MANAGEMENT CONTRACT Management Contract executed as of November __, 2004
between GMO TRUST, a Massachusetts business trust (the "Trust") on behalf
of its GMO World Opportunity Overlay 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 no direct fee to the
Manager as compensation for the Manager's investment management services
rendered hereunder. In the event that expenses of the Fund for any fiscal
year should exceed (i) 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 or (ii) the
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
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.
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.
GMO TRUST
By /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President
GRANTHAM, MAYO, VAN OTTERLOO
& CO. LLC
By /s/ Xxxxxxx X. Xxxxx
Title: Member and General Counsel
