EXHIBIT 3
ACCOUNTING AGENCY AGREEMENT
THIS ACCOUNTING AGENCY AGREEMENT is made as of June 29, 2001 by and
between XXXXX BROTHERS XXXXXXXX & CO., a limited partnership organized under the
laws of the State of New York (the "Accounting Agent"), and GMO TRUST (the
"Trust"), a Massachusetts business trust on behalf of each series of the Trust
set forth on Schedule I hereto (each, a "Fund").
WHEREAS, the Trust is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Accounting Agent to perform
certain accounting and recordkeeping services on behalf of the Funds, and the
Accounting Agent is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Employment of Accounting Agent. The Trust hereby employs and
appoints the Accounting Agent to act as its fund accounting agent on the terms
set forth in this Agreement, and the Accounting Agent accepts such appointment.
2. Delivery of Documents. The Trust will (i) furnish the Accounting
Agent with properly certified or authenticated copies of resolutions of the
Trust's Board of Trustees authorizing the appointment of the Accounting Agent to
provide certain fund accounting services to the Funds and approving this
Agreement; (ii) provide the Accounting Agent with any other documents or
resolutions (including but not limited to directions or resolutions of the
Trust's Board of Trustees) which relate to or affect the Accounting Agent's
performance of its duties hereunder or which the Accounting Agent may reasonably
request; and (iii) notify the Accounting Agent promptly of any matter affecting
the performance by the Accounting Agent of its services under this Agreement.
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3. Recordkeeping and Calculation of Net Asset Value. The Accounting
Agent shall compute and determine the net asset value per share of each Fund as
of the close of business on the New York Stock Exchange on each day on which
such Exchange is open, unless otherwise directed by Proper Instructions. Such
computation and determination shall be made in accordance with (1) the
provisions of the Trust's Declaration of Trust and By-Laws, as they may from
time to time be amended and delivered to the Accounting Agent, (2) the votes of
the Board of Trustees of the Trust at the time in force and applicable, as they
may from time to time be delivered to the Accounting Agent, and (3) Proper
Instructions. On each day that the Accounting Agent shall compute the net asset
value per share of a Fund, the Accounting Agent shall provide such Fund's
investment adviser with written reports which the investment adviser may use to
verify that portfolio transactions have been recorded in accordance with the
Fund's instructions and are reconciled with the Fund's trading records.
In computing the net asset value, the Accounting Agent may rely upon any
information furnished by Proper Instructions, including without limitation any
information (1) as to accrual of liabilities of the Fund and as to liabilities
of the Fund not appearing on the books of account kept by the Accounting Agent,
(2) as to the existence, status and proper treatment of reserves, if any,
authorized by the Fund, (3) as to the sources of quotations to be used in
computing the net asset value, including those listed in Appendix A, (4) as to
the fair value to be assigned to any securities or other property for which
price quotations are not readily available, and (5) as to the sources of
information with respect to "corporate actions" affecting portfolio securities
of the Fund, including those listed in Appendix A. (Information as to "corporate
actions" shall include information as to dividends, distributions, stock splits,
stock dividends, rights offerings, conversions, exchanges, recapitalizations,
mergers, redemptions, calls, maturity dates and similar transactions, including
the ex- and record dates and the amounts or other terms thereof). The Trust may
instruct the Accounting Agent to utilize a particular source for the valuation
of a specific Security or other Property and the Accounting Agent shall be
protected in utilizing the valuation provided by such source without further
inquiry in order to effect calculation of a Fund"s net asset value.
Notwithstanding anything in this Agreement to the contrary, the Accounting Agent
shall not be responsible for the failure of a Fund or its investment adviser to
provide the Accounting Agent with Proper Instructions regarding liabilities
which ought to be
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included in the calculation of such Fund's net asset value.
In like manner, the Accounting Agent shall compute and determine the net
asset value of a Fund as of such other times as the Board of Trustees of the
Trust from time to time may reasonably request.
4. Expenses and Compensation. For the services to be rendered and the
facilities to be furnished by the Accounting Agent as provided for in this
Agreement, a Fund shall pay the Accounting Agent for its services rendered
pursuant to this Agreement a fee based on such fee schedule as may from time to
time be agreed upon in writing by the Trust and the Accounting Agent. In
addition to such fee, the Accounting Agent shall xxxx a Fund separately for any
out-of-pocket disbursements of the Accounting Agent. Out-of-pocket disbursements
shall include, but shall not be limited to, postage, including courier services;
telephone; telecommunications; printing, duplicating and photocopying charges;
forms and supplies; filing fees; legal expenses; and travel expenses. The
foregoing fees and disbursements shall be billed to the appropriate Fund by the
Accounting Agent and shall be paid promptly by wire transfer or other
appropriate means to the Accounting Agent.
5. Standard of Care. The Accounting Agent shall be held to the exercise
of reasonable care in computing and determining net asset value as provided in
this Agreement, but shall not be held accountable or liable for any losses or
damages a Fund or any shareholder or former shareholder of a Fund or any other
person may suffer or incur arising from or based upon errors or delays in the
determination of such net asset value resulting from any event beyond the
reasonable control of the Accounting Agent unless such error or delay was due to
the Accounting Agent's negligence or reckless or willful misconduct in
determination of such net asset value. (The parties hereto acknowledge, however,
that the Accounting Agent's causing an error or delay in the determination of
net asset value may, but does not in and of itself, constitute negligence or
reckless or willful misconduct.) In no event shall the Accounting Agent be
liable or responsible to the Trust or any Fund, any present or former
shareholder of the Trust or any Fund or any other person for any error or delay
which continued or was undetected after the date of an audit performed by the
certified public accountants employed by the Trust if, in the exercise of
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reasonable care in accordance with generally accepted accounting standards,
such accountants should have become aware of such error or delay in the course
of performing such audit. The Accounting Agent's liability for any such
negligence or reckless or willful misconduct which results in an error in
determination of such net asset value shall be limited exclusively to the
direct, out-of-pocket loss the Trust, any Fund, or shareholder or former
shareholder thereof shall actually incur, measured by the difference between the
actual and the erroneously computed net asset value, and any expenses the Trust
or any Fund shall incur in connection with correcting the records of the Fund
affected by such error (including charges made by the Fund's registrar and
transfer agent for making such corrections) or communicating with shareholders
or former shareholders of the Fund affected by such error.
Without limiting the foregoing, the Accounting Agent shall not be held
accountable or liable to the Trust, any Fund, any shareholder or former
shareholder thereof or any other person for any delays or losses, damages or
expenses any of them may suffer or incur resulting from (1) the Accounting
Agent's failure to receive timely and suitable notification concerning
quotations or corporate actions relating to or affecting portfolio securities of
the Fund or (2) any errors in the computation of the net asset value based upon
or arising out of quotations or information as to corporate actions if (i)
received by the Accounting Agent either (a) from a source which the Accounting
Agent was authorized pursuant to Section 3 hereof to rely upon, or (b) from a
source which in the Accounting Agent's reasonable judgment was as reliable a
source for such quotations or information as the sources authorized pursuant to
Section 3 hereof or (ii) relevant information known to the Trust, the Fund, the
investment adviser or Accounting Agent's pricing sources which would impact the
calculation of net asset value is not communicated by the Trust, the Fund, the
investment adviser or such pricing sources to the Accounting Agent.
Nevertheless, the Custodian will use its best judgment in determining
whether to verify through other sources any information it has received as to
quotations or corporate actions if the Custodian has reason to believe that any
such information might be incorrect. It is also agreed that in the event of any
act, omission, error or delay in the determination of such net asset value leads
to losses, costs or expenses for which the Accounting Agent may be liable, the
Trust and the Accounting Agent will consult and make good faith efforts to reach
agreement on what actions should be taken in order to mitigate any loss suffered
by the Trust, any Fund or its present
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or former shareholders, in order that the Accounting Agent's exposure to
liability shall be reduced to the extent possible after taking into account all
relevant factors and alternatives. Such actions might, but need not, include the
Trust, any Fund or the Accounting Agent taking reasonable steps to collect from
any shareholder or former shareholder who has received any overpayment upon
redemption of shares such overpaid amount or to collect from any shareholder who
has underpaid upon a purchase of shares the amount of such underpayment or to
reduce the number of shares issued to such shareholder. It is understood that in
attempting to reach agreement on the actions to be taken or the amount of the
loss which should appropriately be borne by the Accounting Agent, the Trust and
the Accounting Agent will consider such relevant factors as the amount of the
loss involved, the Trust's desire to avoid loss of shareholder good will, the
fact that other persons or entities could have been reasonably expected to have
detected the error sooner than the time it was actually discovered, the
appropriateness of limiting or eliminating the benefit which shareholders or
former shareholders might have obtained by reason of the error, and the
possibility that other parties providing services to the Trust might be induced
to absorb a portion of the loss incurred.
6. Limitation of Liability.
(a) The Accounting Agent shall incur no liability with respect
to any telecommunications, equipment or power failures, or any failures to
perform or delays in performance by postal or courier services or third-party
information providers. The Accounting Agent shall also incur no liability under
this Agreement if the Accounting Agent or any agent or entity utilized by the
Accounting Agent shall be prevented, forbidden or delayed from performing, or
omits to perform, any act or thing which this Agreement provides shall be
performed or omitted to be performed, by reason of causes or events beyond its
control, including but not limited to (x) any Sovereign Risk, or (y) any
provision of any present or future law, regulation or order of the United States
or any state thereof, or of any foreign country or political subdivision
thereof, or of any securities depository or clearing agency, or (z) any
provision of any order or judgment of any court of competent jurisdiction. A
"Sovereign Risk" shall mean any nationalization; expropriation; devaluation;
revaluation; confiscation; seizure; cancellation; destruction; strike; act of
war, terrorism, insurrection or revolution; or any other act or event
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beyond the Accounting Agent's control.
(b) Notwithstanding any other provision of this Agreement, the
Accounting Agent shall not be held accountable or liable for any losses, damages
or expenses the Fund or any shareholder or former shareholder of the Fund or any
other person may suffer or incur arising from acts, omissions, errors or delays
of the Accounting Agent in the performance of its obligations and duties
hereunder, including without limitation any error of judgment or mistake of law,
except a damage, loss or expense resulting from the Accounting Agent's willful
malfeasance, bad faith or negligence in the performance of such obligations and
duties.
(c) The Accounting Agent shall in no event be required to take
any action which is in contravention of any applicable law, rule or regulation
or any order or judgment of any court of competent jurisdiction. The Trust on
behalf of each Fund severally, and not jointly and severally, hereby agrees to
indemnify the Accounting Agent against and hold it harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any act, omission, error or delay or any
claim, demand, action or suit, in connection with or arising out of performance
of its obligations and duties under this Agreement, not resulting from the
willful malfeasance, bad faith or negligence of the Accounting Agent in the
performance of such obligations and duties.
(d) Except as set forth in Section 5 hereof, the Accounting
Agent's entire liability to the Trust or any Fund for any loss or damage arising
or resulting from its performance or failure to perform hereunder and regardless
of the form of action, shall be limited to the Trust's or such Fund's actual and
direct out-of-pocket expenses and losses which are reasonably incurred by the
Trust or such Fund. In no event and under no circumstances shall the Accounting
Agent, the Trust or any Fund be held liable for consequential or indirect
damages, loss of profits, damage to reputation or business or any other special
damages arising under or by reason of any provision of this Agreement or for any
act or omission hereunder.
7. Reliance by the Accounting Agent on Proper Instructions and
Opinions of Counsel and Opinions of Certified Public Accountants.
(a) The Accounting Agent shall not be liable for, and shall be
severally indemnified by each Fund against any and all losses, costs, damages or
expenses arising from or
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as a result of, any action taken or omitted in reliance upon Proper
Instructions.
Proper Instructions shall include a written request, direction,
instruction or certification signed or initialed on behalf of the Trust or any
Fund by one or more persons as the Board of Trustees of the Trust shall have
from time to time authorized. Those persons authorized to give Proper
Instructions may be identified by the Board of Trustees by name, title or
position and will include at least one officer empowered by the Board to name
other individuals who are authorized to give Proper Instructions on behalf of
the Trust or any Fund. Telephonic or other oral instructions or instructions
given by telefax transmission may be given by any one of the above persons and
will also be considered Proper Instructions if the Accounting Agent reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved.
With respect to telefax transmissions, the Trust hereby acknowledges
that (i) receipt of legible instructions cannot be assured, (ii) the Accounting
Agent cannot verify that authorized signatures on telefax instructions are
original, and (iii) the Accounting Agent shall not be responsible for losses or
expenses incurred through actions taken in reasonable reliance on such telefax
instructions. Proper Instructions given orally will be confirmed by written
instructions in the manner set forth above, including by telefax, but the lack
of such confirmation shall in no way affect any action taken by the Accounting
Agent in reasonable reliance upon such oral instructions. The Trust authorizes
the Accounting Agent to tape record any and all telephonic or other oral
instructions given to the Accounting Agent by or on behalf of the Trust or any
Fund (including any of its officers, Trustees, employees or agents or any
investment manager or adviser or person or entity with similar responsibilities
which is authorized to give Proper Instructions on behalf of the Trust or any
Fund to the Accounting Agent.)
(b) The Accounting Agent may consult with its counsel
(provided such counsel is reasonably acceptable to the Trust whose consent shall
not be unreasonably withheld) or the Trust's counsel in any case where so doing
appears to the Accounting Agent to be necessary or desirable. The Accounting
Agent shall not be considered to have engaged in any misconduct or to have acted
negligently and shall be without liability in acting upon the advice of its
counsel or of the Trust's counsel.
(c) The Accounting Agent may consult with a certified public
accountant
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(provided such certified public accountant is reasonably acceptable to the Trust
whose consent shall not be unreasonably withheld) or the Trust's Treasurer in
any case where so doing appears to the Accounting Agent to be necessary or
desirable. The Accounting Agent shall not be considered to have engaged in any
misconduct or to have acted negligently and shall be without liability in acting
upon the advice of such certified public accountant or of the Trust's Treasurer.
8. Termination of Agreement.
(a) This Agreement shall continue in full force and effect
until terminated by the Accounting Agent or the Trust by an instrument in
writing delivered or mailed, postage prepaid, to the other party, such
termination to take effect not sooner than ninety (90) days after the date of
such delivery or mailing. In the event a termination notice is given by a party
hereto, all expenses associated with the movement of records and materials and
the conversion thereof shall be paid by the Trust for which services shall cease
to be performed hereunder. The Accounting Agent shall be responsible for
completing all actions in progress when such termination notice is given unless
otherwise agreed.
Notwithstanding anything in the foregoing provisions of this clause, if
it appears impracticable in the circumstances to effect an orderly delivery of
the necessary and appropriate records of the Accounting Agent to a successor
within the time specified in the notice of termination as aforesaid, the
Accounting Agent and the Trust agree that this Agreement shall remain in full
force and effect for such reasonable period as may be required to complete
necessary arrangements with a successor.
(b) If the Accounting Agent shall fail to perform its duties
and obligations hereunder resulting in material loss to the Trust or any Fund,
the Trust may terminate this Agreement by giving written notice of such
termination to the Accounting Agent. If the Trust shall fail to perform its
duties and obligations hereunder resulting in material loss to the Accounting
Agent, the Accounting Agent may give written notice thereof to the Trust, and if
such material breach shall not have been remedied within thirty (30) calendar
days after such written notice is given, then the Accounting Agent may
immediately terminate this Agreement. If the Accounting Agent terminates this
Agreement pursuant to this Section 8(b), it shall not constitute a waiver of any
other rights or remedies of the Accounting Agent with respect to
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payment for services performed prior to such termination or rights of the
Accounting Agent to be reimbursed for out-of-pocket expenses. In all cases,
termination by a party pursuant to this Section 8(b) shall not constitute a
waiver by such party of any other rights it might have under this Agreement or
otherwise against the other party hereto.
(c) This Section 8 shall survive any termination of this
Agreement, whether for cause or not for cause.
9. Amendment of this Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof. No provision of this Agreement may be amended or terminated
except by a statement in writing signed by the party against which enforcement
of the amendment or termination is sought.
In connection with the operation of this Agreement, the Trust and the
Accounting Agent may agree in writing from time to time on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
The section headings and the use of defined terms in the singular or
plural tenses in this Agreement are for the convenience of the parties and in no
way alter, amend, limit or restrict the contractual obligations of the parties
set forth in this Agreement.
10. GOVERNING LAW AND JURISDICTION. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH, AND BE GOVERNED BY THE LAWS OF, THE COMMONWEALTH OF
MASSACHUSETTS, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW OF SUCH STATE. THE
PARTIES HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE COMMONWEALTH OF MASSACHUSETTS AND THE FEDERAL COURTS LOCATED IN
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MASSACHUSETTS.
11. Notices. Notices and other writings delivered or mailed postage
prepaid to a Trust addressed to the Trust at 00 Xxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 or to such other address as the Trust may have designated to
the Accounting Agent in writing, or to the Accounting Agent at 00 Xxxxx Xxxxxx,
Xxxxxx, XX 00000, Attention: Manager, Fund Accounting Department, or to such
other address as the Accounting Agent may have designated to the Trust in
writing, shall be deemed to have been properly delivered or given hereunder to
the respective addressee.
12. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Trust and the Accounting Agent and their respective
successors and assigns, provided that no party hereto may assign this Agreement
or any of its rights or obligations hereunder without the written consent of the
other party.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
collectively shall be deemed to constitute only one instrument. This Agreement
shall become effective when one or more counterparts have been signed and
delivered by each of the parties.
14. Exclusivity. The services furnished by the Accounting Agent
hereunder are not to be deemed exclusive, and the Accounting Agent shall be free
to furnish similar services to others.
15. Authorization. The Trust hereby represents and warrants that the
execution and delivery of this Agreement have been authorized by the Trust's
Board of Trustees and that this Agreement has been signed by an authorized
officer of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
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XXXXX BROTHERS XXXXXXXX & CO. GMO TRUST on behalf of each of the
Funds set forth in Schedule I hereto
By: __________________________________ By: _______________________________
Name: ________________________________ Name: _____________________________
Title: _______________________________ Title: ____________________________
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APPENDIX A
The Trust on behalf of each Fund hereby acknowledges that the Accounting Agent
is authorized to use the following authorized sources for pricing (including
corporate actions, dividends and rights offering), and foreign exchange
quotations, to assist it in fulfilling its obligations under the Accounting
Agency Agreement.
AUTHORIZED SOURCES
BLOOMBERG
EXTEL (LONDON)
FUND MANAGERS
INTERACTIVE DATA CORPORATION
REPUTABLE BROKERS
REUTERS
SUBCUSTODIAN BANKS
TELEKURS
VALORINFORM (GENEVA)
REPUTABLE FINANCIAL PUBLICATIONS
STOCK EXCHANGES
FINANCIAL INFORMATION INC. CARD
XX XXXXX
FRI CORPORATION
XXXXXXX XXXXX PRICING SERVICE
XXXXXX
BRIDGE
Except as set forth in the Agreement, the Trust on behalf of each Fund hereby
acknowledges and agrees that the Accounting Agent shall not guarantee and make
no warranties whatsoever, with respect to the sources listed above and to the
accuracy or completeness of currency and quotations, market information or other
information. The Accounting Agent shall have no liability to the Trust, any Fund
or any third party for any loss, damages or expenses arising from the use of the
above listed sources.
GMO TRUST ON BEHALF OF THE FUNDS
SET FORTH IN SCHEDULE I
By: ___________________________
Name: _________________________
Title: ________________________
Date: June 29, 2001
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SCHEDULE I
GMO International Disciplined Equity Fund
GMO International Intrinsic Value Fund
GMO International Growth Fund
GMO Currency Hedged International Equity Fund
GMO Foreign Fund
GMO Foreign Small Companies Fund
GMO International Small Companies Fund
GMO Emerging Markets Fund
GMO Evolving Countries Fund
GMO Asia Fund
GMO Tax-Managed International Equities Fund
GMO Global Hedged Equity Fund
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