Commission Paying Agreement [Amended and Restated] (2000)Full Document 

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                              DATED 31 JANUARY 2000

                       TEMPLETON GLOBAL STRATEGY FUNDS

                      TEMPLETON GLOBAL ADVISORS LIMITED

                    TEMPLETON GLOBAL STRATEGIC SERVICES SA

                      LIGHTNING FINANCE COMPANY LIMITED

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                AMENDED AND RESTATED COMMISSION PAYING AGREEMENT

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                            MATHESON ORMSBY PRENTICE
                                30 HERBERT STREET
                                    DUBLIN 2
                                    IRELAND

                           J:\WP\PMY\LUXAMENDAGR3.DOC






                              INDEX

ARTICLE 1..................................................2
  Definitions..............................................2
ARTICLE 2.................................................10
  Closing Arrangements....................................10
ARTICLE 3.................................................10
  Commission Payment......................................10
ARTICLE 4.................................................12
  Payment of Fees.........................................12
ARTICLE 5.................................................14
  Representations and Warranties..........................14
ARTICLE 6.................................................18
  Conditions Precedent....................................18
ARTICLE 7.................................................21
  Covenants...............................................21
ARTICLE 8.................................................24
  Termination Events......................................24
ARTICLE 9.................................................26
  Indemnification.........................................26
ARTICLE 10................................................27
  Additional Sub-Funds....................................27
ARTICLE 11................................................27
  General.................................................27
SCHEDULE A................................................35
SCHEDULE B................................................36
SCHEDULE C................................................37
SCHEDULE D................................................38
SCHEDULE E................................................45










THIS AGREEMENT made  on    31 January 2000

BETWEEN:

TEMPLETON GLOBAL STRATEGY FUNDS a societe  d'investissement  a capital variable,
incorporated  under  the  laws of the  Grand-Duchy  of  Luxembourg,  having  its
registered office at 26 boulevard Royale, L-2449, Luxembourg, (the "Fund");

TEMPLETON  GLOBAL ADVISORS  LIMITED  (formerly  known as Templeton,  Galbraith &
Hansberger  Limited),  a company incorporated under the laws of the Commonwealth
of the Bahamas and having its registered office at Nassau,  Bahamas,  ("TGAL" or
the "Principal Distributor");

TEMPLETON GLOBAL STRATEGIC  SERVICES SA, a Societe Anonyme,  incorporated  under
the laws of the Grand-Duchy of Luxembourg and having its registered office at 26
boulevard Royale, L-2449, Luxembourg ("TGSS" );

AND

LIGHTNING FINANCE COMPANY LIMITED,  a limited liability company  incorporated in
Ireland and having its registered office at Chase Manhattan House,  IFSC, Dublin
1, Ireland ("LFL").

WHEREAS:

A     The Fund has been  incorporated  as an investment  fund for the investment
      and  reinvestment  of its assets in certain types of  securities,  as more
      fully described in its Articles of Incorporation.

B     The Fund, pursuant to a distribution agreement dated as of 6 November 1990
      made  between the Fund and  Templeton,  Galbraith  and  Hansberger  Ltd, a
      company  incorporated under the laws of the Cayman Islands ("TGH Cayman"),
      appointed  TGH Cayman as principal  distributor  of the shares issued from
      time to time in the capital of the Fund (the  "Shares")  for all countries
      outside of the United States of America (the "Distribution Agreement").

C     TGH Cayman,  pursuant to an assignment  dated 30 October 1992 made between
      the Fund, TGH Cayman and the Principal Distributor, assigned its title and
      interest in the  Distribution  Agreement to the Principal  Distributor and
      the Principal  Distributor  thereby  assumed the obligations of TGH Cayman
      under the  Distribution  Agreement as if the  Principal  Distributor  were
      named in the  Distribution  Agreement  as a party  thereto  in lieu of TGH
      Cayman.

D     Pursuant to the Addendum to the Distribution  Agreement (the "Distribution
      Agreement  Addendum") dated 1 July 1999 between the Fund and the Principal
      Distributor  (which  has taken  effect as and from the 1 July  1999),  the
      Principal   Distributor   has  been  granted  the  right  to  receive  all
      conditional deferred sales charges and servicing charges in respect of the
      Shares.

E     Pursuant to a  distribution  controller  agreement made as of 1 October
      1995  between the  Principal  Distributor  and TGSS (the  "Distribution
      Controller  Agreement"),  the Principal  Distributor  appointed TGSS as
      distribution   controller   of  the  Fund  (in   such   capacity,   the
      "Distribution   Controller").   It  was  agreed  in  the   Distribution
      Controller  Agreement  that TGSS would  receive  certain fees in return


      for  co-ordinating the distribution of the Shares and providing certain
      other associated services.

F     Pursuant  to  a  letter  (the  "Fees   Side-Letter")  from  the  Principal
      Distributor  to TGSS  (which is stated to take  effect as of 29 July 1994)
      the  Principal  Distributor  granted to TGSS the right to receive  certain
      conditional  deferred  sales charges and other charges in connection  with
      the class of Shares which, up until 1 July 1999, were known as the Class B
      Shares  and which are now  known as the  Class Bx  Shares  (the  "Class Bx
      Shares").

G     With effect  from 1 July 1999 and as more  particularly  described  in the
      addendum  dated June 1999 to the  prospectus  of the Fund dated  September
      1997 (as  amended,  varied or  supplemented  from time to time by  various
      instruments  including the addendum)  (the  "Prospectus"),  a new class of
      Shares named Class B Shares (the "New B Shares")  will be  introduced  for
      certain Sub-Funds.

H     On the terms and  subject  to the  conditions  set out in a  Commission
      Paying  Agreement and letter agreement in relation thereto each dated 1
      July 1999 and each among the parties hereto  (together the  "Commission
      Paying  Agreement"),  pursuant to which the Fund with the knowledge and
      consent of TGAL and TGSS  requested  LFL to perform,  in respect of the
      New B Shares,  certain  services in connection with the distribution of
      the New B Shares  (including  the  payment of Selling  Commissions  (as
      defined in Article 1.1)).  In return,  the Fund,  pursuant to the terms
      of the  Commission  Paying  Agreement,  agreed to pay certain  fees (as
      more particularly  described in the Commission Paying Agreement) to LFL
      (and TGAL and TGSS  agreed to waive  any  entitlement  they may have to
      such  fees) for each New B Share in  respect  of which  LFL has  become
      obligated  to pay a Selling  Commission  and any related  Transfer  and
      Reinvested  Shares.  The Fund's  obligation to pay the appropriate fees
      in respect of a New B Share and any  related  Transfer  and  Reinvested
      Shares  commenced on the Trade Date for which LFL is obligated to pay a
      Selling Commission in respect of that New B Share.

I     The  parties  hereto  wish to amend  and  restate  the  Commission  Paying
      Agreement  upon the terms and  subject to the  conditions  set out in this
      Agreement  and,  with effect from the date  hereof,  this  Agreement  will
      supersede the Commission  Paying Agreement which shall  automatically  and
      without  further  act or  document  terminate  upon the  execution  by the
      parties hereto of this Agreement.

NOW THEREFORE  THIS  AGREEMENT  WITNESSES  that in  consideration  of the mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and sufficiency of which are hereby  acknowledged,  the parties agree as
follows:


                                    ARTICLE 1

                                   DEFINITIONS

1.1. DEFINITIONS.  Whenever  used in this  Agreement and the  schedules,  unless
     there is something inconsistent in the subject matter or context, words and
     terms shall have the meanings  given to them in this Article 1.1 and in the
     recitals hereto:

     "Additional Sub-Fund" means any new or existing Sub-Fund which commences to
     issue New B Shares.

     "Adverse  Effect" when used alone or in conjunction  with other terms means
     the  occurrence or existence of any act,  circumstance,  condition,  event,
     fact, or combination of the foregoing which, in the reasonable judgement of
     LFL,  creates a  significant  probability  of any (a)  adverse  effect  (or
     material  adverse effect,  where such occurrence is caused by a computer or
     operations  error) upon (i) the timing or amount of any payment of any Fee;
     or (ii) the timely  receipt by LFL of any Fees;  or (b) a material  adverse
     effect upon (i) the Funds's, TGAL's or TGSS's ability to pay or perform its
     obligations  under this  Agreement in a timely  manner or (ii) the remedies
     and other rights of LFL under this Agreement.

     "Advisory Agreements" means the investment management agreements in respect
     of each of the  Sub-Funds  between the Fund and the  applicable  investment
     advisor as described in Schedule A as  supplemented or amended from time to
     time.

     "Affiliate" has the meaning  provided to that term under the Securities and
     Exchange Act of 1933 of the United States of America.

     "Agreement"  means  this  Agreement,  as the same may from  time to time be
     amended, supplemented, waived or modified.

     "Anniversary  of the Sale Cutoff Date" means,  in respect of any particular
     Monthly Pool,  the date which is 6 years  following the Sale Cutoff Date in
     respect of that Monthly Pool.

     "Approved  Dealers"  means  dealers in respect of the Shares as approved by
     TGAL or its duly appointed agents.

     "Articles  of  Incorporation"  means the articles of  incorporation  of the
     Fund.

     "Business  Day" means a day on which the Fund is valued in accordance  with
     the Prospectus Documents.

     "Closing"  means the completion of the  transactions  contemplated  by this
     Agreement  and the delivery of  additional  documentation  required by this
     Agreement.

     "Closing  Date" means such date as the parties agree is the date upon which
     Closing shall take place.

     "Closing  Time" means 12:00 p.m. on the Closing  Date or such other time on
     the Closing  Date as the parties may agree as the time at which the Closing
     shall take place.

     "Collection  Account"  means a bank account of LFL  maintained at The Chase
     Manhattan  Bank at account number  323-13-43-35,  with respect to which the
     Fund, TGSS and TGAL shall have no access or control.


     "Collections"  means (a) all  amounts  paid or  payable  under the  Program
     Documents  in respect of the Fees and (b) all  proceeds  of the  foregoing,
     except  that  "Collections"  shall  not  include  amounts  paid or  payable
     pursuant to Article 9.1.

     "Commission  Payer"  means LFL acting in its capacity as  commission  payer
     hereunder.

     "Deferred Sales Charge" means,  with respect to any Sub-Fund,  the deferred
     sales charge payable,  either directly or by withholding  from the proceeds
     of the redemption of Shares of such Sub-Fund,  by the  shareholders of such
     Sub-Fund on any  redemption of Shares of such  Sub-Fund in accordance  with
     the Prospectus Documents relating to such Sub-Fund.

     "Deferred  Sales Charge  Share" means each New B Share issued after July 1,
     1999 by a New B Share  Sub-Fund in respect of which a Deferred Sales Charge
     is payable.

     "Distributed  Shares"  means  collectively,  the Original  Charge Shares
     and the Transfer Shares.

     "Distribution   Agreements"  means  the  distribution  services  agreements
     between  each of the Fund,  TGAL,  TGSS and TGH Cayman  (including  without
     limitation,   the  Distribution   Agreement,   the  Distribution  Agreement
     Addendum,  the Distribution  Controller Agreement and the Fees Side-Letter)
     as supplemented or amended from time to time.

     "Distributor  Report"  means a monthly  report to be prepared by TGSS which
     shall set forth,  among other things TGSS's  determination,  as of the last
     Business Day of such month, of (a) the Selling  Commissions paid or payable
     by LFL in respect of Deferred Sales Charges Shares  distributed during such
     month,  (b) the amount of Fees paid or payable in respect of such month and
     the Deferred  Sales  Charge  Shares  attributable  to such Fees and (c) the
     computation of the amount of such Fees in reasonable detail.

     "Distributors" means TGAL and TGSS and "Distributor" means any one of them.

     "Eligible  Fee" means a Fee which (a) (i)  constitutes  a legal,  valid and
     binding  obligation  of the  obligor  thereof  which is not  subject to any
     dispute,  offset,  counterclaim or defence whatsoever and (ii) which is not
     subject to any adverse  claim;  and (b) does not  contravene any applicable
     law.

     "External  Reinvested  Share" is a  Reinvested  Share which is a share of a
     Sub-Fund which is not a New B Share Sub-Fund.

     "External  Share" means a Share issued by a Sub-Fund,  which is not a New B
     Share Sub-Fund,  upon the immediate  investment of proceeds realised on the
     redemption of a Distributed  Share or another External Share (and any other
     Share issued upon the consolidation or subdivision of an External Share).

     "Fees" means all amounts  payable to LFL under this Agreement and any other
     Program Document.

     "Free  Exchange"  shall mean the  exchange of Shares of one  Sub-Fund for a
     Transfer Share or an External Share of another Sub-Fund.

     "Free  Redemption"  means a redemption  of  Distributed  Shares or External
     Shares where the obligation of the shareholder of such  Distributed  Shares
     or External Shares to pay the applicable  Deferred Sales Charge is relieved
     or deferred in whole or in part.


     "FRI" means Franklin  Resources,  Inc.,  the indirect  parent company of
     each of the Distributors.

     "Fund Event of Termination" means:

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