VANCE ACQUISITIONS, a Massachusetts business trust

	By:		/s/ James B. Hawkes
			Name: James B. Hawkes Title: President

	MEMBERS
	/s/ Brian Langstraat
	Brian Langstraat
	/s/ David M. Stein
	David M. Stein

IN WITNESS WHEREOF, for good and valuable consideration, the receipt of which is hereby acknowledged, the undersigned, having reviewed this Agreement, hereby joins this Agreement in order to, and hereby does, unconditionally guarantee the payment obligations of Buyer under this Agreement, all as of the day and year first above written, in each case conditioned upon the Closing having occurred, and agrees that this guarantee shall be binding upon the undersigned’s legal successors and assigns.

EATON VANCE MANAGEMENT,
a Massachusetts Business Trust

By:		/s/ James B. Hawkes
		Name: James B. Hawkes Title: President

Exhibit 2.4

Exhibit N to Stock Purchase Agreement
Pro Rata Shares

Brian Langstraat	38%
David M. Stein	62%

Exhibit 2.5

FIRST AMENDMENT OF
STOCK PURCHASE AGREEMENT

THIS FIRST AMENDMENT OF STOCK PURCHASE AGREEMENT (this “Amendment”) is entered into as of July 30, 2003 by and among Eaton Vance Acquisitions, a Massachusetts business trust (“Buyer”), PPA Acquisition, L.L.C., a Delaware limited liability company (“Seller”), PPA Acquisition Corp., a Delaware corporation doing business under the name “Parametric Portfolio Associates” (the “Company”), and each of Brian Langstraat and David M. Stein (the “Members”). Terms used in this letter agreement without definition shall have the meanings given to them in the Stock Purchase Agreement.

In consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agree as follows:

1. Amendment of Section 8.1(b) of the Stock Purchase Agreement . Section 8.1(b) of the Stock Purchase Agreement is hereby amended to replace the date “August 31, 2003” therein with the date “September 15, 2003”.

2. Effect . Except as amended by the provisions of this Amendment, the Stock Purchase Agreement shall remain in full force and effect, without modification or waiver.

3. Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above stated.

	PPA ACQUISITION CORP., a Delaware corporation

	By:		/s/ Brian Langstraat
			Name: Brian Langstraat Title: Chief Executive Officer

	PPA ACQUISITION, L.L.C., a Delaware limited liability company

	By:		/s/ Brian Langstraat
			Name: Brian Langstraat Title: Chief Executive Officer

	EATON VANCE ACQUISITIONS, a Massachusetts business trust

	By:		/s/ James B. Hawkes
			Name: James B. Hawkes Title: President

	MEMBERS
	/s/ Brian Langstraat
	Brian Langstraat
	/s/ David M. Stein
	David M. Stein

Exhibit 2.6

SECOND AMENDMENT OF
STOCK PURCHASE AGREEMENT

THIS SECOND AMENDMENT OF STOCK PURCHASE AGREEMENT (this “Amendment”) is entered into as of September 10, 2003 by and among Eaton Vance Acquisitions, a Massachusetts business trust (“Buyer”), PPA Acquisition, L.L.C., a Delaware limited liability company (“Seller”), PPA Acquisition Corp., a Delaware corporation doing business under the name “Parametric Portfolio Associates” (the “Company”), and each of Brian Langstraat and David M. Stein (the “Members”). Terms used in this Amendment without definition shall have the meanings given to them in the Stock Purchase Agreement, dated as of June 4, 2003, by and among the parties hereto, as amended by the First Amendment of Stock Purchase Agreement, dated as of July 30, 2003 (as amended, the “Stock Purchase Agreement”).

1. Amendment of Section 1.1 of the Stock Purchase Agreement . Section 1.1 of the Stock Purchase Agreement is hereby amended (a) to insert in clause (a)(ii) thereof after the text “without limitation,” and before the text “all premiums” the text “(A)”, (b) to insert in clause (a)(ii) thereof immediately after the text “fees and expenses” and immediately prior to the parenthetical definition of “Transaction Insurance Costs” the text “and (B) any premiums payable at or in connection with Closing in respect of any Tail Coverage (as defined in Section 4.11) determined by Buyer to be necessary in order to assure, in connection with the Transaction Insurance, full coverage of any and all Loss above the retention and within the limit of the Transaction Insurance”, and (c) to insert the following new sentence at the end thereof: “It is acknowledged that certain items of Transaction Insurance Costs (including, without limitation, applicable surplus lines taxes) may not be determined at the time of Closing, in which event such costs may, upon determination, be paid by offset against the Working Capital Holdback or paid to Buyer upon written notice of the determination thereof, with such notice to include such invoices or other supporting documentation as Seller may reasonably request.”

2. Amendment of Section 2.15(b) of the Stock Purchase Agreement . Section 2.15(b) of the Stock Purchase Agreement is hereby amended to correct the text “Section 1.6(c)” therein to read “Section 1.6(d)”.

3. Amendment of Section 2.17(b) of the Stock Purchase Agreement . Section 2.17(b) of the Stock Purchase Agreement is hereby amended to replace the third sentence thereof with the following sentence: “As of the Closing Date, the landlord under the Fairview Lease shall have ratified and consented to the assignment of the Fairview Lease to the Company, and such landlord shall have waived any default resulting from any prior alleged non-compliance with the assignment provisions of the Fairview Lease, each in a form reasonably acceptable to Buyer and the Insurer.”

4. Amendment of Section 4 of the Stock Purchase Agreement . Section 4 of the Stock Purchase Agreement is hereby amended to add the following new Section 4.11 thereto:

“4.11 Purchase of Tail Coverage . Seller acknowledges that the Insurer under the Transaction Insurance has conditioned coverage thereunder upon the retention by the Company or Buyer of current insurance policies, or the purchase of adequate replacement coverage, covering Losses arising out of pre-Closing events and occurrences. Such policies and coverages may include so-called “tail” insurance coverage, or the addition of the Company as an insured under Buyer’s policies with coverage relating back to the continuity date of the Company’s prior insurance policies, which the Company represents to be June 15, 2001. Such “tail” or other replacement coverages are collectively referred to in this

Agreement as “ Tail Coverage ”. It is acknowledged and agreed that, in addition to deduction of the first year’s premiums for Tail Coverage from the Purchase Price as contemplated by Section 1.1, Seller shall reimburse Buyer or Parent, as the case may be, for all premiums and related costs and expenses associated with such Tail Coverage for an additional two years, thereby funding Tail Coverage for an aggregate of three years following the Closing Date. Buyer may offset such payments against any amounts retained or owed under this Agreement or any other agreement entered into with Seller or Buyer in connection with this Agreement or the Contemplated Transactions, and Seller hereby agrees, consents and authorizes, for all purposes of the Company Operating Agreement, the Company to pay to Buyer, for Seller’s account, such amounts from or out of any distributions to which Seller would otherwise be entitled under the Company Operating Agreement.”

5. Amendment of Section 9.4(a) of the Stock Purchase Agreement . Section 9.4(a) of the Stock Purchase Agreement is hereby amended to correct the text “clause (b) below” to read “clauses (b) and (c) below”.

6. Effect . Except as amended by the respective provisions of this Amendment, the Stock Purchase Agreement shall each remain in full force and effect, without modification or waiver.

7. Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above stated.

	PPA ACQUISITION CORP., a Delaware corporation

	By:		/s/ Brian Langstraat
			Name: Brian Langstraat Title: Chief Executive Officer

	PPA ACQUISITION, L.L.C., a Delaware limited liability company

	By:		/s/ Brian Langstraat
			Name: Brian Langstraat Title: Chief Executive Officer

	EATON VANCE ACQUISITIONS, a Massachusetts business trust

	By:		/s/ James B. Hawkes
			Name: James B. Hawkes Title: President

	MEMBERS
	/s/ Brian Langstraat
	Brian Langstraat
	/s/ David M. Stein
	David M. Stein

Exhibit 21.1
List of Subsidiaries
As of October 31, 2003*

	State or Jurisdiction of Incorporation or Organization	Name Under Which Subsidiary Does Business
First Tier Subsidiary of Eaton Vance Corp.:
Eaton Vance Business Trust	Massachusetts	Same

Certain Subsidiaries of Eaton Vance Business Trust:
Eaton Vance Company Business Trust	Massachusetts	Same

Certain Subsidiaries of Eaton Vance Company
Business Trust:
Eaton Vance Management	Massachusetts	Same

Certain Subsidiaries of Eaton Vance Management:
Eaton Vance Distributors, Inc.	Massachusetts	Same
Boston Management and Research	Massachusetts	Same
Eaton Vance Acquisitions	Massachusetts	Same
Eaton Vance Management (International) Limited	United Kingdom	Same

Certain Subsidiaries of Eaton Vance Acquisitions:
Atlanta Capital Management Company, LLC	Delaware	Same
Fox Asset Management LLC	Delaware	Same
Parametric Portfolio Associates LLC	Delaware	Same

*The names of certain subsidiaries have been omitted in this list inasmuch as the unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of the Company’s fiscal year ended October 31, 2003.

Exhibit 23.1

INDEPENDENT AUDITORS’ CONSENT

To the Board of Directors and Shareholders of
Eaton Vance Corp.:

We consent to the incorporation by reference in the Registration Statements listed at Exhibit 99.1 on Forms S-8 and S-3 of Eaton Vance Corp. (the “Company”) of our report dated December 12, 2003 appearing in the Annual Report on Form 10-K of the Company for the year ended October 31, 2003.

/s/ DELOITTE & TOUCHE LLP

Boston, Massachusetts
January 21, 2004

Exhibit 31.1
CERTIFICATION AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James B. Hawkes, certify that:

I have reviewed this annual report on Form 10-K of Eaton Vance Corp.;

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: January 21, 2004

/s/James B. Hawkes
(Signature)
James B. Hawkes
Chairman, Director and Chief Executive Officer

Exhibit 31.2
CERTIFICATIONAS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William M. Steul, certify that:

I have reviewed this annual report on Form 10-K of Eaton Vance Corp.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: January 21, 2004

/s/William M. Steul
(Signature)
William M. Steul
Chief Financial Officer

Exhibit 32.1
CERTIFICATION
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Eaton Vance Corp. (the “Company”) on Form 10-K for the period ending October 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James B. Hawkes, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

DATE: January 21, 2004

/s/James B. Hawkes
(Signature)
James B. Hawkes
Chairman, Director and
Chief Executive Officer

Exhibit 32.2
CERTIFICATION
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Eaton Vance Corp. (the “Company”) on Form 10-K for the period ending October 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William M. Steul, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

DATE: January 21, 2004

/s/William M. Steul
(Signature)
William M. Steul
Chief Financial Officer

Exhibit 99.1
Eaton Vance Corp.
Open Registration Statements

Registration Statement	Filing Date	Filing Number
Form S-3 A	February 5, 2002	333-73080
Form S-3	November 9, 2001	333-73080
Form S-8	November 13, 2000	333-49744
Form S-8	June 26, 2000	333-40112
Form S-8	April 28, 2000	333-35940
Form S-8	October 29, 1999	333-89921
Form S-8	August 13, 1999	333-85137
Form S-8	August 26, 1998	333-62259
Form S-8	September 3, 1998	333-62801
Form S-8	September 9, 1998	333-63077
Form S-8	December 19, 1997	333-42813
Form S-3	June 28, 1995	33-60649
Form S-8	June 27, 1995	33-60617
Form S-8	December 1, 1994	33-56701
Form S-8	June 8, 1994	33-54035
Form S-8	March 8, 1994	33-52559
Form S-8	April 23, 1992	33-47405
Form S-8	April 23, 1992	33-47403
Form S-8	April 23, 1992	33-47402
Form S-8	April 23, 1992	33-47401
Form S-3	February 13, 1992	33-45685
Form S-8	September 16, 1991	33-42667
Form S-8	October 11, 1989	33-31382
Form S-8	April 10, 1987	33-13217

Exhibit 99.2
Eaton Vance Corp.
Audit Committee Charter

I. PURPOSE

The primary function of the Audit Committee (the “Committee”) is to assist the Board of Directors (the “Board”) in fulfilling its oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to the public, the Company’s systems of internal controls regarding finance, accounting, regulatory compliance and ethics that management and the Board have established and the Company’s auditing, accounting and financial reporting processes.

The Committee’s primary duties and responsibilities are to:

Serve as an independent and objective party to monitor the Company’s financial reporting process and internal control system;

Review the audit efforts of the Company’s independent auditor and internal auditing department; and

Foster open communications among the Company’s independent auditor, financial and senior management, the internal auditing department, and the Board of Directors.

II. COMPOSITION

The Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be “independent” as defined by the New York Stock Exchange and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. All members of the Committee shall have a working familiarity with basic finance and accounting practices and at least one member of the Committee shall have accounting or financial management expertise, as the Board interprets such familiarity or expertise in its business judgement.

The members of the Committee shall be elected by the Board and serve until successors are duly elected and qualified. Unless a Chair is elected by the Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership.

III. AUTHORITY

The Committee has the authority to investigate any activity of the Company, and all employees shall cooperate with the Committee. The Committee may retain persons having special competence as necessary to assist the Committee in fulfilling its responsibilities. The Committee is subject to the direction and control of the Board.

IV. MEETINGS

The Committee shall meet four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee should meet at least annually with management, the director of the internal auditing department and the independent auditor in separate executive sessions. The opportunity for management, the independent auditor or the director of the internal auditing department to meet with the entire Committee or Board as needed is not restricted.

V. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties the Committee shall:

Documents/Reports Review

Review and reassess the adequacy of this Charter periodically, at least annually, and update the Charter as appropriate;

Review the Company’s annual financial statements and any reports or other financial information submitted to the public, including any certification, report, opinion or review rendered by the independent auditor;

Review with financial management and the independent auditor the Company’s quarterly financial results prior to the release of earnings or the filing of the Company’s report on Form 10-Q;

Discuss with management any significant changes to the Company’s accounting principles and any items required to be communicated by the independent auditor in accordance with generally accepted auditing standards;

Review the regular internal reports to management prepared by the internal auditing department and management’s response;

Independent Audit and Financial Reporting Processes

Annually recommend to the Board the selection of and approve the fees and other compensation to be paid to the independent auditor after having reviewed the performance of the independent auditor and propose any discharge of the independent auditor when circumstances warrant. The Company’s independent auditor is ultimately accountable to the Board and the Committee. The Committee and the Board have the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the Company’s independent auditor;

Ensure that the Company’s independent auditor submits on a periodic basis, and at least annually, to the Committee a formal written statement delineating all relationships between such auditor and the Company and other relevant relationships, and actively engage in a dialogue with the independent auditor with respect to any disclosed relationship or services that may impact the objectivity and independence of such auditor, and recommend that the Board take appropriate action in response to such auditor’s report to satisfy itself of such auditor’s independence;

Annually review and approve the audit plan to be performed by the Company’s independent auditor. The Committee’s review should entail an understanding from the independent auditor of the factors considered by it in determining the audit scope, including:

Industry and business risk characteristics of the Company.

External reporting requirements.

Materiality of the various segments of the Company’s activities.

Quality of internal controls.

Other areas to be covered during the audit engagement;

In consultation with the independent auditor and the internal auditor, review the integrity of the Company’s financial reporting processes, both internal and external;

10.

Review major changes to the Company’s auditing and accounting principles and practices as suggested by the independent auditor, management, or the internal auditing department;

11.

Discuss any significant disagreement among management and the independent auditor or the internal auditing department in connection with the preparation of the financial statements or internal controls;

Ethical and Legal Compliance

12.

Periodically review the Company’s code of ethics and ensure that management has established a system to enforce this code;

13.

Review, with the Company’s chief legal officer, legal and compliance matters, including corporate securities trading policies and any legal matter that could have a significant impact on the Company’s financial statements;

14.

Perform any other activities consistent with this Charter, the Company’s By-laws and governing law, as the Committee or the Board deems necessary or appropriate;

Audit Committee Reporting

15.

Report, as contemplated by the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K (in lieu of an annual proxy statement), that the Committee has reviewed and discussed the audited financial statements with management, discussed the matters required to be discussed by Statement on Auditing Standards No. 61 with the independent auditor; and received from and discussed with the independent auditor its disclosure required by Independence Standards Boards Standard No. 1. Also to be included is a statement from the Committee that, based on the above review and discussions, it recommends to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K; and

16.

Ensure that the Company discloses in its Annual Report on Form 10-K (in lieu of an annual proxy statement) that the Board has adopted an Audit Committee Charter and that the Charter be included with such disclosure at least once every three years, and that the members of the Committee are independent as defined by the New York Stock Exchange.

The Chair of the Committee or his designee may represent the entire Committee for purposes of the review and discussion referred to in paragraphs 3 and 4 above.