FRANKLIN NEW YORK TAX-FREE TRUST
on behalf of
FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made as of the 1st day of October, 1996, by
and between the FRANKLIN NEW YORK TAX-FREE TRUST on behalf of the FRANKLIN NEW
YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND, hereinafter called the "Fund", a
series of the Franklin New York Tax-Free Trust, a Massachusetts Business Trust,
hereinafter called the "Trust", and FRANKLIN INVESTMENT ADVISORY SERVICES, INC.,
a Connecticut Corporation, hereinafter called the "Manager".
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940 for the purpose of
investing and reinvesting its assets in securities, as set forth in its
Agreement and Declaration of Trust, its By-Laws and its Registration Statements
under the Investment Company Act of 1940 and the Securities Act of 1933, all as
heretofore amended and supplemented; and the Trust desires to avail itself of
the services, information, advice, assistance and facilities of an investment
manager and to have an investment manager perform for its various management,
statistical, research, investment advisory and other services for FRANKLIN NEW
YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND.
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisor's Act of 1940, is engaged in the business of rendering
management, investment advisory, counselling and supervisory services to
investment companies and other investment counselling clients, and desires to
provide these services to the Fund.
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE MANAGER. The Trust hereby employs the Manager to
manage the investment and reinvestment of the Fund's assets and to administer
its affairs, subject to the direction of the Board of Trustees and the officers
of the Trust, for the period and on the terms hereinafter set forth. The Manager
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth for the compensation
herein provided. The Manager shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Trust in any way or otherwise be deemed an agent of the Trust.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE MANAGER. The
Manager undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. OFFICE SPACE, FURNISHINGS, FACILITIES, EQUIPMENT, AND PERSONNEL. The
Manager shall furnish to the Fund adequate, i) office space, which may be space
within the offices of the Manager or in such other place as may be agreed upon
from time to time, ii) office furnishings, facilities and equipment as may be
reasonably required for managing the affairs and conducting the business of the
Fund, including complying with the securities reporting requirements of the
United States and the various states in which the Fund does business, conducting
correspondence and other communications with the shareholders of the Fund,
maintaining all internal bookkeeping, accounting and auditing services and
records in connection with the Fund's investment and business activities, and
computing net asset value. The Manager shall employ or provide and compensate
the executive, secretarial and clerical personnel necessary to provide such
services. The Manager shall also compensate all officers and employees of the
Trust who are officers or employees of the Manager.
B. INVESTMENT MANAGEMENT SERVICES
a) The Manager shall manage the Fund's assets and portfolio subject
to and in accordance with the investment objectives and policies of the Fund and
any directions which the Trust's Board of Trustees may issue from time to time.
In pursuance of the foregoing, the Manager shall make all determinations with
respect to the investment of the Fund's assets and the purchase and sale of
portfolio securities, and shall take such steps as may be necessary to implement
the same. Such determinations and services shall also include determining the
manner in which voting rights, rights to consent to legal action and any other
rights pertaining to the Fund's portfolio securities shall be exercised. The
Manager shall render regular reports to the Trust, at regular meetings of the
Board of Trustees and at such other times as may be reasonably requested by the
Trust's Board of Trustees, of i) the decisions which it has made with respect to
the investment of the Fund's assets and the purchase and sale of portfolio
securities, ii) the reasons for such decisions, and iii) the extent to which
those decisions have been implemented.
b) The Manager, subject to and in accordance with any directions
which the Trust's Board of Trustees may issue from time to time,shall place, in
the name of the Fund, orders for the execution of the Fund's portfolio
transactions. When placing such orders the Manager shall seek to obtain the best
net price and execution for the Fund, but this requirement shall not be deemed
to obligate the Manager to place any order solely on the basis of obtaining the
lowest commission rate if the other standards set forth in this section have
been satisfied. The parties recognize that there are likely to be many cases in
which different brokers are equally able to provide such best price and
execution and that, in selecting among such brokers with respect to particular
trades, it is desirable to choose those brokers who furnish research,
statistical quotations and other information to the Fund and the Manager in
accord with the standards set forth below. Moreover, to the extent that it
continues to be lawful to do so and so long as the Board determines that the
Fund will benefit, directly or indirectly, by doing so, the Manager may place
orders with a broker who charges commission for that transaction which is in
excess of the amount of commission that another broker would have charged for
effecting that transaction, provided that the excess commission is reasonable in
relation to the value of "brokerage and research services" (as defined in
Section 28(e)(3) of the Securities Exchange Act of 1934) provided by that
broker. Accordingly, the Fund and the Manager agree that the Manager shall
select brokers for the execution of the Fund's portfolio transactions from
among:
i) Those brokers and dealers who provide quotations and other
services to the Fund, specifically including the quotations necessary to
determine the Fund's net assets, in such amount of total brokerage as may
reasonably be required in light of such services;
ii) Those brokers and dealers who supply research, statistical
and other data to the Manager or its affiliates which relate directly to
portfolio securities, actual or potential, of the Fund or which place the
Manager in a better position to make decisions in connection with the management
of the Fund's assets and portfolio, whether or not such data may also be useful
to the Manager and its affiliates in managing other portfolios or advising other
clients, in such amount of total brokerage as may reasonably be required.
Provided that the Trust's officers are satisfied that the
best execution is obtained, the sale of Fund shares may also be considered as a
factor in the selection of broker-dealers to execute the Fund's portfolio
transactions.
(c) When the Manager has determined that the Fund should tender
securities pursuant to a "tender offer solicitation," the Manager shall be
designated as the "tendering dealer" so long as it is legally permitted to
act in such capacity under the Federal securities laws and rules thereunder and
the rules of any securities exchange or association of which it may be a member.
The Manager shall not be obligated to make any additional commitments of
capital, expense or personnel beyond that already committed (other than normal
periodic fees or payments necessary to maintain its legal existence and
membership in the National Association of Securities Dealers, Inc.) as of the
date of this Agreement and this Agreement shall not obligate the Manager i) to
act pursuant to the foregoing requirement under any circumstances in which they
might reasonably believe that liability might be imposed upon them as a result
of so acting, or ii) to institute legal or other proceedings to collect fees
which may be considered to be due from others to it as a result of such a
tender, unless the Fund shall enter into an agreement with the Manager to
reimburse them for all expenses connected with attempting to collect such fees
including legal fees and expenses and that portion of the compensation due to
their employees which is attributable to the time involved in attempting to
collect such fees.
(d) The Manager shall render regular reports to the Trust, not
less frequently than quarterly, of how much total brokerage business has been
placed by the Manager with brokers falling into each of the foregoing categories
and the manner in which the allocation has been accomplished.
(e) The Manager agrees that no investment decision will be made
or influenced by a desire to provide brokerage for allocation in accordance
with the foregoing, and that the right to make such allocation of brokerage
shall not interfere with the Manager's paramount duty to obtain the best net
price and execution for the Fund.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF SECURITIES
REGISTRATION STATEMENTS, AMENDMENTS AND OTHER MATERIALS. The Manager, its
officers and employees, will make available and provide accounting and
statistical information required by the Underwriter in the preparation of
registration statements, reports and other documents required by Federal and
State securities laws and with such information as the Underwriter may
reasonably request for use in the preparation of such documents or of other
materials necessary for the distribution of the Fund's shares.
D. OTHER OBLIGATIONS AND SERVICES. The Manager shall make
available its officers and employees to the Board of Trustees and officers of
the Trust for consultation and discussions regarding the administrative
management of the Fund and its investment activities.
3. EXPENSES OF THE FUND. It is understood that the Fund will pay all its
expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Fund shall include:
A. Fees to the Manager as provided herein;
B. Expenses of all audits by independent public accountants;
C. Expenses of transfer agent, registrar, custodian, dividend
disbursing agent and shareholder record-keeping services;
D. Expenses of obtaining quotations for calculating the value of the
Fund's net assets;
E. Salaries and other compensation of any of its executive
officers who are not officers, trustees, stockholders or employees of the
Manager;
F. Taxes levied against the Fund;
G. Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Fund;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to meetings of the Board of Trustees and
shareholders of the Fund, reports to the Fund's shareholders, the filing of
reports with regulatory bodies and the maintenance of the Fund's legal
existence;
J. Legal fees, including the legal fees related to the registration
and continued qualification of the Fund shares for sale;
K. Costs of printing stock certificates representing shares of the
Fund;
L. Trustees' fees and expenses to trustees who are not
trustees, officers, employees or stockholders of the Manager or any of its
affiliates; and
M. Its pro rata portion of the fidelity bond insurance premium.
4. COMPENSATION OF THE MANAGER. The Fund shall pay a monthly management
fee in cash to the Manager based upon a percentage of the value of its net
assets, calculated as set forth below, on the first business day of each month
in each year as compensation for the services rendered and obligations assumed
by the Manager during the preceding month. The initial management fee under this
Agreement shall be payable on the first business day of the first month
following the effective date of this Agreement, and shall be reduced by the
amount of any advance payments made by the Fund relating to the previous month.
A. For purposes of calculating such fee, the value of the net assets
of the Fund shall be the net assets computed as of the close of business on the
last business day of the month preceding the month in which the payment is being
made, determined in the same manner the Fund uses to compute the value of its
net assets in connection with the determination of the net asset value of the
shares, all as set forth more fully in the Fund's current prospectus. The rate
of the monthly management fee shall be as follows:
5/96 of 1% (approximately 5/8 of 1% per year) of
the value of net assets up to and including
$100,000,000; and
1/24 of 1% (approximately 1/2 of 1% per year)
of the value of net assets over $100,000,00 and
not over $250,000,000; and
9/240 of 1% (approximately 45/100 of 1% per year) of
the value of net assets in excess of $250,000,000.
B. The Management fee payable by the Fund shall be reduced or
eliminated to the extent that Franklin Distributors, Inc. has actually received
cash payments of tender offer solicitation fees less certain costs and expenses
incurred in connection therewith; and to the extent necessary to comply with the
limitations on expenses which may be borne by the Fund as set forth in the laws,
regulations and administrative interpretations of those states in which the
Fund's shares are registered. The Manager may waive all or a portion of its fees
provided for hereunder and such waiver shall be treated as a reduction in
purchase price of its services. The Manager shall be contractually bound
hereunder by the terms of any publicly announced waiver of its fee, or any
limitation of the Fund's expenses, as if such waiver or limitation were fully
set forth herein.
C. If this Agreement is terminated prior to the end of any month, the
management fee shall be prorated for the portion of any month in which this
Agreement is in effect which is not a complete month according to the proportion
which the number of calendar days in the month during which the Agreement is in
effect bears to the number of calendar days in the month, and shall be payable
within 10 days after the date of termination.
5. ACTIVITIES OF THE MANAGER. The services of the Manager to the Fund
hereunder are not to be deemed exclusive, and the Manager and any of its
affiliates shall be free to render similar services to others. Subject to and in
accordance with the Agreement and Declaration of Trust and the By-Laws of the
Trust and to Section 10(a) of the Federal Investment Company Act of 1940, it is
understood that trustees, officers, agents and shareholders of the Fund are or
may be interested in the Manager or its affiliates as directors, officers,
agents or stockholders, and that directors, officers, agents or stockholders of
the Manager or its affiliates are or may be interested in the Trust as trustees,
officers, agents, shareholders or otherwise, that the Manager or its affiliates
may be interested in the Trust as shareholders or otherwise; and that the effect
of any such interests shall be governed by said Agreement and Declaration of
Trust, the By-Laws and the Act.
6. LIABILITIES OF THE MANAGER.
A. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to 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 or for any losses that may be sustained in
the purchase, holding or sale of any security by the Fund.
B. Notwithstanding the foregoing, the Manager agrees to reimburse the
Fund for any and all costs, expenses, and counsel and trustees' fees reasonably
incurred by the Fund in the preparation, printing and distribution of proxy
statements, amendments to its Registration Statement, holdings of meetings of
its shareholders or trustees, the conduct of factual investigations, any legal
or administrative proceedings (including any applications for exemptions or
determinations by the Securities and Exchange Commission) which the Fund incurs
as the result of action or inaction of the Manager or any of its affiliates or
any of their officers, trustees, employees or shareholders where the action or
inaction necessitating such expenditures i) is directly or indirectly related to
any transactions or proposed transaction in the shares or control of the Manager
or its affiliates (or litigation related to any pending or proposed or future
transaction in such shares or control) which shall have been undertaken without
the prior, express approval of the Trust's Board of Trustees; or, ii) is within
the control of the Manager or any of its affiliates or any of their officers,
trustees, employees or shareholders. The Manager shall not be obligated pursuant
to the provisions of this Subsection 6(B), to reimburse the Fund for any
expenditures related to the institution of an administrative proceeding or civil
litigation by the Fund or a Fund shareholder seeking to recover all or a portion
of the proceeds derived by any shareholder of the Manager or any of its
affiliates from the sale of his shares of the Manager, or similar matters. So
long as this Agreement is in effect the Manager shall pay to the Fund the amount
due for expenses subject to this Subsection 6(B) Agreement within 30 days after
a xxxx or statement has been received by the Fund therefore. This provision
shall not be deemed to be a waiver of any claim the Fund may have or may assert
against the Manager or others for costs, expenses or damages heretofore incurred
by the Fund or for costs, expenses or damages the Fund may hereafter incur which
are not reimbursable to it hereunder.
C. No provision of this Agreement shall be construed to protect any
director or officer of the Trust, or the Manager, from liability in violation of
Sections 17(h) and (i) of the Investment Company Act of 1940.
7. RENEWAL AND TERMINATION.
A. This Agreement shall become effective on the date written below
and shall continue in effect for one year. The Agreement is renewable annually
thereafter for successive periods not to exceed one year i) by a vote of a
majority of the outstanding voting securities of the Fund or by a vote of the
Board of Trustees of the Trust, and ii) by a vote of majority of the trustees of
the Trust who are not parties to the Agreement or interested persons of any
parties to the Agreement (other than as Trustees of the Trust) cast in person at
a meeting called for the purpose of voting on the Agreement.
B. This Agreement.
i) may at any time be terminated without the payment of any
penalty either by vote of the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting
securities of the Fund, on 30 days' written notice to the
Manager;
ii) shall immediately terminate in the event of its assignment;
and
iii) may be terminated by the Manager on 30 days' written notice
to the Fund.
C. As used in this Section the terms "assignment", "interested person"
and "vote of a majority of the outstanding voting securities" shall have the
meanings set forth for any such terms in the Investment Company Act of 1940, as
amended.
D. Any notice under this Agreement shall be given in writing
addressed and delivered, or mailed post-paid, to the other party at any office
of such party.
8. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision,statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective the 1st day of October, 1996.
FRANKLIN NEW YORK TAX FREE TRUST on behalf of
FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND
By /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Vice President & Secretary
FRANKLIN INVESTMENT ADVISORY SERVICES, INC.
By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Executive Vice President
TERMINATION OF AGREEMENT
Franklin New York Tax-Free Trust and Franklin Advisers, Inc., hereby agree that
the Management Agreement between them dated September 21, 1992 is terminated
with respect to the Franklin New York Intermediate-Term Tax-Free Income Fund,
and only with respect to that Fund, effective as of the date of the Management
Agreement above.
FRANKLIN NEW YORK TAX-FREE TRUST
By /s/Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Vice President & Secretary
FRANKLIN ADVISERS, INC.
By /s/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Executive Vice President
