MANAGEMENT CONTRACT Management Contract executed as of March 30, 2005 between
GMO TRUST, a Massachusetts business trust (the "Trust") on behalf of its GMO
Alternative Asset Opportunity 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 to the Manager as compensation for the Manager's
services rendered, for the facilities furnished and for the expenses borne by
the Manager pursuant to Section 1, a fee, computed and paid monthly at the
annual rate of 0.45% of the Fund's average daily net asset value. Such average
daily net asset value of the Fund shall be determined by taking an average of
all of the determinations of such net asset value during such month at the close
of business on each business day during such month while this Contract is in
effect. Such fee shall be payable for each month within five (5) business days
after the end of such month. In the event that expenses of the Fund for any
fiscal year should exceed 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, the compensation due the
Manager for such fiscal year shall be reduced by the amount of such excess by a
reduction or refund thereof. In the event that the expenses of the Fund exceed
any 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
compensation due the Manager shall be reduced, and, if necessary, 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/ Xxxxx X. Xxxxx
Title: Xxxxx X. Xxxxx
Vice President, Secretary and Clerk
GRANTHAM, MAYO, VAN OTTERLOO
& CO. LLC
By /s/ Xxxxxx X. Xxxxxxxx
Title: Xxxxxx X. Xxxxxxxx
Associate General Counsel
