MANAGEMENT CONTRACT
Management
Contract executed as of December 2, 2009 between GMO TRUST, a Massachusetts
business trust (the "Trust") on behalf of its GMO Debt Opportunities 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:
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1.
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SERVICES
TO BE RENDERED BY MANAGER TO THE
TRUST.
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(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.
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2.
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OTHER
AGREEMENTS, ETC.
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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.
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3.
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COMPENSATION
TO BE PAID BY THE TRUST TO THE
MANAGER.
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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.
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4.
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ASSIGNMENT
TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
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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.
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5.
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EFFECTIVE
PERIOD AND TERMINATION OF THIS
CONTRACT.
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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.
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6.
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CERTAIN
DEFINITIONS.
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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.
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7.
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NONLIABILITY
OF MANAGER.
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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.
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8.
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INITIALS
"GMO".
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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.
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9.
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LIMITATION
OF LIABILITY OF THE TRUSTEES AND
SHAREHOLDERS.
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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 Xxxxxxxx
Title:
Xxxxx Xxxxxxxx
Clerk
GRANTHAM,
MAYO, VAN OTTERLOO
&
CO. LLC
By /s/
X.X. Xxxxxxxxx
Title:
X.X. Xxxxxxxxx
General
Counsel
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9627764.2
