MANAGEMENT CONTRACT
Management
Contract executed as of August 29, 2005 between GMO TRUST, a Massachusetts
business trust (the "Trust") on behalf of its GMO U.S. Intrinsic Value Fund
(the
"Fund"), and GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC, a Massachusetts limited
liability company (the "Manager").
W
I T N E
S S E T H:
That
in
consideration of the mutual covenants herein contained, it is agreed as
follows:
| 1. |
SERVICES
TO BE RENDERED BY MANAGER TO THE TRUST.
|
(a)
Subject
always to the control of the Trustees of the Trust and to such policies as
the
Trustees may determine, the Manager will, at its expense, (i) furnish
continuously an investment program for the Fund and will make investment
decisions on behalf of the Fund and place all orders for the purchase and
sale
of its portfolio securities and (ii) furnish office space and equipment,
provide
bookkeeping and clerical services (excluding determination of net asset value,
shareholder accounting services and the fund accounting services for the
Fund
being supplied by Investors Bank & Trust Company or such other administrator
as the Fund may engage from time to time) and pay all salaries, fees and
expenses of officers and Trustees of the Trust who are affiliated with the
Manager. In the performance of its duties, the Manager will comply with the
provisions of the Agreement and Declaration of Trust and By-laws of the Trust
and the Fund's stated investment objective, policies and
restrictions.
(b)
In
placing orders for the portfolio transactions of the Fund, the Manager will
seek
the best price and execution available, except to the extent it may be permitted
to pay higher brokerage commissions for brokerage and research services as
described below. In using its best efforts to obtain for the Fund the most
favorable price and execution available, the Manager shall consider all factors
it deems relevant, including, without limitation, the overall net economic
result to the Fund (involving price paid or received and any commissions
and
other costs paid), the efficiency with which the transaction is effected,
the
ability to effect the transaction at all where a large block is involved,
availability of the broker to stand ready to execute possibly difficult
transactions in the future and financial strength and stability of the broker.
Subject to such policies as the Trustees may determine, the Manager shall
not be
deemed to have acted unlawfully or to have breached any duty created by this
Contract or otherwise solely by reason of its having caused a Fund to pay
a
broker or dealer that provides brokerage and research services to the Manager
an
amount of commission for effecting a portfolio investment transaction in
excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Manager determines in good faith that
such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms
of
either that particular transaction or the Manager's overall responsibilities
with respect to the Trust and to other clients of the Manager as to which
the
Manager exercises investment discretion.
(c)
The
Manager shall not be obligated under this agreement to pay any expenses of
or
for the Trust or of or for the Fund not expressly assumed by the Manager
pursuant to this Section 1 other than as provided in Section 3.
| 2. |
OTHER
AGREEMENTS, ETC.
|
It
is
understood that any of the shareholders, Trustees, officers and employees
of the
Trust may be a partner, shareholder, director, officer or employee of, or
be
otherwise interested in, the Manager, and in any person controlled by or
under
common control with the Manager, and that the Manager and any person controlled
by or under common control with the Manager may have an interest in the Trust.
It is also understood that the Manager and persons controlled by or under
common
control with the Manager have and may have advisory, management service,
distribution or other contracts with other organizations and persons, and
may
have other interests and businesses.
| 3. |
COMPENSATION
TO BE PAID BY THE TRUST TO THE MANAGER.
|
The
Fund
will pay to the Manager as compensation for the Manager's services rendered,
for
the facilities furnished and for the expenses borne by the Manager pursuant
to
Section 1, a fee, computed and paid monthly at the annual rate of 0.45% of
the
Fund's average daily net asset value. Such average daily net asset value
of the
Fund shall be determined by taking an average of all of the determinations
of
such net asset value during such month at the close of business on each business
day during such month while this Contract is in effect. Such fee shall be
payable for each month within five (5) business days after the end of such
month.
In
the
event that expenses of the Fund for any fiscal year should exceed the expense
limitation on investment company expenses imposed by any statute or regulatory
authority of any jurisdiction in which shares of the Trust are qualified
for
offer and sale, the compensation due the Manager for such fiscal year shall
be
reduced by the amount of such excess by a reduction or refund thereof. In
the
event that the expenses of the Fund exceed any expense limitation which the
Manager may, by written notice to the Trust, voluntarily declare to be effective
with respect to the Fund, subject to such terms and conditions as the Manager
may prescribe in such notice, the compensation due the Manager shall be reduced,
and, if necessary, the Manager shall bear the Fund's expenses to the extent
required by such expense limitation.
If
the
Manager shall serve for less than the whole of a month, the foregoing
compensation shall be prorated.
| 4. |
ASSIGNMENT
TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
|
This
Contract shall automatically terminate, without the payment of any penalty,
in
the event of its assignment; and this Contract shall not be amended unless
such
amendment is approved at a meeting by the affirmative vote of a majority
of the
outstanding shares of the Fund, and by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the Trustees
of the Trust who are not interested persons of the Trust or of the
Manager.
| 5. |
EFFECTIVE
PERIOD AND TERMINATION OF THIS CONTRACT.
|
This
Contract shall become effective upon its execution, and shall remain in full
force and effect continuously thereafter (unless terminated automatically
as set
forth in Section 4) until terminated as follows:
(a)
Either
party hereto may at any time terminate this Contract by not more than sixty
days' written notice delivered or mailed by registered mail, postage prepaid,
to
the other party, or
(b)
If
(i)
the Trustees of the Trust or the shareholders by the affirmative vote of
a
majority of the outstanding shares of the Fund, and (ii) a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager, by vote cast in person at a meeting called for the purpose of voting
on
such approval, do not specifically approve at least annually the continuance
of
this Contract, then this Contract shall automatically terminate at the close
of
business on the second anniversary of its execution, or upon the expiration
of
one year from the effective date of the last such continuance, whichever
is
later; provided, however, that if the continuance of this Contract is submitted
to the shareholders of the Fund for their approval and such shareholders
fail to
approve such continuance of this Contract as provided herein, the Manager
may
continue to serve hereunder in a manner consistent with the Investment Company
Act of 1940 and the rules and regulations thereunder.
Action
by
the Trust under (a) above may be taken either (i) by vote of a majority of
its
Trustees, or (ii) by the affirmative vote of a majority of the outstanding
shares of the Fund.
Termination
of this Contract pursuant to this Section 5 shall be without the payment
of any
penalty.
| 6. |
CERTAIN
DEFINITIONS.
|
For
the
purposes of this Contract, the "affirmative vote of a majority of the
outstanding shares" of the Fund means the affirmative vote, at a duly called
and
held meeting of shareholders, (a) of the holders of 67% or more of the shares
of
the Fund present (in person or by proxy) and entitled to vote at such meeting,
if the holders of more than 50% of the outstanding shares of the Fund entitled
to vote at such meeting are present in person or by proxy, or (b) of the
holders
of more than 50% of the outstanding shares of the Fund entitled to vote at
such
meeting, whichever is less.
For
the
purposes of this Contract, the terms "affiliated person", "control", "interested
person" and "assignment" shall have their respective meanings defined in
the
Investment Company Act of 1940 and the rules and regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities
and
Exchange Commission under said Act; and the phrase "specifically approve
at
least annually" shall be construed in a manner consistent with the Investment
Company Act of 1940 and the rules and regulations thereunder.
| 7. |
NONLIABILITY
OF MANAGER.
|
In
the
absence of willful misfeasance, bad faith or gross negligence on the part
of the
Manager, or reckless disregard of its obligations and duties hereunder, the
Manager shall not be subject to any liability to the Trust, or to any
shareholder of the Trust, for any act or omission in the course of, or connected
with, rendering services hereunder.
| 8. |
INITIALS
"GMO".
|
The
Manager owns the initials "GMO" which may be used by the Trust only with
the
consent of the Manager. The Manager consents to the use by the Trust of the
name
"GMO Trust" or any other name embodying the initials "GMO", in such forms
as the
Manager shall in writing approve, but only on condition and so long as (i)
this
Contract shall remain in full force and (ii) the Trust shall fully perform,
fulfill and comply with all provisions of this Contract expressed herein
to be
performed, fulfilled or complied with by it. No such name shall be used by
the
Trust at any time or in any place or for any purposes or under any conditions
except as in this section provided. The foregoing authorization by the Manager
to the Trust to use said initials as part of a business or name is not exclusive
of the right of the Manager itself to use, or to authorize others to use,
the
same; the Trust acknowledges and agrees that as between the Manager and the
Trust, the Manager has the exclusive right so to authorize others to use
the
same; the Trust acknowledges and agrees that as between the Manager and the
Trust, the Manager has the exclusive right so to use, or authorize others
to
use, said initials and the Trust agrees to take such action as may reasonably
be
requested by the Manager to give full effect to the provisions of this section
(including, without limitation, consenting to such use of said initials).
Without limiting the generality of the foregoing, the Trust agrees that,
upon
any termination of this Contract by either party or upon the violation of
any of
its provisions by the Trust, the Trust will, at the request of the Manager
made
within six months after the Manager has knowledge of such termination or
violation, use its best efforts to change the name of the Trust so as to
eliminate all reference, if any, to the initials "GMO" and will not thereafter
transact any business in a name containing the initials "GMO" in any form
or
combination whatsoever, or designate itself as the same entity as or successor
to an entity of such name, or otherwise use the initials "GMO" or any other
reference to the Manager. Such covenants on the part of the Trust shall be
binding upon it, its trustees, officers, stockholders, creditors and all
other
persons claiming under or through it.
| 9. |
LIMITATION
OF LIABILITY OF THE TRUSTEES AND
SHAREHOLDERS.
|
A
copy of
the Agreement and Declaration of Trust of the Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given
that
this instrument is executed on behalf of the Trustees of the Trust as Trustees
and not individually and that the obligations of this instrument are not
binding
upon any of the Trustees or shareholders individually but are binding only
upon
the assets and property of the Fund.
9627764.2
IN
WITNESS WHEREOF, GMO TRUST and GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC have
each caused this instrument to be signed in duplicate on its behalf by its
duly
authorized representative, all as of the day and year first above
written.
By
/s/
Xxxxx X. Xxxxx
Title:
Xxxxx X. Xxxxx
Vice
President, Secretary and Clerk
GRANTHAM,
MAYO, VAN OTTERLOO
&
CO.
LLC
By
/s/
Xxxxx X. Xxxxx
Title:
Xxxxx X. Xxxxx
Legal
Counsel
By
/s/
Xxxxxxx X. Xxxxxx
Title:
Xxxxxxx X. Xxxxxx
Legal
Counsel
