INVESTMENT ADVISORY AGREEMENT
This AGREEMENT is made the 15th day of September 2005, by and between ASSET
ALLOCATION TRUST, a Delaware statutory trust (the "Trust"), and GRANTHAM, MAYO,
VAN OTTERLOO & CO. LLC, a Massachusetts limited liability company (the
"Adviser").
WHEREAS, the Trust and the Adviser wish to enter into an Agreement setting
forth the terms on which the Adviser will perform certain services for the Trust
and the series of shares listed on Schedule 1 to this Agreement from time to
time (each singly a "Fund" or collectively the "Funds");
NOW, THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Trust and the Adviser agree as follows:
1. (a) The Trust hereby employs the Adviser to manage the investment and
reinvestment of the assets of each Fund in conformity with such Fund's
investment objectives and restrictions as may be set forth from time to time in
the Fund's then current prospectus and statement of additional information, if
any, and other governing documents, all subject to the supervision of the Board
of Trustees of the Trust, for the period and on the terms set forth in this
Agreement. The Adviser hereby accepts such employment and agrees during such
period, at its own expense, to render the services and to assume the obligations
set forth herein, for the compensation provided herein. The Adviser shall for
all purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust.
(b) In the event that the Trust establishes one or more Funds, in addition
to the Fund or Funds listed on Schedule 1, for which it wishes the Adviser to
perform services hereunder, it shall notify the Adviser in writing. If the
Adviser is willing to render such services, it shall notify the Trust in writing
and such Fund shall become a Fund hereunder and the compensation payable to the
Adviser by the new Fund will be as agreed in writing at the time.
2. (a) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of each Fund with broker-dealers selected
by the Adviser. In executing portfolio transactions and selecting
broker-dealers, the Adviser will use its best efforts to seek best execution on
behalf of each Fund. In assessing the best execution available for any
transaction, the Adviser shall consider all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any (all for the specific transaction and
on a continuing basis). In evaluating the best execution available, and in
selecting the broker-dealer to execute a particular transaction, the Adviser may
also consider the brokerage and research services (as those terms are used in
Section 28(e) of the Securities Exchange Act of 1934 (the "1934 Act")) provided
by that broker-dealer. The Adviser is authorized to pay a broker-dealer who
provides brokerage and research services a commission for executing a portfolio
transaction for a Fund which is in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction if the Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services
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provided by such broker-dealer, viewed in terms of either that particular
transaction or the Adviser's overall responsibilities with respect to the Funds
and the other the accounts over which the Adviser exercises investment
discretion.
(b) The Adviser may execute agreements, contracts, and other documents
requested by brokers, dealers, counterparties, and other persons in connection
with its providing the investment advisory services contemplated by this
Agreement to the Funds.
(c) The Adviser makes no representation or warranty, express or implied,
that any level of investment performance or results will be achieved by any Fund
or that any Fund will perform comparably with any performance standard,
including other investment companies managed by the Adviser.
3. The Adviser shall bear its own expenses in providing services pursuant
to this Agreement, including salaries of its personnel. The Adviser shall not be
obligated to pay any other expenses of the Trust or any Fund. The Trust assumes
and shall pay all other expenses of the Trust and its Funds, including, without
limitation:
(a) all charges and expenses of any custodian or depository appointed by
the Trust for the safekeeping of the cash, securities and other property of any
of its Funds;
(b) all charges and expenses for bookkeeping and auditors;
(c) all charges and expenses of any transfer agents and registrars
appointed by the Trust;
(d) all fees of all Trustees of the Trust;
(e) all brokers' fees, expenses, and commissions and issue and transfer
taxes in connection with transactions involving securities and other property of
any Fund;
(f) all costs and expenses of distribution of shares of its Funds incurred
pursuant to Plans of Distribution adopted under Rule 12b-1 under the Investment
Company Act of 1940 ("1940 Act");
(g) all taxes and trust fees payable by the Trust or its Funds to Federal,
state, or other governmental agencies;
(h) all costs of certificates representing shares of the Trust or its
Funds;
(i) all fees and expenses involved in registering and maintaining
registrations of the Trust, its Funds and of their shares with the Securities
and Exchange Commission (the "Commission") and registering or qualifying the
Funds' shares under state or other securities laws, including, without
limitation, the preparation and printing of registration statements,
prospectuses, and statements of additional information for filing with the
Commission and other authorities;
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(j) expenses of preparing, printing, and mailing prospectuses and
statements of additional information to shareholders of each Fund of the Trust;
(k) all expenses of shareholders' and Trustees' meetings and of preparing,
printing, and mailing notices, reports, and proxy materials to shareholders of
the Funds;
(l) all charges and expenses of legal counsel for the Trust and its Funds
and for Trustees of the Trust in connection with legal matters relating to the
Trust and its Funds, including, without limitation, legal services rendered in
connection with the Trust and its Funds' existence and financial structure and
relations with its shareholders, registrations and qualifications of securities
under Federal, state, and other laws, issues of securities, expenses which the
Trust and its Funds have herein assumed, whether customary or not, and
extraordinary matters, including, without limitation, any litigation involving
the Trust and its Funds, its Trustees, officers, employees, or agents;
(m) all charges and expenses of filing annual and other reports with the
Commission and other authorities; and
(n) all extraordinary expenses and charges of the Trust and its Funds.
In the event that the Adviser provides any of these services or pays any of
these expenses, the Trust and any affected Fund will promptly reimburse the
Adviser therefor.
The services of the Adviser to the Trust and its Funds hereunder are not to
be deemed exclusive, and the Adviser shall be free to render similar services to
others.
4. As compensation for the Adviser's services to the Trust with respect to
each Fund during the period of this Agreement, the Trust, on behalf of each
Fund, will pay to the Adviser a fee at the annual rate set forth on Schedule 2
for such Fund. The Adviser's fee is computed as of the close of business on each
business day. A pro rata portion of the fee with respect to a Fund shall be
payable in arrears at the end of each calendar month. If and when this Agreement
terminates, any compensation payable hereunder for the period ending with the
date of such termination shall be payable upon such termination. Amounts payable
hereunder shall be promptly paid when due.
5. Absent willful misfeasance, bad faith, gross negligence, or reckless
disregard of obligations or duties hereunder on the part of the Adviser, the
Adviser shall not be liable for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security. Subject to the
foregoing, nothing herein shall constitute a waiver of any rights or remedies
that the Trust may have under any federal or state securities laws.
6. Subject to and in accordance with the Agreement and Declaration of Trust
of the Trust, it is understood that Trustees, Directors, officers, agents and
shareholders of the Trust are
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or may be interested in the Adviser (or any successor thereof); that Directors,
officers and agents of the Adviser and its affiliates are or may be interested
in the Trust as Trustees, officers, shareholders or otherwise; and that the
Adviser (or any such successor) is or may be interested in the Trust or any
SubAdviser as shareholder, or otherwise.
7. This Agreement shall continue in effect for two years from the date set
forth above and after such date if (a) such continuance is specifically approved
at least annually by the Board of Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of the Trust, and (b) such
continuance has been approved by the vote of the majority of Trustees of the
Trust who are not interested persons, as that term is defined in the 1940 Act,
of the Adviser or of the Trust, cast in person at a meeting called for the
purpose of voting on such approval.
8. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time, without the payment of any penalty by a Fund, by the
Board of Trustees of the Trust or by vote of the holders of a majority of the
outstanding voting securities of any Fund with respect to that Fund; and on
sixty days' written notice to the Trust, this Agreement may be terminated by the
Adviser with respect to a Fund at any time without the payment of any penalty.
This Agreement shall automatically terminate upon its assignment (as that term
is defined in the 1940 Act). Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postage prepaid, to the other party
at the main office of such party. The Trust shall not use or refer in any way to
the Adviser following the termination of this Agreement without the Adviser's
consent, except to identify the Adviser as the former investment adviser of a
Fund or to the extent required by applicable law.
9. This Agreement may be amended at any time by an instrument in writing
executed by both parties hereto or their respective successors, provided that,
to the extent provided by applicable law, such execution by the Trust shall have
been first approved by the vote of the holders of a majority of the outstanding
voting securities of the affected Funds and by the vote of a majority of
Trustees of the Trust who are not interested persons (as that term is defined in
the 0000 Xxx) of the Adviser or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval. A "majority of the outstanding
voting securities" of the Trust or the affected Funds shall have, for all
purposes of this Agreement, the meaning provided therefor in the 1940 Act.
10. Any compensation payable to the Adviser hereunder for any period other
than a full year shall be proportionately adjusted.
11. The provisions of this Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Delaware.
12. A Certificate of Trust in respect of the Trust is on file with the
Secretary of State of the State of Delaware. This Agreement is made by the Trust
on behalf of each of Fund separately, and the obligations of this Agreement are
not binding on the Trustees of the Trust or on any officer of officers of the
Trust or on the shareholders of the Trust or any Fund individually but are
binding only upon the assets and property of the Fund in question.
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13. Any obligation or liability of the Trust hereunder relating to or
arising out of the Adviser's service as such to any Fund shall be an obligation
or liability only of that Fund and not of any other Fund or of the Trust
generally, and this Agreement shall be construed as if it had been entered into
between the Adviser and with each Fund separately.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
ASSET ALLOCATION TRUST
By:
Name:
Title:
GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
By:
Name:
Title:
By:
Name:
Title:
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As of September 15, 2005
Schedule 1
The Trust consists of a single class of shares. References to a "Fund" in the
Agreement shall be deemed to be references to the Trust generally until this
Schedule may be amended to reflect creation of additional series of shares of
the Trust.
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As of September 15, 2005
Schedule 2
The Fund does not pay a fee for the Adviser's services hereunder. It being
understood that the Fund will invest in other investment companies managed by
the Adviser, nothing herein shall be deemed to limit the ability of the Adviser
to receive fees, including investment advisory and administrative fees, from any
other investment company or pool in which the Fund may invest.
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