EXHIBIT 10.33
FRANKLIN NEW YORK TAX-FREE INCOME FUND, INC.
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made between FRANKLIN NEW YORK TAX-FREE INCOME
FUND, INC., a New York Corporation, hereinafter called the "Fund" and FRANKLIN
INVESTMENT ADVISORY SERVICES, INC., a Connecticut Corporation, hereinafter
called the "Manager".
WHEREAS, the Fund 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 Articles of Incorporation, 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 Fund 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, 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:
1. EMPLOYMENT OF THE MANAGER. The Fund 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 Directors and the officers of
the Fund, 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
Fund any way or otherwise be deemed an agent of the Fund.
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 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 reasonably
required for managing the corporate affairs and conducting the business of
the Fund, including complying with the corporate and 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 Fund 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 Fund's Board of
Directors 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
corporate action and any other rights pertaining to the Fund's
portfolio securities shall be exercised. The Manager shall render
regular reports to the Fund, at regular meetings of the Board of
Directors and at such other times as may be reasonably requested by
the Fund's Board of Directors, 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 Fund's Board of Directors 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 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 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 Fund'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,"
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 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 Fund, 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
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 or helpful for the underwriting and distribution of the
Fund's shares.
D. OTHER OBLIGATIONS AND SERVICES. The Manager shall make available
its officers and employees to the Board of Directors and officers of the
Fund 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, directors, 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 corporate meetings of the Fund, reports to the
Fund to its shareholders, the filing of reports with regulatory bodies and
the maintenance of the Fund's corporate 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. Directors' fees and expenses to directors who are not directors,
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 the Fund'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 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 as the Fund uses to compute
the value of its net assets in connection with the determination of the net
asset value of Fund 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% of the value of net assets up to and including
$100,000,000; and
1/be 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 Fund shall be reduced or
eliminated to the extent that Distributors 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 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
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 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 Articles of Incorporation and By-Laws of the Fund and to
Section 10(a) of the 1940 Act, it is understood that directors, officers, agents
and stockholders 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 Fund as directors, officers, agents, stockholders or
otherwise, that the Manager or its affiliates may be interested in the Fund as
stockholders or otherwise; and that the effect of any such interests shall be
governed by said Articles of Incorporation, 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 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 directors' 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 directors, 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,
directors, 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 Fund's Board of
Directors; or (ii) is within the control of the Manager or any of its
affiliates or any of their officers, directors, 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 Fund, 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 Fund or by a vote of the Board of Directors of the
Fund, and (ii) by a vote of a majority of the directors of the Fund who are
not parties to the Agreement or interested persons of any parties to the
Agreement (other than as Directors of the Fund) 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 Directors of the Fund 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 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, 1996.
FRANKLIN NEW YORK TAX-FREE INCOME FUND, INC.
By:_________________________
Xxxxxxx X. Xxxxxx
Vice President &
Assistant Secretary
FRANKLIN INVESTMENT ADVISORY SERVICES, INC.
By:__________________________
Xxxxxx X. Xxxxxxx, Xx.
Senior Vice President
TERMINATION OF AGREEMENT
Franklin New York Tax-Free Income Fund, Inc. and Franklin Advisers, Inc., hereby
agree that the Management Agreement between them dated May 1, 1994 is terminated
effective as of the date of the Management Agreement above.
FRANKLIN NEW YORK TAX-FREE INCOME FUND, INC.
By:_________________________
Xxxxxxx X. Xxxxxx
Vice President &
Assistant Secretary
FRANKLIN ADVISERS, INC.
By __________________________
Xxxxxx X. Xxxxx
Executive Vice President
