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 19th day of March, 1998, 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 ADVISERS, INC.,
a California 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, counseling and supervisory services to
investment companies and other investment counseling 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 19th day of March, 1998.
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 ADVISERS, INC.
By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Executive Vice President
TERMINATION OF AGREEMENT
Franklin New York Tax-Free Trust and Franklin Investment Advisory Services,
Inc., hereby agree that the Management Agreement between them dated October
1, 1996 is terminated with respect to the Franklin New York Intermediate-Term
Tax-Free Income 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 INVESTMENT ADVISORY SERVICES, INC.
By /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Secretary
