EXHIBIT 2
SHAREHOLDER SERVICE AGREEMENT
Agreement made as of September 9, 2002 by and between GMO Trust, on
behalf of each fund listed on Schedule A, severally and not jointly (each, a
"Fund"), and Deutsche Bank Trust Company Americas ("Service Provider").
WHEREAS, the Service Provider provides or intends to provide investment
and administrative services including, but not limited to, asset allocation,
fund selection, executing trades, providing market commentary, record-keeping,
reporting and processing service for its clients ("Shareholders"); and
WHEREAS, the Fund and the Service Provider desire to facilitate the
purchase and redemption of shares of the Fund on behalf of the Shareholders
through one or more omnibus accounts in the Fund (each, an "Account"); and
WHEREAS, the Fund desires that the Service Provider provide certain
recordkeeping and shareholder services to the Shareholders in connection with
investment by the Account in the Fund, subject to the terms and conditions of
this Agreement:
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. Transaction Processing and Settlement. The Service Provider will
enable and facilitate the purchase and redemption of Fund shares on behalf of
Shareholders through the Account. Such purchases and redemptions shall be
processed through the National Securities Clearing Corporation ("NSCC")
Fund/SERV system in accordance with NSCC rules then in effect.
2. Shareholder Services. The Service Provider agrees to perform the
services described on Schedule B.
3. Representations of the Service Provider. The Service Provider
represents and warrants that:
(a) it is a banking corporation duly organized under the laws of
New York and is duly registered and/or qualified as a broker/dealer
with the SEC, NASD and in every state or territory of the United
States of America (including the District of Columbia) where such
registration or qualification is required and has the requisite
authority to enter into this Agreement and to carry out the
services contemplated herein;
(b) it has full power and authority to enter into and perform this
Agreement;
(c) the arrangements provided for in this Agreement will be
disclosed to the Shareholders;
(d) it will comply with all applicable requirements of laws, rules
and regulations of governmental or self-regulatory authorities
having jurisdiction for the acts and duties of it under this
Agreement;
(e) it will transmit to the Fund such information concerning
Shareholders as the Fund will reasonably conclude is necessary to
enable the Fund to comply with applicable state Blue Sky laws;
(f) it will promptly notify the Fund in the event that it is for
any reason unable to perform any of its obligations under this
Agreement.
4. Representations of Fund. The Fund represents and warrants that:
(a) it has full power and authority to enter into and perform this
Agreement;
(b) that the payment to Service Provider of any fees pursuant
hereto has been duly authorized by the Fund, the Board of Trustees
of the Fund, or any other persons to the extent such authorization
is required to properly make such payment and is properly disclosed
in the relevant Fund prospectus to the extent such disclosure may
be required;
(c) it is registered as an open-end investment company pursuant to
the Investment Company Act of 1940; and
(d) it will promptly notify the Service Provider in the event that
it is for any reason unable to perform any of its obligations under
this Agreement.
5. Information Regarding Fund. The Fund will supply the Service
Provider with the Fund's current prospectus, periodic fund reports, proxy
statements, and related materials for delivery to the Shareholders. The cost of
any distribution of the prospectus, periodic fund reports, proxy statements, and
related materials of the Fund to the Accounts or the Shareholders will be paid
by the Service Provider or the Shareholders, as determined by the Service
Provider's agreement with each Shareholder, and will not be the responsibility
of the Fund.
6. Compensation of the Service Provider. In consideration for
providing the services under this Agreement, the Fund will pay the Service
Provider the fee set forth in Schedule C attached hereto.
7. Indemnification.
(a) Except with respect to matters excluded from liability pursuant to
this paragraph 7, each of the Fund and the Service Provider (an "Indemnitor")
will indemnify and hold harmless each other, and their respective officers,
directors, partners, trustees, shareholders and agents ("Indemnitees"), against
any claims or liabilities suffered by all or any of such Indemnitees to the
extent arising out of (i) the responsible Indemnitor's lack of good faith,
negligence or willful misconduct in carrying out its duties and responsibilities
under this Agreement; (ii) any breach by the responsible Indemnitor of any
material provision of this Agreement; or (iii) any breach by the responsible
Indemnitor of any representation, warranty, or covenant made in this Agreement,
including reasonable legal fees and other out-of-pocket costs of defending
against any such claim or liability. The indemnification
provided in this paragraph 7 will not be valid to the extent the claim or
liability suffered is due to the negligence or willful misconduct of the
Indemnitee.
(b) Promptly after receipt by an Indemnitee of notice of the
commencement of an investigation, action, claim or proceeding, such Indemnitee
will, if a claim in respect thereof is to be made against the Indemnitor under
this Section 7, notify the Indemnitor of the commencement thereof; but the
omission so to notify the Indemnitor will not relieve it from any liability
which it may have to any Indemnitee otherwise than under this paragraph. In case
any such action is brought against any Indemnitee, and it notified the
Indemnitor of the commencement thereof, the Indemnitor will be entitled to
participate therein and, to the extent that it may wish, assume the defense
thereof, with counsel satisfactory to such Indemnitee. After notice from the
Indemnitor of its intention to assume the defense of an action, the Indemnitee
shall bear the expenses of any additional counsel obtained by it, and the
Indemnitor shall not be liable to such Indemnitee under this paragraph for any
legal or other expenses subsequently incurred by such Indemnitee in connection
with the defense thereof other than reasonable costs of investigation.
8. Non-Exclusivity. Each party acknowledges and agrees that this
Agreement and the arrangements described herein are intended to be non-exclusive
and that each of them is free to enter into similar arrangements with other
entities.
9. Confidentiality. All information, books, records, and data supplied
by one party to the other in connection with the negotiation or carrying out of
the Agreement are and will remain the property of the party supplying such
information, books, records, or data and will be kept confidential by the other
party except as may be required by law.
10. Termination of Agreement. This Agreement shall become effective
upon the date set forth above, provided that this Agreement has been approved by
the Fund or its Board of Trustees, if such approval is required. It shall
continue in force for one year, and shall thereafter continue automatically for
successive annual periods unless earlier terminated, subject to any periodic
approval required by the Fund or its Board of Trustees. This Agreement is
terminable as to any Fund by either party upon 60 days written notice thereof to
the other party. Upon default by either party, the non-defaulting party may
terminate this Agreement provided that it has notified the defaulting party of
such default and the defaulting party has failed to cure such default within 10
business days of such notice.
After the date of termination as to any Fund, no fee will be due with
respect to any shares of such Fund that are first placed or purchased in the
Accounts after the date of such termination. However, notwithstanding any such
termination, the Fund will remain obligated to pay the Service Provider the fee
as to each share of such Fund that was considered in the calculation of the fee
as of the date of such termination, for so long as such share is held in the
Account.
This Agreement, or any provision hereof, shall survive termination to
the extent necessary for each party to perform its obligations with respect to
shares for which a fee continues to be due subsequent to such termination.
11. Notices. All notices and other communications hereunder will be in
writing and will be hand delivered or mailed by certified mail or overnight
courier to the other party at the following address or such other address as
each party may give notice to the other:
If to the Service Provider:
Xxxxxx Xxxxxx-Xxxxx
Deutsche Bank Trust Company Americas
MS NYC03-2202
Xxx Xxxx, XX 00000
Cc: Xxxxxx Xxxxxx
Deutsche Bank Trust Company Americas
000 Xxxx Xxxxxx 00X
XX XXX00-0000
Xxx Xxxx, XX 00000
If to the Fund:
GMO Foreign Fund
c/o Grantham, Mayo, Van Otterloo & Co. LLC
00 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxxxxx
12. Amendment. This Agreement may not be amended except by a writing
signed by both parties; provided, however, that GMO Trust may amend this
Agreement unilaterally to add additional funds to Schedule A. The new or amended
Schedule A will be effective upon receipt by the Service Provider and will not
require execution by the Service Provider. It is understood and agreed that the
intent of this provision is to avoid the inadvertent omission of funds from
Schedule A where the Service Provider has agreed to provide services to
Shareholders seeking to invest in the funds.
13. Assignment and Other Matters. This Agreement shall not be assigned
by either party without the written consent of the other party. This Agreement
may be executed in several counterparts, each of which will be an original but
all of which together will constitute one and the same instrument. The headings
in this Agreement are for reference only and will not affect the interpretation
or construction of this Agreement. This Agreement contains the entire agreement
of the parties as to the subject matter hereof and supersedes any prior
agreements, written or oral. This Agreement will be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to the principles of conflicts of law thereof.
14. GMO Trust. GMO Trust is a Massachusetts business trust and a copy
of the Agreement and Declaration of Trust of GMO Trust is on file with the
Secretary of The Commonwealth of Massachusetts. Notice is hereby given that this
Agreement is executed on behalf of the Trustees of the Trust as Trustees and not
individually, and that the obligations of or arising out of this Agreement with
respect to each Fund are not binding upon any of the Trustees
or shareholders individually or any other series of the Trust, but are binding
only upon the assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
DEUTSCHE BANK TRUST COMPANY AMERICAS GMO TRUST, ON BEHALF OF EACH
FUND LISTED ON SCHEDULE A,
SEVERALLY BUT NOT JOINTLY
By: By:
_______________________
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: Director Title: Vice President
SCHEDULE A
LIST OF FUNDS
GMO Foreign Fund - Class M
SCHEDULE B
The Service Provider will, in accordance with the terms of this Agreement,
perform certain administrative services in connection with the purchase of
shares of the Fund by the Shareholders, including, but not limited to, the
following services:
1. Answer inquiries from Shareholders and provide them with information
concerning investment options in shares of the Fund.
2. Maintain separate records for each Shareholder, which records will reflect
the dollar amount of shares of the Fund purchased (including by reinvestment
by the Shareholder of dividends and capital gains distributions paid by the
Fund) and redeemed, including the date and price for all transactions and
the dollar value of Shareholder account balances.
3. For each Shareholder, maintain such Shareholder's name and address, social
security or taxpayer identification numbers.
4. Prepare and transmit to Shareholder's confirmations of purchases and
redemptions and periodic account statements showing the investment in the
Fund as of the statement closing date, and such pertinent information as the
Service Provider and the Fund may agree from time to time.
5. Furnish to Shareholders or make available to Shareholders all information
regarding the Fund which is to be delivered to the Service Provider pursuant
to paragraph 5 of this Agreement.
6. Provide to Shareholders such reports and information as may be required by
the then-prevailing laws and regulations under the Internal Revenue Code for
non-retirement accounts and qualified and non-qualified retirement plan
accounts.
SCHEDULE C
Capitalized terms used in this schedule have the meanings given to them in this
Agreement:
The Fund will pay to the Service Provider a fee, computed daily and paid
quarterly in arrears, equal to 0.25% per annum of the average daily value of the
total number of shares of the Fund held in the Accounts. The Fund will pay the
Service Provider such fee within 30 days after the end of each quarter. For
purposes of this Schedule C, the average daily value of the shares of the Fund
will be based on the NAV reported by the Fund to the Service Provider.
