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 INVESTMENT ADVISORY
SERVICES, Inc., a Connecticut 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, counselling and supervisory services to
investment companies and other investment counselling 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 Investment Advisory Services, 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 May, 1997.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
By: /S/XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
Vice President
FRANKLIN INVESTMENT ADVISORY SERVICES, INC.
By: /S/XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President &
Assistant Secretary
