EXHIBIT 3
XXXXXX MASTER INTERMEDIATE INCOME TRUST
MANAGEMENT CONTRACT
Management Contract dated as of July 11, 1991 between XXXXXX MASTER
INTERMEDIATE INCOME TRUST, a Massachusetts business trust (the "Fund"), and THE
XXXXXX MANAGEMENT COMPANY, INC., a Delaware corporation (the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously an investment
program for the Fund, will determine what investments shall be purchased, held,
sold or exchanged by the Fund and what portion, if any, of the assets of the
Fund shall be held uninvested and shall, on behalf of the Fund, make changes in
the Fund's investments. Subject always to the control of the Trustees of the
Fund and except for the functions carried out by the officers and personnel
referred to in Section 1(d), the Manager will also manage, supervise and conduct
the other affairs and business of the Fund and matters incidental thereto. 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 Fund and its stated
investment objectives, policies and restrictions, and will use its best efforts
to safeguard and promote the welfare of the Fund and to comply with other
policies which the Trustees may from time to time determine and shall exercise
the same care and diligence expected of the Trustees.
(b) The Manager, at its expense, except as such expense is paid by the Fund
as provided in Section 1(d), will furnish (1) all necessary investment and
management facilities, including salaries of personnel, required for it to
execute its duties faithfully; (2) suitable office space for the Fund; and (3)
administrative facilities, including bookkeeping, clerical personnel and
equipment necessary for the efficient conduct of the affairs of the Fund,
including determination of the Fund's net asset value, but excluding shareholder
accounting services. Except as otherwise provided in Section 1(d), the Manager
will pay the compensation, if any, of the officers of the Fund.
(c) The Manager, at its expense, shall place all orders for the purchase
and sale of portfolio investments for the Fund's account with brokers or dealers
selected by the Manager. In the selection of such brokers or dealers and the
placing of such orders, the Manager shall use its best efforts to obtain for the
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Fund the most favorable 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, bearing in mind
the Fund's best interests at all times, shall consider all factors it deems
relevant, including by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer involved
and the quality of service rendered by the broker or dealer in other
transactions. Subject to such policies as the Trustees of the Fund 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 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 Fund and to other clients
of the Manager as to which the Manager exercises investment discretion. The
Manager agrees that in connection with purchases or sales of portfolio
investments for the Fund's account, neither the Manager or any officer,
director, employee or agent of the Manager shall act as a principal or receive
any commission other than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for (i) the compensation of
the Vice Chairman of the Fund and of any persons assisting him in the office, as
determined from time to time by the Trustees of the Fund, (ii) the compensation
in whole or in part of such other officers of the Fund and persons assisting
them as may be determined from time to time by the Trustees of the Fund, and
(iii) the cost of suitable office space, utilities, support services and
equipment of the Vice Chairman and persons assisting him and, as determined from
time to time by the Trustees of the Fund, all or a part of such cost
attributable to the other officers and persons assisting them whose compensation
is paid in whole or in part by the Fund. The Fund will pay the fees, if any, of
the Trustees of the Fund.
(e) The Manager shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Manager pursuant to this Section 1 other than
as provided in Section 3.
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2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a 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 Fund. It is also understood that the Manager and any person controlled by or
under common control with the Manager have and may have advisory, management,
service or other contracts with other organizations and persons, and may have
other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND 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 paragraphs (a), (b), (c) and (e) of Section 1, a fee, computed and
paid quarterly at the following annual rates:
(a) 0.75% of the first $500 million of the average net
asset value of the Fund;
(b) 0.65% of the next $500 million of such average
net asset value;
(c) 0.60% of the next $500 million of such average net
asset value; and
(d) 0.55% of any excess over $1.5 billion of such average
net asset value.
Such average net asset value shall be determined by taking the average of the
weekly determinations of such net asset value, determined at the close of the
last business day of each week, for each week which ends during the quarter.
Such fees shall be payable for each fiscal quarter within 30 days after the
close of such quarter.
The fees payable by the Fund to the Manager pursuant to this Section 3
shall be reduced by any commissions, fees, brokerage or similar payments
received by the Manager or any affiliated person of the Manager in connection
with the purchase and sale of portfolio investments of the Fund, less any direct
expenses approved by the Trustees incurred by the Manager or any affiliated
person of the Manager in connection with obtaining such payments.
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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 Fund are
qualified for offer or sale, the compensation due the Manager for such fiscal
year shall be reduced by the amount of 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 Fund, voluntarily declare to be
effective 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 assume expenses of the Fund to the extent required
by the terms and conditions of such expense limitation.
If the Manager shall serve for less than the whole of a quarter, 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 be 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 Fund who are not interested persons of the Fund 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' nor less than thirty days' written notice delivered or mailed
by registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Fund 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 Fund who are not interested persons of the Fund 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 March 31, 1993 or the expiration of one year from the effective date
of the
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last such continuance, whichever is later.
Action by the Fund 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 will 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 of the Fund, (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; the term "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; and the
term "brokerage and research services" shall have the meaning given in the
Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NON-LIABILITY 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 Fund or to
any shareholder of the Fund, for any act or omission in the course of, or
connected with, rendering services hereunder.
8. TERMINATION OF PRIOR CONTRACT.
This Contract shall become effective as of its date, and supersedes the
Management Contract dated April 12, 1988.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund
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is on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Fund as Trustees and not individually and that the obligations
of or arising out of this instrument are not binding upon any of the Trustees,
officers or shareholders but are binding only upon the assets and property of
the Fund.
IN WITNESS WHEREOF, XXXXXX MASTER INTERMEDIATE INCOME TRUST and THE XXXXXX
MANAGEMENT COMPANY, INC. have each caused this instrument to be signed in
duplicate in its behalf by its President or a Vice President thereunto duly
authorized, all as of the day and year first above written.
XXXXXX MASTER INTERMEDIATE INCOME TRUST
By: /s/ Xxxxxxx X. Xxxxxx
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THE XXXXXX MANAGEMENT COMPANY, INC.
By: /s/ Xxxxxx X. Silver
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