Exhibit 5.2
GMO EMERGING MARKETS L FUND
CONSULTING AGREEMENT
Consulting Agreement executed as of __________, 1997 between GRANTHAM,
MAYO, VAN OTTERLOO & CO. LLC, a Massachusetts limited liability company (the
"Manager"), and Dancing Elephant, Ltd., a Delaware corporation (the
"Consultant").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY CONSULTANT.
(a) Subject always to the control of the Trustees of GMO Trust
(the "Trust"), a Massachusetts business trust, the Consultant, at its
expense, will furnish continuously an investment program for the GMO
Emerging Markets L Fund series of the Trust (the "Fund") and will make
investment decisions on behalf of the Fund and place all orders for the
purchase and sale of portfolio securities and all other investments. In
the performance of its duties, the Consultant (1) will comply with the
provisions of the Trust's Agreement and Declaration of Trust and
By-laws, including any amendments thereto, (upon receipt of such
amendments by the Consultant), and the investment objectives, policies
and restrictions of the Fund as set forth in its current Prospectus and
Statement of Additional Information (copies of which will be supplied
to the Consultant upon filing with the SEC), (2) will use its best
efforts to safeguard and promote the welfare of the Fund in carrying
out the Fund's investment program, (3) will comply with other policies
which the Trustees or the Manager, as the case may be, may from time to
time determine as promptly as practicable after such policies have been
communicated to the Consultant in writing, and (4) shall exercise the
same care and diligence expected of the Trustees. The Consultant and
the Manager shall each make its officers and employees available to the
other from time to time at reasonable times to review investment
policies of the Fund and to consult with each other regarding the
investment affairs of the Fund.
(b) Consultant, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel,
required for it to execute its duties hereunder faithfully and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Fund, including verification and oversight of the
pricing of the Fund's portfolio (but excluding determination of net
asset value and shareholder accounting services).
(c) In the selection of brokers or dealers and the placing of
orders for the purchase and sale of portfolio investments for the Fund,
the Consultant shall use its best efforts to obtain for the Fund the
most favorable 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 Consultant, bearing in mind the Fund's best interests at all times,
shall consider all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of
the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer
involved and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Trustees of the
Trust may determine and communicate to the Consultant in writing, the
Consultant shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Consultant or its
affiliates 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
Consultant 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 Consultant's overall
responsibilities with respect to the Fund and to other clients of the
Consultant and its affiliates as to which the Consultant or its
affiliates exercise investment discretion. The Trust agrees that any
entity or person associated with the Consultant or its affiliates which
is a member of a national securities exchange is authorized to effect
any transaction on such exchange for the account of the Trust and any
Fund thereof which is permitted by Section 11(a) of the Securities
Exchange Act of 1934, as Amended (the "1934 Act") and Rule 11a2-2(T)
thereunder, and the Trust has consented to the retention of
compensation for such transactions in accordance with Rule
11a2-2(T)(2)(iv).
(d) The Consultant shall not be obligated to pay any expenses
of or for the Fund not expressly assumed by the Consultant pursuant to
this Section 1.
(e) Nothing herein shall be considered as constituting the
Consultant as an agent for the Manager or the Fund or the Trust or as
anything other than an independent contractor with respect to the
Manager or the Fund or the Trust.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees,
officers and employees of the Trust may be a shareholder, director,
officer or employee of, or be otherwise interested in, the Consultant,
and in any person controlled by or under common control
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with the Consultant, and that the Consultant and any person controlled
by or under common control with the Consultant may have an interest in
the Trust. It is also understood that the Consultant and persons
controlled by or under common control with the Consultant have and may
have advisory, management service or other contracts with other
organizations and persons, and may have other interests and businesses;
provided, however, that, without the prior consent of the Manager,
neither the Consultant nor any of its affiliates shall undertake to act
as investment adviser or subadviser for any U.S. registered investment
company that has substantially similar investment policies to the Fund.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE
CONSULTANT.
The Manager will pay to the Consultant as compensation for the
Consultant's services rendered and for the expenses borne by the
Consultant pursuant to Section 1, a fee at the annual rate of $250,000,
computed and paid monthly. Such fee shall be payable for each month
within 10 business days after the end of such month.
If the Consultant shall serve for less than the whole of a
month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF
THIS CONTRACT.
This Agreement shall automatically terminate, without the
payment of any penalty, in the event of its assignment or in the event
that the Management Contract between the Manager and the Trust shall
have terminated for any reason; and this Agreement shall not be amended
unless such amendment be 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 or of the Consultant.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall not become effective until such time as
it is executed and the Consultant's registration as an investment
adviser with the Securities and Exchange Commission on Form ADV becomes
effective. Thereafter, this Agreement shall remain in full force and
effect as to the Fund continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
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(a) The Trust may at any time terminate this Agreement by
written notice delivered or mailed by registered mail, postage prepaid,
to the Manager and the Consultant, 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 or of the Consultant,
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 Agreement, then this Agreement 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 Agreement is submitted to the
shareholders of the Fund for their approval and such shareholders fail
to approve such continuance of this Agreement as provided herein, the
Consultant may continue to serve hereunder in a manner consistent with
the Investment Company Act of 1940 and the rules and regulations
thereunder, or
(c) The Manager may at any time terminate this Agreement by
not less than 45 days' written notice delivered or mailed by registered
mail, postage prepaid, to the Consultant, and the Consultant may at any
time terminate this Agreement by not less than 180 days' written notice
delivered or mailed by registered mail, postage prepaid, to the
Manager.
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 Agreement pursuant to this Section 5 shall
be without the payment of any penalty.
6. CERTAIN INFORMATION.
The Consultant shall promptly notify the Manager in writing of
the occurrence of any of the following events: (a) the Consultant shall
fail to be registered as an investment adviser under the Investment
Advisers Act of 1940, as amended from time to time, and under the laws
of any jurisdiction in which the Consultant is required to be
registered as an investment adviser in order to perform its obligations
under this Agreement or any other agreement concerning the provision of
investment advisory services to the Trust, (b) the Consultant shall be
disqualified from serving as investment adviser to the Fund pursuant to
Section 9 of the 1940 Act, or otherwise, (c) the Consultant shall have
been served or otherwise have notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court,
public
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board or body, involving the affairs of the Trust, (d) there is a
change in control of the Consultant or any parent of the Consultant
within the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act"), (e) there is a material adverse change in the
business or financial position of the Consultant or (f) the Chairman of
the Consultant or the portfolio manager of the Fund shall have changed.
7. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a
majority of the outstanding shares" 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, as the case may be, 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, as the
case may be, 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, as the case may be, entitled to vote at such
meeting, whichever is less.
For the purposes of this Agreement, the terms "affiliated
person," "control," "interested person" and "assignment" shall have
their respective meanings defined in the 1940 Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under the 1940 Act;
the term "specifically approve at least annually" shall be construed in
a manner consistent with the 1940 Act and the rules and regulations
thereunder; and the term "brokerage and research services" shall have
the meaning given in the 1934 Act and the rules and regulations
thereunder.
8. NONLIABILITY OF CONSULTANT.
Notwithstanding any other provision of this Agreement, in the
absence of willful misfeasance, bad faith or gross negligence on the
part of the Consultant, or reckless disregard of its obligations and
duties hereunder, the Consultant, including its officers, directors and
shareholders, shall not be subject to any liability to the Manager, to
the Trust, to the Fund, or to any shareholder, officer, director or
Trustee thereof, for any act or omission in the course of, or connected
with, rendering services hereunder.
9. EXERCISE OF VOTING RIGHTS.
Except as instructed otherwise by the Trustees of the Trust or
the Manager, the Consultant shall at its discretion exercise or procure
the exercise of any voting right attaching to investments of the Fund.
10. REPORTS.
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During the term of this Agreement, the Manager agrees to use
its best efforts (a) to furnish to the Consultant a reasonable time
prior to the use thereof all prospectuses (as described in Section
10(a) of the Securities Act of 1933), proxy statements and reports to
stockholders which describe the Consultant or its ownership, business
or investment processes in any way that is materially different from
the "Agreed Disclosure" (which for this purpose means either (i) the
prospectus (including any prospectus supplement) or (ii) the most
recent amendment to the Trust's registration statement under the
Securities Act of 1933 depending on whether, on the relevant date, the
prospectus or the amendment was more recently filed with the SEC) and
(b) not to use any such material (to the extent it relates to the
Consultant) if the Consultant objects promptly in writing and the
Manager reasonably concludes that the description of the Consultant or
its ownership, business or investment process is materially misleading
or inaccurate.
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In Witness Whereof, GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC and DANCING
ELEPHANT, LTD. 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.
GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
By:
By:_____________________________
Title:
DANCING ELEPHANT, LTD.
By:______________________________
Title:
Accepted and agreed to as of the day and year first above written:
GMO TRUST,
on behalf of its
GMO Emerging Markets L Fund
By:_________________________
Title:
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 upon the assets and property of the Fund.
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