MANAGEMENT CONTRACT
Management Contract executed as of March __, 2005 among GMO Alternative
Asset SPC Ltd., a company incorporated under the provisions of the Companies Act
1981 of Bermuda on the 14th day of July 2004 as an exempted company (the
"Company") and a wholly owned subsidiary of GMO Alternative Asset Opportunity
Fund (the "Fund"), a series of GMO Trust, a Massachusetts business trust (the
"Trust"), 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 COMPANY.
(a) Subject always to the control of the Company, and to such policies as
the Company may determine, the Manager will, at its expense, furnish
continuously an investment program for the Company and will make investment
decisions on behalf of the Company and place all orders for the purchase and
sale of its portfolio securities. In the performance of its duties, the Manager
will comply with the provisions of the Management Contract between the Trust, on
behalf of the Fund, and the Manager, dated as of January __, 2005 (the "Fund
Management Contract"), the Bye-Laws of the Company, and the stated investment
objective, policies and restrictions of the Fund.
(b) In placing orders for the portfolio transactions of the Company, 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 Company 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 Company (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 Company 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 the Company 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 Company and to other clients of the
Manager, including the Trust, 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 Company 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, officers and directors of
the Company may be a member, 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 Company. 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 COMPANY TO THE MANAGER.
The Company will pay no direct fee to the Manager as compensation for the
Manager's services rendered hereunder. Since the Fund is the sole shareholder of
the Company, the Manager will be indirectly compensated for its services
rendered hereunder pursuant to the terms of the Fund Management Contract.
In the event that the expenses of the Company exceed any expense
limitation which the Manager may, by written notice to the Company, voluntarily
declare to be effective with respect to the Company, 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
Company's expenses to the extent required by such expense limitation.
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 by both parties hereto and the sole
shareholder of the Company.
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:
(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) The Fund Management Contract is terminated or otherwise ceases to
remain in effect.
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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 terms "control" 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.
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 Company, or
to any shareholder of the Company, including the Fund, 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 Company only
with the consent of the Manager. The Manager consents to the use by the Company
of the name "GMO" as part of the Company's name, but only on condition and so
long as (i) this Contract shall remain in full force and (ii) the Company 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 Company 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 Company 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 Company acknowledges and agrees that as between the
Manager and the Company, the Manager has the exclusive right so to authorize
others to use the same; the Company acknowledges and agrees that as between the
Manager and the Company, the Manager has the exclusive right so to use, or
authorize others to use, said initials and the Company 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
Company agrees that, upon any termination of this Contract by either party or
upon the violation of any of its provisions by the Company, the Company 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 Company 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 Company shall be binding upon it, its directors, officers, shareholders,
creditors and all other persons claiming under or through it.
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9. MISCELLANEOUS
(a) It is understood that the Manager is an independent contractor and not
an employee or agent of the Company. Except as provided in this Contract, the
Manager shall not have authority to bind, obligate or represent the Company.
(b) This Contract shall be executed outside of The Commonwealth of
Massachusetts.
(c) Pursuant to an exemption from the Commodity Futures Trading Commission
(the "CFTC") in connection with accounts of qualified eligible persons, this
brochure or account document is not required to be, and has not been, filed with
the CFTC. The CFTC does not pass upon the merits of participation in a trading
program or upon the adequacy or accuracy of commodity trading advisor
disclosure. Consequently, the CFTC has not reviewed or approved this trading
program or this brochure or account document.
10. LIMITATION OF LIABILITY OF SHAREHOLDERS AND DIRECTORS
The Manager agrees that in satisfaction of any liability, debt, judgment,
or other obligation owing from the Company under this Contract, it shall have
recourse to the assets of the Company only and not to any shareholder, director
or officer of the Company individually.
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IN WITNESS WHEREOF, GMO ALTERNATIVE ASSET SPC LTD. 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 ALTERNATIVE ASSET SPC LTD.
By ___________________________________
Title:
XXXXXXXX, XXXX, XXX XXXXXXXX
& CO. LLC
By ___________________________________
Title:
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