PUTNAM INTERMEDIATE U.S. GOVERNMENT INCOME FUND
MANAGEMENT CONTRACT
Management Contract dated as of July 1, 2000 between ▇▇▇▇▇▇ INTERMEDIATE
U.S. GOVERNMENT INCOME FUND, a Massachusetts business trust (the
"Fund"), and ▇▇▇▇▇▇ INVESTMENT MANAGEMENT, INC., a Massachusetts
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 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 nor 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 the compensation in
whole or in part of such officers of the Fund and persons assisting them
as may be determined from time to time by the Trustees of the Fund. The
Fund will also pay or reimburse the Manager for all or part of the cost
of suitable office space, utilities, support services and equipment
attributable to such officers and persons, as may be determined in each
case by the Trustees of the Fund. The Fund will pay the fees, if any,
of the Trustees of the Fund.
(e) The Manager shall pay all expenses incurred in connection with the
organization of the Fund and the initial public offering and sale of its
shares of beneficial interest, provided that upon the issuance and sale
of such shares to the public pursuant to the offering, and only in such
event, the Fund shall become liable for, and to the extent requested
reimburse the Manager for, registration fees payable to the Securities
and Exchange Commission and for an additional amount not exceeding
$125,000 as its agreed share of such expenses.
(f) 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.
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 lesser of (i)
annual rate of 0.50% of the average net asset value of the Fund or (ii)
the following annual rates:
(a) 0.60% of the first $500 million of the average net asset value of
the Fund;
(b) 0.50% of the next $500 million of such average net asset value;
(c) 0.45% of the next $500 million of such average net asset value;
(d) 0.40% of the next $5 billion of such average net asset value;
(e) 0.375% of the next $5 billion of such average net asset value;
(f) 0.355% of the next $5 billion of such average net asset value; and
(g) 0.34% of the next $5 billion of such average net asset value; and
(h) 0.33% of any excess over $21.5 billion of such average net asset
value.
Such average net asset value shall be determined by taking an average of
all of the determinations of such net asset value during such quarter at
the close of business on each business day during such quarter while
this Contract is in effect. Such fee shall be payable for each fiscal
quarter within 30 days after the close of such quarter and shall
commence accruing as of the date of the initial issuance of shares of
the Fund to the public.
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.
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 THISCONTRACT.
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 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.
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 (the "1940 Act"), 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 1940 Act;
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 March 20, 1997.
9. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, ANDSHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund 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 individually but are
binding only upon the assets and property of the Fund.
IN WITNESS WHEREOF, ▇▇▇▇▇▇ INTERMEDIATE U.S. GOVERNMENT INCOME FUND and
▇▇▇▇▇▇ INVESTMENT MANAGEMENT, 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.
▇▇▇▇▇▇ INTERMEDIATE U.S. GOVERNMENT INCOME FUND
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
▇▇▇▇▇▇ INVESTMENT MANAGEMENT, INC
By: /s/▇▇▇▇▇▇ ▇. Silver
--------------------
▇▇▇▇▇▇ ▇. Silver
Senior Managing Director
