FRANKLIN NEW YORK TAX-FREE INCOME FUND
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made between FRANKLIN NEW YORK TAX-FREE INCOME
FUND, a Delaware business trust, (the "Trust") and FRANKLIN ADVISERS, INC., a
California Corporation, (the "Manager").
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940 ( the "1940 Act")
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 1940 Act 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 various
management, statistical, research, investment advisory and other services;
and,
WHEREAS, the Manager is registered as an investment adviser under the
Investment Adviser'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 Trust.
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as:
1. Employment of the Manager. The Trust hereby employs the Manager to
manage the investment and reinvestment of the Trust'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 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. Administrative Services. The Manager shall furnish to the
Trust 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 reasonably required for
managing the corporate affairs and conducting the business of the Trust,
including complying with the corporate and securities reporting requirements
of the United States and the various states in which the Trust does business,
conducting correspondence and other communications with the shareholders of
the Trust, maintaining all internal bookkeeping, accounting and auditing
services and records in connection with the Trust'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 Trust's assets and portfolio
subject to and in accordance with the investment objectives and policies of
the Trust 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 Trust'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 corporate action and any other rights pertaining to the Trust'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 Trust'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 Trust, orders for the execution of the
Trust's portfolio transactions. When placing such orders the Manager shall
seek to obtain the best net price and execution for the Trust 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 Trust 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 Trust will
benefit, directly or indirectly, by doing so, the Manager may place orders
with a broker who charges a 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 Trust and the Manager agree that the Manager
shall select brokers for the execution of the Trust's portfolio transactions
from among:
(i) Those brokers and dealers who provide quotations and
other services to the Trust, specifically including the
quotations necessary to determine the Trust'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 Trust or which place the Manager in a better
position to make decisions in connection with the management
of the Trust'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 Trust shares may also be
considered as a factor in the selection of broker-dealers to
execute the Trust's portfolio transactions.
(c) When the Manager has determined that the Trust
should tender securities pursuant to a "tender offer solicitation,"
Franklin/Xxxxxxxxx Distributors, Inc. ("Distributors") 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.
Neither the Manager nor Distributors shall 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 corporate 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 or Distributors (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 follows to be due from others to it as a result of such a tender,
unless the Trust 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 more frequently than quarterly, of how much total brokerage
business has been placed by the Manager with brokers falling into each of the
categories set forth in (b)(i) and (ii) above 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 Trust.
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 or helpful for the underwriting and
distribution of the Trust'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 Trust and its investment activities.
3. Expenses of the Trust. It is understood that the Trust will pay
all its expenses other than those expressly assumed by the Manager herein,
which expenses payable by the Trust 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 Trust'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 Trust;
G. Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Trust;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to corporate meetings of the Trust, reports to
the Trust to its shareholders, the filing of reports with regulatory bodies
and the maintenance of the Trust's corporate existence;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Trust shares for sale;
K. Costs of printing stock certificates representing shares of
the Trust;
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 Trust shall pay a monthly
management fee in cash to the Manager based upon a percentage of the value of
the Trust's 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 Trust
relating to the previous month.
A. For purposes of calculating such fee, the value of the net
assets of the Trust 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 as the Trust uses to
compute the value of its net assets in connection with the determination of
the net asset value of Trust shares, all as set forth more fully in the
Trust's current prospectus. The rate of the monthly management fee shall be
as follows:
5/96 of 1% of the value of net assets up to and including
$100,000,000; and
1/24 of 1% of the value of net assets over $100,000,000 and
not over $250,000,000; and
9/240 of 1% of the value of net assets over $250,000,000 and
not over $10 billion; and
11/300 of 1% of the value of net assets over $10 billion and
not over $12.5 billion; and
7/200 of 1% of the value of net assets over $12.5 billion and
not over $15 billion; and
1/30 of 1% of the value of net assets over $15 billion and
not over $17.5 billion; and
19/600 of 1% of the value of net assets over from $17.5
billion and not over $20 billion; and
3/100 of 1% of the value of net assets in excess of $20
billion.
B. The Management fee payable by the Trust shall be reduced or
eliminated to the extent that Franklin Advisers, 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 Trust as
set forth in the laws, regulations and administrative interpretations of
those states in which the Trust's shares are registered.
C. If this Agreement is terminated prior to the end of any month,
the monthly 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 fiscal quarter 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
Trust 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 By-Laws
of the Trust and to Section 10(a) of the 1940 Act, it is understood that
trustees, officers, agents and stockholders of the Trust are or may be
interested in the Manager or its affiliates as trustees, officers, agents or
stockholders, and that trustees, officers, agents or stockholders of the
Manager or its affiliates are or may be interested in the Trust as trustees,
officers, agents, stockholders or otherwise, that the Manager or its
affiliates may be interested in the Trust as stockholders 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 1940 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
Trust or to any shareholder of the Trust 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
Trust.
B. Notwithstanding the foregoing, the Manager agrees to reimburse
the Trust for any and all costs, expenses, and counsel and trustees' fees
reasonably incurred by the Trust 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 Trust 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 Trust for any expenditures related to the institution of an
administrative proceeding or civil litigation by the Trust or a Trust
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 Trust 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 Trust therefore. This provision shall not be deemed
to be a waiver of any claim the Trust may have or may assert against the
Manager or others for costs, expenses or damages heretofore incurred by the
Trust or for costs, expenses or damages the Trust may hereafter incur which
are not reimbursable to it hereunder.
C. No provision of this Agreement shall be construed to protect
any trustee or officer of the Trust, or the Manager, from liability in
violation of Sections 17(h) and (i) of the 1940 Act.
7. Renewal and Termination.
A. This Agreement shall become effective on the date written
below and shall continue in effect for two (2) years thereafter, unless
sooner terminated as hereinafter provided and share continue in effect
thereafter for periods not exceeding one (1) year so long as such
continuation is approved at least annually (i) by a vote of a majority of the
outstanding voting securities of the Trust or by a vote of the Board of
Trustees of the Trust, and (ii) by a vote of a 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 trust, 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 Trust.
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 1940 Act, 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 here to have caused this
Agreement to be executed the 1st day of October, 1998.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
By: /s/ X.X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President &
Assistant Secretary
FRANKLIN ADVISERS, INC.
By: /s/ H.E. XXXXX
Xxxxxx X. Xxxxx
Executive Vice President
Termination of Agreement
Franklin New York Tax-Free Income Fund and Franklin Investment Advisory
Services, Inc., hereby agree that the Management Agreement between them dated
May 1, 1997 is terminated effective as of the date of the Management
Agreement above.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
By: /s/ H.E. XXXXX
Xxxxxx X. Xxxxx
Vice President
FRANKLIN INVESTMENT ADVISORY SERVICES, INC.
By /s/ X.X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President
