DATED 31 JANUARY 2000

                      (1) TEMPLETON GLOBAL STRATEGY FUNDS

                     (2) TEMPLETON GLOBAL ADVISORS LIMITED

                   (3) TEMPLETON GLOBAL STRATEGIC SERVICES SA

                     (4) LIGHTNING FINANCE COMPANY LIMITED

         --------------------------------------------------------------

                AMENDED AND RESTATED COMMISSION PAYING AGREEMENT

         ---------------------------------------------------------------



                            MATHESON ORMSBY PRENTICE
                                30 HERBERT STREET
                                    DUBLIN 2
                                    IRELAND

                           J:\WP\PMY\LUXAMENDAGR3.DOC


<PAGE>



                              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




<PAGE>





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
<PAGE>

      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:
<PAGE>

                                    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.
<PAGE>

     "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.
<PAGE>

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

     "Fund Event of Termination" means:

     (a)  any change (or proposed  change as agreed between the parties  hereto)
          in accounting, governmental or other legislation, regulation or policy
          (i) which will  materially and adversely  affect the accounting or tax
          treatment of the  arrangements  under the Program  Documents to any of
          the Fund,  TGSS or TGAL or (ii) as a result of which TGAL, TGSS or the
          Fund will become  liable,  under  Article  11.8,  to pay any amount or
          amounts which,  but for such change,  it would not have been liable to
          pay;

     (b)  the occurrence of an LFL Insolvency Event; or

     (c)  a suit,  litigation  or  regulatory  proceeding  which has a  material
          adverse  effect on the  ability of LFL to  perform or comply  with its
          obligations hereunder.

     "GAAP" means generally accepted accounting principles in Luxembourg (in the
     case of the Fund), or the United States of America (in the case of LFL), as
     in  effect  from  time to  time  and  consistently  applied  (except  where
     specified otherwise).

     "Insolvency Event" means any of the following occurrences:

     (a)  TGSS, TGAL or the Fund shall generally not pay its obligations as such
          obligations  become due or shall admit in writing its inability to pay
          its obligations  generally or shall make a general  assignment for the
          benefit of creditors; or

     (b)  any  proceeding  shall be instituted  by or against TGSS,  TGAL or the
          Fund  seeking  to  adjudicate  it in  whole  or in  part  bankrupt  or
          insolvent,   or  seeking  liquidation,   winding-up,   reorganisation,
          arrangement,  adjustment,  protection,  relief or composition of it or
          its  obligations or proposal to its creditors  under any laws relating
          to bankruptcy,  insolvency or  reorganisation  or relief of debtors or
          seeking  the entry of an order  for  relief  or the  appointment  of a
          receiver,  trustee,  custodian or other similar official for it or for
          any  substantial  part of its  property  and,  in the case of any such
          proceedings  instituted  against it (but not  instituted  by it), such
          proceedings  shall remain  undismissed  or unstayed for a period of 60
          days; or

     (c)  a court or other governmental  authority or agency having jurisdiction
          in the premises shall enter a decree or order (i) for the  appointment
          of a receiver, liquidator, assignee, trustee or sequestrator (or other
          similar  official) of TGAL,  TGSS or the Fund of any material  part of
          its property or for the winding up or  liquidation  of its affairs and
          such decree  shall  remain in force  undischarged  and  unstayed for a
          period of 60 days; or (ii) for the  sequestration or attachment of any
          material  part of the  property of TGSS,  TGAL or the Fund without its
          unconditional  return to the  possession of TGSS,  TGAL or the Fund or
          its unconditional release from such sequestration or attachment within
          60 days thereafter; or

     (d)  TGAL,  TGSS or the Fund shall take any action to authorise  any of the
          actions set forth above.
<PAGE>

     "Liabilities"  means  claims,  damages,  losses,   liabilities,   expenses,
     obligations,  penalties, actions, suits, judgments and disbursements of any
     kind or nature whatsoever  (including,  without limitation,  the reasonable
     fees and disbursements of counsel).

     "LFL Event of Termination" means each of the following events:

     (a)  the Fund,  TGAL or TGSS  shall fail to make or cause to be made in the
          manner and when due any  payment to be made or to be caused to be made
          by it under any Program Document and the failure of such payment shall
          continue unremedied for 10 Business Days following notice thereof from
          LFL to the entity  obligated  to make such  payment and the failure of
          such payment has an Adverse Effect;

     (b)  TGSS,  TGAL or the Fund shall  fail to  perform  or observe  any other
          material  term,  covenant or  agreement on its part to be performed or
          observed under any Program Document following TGSS, TGAL or the Fund's
          (as the case may be)  actual  knowledge  thereof  or receipt of notice
          from LFL, whichever is the earlier;

     (c)  any  representation  or warranty made or deemed made by TGSS,  TGAL or
          the Fund or any of their respective  officers or directors under or in
          connection with any Program Document shall have been false,  incorrect
          or  misleading  in any  material  respect when made or deemed made and
          which gives rise to an Adverse Effect;

     (d)  any material  provision of any Program Document to which TGSS, TGAL or
          the  Fund is a party  shall  cease to be a legal,  valid  and  binding
          obligation of any such Person enforceable in accordance with its terms
          or any such Person shall so assert in writing;

     (e)  there shall have occurred an Insolvency Event;

     (f)  FRI shall cease to own,  directly or  indirectly,  at least 80% of the
          issued and outstanding equity securities of each of TGSS and TGAL;

     (g)  there shall have occurred any change (or proposed  change as agreed by
          the parties hereto) in accounting,  governmental or other legislation,
          regulation or policy which would have an Adverse Effect;

     (h)  the  termination of the Joint Venture  Agreement  dated  September 11,
          1998 as  amended  respecting  LFL  among  FEP  Capital  II LLC and TGH
          Holdings Limited and LFL pursuant to Article 14 of that agreement; and

     (i)  a suit,  litigation  or  regulatory  proceeding  which has a  material
          adverse  effect on the  ability  of any of the  Fund,  TGAL or TGSS to
          perform or comply with its obligations hereunder.

     "LFL Insolvency Event" means any of the following occurrences:

     (a)  LFL shall generally not pay its obligations as such obligations become
          due or shall admit in writing  its  inability  to pay its  obligations
          generally  or shall  make a  general  assignment  for the  benefit  of
          creditors; or
<PAGE>

     (b)  any  proceeding  shall be  instituted  by or  against  LFL  seeking to
          adjudicate it in whole or in part  bankrupt or  insolvent,  or seeking
          liquidation,    winding-up,    court    protection,    reorganisation,
          arrangement,  adjustment,  protection,  relief or composition of it or
          its  obligations or proposal to its creditors  under any laws relating
          to bankruptcy,  insolvency or  reorganisation  or relief of debtors or
          seeking  the entry of an order  for  relief  or the  appointment  of a
          receiver,  trustee, examiner,  custodian or other similar official for
          it or for any substantial part of its property and, in the case of any
          such  proceedings  instituted  against it (but not  instituted by it),
          such proceedings shall remain  undismissed or unstayed for a period of
          60 days; or

     (c)  a court or other governmental  authority or agency having jurisdiction
          in the premises shall enter a decree or order (i) for the  appointment
          of a receiver, liquidator, examiner, assignee, trustee or sequestrator
          (or  other  similar  official)  of  LFL of any  material  part  of its
          property or for the winding up or  liquidation of its affairs and such
          decree shall remain in force undischarged and unstayed for a period of
          60 days; or (ii) for the  sequestration  or attachment of any material
          part of the  property of LFL without its  unconditional  return to the
          possession of LFL or its unconditional release from such sequestration
          or attachment within 60 days thereafter; or

     (d)  LFL shall take any action to  authorise  any of the  actions set forth
          above.

     "Lien"  means any  mortgage,  pledge,  hypothecation,  assignment,  deposit
     arrangement, encumbrance, lien or security interest (statutory or other) or
     preference,   priority  or  other   security   agreement  or   preferential
     arrangement   of  any  kind  or  nature   whatsoever  or  other  charge  or
     encumbrance,  including the retained security title of a conditional vendor
     or lessor.

     "Master Trust" means any trust or other special purpose entity or Person to
     which  any  interest  in any of  the  Fees  or the  right  to  receive  any
     Collections  with respect thereto has been transferred in connection with a
     Takeout Transaction.

     "Master Trust Transfer Agreement" means any agreement pursuant to which any
     interest in the Fees is transferred to a Master Trust.

     "Monthly  Fee" means,  in respect of each Monthly Pool, a monthly fee equal
     to 0.975% (on an annual  basis) of the  average  daily Net Asset  Value for
     that month of all  Distributed  and Reinvested  Shares and External  Shares
     forming part of such Monthly Pool divided by twelve.

     "Monthly Pool" means, with respect to any Sub-Fund and any calendar month:

     (i)  each  Original  Charge  Share  issued  by such  Sub-Fund  during  such
          calendar month;

     (ii) Transfer   Shares  of  such   Sub-Fund   issued  upon  the   immediate
          reinvestment of proceeds realised on the redemption of (a) an Original
          Charge Share of another  Sub-Fund  issued by such Sub-Fund  during the
          calendar month described in clause (i) above;  (b) a Reinvested  Share
          (that is not an External  Reinvested Share) of another Sub-Fund issued
          in respect of Deferred Sales Charge Shares described in clause (ii)(a)
          above or this  clause  (ii)(b);  or (c) a  Transfer  Share of  another
          Sub-Fund which relates to a Deferred  Sales Charge Share  described in
          clause (ii)(a) or (ii)(b) above or this clause (ii)(c);
<PAGE>

     (iii)Deferred  Sales  Charge  Shares  of  such  Sub-Fund  issued  upon  the
          automatic  reinvestment of income and capital gains distributions with
          respect to Deferred Sales Charge Shares of such Sub-Fund  described in
          clauses (i) or (ii) above, or this clause (iii); and

     (iv) External Shares or External  Reinvested  Shares of such Sub-Fund which
          are derived  (directly  or  indirectly)  from a Deferred  Sales Charge
          Share formerly  included in the Monthly Pool of a New B Share Sub-Fund
          whose Sale Cutoff Date occurred in such calendar month,

      provided  always that each  Deferred  Sales Charge Share of such  Sub-Fund
      will be  allocated  to a Monthly Pool in  accordance  with the  allocation
      procedures in Schedule D.

     "Multiple  Material  Errors" means errors in the calculation of amounts due
     to and adverse to LFL in excess of 10% of any amounts payable, which errors
     occur in excess of three times during the term of this Agreement  excluding
     any and all errors  (other  than those  caused by bad faith or fraud on the
     part of TGSS or TGAL) occurring prior to the first year anniversary date of
     this Agreement.

     "Net Asset Value" means,  with respect to any Sub-Fund or any Share,  as of
     the date any determination  thereof is made, the meaning given to that term
     in the Prospectus Documents.

     "New B Share  Sub-Funds"  means,  at any  time,  the  Sub-Funds  listed  in
     Schedule  C  together  with any  Sub-Funds  that  have  become  New B Share
     Sub-Funds in accordance with Article 10.

     "Original Charge Share" means, in respect of any calendar month, a Deferred
     Sales  Charge  Share issued in that month for which LFL is obligated to pay
     the Selling  Commission (and the term "Original  Charge Share" includes any
     Shares issued upon the  consolidation  or subdivision of an Original Charge
     Share).

     "Person" means any  individual,  partnership,  limited  partnership,  joint
     venture,  syndicate, sole proprietorship,  company or corporation,  with or
     without  share  capital,   unincorporated   association,   trust,  trustee,
     executor, administrator or other legal personal representative,  regulatory
     body or governmental  agency,  authority or entity,  however  designated or
     constituted.

     "Permitted  Designee" means (a) any Person  designated by LFL or any Master
     Trust, as the case may be, which may be The Chase Manhattan Bank,  Deutsche
     Bank,  Bank of New  York or  Constellation  Financial  Management  Company,
     L.L.C.  or  any  Affiliate  of  the  foregoing,  or (b)  any  other  Person
     designated by LFL or any Master Trust, as the case may be, (i) which is not
     actively  engaged in the sponsorship or management of any other mutual fund
     in the United States,  Canada or Europe in the reasonable  judgment of TGSS
     (such judgment not to be unreasonably withheld or delayed),  and (ii) which
     has  agreed  to be  bound  by  confidentiality  undertakings  in  substance
     comparable to those contained in this Agreement.

     "Program  Documents" means this Agreement,  the Articles of  Incorporation,
     the  Advisory  Agreements,   the  Prospectus  Documents,  the  Distribution
     Agreements, the Material Contracts, any Master Trust Transfer Agreement and
     the other agreements,  documents, certificates and instruments entered into
     or delivered in  connection  herewith and  therewith,  as the same may from
     time to time be amended, supplemented, waived or modified.
<PAGE>

     "Prospectus  Documents"  means, with respect to the Fund and each Sub-Fund,
     the most recent  prospectus  and addenda  thereto filed in connection  with
     registration  in  Luxembourg as more  particularly  described in Schedule A
     hereto as amended or supplemented from time to time.

     "Reinvested  Share" means a Deferred Sales Charge Share or any Share issued
     upon  the   automatic   reinvestment   of  income   and/or   capital  gains
     distributions  upon an Original Charge Share, a Transfer Share or any Share
     which has derived  directly or indirectly  (through  reinvestment of income
     and/or  capital  gains) from an Original  Charge Share or a Transfer  Share
     (and the term  "Reinvested  Share" also includes any Shares issued upon the
     consolidation  or  subdivision  of a Reinvested  Share) or any Share issued
     upon the immediate  investment of proceeds  realised on the redemption of a
     Reinvested Share of a New B Share Fund.

     "Sale Cutoff Date" means, with respect to any particular  Monthly Pool, the
     last  Business Day of the calendar  month during which LFL arranged for the
     payment of  commissions  of  Original  Charge  Shares  forming  part of the
     Monthly Pool and became obligated to pay the Selling Commissions in respect
     of such Monthly Pool.

     "Selling Commission" means, in respect of a Deferred Sales Charge Share, 4%
     of the Subscription Price of such Deferred Sales Charge Share.

     "Sub-Funds" means the sub-funds of the Fund (including, without limitation,
     those sub-funds in Schedule C).

     "Subscription  Price" means with respect to any Deferred Sales Charge Share
     at any  particular  time,  the gross  purchase price of such Deferred Sales
     Charge  Share  in the  applicable  currency  of the  relevant  New B  Share
     Sub-Fund established by the Prospectus Documents.

     "Substantial  Funds" means,  at any time, any New B Share Sub-Fund or group
     of New B Share  Sub-Funds  which, at such time, have an aggregate Net Asset
     Value  equal to thirty per cent (30%) or more of the total Net Asset  Value
     of all the New B Share Sub-Funds taken together at such time.

     "Takeout  Transaction" means any transaction  pursuant to which LFL, or any
     Master Trust which obtains such interest  directly or indirectly  from LFL,
     sells  or  otherwise   transfers,   participates  or  causes  to  be  sold,
     transferred  or  participated  interests in the Fees  relating to any New B
     Share Sub-Fund  (including,  without  limitation,  the right to receive any
     portion of any  Collections)  to any Person,  including a Master Trust or a
     subsidiary  or  Affiliate  of LFL which  publicly or  privately  sells debt
     instruments and/or certificates or other instruments representing ownership
     interests in such Master Trust or interest in any Fees (including,  without
     limitation, any right to receive any portion of any Collections).

     "Termination Date" means 30 June 2002, subject to termination or suspension
     as set forth in  Article  3.1,  or such later date as shall be agreed to in
     writing by the  parties  hereto,  except that the  Termination  Date may be
     deemed to have occurred on an earlier date pursuant to Article 8.

     "Trade  Date" means,  in respect of the  purchase of Deferred  Sales Charge
     Shares, the relevant Valuation Day of such Shares.
<PAGE>

     "Transfer  Share"  means a Deferred  Sales  Charge  Share  issued  upon the
     immediate  investment of proceeds realised on the redemption of an Original
     Charge Share, or another Transfer Share in a Deferred Sales Charge Share of
     another  New B Share  Sub-Fund  provided  that  the term  "Transfer  Share"
     includes any Deferred Sales Charge Share issued upon the  consolidation  or
     subdivision of a Transfer Share.

     "Valuation  Day" means a day on which the Fund is  accepting  subscriptions
     for Deferred Sales Charge Shares.

                                    ARTICLE 2

                              CLOSING ARRANGEMENTS

2.1  THE CLOSING.  The  transactions  contemplated  by this  Agreement  shall be
     completed  at the  Closing  Time at the offices of the counsel to LFL or at
     such other location as may be agreed to by the parties.

                                    ARTICLE 3

                               COMMISSION PAYMENT

3.1  APPOINTMENT  OF LFL. Upon and subject to the terms and  conditions  hereof,
     the Fund,  with the  knowledge and consent of TGAL and TGSS as evidenced by
     their signatures hereto, hereby appoints LFL as Commission Payer in respect
     of the  Deferred  Sales Charge  Shares in any country  where it is legal to
     distribute  the Fund and LFL will pay or  procure  the  payment  of Selling
     Commissions to Approved Dealers as and from 1 July 1999 up to and including
     30 June 2002,  subject to  suspension  and  termination  at any time in the
     circumstances  described in this Agreement.  Until terminated in accordance
     with the  terms of this  Agreement,  LFL will be the  exclusive  Commission
     Payer with respect to such  Deferred  Sales Charge Shares during the period
     described  above. It is acknowledged  and agreed by the parties hereto that
     LFL's  obligations  do not extend to sales of Shares which are not Deferred
     Sales Charge Shares and that LFL shall not receive any  remuneration of any
     kind in respect of such Shares.

3.2  DISTRIBUTION THROUGH APPROVED DEALERS. LFL will pay the Selling Commissions
     based on sales of  Deferred  Sales  Charge  Shares  only  through  Approved
     Dealers, and LFL will not itself directly or indirectly promote,  market or
     sell any Shares or accept  orders for the purchase of Shares.  All Deferred
     Sales  Charge  Shares  will be sold at a price equal to the Net Asset Value
     per  Share at the time of  purchase,  without  a sales  charge  payable  by
     investors.  TGSS will advise LFL upon the execution hereof and regularly as
     required  thereafter  so  long  as  LFL  is  entitled  hereunder  to act as
     Commission  Payer and receive  fees  hereunder of the names of all Approved
     Dealers through whom the Deferred Sales Charge Shares may be sold.
<PAGE>

     The  Distributors  agree not to  knowingly  accept  purchase  orders  from
     Persons  with respect to the sale of Deferred  Sales Charge  Shares in any
     jurisdiction in which the Deferred Sales Charge Shares are not registered,
     qualified  for sale or otherwise  exempt from the need to qualify for sale
     under applicable securities  legislation.  In respect of any such purchase
     orders which are unknowingly  accepted by the  Distributors,  the Deferred
     Sales Charge  Shares sold  pursuant to such orders will be subject to this
     Agreement  unless the trade in such Shares is  subsequently  reversed,  in
     which case such Deferred  Sales Charge Shares shall not be subject to this
     Agreement  and the  Distributors,  will  forthwith,  following  the  trade
     reversal and out of the proceeds of the trade reversal,  refund to LFL the
     amount of the Selling  Commissions  paid by it, if any, in respect of such
     Shares.

3.3  REJECTION OF PURCHASE ORDERS. Each of the Fund and TGAL may reject purchase
     orders for Deferred  Sales Charge Shares  received from an Approved  Dealer
     during the term of this Agreement only in accordance  with the terms stated
     in the Prospectus Documents.

3.4  REGISTRATION OF PURCHASES. After receipt and acceptance of a purchase order
     together with an amount equal to the purchase price for each Deferred Sales
     Charge Share  purchased,  TGSS will  promptly  register the  purchaser as a
     holder of the  purchased  Share or Shares and shall  deposit  the  purchase
     price to the credit of the Fund.

3.5  SERVICES OF LFL.  The primary  purpose of this  Agreement is to ensure that
     satisfactory  arrangements exist for the distribution of the Deferred Sales
     Charge  Shares  and to  provide a  mechanism  for the  payment  of  Selling
     Commissions  to  Approved  Dealers who  distribute  Deferred  Sales  Charge
     Shares.  Subject to its rights of termination as provided herein,  LFL will
     provide the following  services to the Distributors and the Fund during the
     period in which LFL acts as  Commission  Payer in  accordance  with Article
     3.1:

     (a)  paying the Selling Commissions in respect of the Deferred Sales Charge
          Shares;  the parties  agree that LFL's  obligation  to pay the Selling
          Commission in respect of a Deferred  Sales Charge Share shall arise on
          the Trade Date for such Deferred  Sales Charge Share,  notwithstanding
          that  LFL is only  required  to make  actual  payment  of the  Selling
          Commission in respect of such purchase on the settlement date for such
          Deferred Sales Charge Share;

     (b)  maintaining  proper and adequate business records of its operations in
          order to properly  monitor the Deferred  Sales Charge Shares for which
          it pays Selling  Commissions and the amount of the Selling Commissions
          paid; and

     (c)  providing confirmation to the Distributors and the Fund when requested
          as to the due and timely payment of Selling Commissions.

     LFL, the Distributors and the Fund acknowledge that the Distributors shall
     continue to arrange for the  distribution  of Deferred Sales Charge Shares
     pursuant to the Program Documents and that,  except as expressly  provided
     by this  Agreement,  LFL shall have no obligation to perform any duties or
     functions or make any payments carried out or made by the Distributors.

3.6  DISTRIBUTOR  REPORT.  On or before 10  Business  Days after the end of each
     month,  TGSS shall  provide LFL or a Permitted  Designee with a Distributor
     Report.  The parties agree to finalise as soon as possible and in any event
     not later than August 31, 1999 the form of the Distributor  Report which is
     acceptable to both parties.
<PAGE>

                                    ARTICLE 4

                                 PAYMENT OF FEES

4.1  MONTHLY  FEE. For its services in paying  Selling  Commissions  on sales of
     Original  Charge Shares  included in a Monthly Pool,  the Fund shall pay to
     LFL the  Monthly  Fee in  respect  of each  Monthly  Pool and TGAL and TGSS
     hereby  waive any  entitlement  they may have,  whether  under the  Program
     Documents or otherwise, to each such Monthly Fee payable hereunder.

     The Monthly  Fee will be accrued  daily on each  Valuation  Day and will be
     paid to LFL  within  ten days  after the end of each  calendar  month.  The
     Monthly Fee shall continue to be payable to LFL in respect of each Deferred
     Sales Charge Share,  External  Share or External  Reinvested  Share forming
     part of a Monthly Pool for the lesser of (i) the period that such  Deferred
     Sales Charge Share,  External Share or External Reinvested Share remains in
     issue;  and (ii) the  Anniversary of the Sale Cutoff Date,  notwithstanding
     that LFL's  appointment  as exclusive  Commission  Payer has expired or has
     been suspended or terminated.

4.2  DEFERRED  SALES  CHARGES.  Each of TGAL,  TGSS and the Fund  represents and
     warrants to LFL that a Deferred  Sales  Charge  applies to all  Distributed
     Shares of a New B Share Sub-Fund and all External Shares which are redeemed
     within five years of their date of issue,  or deemed date of issue,  except
     on  redemptions  where the  redemption  proceeds  realised are  immediately
     invested  in  Distributed  Shares  of one or more of the  other New B Share
     Sub-Funds or in External  Shares).  Each of TGAL, TGSS and the Fund further
     represents and warrants to LFL that the Deferred Sales Charge, expressed as
     a percentage of the lower of the current Net Asset Value or the issue price
     when  purchased per  Distributed  Share or External  Share being  redeemed,
     declines over time from the date of issue,  or deemed date of issue, of the
     Distributed Share or External Share as follows:

           If Redeemed During the Following    Deferred Sales
           Periods After the Date of           Charge
           ISSUE OR DEEMED DATE OF ISSUE       PERCENTAGE

           During the 1st year                  4.0%
           During the 2nd year                  3.0%
           During the 3rd year                  2.0%
           During the 4th year                  1.0%
           During the 5th year                  1.0%
           Thereafter                           Nil

     Each of TGAL,  TGSS and the Fund  represents and warrants to LFL that, for
     the purpose of  calculating  the  Deferred  Sales  Charge  payable to LFL,
     Deferred Sales Charge Shares will be redeemed in the following order:

     (a)  Reinvested Shares will be redeemed first; and

     (b)  Distributed  Shares  (or  External  Shares  derived  therefrom)  of  a
          Sub-Fund issued first, or deemed to be issued first,  will be redeemed
          second.

     In the event of the termination of any Sub-Fund,  LFL shall be entitled to
     receive  any   applicable   Deferred  Sales  Charges  in  respect  of  the
<PAGE>

     outstanding  Distributed Shares or External Shares of that Sub-Fund unless
     such Shares become Transfer Shares or External Shares of another Sub-Fund.

     Notwithstanding the foregoing provisions,  LFL agrees and accepts that, if
     at any time, the Luxembourg  supervisory authority compels the Fund not to
     levy any  Deferred  Sales  Charge as a result  of,  inter  alia,  material
     changes to or liquidation  or merger of Sub-Funds or for whatsoever  other
     reason,  the Fund will not be liable for the payment of any Deferred Sales
     Charge which would otherwise normally be payable.

4.3  DEFERRED SALES CHARGE  PAYMENTS.  In addition to the Monthly Fee payable to
     LFL  pursuant  to  Article  4.1  and  in  consideration  for  its  services
     hereunder,  LFL shall also be entitled to receive any Deferred Sales Charge
     paid by  shareholders  on the  redemption  of their  Distributed  Shares or
     External  Shares.  The  Deferred  Sales  Charges  will  be  calculated  and
     collected  by  TGSS,   its   successors  or  assigns  in  its  capacity  as
     Distribution  Controller  for the  Fund on each  Valuation  Day and will be
     payable  by the Fund to LFL  monthly  within  ten days after the end of the
     calendar month or in the event of  termination  of a Sub-Fund,  immediately
     prior to the termination of the Sub-Fund.  Such amount shall continue to be
     payable  to LFL on the  redemption  of  each  Distributed  Share  and  each
     External  Share  notwithstanding  that (a) LFL's  appointment  hereunder as
     exclusive  Commission  Payer has been  suspended,  has  expired or has been
     terminated or b) TGAL or TGSS has been  terminated as the Fund's  Principal
     Distributor or Distribution Controller, respectively.

4.4   FREE REDEMPTIONS

     In  addition  to all  other  amounts  payable  to  LFL  pursuant  to  this
     Agreement,  promptly  following  each  Free  Redemption  the  Fund  or the
     Distributors  or both of them  shall  pay to LFL an  amount  equal  to the
     maximum  Deferred  Sales Charge that would have been payable in connection
     with such redemption if such redemption had not been a Free Redemption.

4.5  RIGHT OF ACTION

     (a)  The  Fund  hereby  irrevocably  and  unconditionally   authorises  and
          instructs  TGAL  and  TGSS to take  all  necessary  steps  to  recover
          (whether by legal  proceedings  or  otherwise)  any amounts  which may
          become  due and  owing  by a  shareholder  to the Fund in  respect  of
          Deferred  Sales Charges  (including by  withholding  or deducting such
          amounts from any amounts  payable by the Fund to such a  shareholder).
          TGAL and TGSS hereby undertake to keep the Fund advised of any actions
          they may take pursuant to this provision.

     (b)  Each of TGSS and TGAL hereby covenants, in favour of LFL and the Fund,
          that it will diligently take all steps reasonably necessary to recover
          and pay to LFL any such  amounts as referred to in (a) above which are
          payable to LFL.

     (c)  LFL agrees and acknowledges that its only right of action in the event
          of non-payment of the Fees shall be against the Fund and the assets of
          the Fund  attributable  to the relevant  Sub-Fund in relation to which
          the relevant Fees are due and LFL further agrees and acknowledges that
          LFL shall have no recourse  against the assets of the  Distributors or
          other Sub-Funds for such non-payment of the Fees.

4.6  COLLECTION ACCOUNT. All Collections payable by the Fund are to be deposited
     directly by or on behalf of the Fund into the  Collection  Account  without
     any  intermediate  commingling  of such  amounts  with  the  assets  of the
<PAGE>

     Distributors  or any Affiliate of either of them. No amounts other than the
     Collections shall be deposited to the Collection Account.

4.7  ACCRUAL OF LFL'S ENTITLEMENT TO FEES

     Notwithstanding any other provision of this Agreement,  the parties hereto
     acknowledge  and agree that LFL's  entitlement to receive  Monthly Fees in
     respect of a Deferred  Sales Charge Share shall accrue at the same time as
     the  obligation  of LFL to pay, the Selling  Commission in respect of that
     Deferred  Sales Charge Share.  LFL's  entitlement  to receive the Deferred
     Sales Charge  payable by a shareholder  on the redemption of a Distributed
     Share shall  accrue at the same time as the  obligation  of LFL to pay, in
     respect of that  Deferred  Sales Charge Share,  the Selling  Commission in
     respect of (i) (where such Distributed  Share is an Original Charge Share)
     that Distributed Share or (ii) (where such Distributed Share is a Transfer
     Share) the Original Charge Share to which such Distributed Share relates.

4.8  MATERIAL ERRORS

     If Multiple  Material  Errors  occur,  LFL shall provide TGSS with written
     notice of such occurrence, following which TGSS shall have 60 days to cure
     such errors  during  which  period LFL shall have the right to suspend its
     obligation to pay Selling  Commissions.  If such breach continues uncured,
     at the  expiration of such notice  period,  LFL may give a second  written
     notice to the Fund  declaring that the  Termination  Date has occurred (in
     which case the  Termination  Date shall be deemed to have  occurred on the
     date such second notice is given), provided that if such Multiple Material
     Errors  occur  only in respect  of a New B Share  Sub-Fund  or New B Share
     Sub-Funds which are not Substantial  Funds (in either case),  LFL may only
     terminate its obligations in respect of such Sub-Fund or Sub-Funds (as the
     case may be). Where LFL  terminates its  obligations in respect of a New B
     Share Sub-Fund or New B Share Sub-Funds  which are not  Substantial  Funds
     (in either case) then the Fund,  TGAL,  or TGSS shall either (i) take such
     actions as LFL may  reasonably  request  so as to  preserve  the  economic
     return to LFL in respect of such terminated Sub-Fund or Sub-Funds (so that
     LFL receives a return equal to the return it would have  received had such
     Multiple Material Errors not occurred); or (ii) demonstrate to LFL that it
     can  accurately  track  the  relevant  New B  Shares  of  such  terminated
     Sub-Fund.  In the event  that such  errors  are  cured  within  the 60 day
     period,  then LFL shall promptly pay all Selling Commissions in respect of
     the sales of Deferred  Sales  Charge  Shares  which  occurred  during such
     period.

                                    ARTICLE 5

                         REPRESENTATIONS AND WARRANTIES

5.1  DISTRIBUTORS  AND  FUND'S  REPRESENTATIONS  AND  WARRANTIES.  Except  where
     otherwise  indicated,  each of  TGSS,  TGAL  and the  Fund  represents  and
     warrants to LFL:

     (a)  ORGANISATION - It has been duly  incorporated or created,  as the case
          may be, and is  organised,  validly  existing  and  up-to-date  in all
          material  filings  and  registrations   required  under  the  laws  of
          Luxembourg,  the Commonwealth of the Bahamas (in the case of TGAL) and
          each country where such filings or registrations are necessary for the
          conduct of its business, and it has all necessary power, authority and
          capacity to own its properties and assets and to carry on the business
          in which it is now engaged.
<PAGE>

     (b)  DISTRIBUTION  OF NEW B SHARES - The New B Shares are  offered for sale
          to the  public  on a  continuous  basis  pursuant  to  the  Prospectus
          Documents.  All material  information and statements  contained in the
          Prospectus  Documents  with  respect  to the New B Shares are true and
          correct  in  all   material   respects   and   contain   no   material
          misrepresentation.

     (c)  COMPLIANCE  WITH LAWS - It is in compliance  in all material  respects
          with all  applicable  laws,  including but not limited to,  applicable
          securities laws.

     (d)  LICENSES AND REGISTRATIONS - It has received all approvals,  licences,
          registrations  and  authorisations  necessary  for the  conduct of its
          businesses as they are now  conducted,  all of which are in full force
          and  effect;  no  violations  thereof  have  been  recorded;   and  no
          proceeding  is  pending  or  threatened  which  could  result  in  the
          revocation or limitation thereof.

     (e)  INVESTMENT  ADVISER  COMPLIANCE  - To the  best  of the  Distributors'
          knowledge,   after  due  inquiry,  each  of  the  investment  advisers
          appointed in respect of the New B Share  Sub-Funds  has complied  with
          the investment  objectives,  policies and  restrictions  of such New B
          Share  Sub-Funds  as provided in the  Articles of  Incorporation,  the
          Advisory Agreements and the Prospectus Documents.

     (f)  CONSENTS AND APPROVALS - There are no consents,  approvals,  orders or
          authorisations of any Person or registrations,  declarations, notices,
          filings or recordings  with any Person required to be obtained or made
          by it (and which have not been so obtained or made) in connection with
          the  transactions  contemplated by this  Agreement,  the execution and
          delivery of this  Agreement or the  performance  by the Fund,  TGSS or
          TGAL of any of the terms and conditions of this Agreement.

     (g)  FINANCIAL  STATEMENTS - The financial statements of the Fund have been
          prepared  in  accordance  with GAAP and present  fairly the  financial
          position  of the  Fund  as of the  respective  dates  thereof  and the
          changes in the  Fund's  net  assets  for the  period  covered by those
          statements  and  the  treatment  of  management  fees,  legal,  audit,
          custodian,  safekeeping fees,  interest,  operating and administrative
          costs payable by the Fund.

     (h)  ABSENCE OF UNDISCLOSED LIABILITIES - Except to the extent reflected or
          reserved against in the financial  statements of the Fund or otherwise
          disclosed  herein or except as incurred in the ordinary  course of the
          business of the Fund, the Fund has no outstanding  indebtedness or any
          liabilities or  obligations  (whether  direct or indirect,  current or
          long-term, accrued, absolute, contingent or otherwise).

     (i)  TAX  MATTERS - The Fund is not in default in filing any tax returns or
          reports required to be filed as of the date of this Agreement covering
          any  relevant   national,   provincial,   municipal  or  local  taxes,
          assessments  or other  imposts  in  respect  of its  capital,  income,
          business  or  property  (where  such  default  could  have an  Adverse
          Effect).

     (j)  LITIGATION  -  There  is  no  suit,   action,   litigation,   inquiry,
          investigation,   arbitration  or  proceeding,  including  appeals  and
          applications to review,  in progress or, to its knowledge,  threatened
          or pending  against or relating to it or affecting  its  properties or
          businesses which could have an Adverse Effect.  There is not presently
          outstanding  against it any  judgement,  decree,  injunction,  rule or
<PAGE>

          order  of any  court,  governmental  department,  commission,  agency,
          instrumentality or arbitrator which could have an Adverse Effect.

     (k)  ACCURACY OF BOOKS AND RECORDS - The books and records,  financial  and
          otherwise,  of the Fund fairly and  correctly  set out and disclose in
          all  material  respects the  financial  position of the Fund as of the
          date of  this  Agreement  and  all  material  transactions  have  been
          accurately recorded in those books and records.

     (l)  ACCURACY OF INFORMATION  PROVIDED - To the best of its knowledge,  all
          information  provided by or on behalf of the  Distributors,  the Fund,
          FRI or its  Affiliates  to LFL or any agent thereof for purposes of or
          in connection with this Agreement or the transactions  contemplated by
          this Agreement is true, correct and complete in all material respects.

     (m)  DUE  AUTHORISATION,  EXECUTION AND DELIVERY - This  Agreement has been
          duly  authorised,  executed and  delivered  by it and the  obligations
          expressed  to be assumed by it in this  Agreement  are legal and valid
          obligations  binding on it and  enforceable  against it in  accordance
          with the terms hereof,  subject,  however, to limitations with respect
          to enforcement imposed by law in connection with bankruptcy or similar
          proceedings  and  to the  extent  that  equitable  remedies,  such  as
          specific  performance  and  injunction,  are in the  discretion of the
          court from which they are sought.

     (n)  ABSENCE OF  CONFLICTING  AGREEMENTS  - It is not a party to,  bound or
          affected by or subject to any indenture,  mortgage,  lease, agreement,
          instrument,  charter or by-law provision,  statute,  regulation order,
          judgement,  decree  or law which  would be  violated,  contravened  or
          breached by or under which any default  would occur as a result of the
          execution and delivery of this Agreement or the  performance of any of
          the terms of this Agreement or which could have an Adverse Effect.

     (o)  MATERIAL  CONTRACTS - Except for the  Material  Contracts  it is not a
          party to or bound by any presently  existing oral or written contracts
          or a commitment which is material in respect of this Agreement and the
          transactions  contemplated  herein.  The  Material  Contracts  are  in
          compliance in all material  respects with  applicable law, are in full
          force and effect, unamended, and no material default exists in respect
          of any of them on the part of any of the parties  and there  exists no
          set of facts  which,  after  notice  or  lapse of time or both,  would
          constitute such material  default.  It has the capacity to perform all
          its  respective  obligations  in the Material  Contracts.  Each of the
          Material  Contracts  has been duly  executed by it and  constitutes  a
          valid  and  binding  obligation  of  it  enforceable   against  it  in
          accordance  with the terms  thereof,  free and clear of any  mortgage,
          pledge,  lien,  charge,  security interest or encumbrance or rights of
          others.

     (p)  NO  SECURITY  AGREEMENT  -  To  the  best  of  the  knowledge  of  the
          Distributors,  no  security  agreement,  equivalent  security  or lien
          instrument or any financing statement,  has been entered into or is on
          file or on record in respect of the  Deferred  Sales  Charges  (or any
          part thereof) in any jurisdiction.

     (q)  PRINCIPAL  PLACE OF BUSINESS,  NAME - Its principal  place of business
          and the  place  where its  records  are kept is at the  address  first
          written above or such other  address of which LFL has received  notice
          pursuant to Article 11.6.
<PAGE>

     (r)  INSOLVENCY - Since 1 July,  1999, there has not occurred an Insolvency
          Event with respect to the Fund, TGSS or TGAL.

     (s)  INFORMATION  CORRECT - All  information  in respect of the  payment of
          Selling Commissions to be set forth in each Distributor Report will be
          true and correct in all  material  respects  (this  warranty  shall be
          given by TGSS and its successors or assigns only).

     (t)  REGISTRATION  OF FUND - The Fund  continues to be  registered  as (and
          qualify   as)  a  societe   d'investissement   a   capital   variable,
          incorporated under the laws of the Grand-Duchy of Luxembourg.

     (u)  ROLE OF TGAL AND TGSS - TGAL  shall be the  Principal  Distributor  in
          accordance  with the  Distribution  Agreement  and  TGSS  shall be the
          Distribution Controller in accordance with the Distribution Controller
          Agreement.

     Each of the  representations  and warranties  contained in this Article 5.1
     are made severally by TGSS, TGAL and the Fund (each a "Representing Party")
     and accordingly,  a Representing  Party shall not be responsible to LFL for
     any misrepresentation on the part of another Representing Party.

5.2  LFL'S REPRESENTATIONS AND WARRANTIES. LFL hereby represents and warrants to
     TGSS, TGAL and the Fund that:

      (a)  ORGANISATION  AND  GOOD  STANDING  - LFL has  been  duly  formed  and
           organised as a limited liability company  incorporated in Ireland and
           has all necessary  power,  authority and capacity to own its property
           and assets and to carry on the business in which it is now engaged.

      (b)  AUTHORISATION,  EXECUTION AND DELIVERY - This Agreement has been duly
           authorised,  executed and delivered by LFL and is a valid and binding
           obligation of LFL enforceable in accordance with its terms,  subject,
           however, to limitations with respect to enforcement imposed by law in
           connection with bankruptcy or similar  proceedings and, to the extent
           that equitable  remedies such as specific  performance and injunction
           are in the discretion of the court from which they are sought.

      (c)  ABSENCE OF  CONFLICTING  AGREEMENTS - LFL is not a party to, bound or
           affected by or subject to any indenture,  mortgage, lease, agreement,
           instrument, charter or by-law, provision, statute, regulation, order,
           judgement,  decree or law which  would be  violated,  contravened  or
           breached  by, or under which any default  would occur as a result of,
           the execution and delivery by it of this Agreement or the performance
           by it of any of the terms of this Agreement.

     (d)  LITIGATION  -  There  is  no  suit,   action,   litigation,   inquiry,
          investigation,   arbitration  or  proceeding,  including  appeals  and
          applications to review in progress,  pending or threatened  against or
          relating  to LFL or  affecting  its  property  or  business  which may
          materially adversely affect its property,  business,  future prospects
          or financial condition or which could materially  adversely affect the
          performance  or   obligations  of  LFL  under,   or  the  validity  or
          enforceability  of this  Agreement  or which  could  give  rise to any
          adverse  effect on LFL's ability to pay or perform any of its material
          obligations under this Agreement.
<PAGE>

     (e)  COMPLIANCE  WITH LAWS - It is in compliance  in all material  respects
          with all laws that are applicable to it.

     (f)  LICENSES AND REGISTRATIONS - It has received all approvals,  licences,
          registrations  and  authorisations  necessary  for the  conduct of its
          businesses as they are now  conducted,  all of which are in full force
          and  effect;  no  violations  thereof  have  been  recorded;   and  no
          proceeding  is  pending  or  threatened  which  could  result  in  the
          revocation or limitation thereof.

     (g)  CONSENTS AND APPROVALS - There are no consents,  approvals,  orders or
          authorisations  of any Person  required under laws applicable to it or
          registrations,  declarations,  notices, filings or recordings with any
          Person  required  to be  obtained  or  made  by it  pursuant  to  laws
          applicable  to it (and  which  have not been so  obtained  or made) in
          connection with the transactions  contemplated by this Agreement,  the
          execution and delivery of this Agreement or the  performance of any of
          the terms and conditions of this Agreement.

     (h)  INSOLVENCY  - Since  July 1,  1999,  there  has  not  occurred  an LFL
          Insolvency Event.

5.3  NON-WAIVER.  No investigation made by or on behalf of any party at any time
     shall have the effect of  waiving,  diminishing  the scope of or  otherwise
     affecting  any  representation  or  warranty  made by any other party in or
     pursuant to this  Agreement.  No waiver by any party of any  condition,  in
     whole or in part, shall operate as a waiver of any other condition.

5.4  NATURE AND  SURVIVAL OF  REPRESENTATIONS  AND  WARRANTIES.  All  statements
     contained in any certificate or other document delivered by or on behalf of
     a party pursuant to or in connection with the transactions  contemplated by
     this  Agreement  shall  be  deemed  to be  made by that  party  under  this
     Agreement.

     All representations  and warranties,  covenants and agreements on the part
     of each of the parties  contained in this Agreement or in any  certificate
     or other document  delivered  pursuant to this Agreement shall survive the
     Closing and shall survive for the duration of this Agreement.

                                    ARTICLE 6

                              CONDITIONS PRECEDENT

6.1  LFL'S  CONDITIONS  TO  CLOSING.  The  obligation  of  LFL to  complete  the
     transactions  contemplated  by  this  Agreement  shall  be  subject  to the
     satisfaction of, or compliance with, at or before the Closing Time, each of
     the following  conditions  precedent  (each of which is  acknowledged to be
     inserted for the exclusive  benefit of LFL and may be waived by it in whole
     or in part by notice in writing to TGSS, TGAL and the Fund):

     (a)  TRUTH  AND  ACCURACY  OF   REPRESENTATIONS   AND   WARRANTIES  OF  THE
          DISTRIBUTORS  AND THE FUND AT CLOSING  TIME - All the  representations
          and warranties of the Distributors and the Fund made in or pursuant to
          this Agreement  shall be true and correct in all material  respects as
          at the  Closing  Time and with the same effect as if made at and as at
<PAGE>

          the Closing Time. LFL shall receive a certificate  from TGSS, TGAL and
          the Fund confirming the truth and correctness in all material respects
          of the representations and warranties of the each of them.

     (b)  RECEIPT OF CLOSING  DOCUMENTATION - All documentation  relating to the
          transactions contemplated by this Agreement,  including legal opinions
          from counsel to the  Distributors  and the Fund, shall be satisfactory
          to LFL and its  counsel,  both acting  reasonably.  LFL shall  receive
          copies  of all  documentation  or  other  evidence  it may  reasonably
          request in order to establish  the  consummation  of the  transactions
          contemplated  by  this  Agreement  and  the  taking  of all  corporate
          proceedings and action in connection with this Agreement in compliance
          with these conditions in form (as to certification  and otherwise) and
          substance satisfactory to LFL and its counsel.

     (c)  MATERIAL  ADVERSE  CHANGE - Since  September  30,  1998,  no  material
          adverse change in the condition or operations of the business,  assets
          or financial  condition of the Fund shall have occurred  including any
          change in the fundamental  investment objective of a Sub-Fund,  and no
          Adverse Effect shall have occurred.

     (d)  PERFORMANCE OF OBLIGATIONS - The  Distributors and the Fund shall have
          performed  or  complied  with,  in  all  respects,   all  obligations,
          covenants and agreements in this Agreement to be performed or complied
          with by the Closing Time.

     (e)  CONSENTS,  AUTHORISATIONS AND REGISTRATIONS - All consents, approvals,
          orders and  authorisations  of any Person  required in connection with
          the  completion  of any  of  the  transactions  contemplated  by  this
          Agreement,  the  execution  of  this  Agreement,  the  Closing  or the
          performance of any of the terms and conditions of this Agreement shall
          have been obtained at or before the Closing Time.

     (f)  ROLE OF TGAL  AND  TGSS - At the  date  of this  Agreement  and at the
          Closing Time,  TGAL shall be the Principal  Distributor  in accordance
          with the terms of the  Distribution  Agreement  and TGSS  shall be the
          Distribution   Controller  in   accordance   with  the  terms  of  the
          Distribution Controller Agreement.

     (g)  EVENT OF  TERMINATION - The condition set out in Article  6.2(c) shall
          be satisfied.

6.2  LFL'S  CONDITIONS TO PAYMENT OF SELLING  COMMISSIONS FROM TIME TO TIME. The
     obligation of LFL to pay Selling Commissions under this Agreement from time
     to time shall be subject to the  satisfaction  of, or compliance with, each
     of the following  conditions precedent (each of which is acknowledged to be
     inserted for the exclusive  benefit of LFL and may be waived by it in whole
     or in part by notice in  writing  to TGAL,  TGSS and the Fund) at each such
     time:

     (a)  TRUTH  AND  ACCURACY  OF   REPRESENTATIONS   AND   WARRANTIES  OF  THE
          DISTRIBUTORS AND THE FUND - The  representations and warranties of the
          Distributors  and the Fund made in or pursuant to this Agreement shall
          be true and correct in all material respects as of the time of payment
          of such Selling Commissions and with the same effect as if made at the
          time of payment of such Selling Commissions.
<PAGE>

     (b)  ROLE OF TGAL AND TGSS - TGAL  shall be the  Principal  Distributor  in
          accordance with the terms of the Distribution Agreement and TGSS shall
          be the  Distribution  Controller in  accordance  with the terms of the
          Distribution Controller Agreement.

     (c)  EVENT OF TERMINATION - Both immediately  before and immediately  after
          giving  effect to the payment of a Selling  Commission on such date by
          LFL, no LFL Event of Termination (or event which,  with the passage of
          time or the giving of notice,  or both,  would constitute an LFL Event
          of  Termination)  in  respect  of TGAL,  TGSS or the Fund  shall  have
          occurred and be continuing.

     (d)  DISTRIBUTOR  REPORTS  - TGSS  shall  have  delivered  all  Distributor
          Reports  required to be delivered on or prior to such date pursuant to
          this  Agreement,  which  shall  be in form  and  substance  reasonably
          satisfactory to LFL or its Permitted Designee.

     (e)  PERFORMANCE OF OBLIGATIONS - The  Distributors and the Fund shall have
          performed or complied with, in all material respects, all obligations,
          covenants and agreements in this Agreement to be performed or complied
          with by each of them.

     The delivery of a Distributor  Report from time to time shall constitute a
     representation  and warranty by TGSS that,  on the date of such  delivery,
     the  conditions  set forth in Article 6.2 have been  fulfilled,  except as
     specifically agreed to in writing by LFL.

6.3  DISTRIBUTOR AND FUND  CONDITIONS.  The obligations of the  Distributors and
     the Fund to complete the transactions  contemplated by this Agreement shall
     be subject to the  satisfaction  of, or  compliance  with, at or before the
     Closing Time, each of the following  conditions precedent (each of which is
     acknowledged to be inserted for the exclusive  benefit of the  Distributors
     and the Fund and may be waived by all of them in whole or in part by notice
     in writing to LFL):

     (a)  TRUTH AND ACCURACY OF REPRESENTATIONS OF LFL AT CLOSING TIME - All the
          representations  and  warranties  of LFL made in or  pursuant  to this
          Agreement shall be true and correct in all material respects as at the
          Closing  Time with the same effect as if made at and as at the Closing
          Time.

     (b)  PERFORMANCE  OF  OBLIGATIONS  - LFL shall have  performed  or complied
          with,  in  all  material  respects,  all  obligations,  covenants  and
          agreements  in this  Agreement to be performed or complied with by the
          Closing Date.

     (c)  MATERIAL  ADVERSE EFFECT - As of December 31, 1998 no material adverse
          change  in the  condition  or  operation  of the  business,  assets or
          financial  condition of LFL shall have occurred which would  adversely
          affect its  ability to pay or to perform  its  obligations  under this
          Agreement.

     (d)  CONSENTS,  AUTHORISATIONS AND REGISTRATIONS - All consents, approvals,
          orders  and  authorisations  of any  Person  or  government  authority
          required  in  connection  with  the   contemplation   of  any  of  the
          transactions  contemplated  by this  Agreement,  the execution of this
          Agreement,  the  closing  or  performance  of  any of  the  terms  and
          conditions of this Agreement shall have been obtained on or before the
          Closing Time.
<PAGE>

     (e)  FINANCIAL  CAPABILITY - LFL shall have the  financial  capability  and
          resources to perform its obligations  under this Agreement,  including
          the  payment  of  all  Selling  Commissions  due to  Approved  Dealers
          pursuant  to Article 4 hereof  provided  always that in the event that
          this  condition (e) is not satisfied  because LFL is in the process of
          being wound-up or has otherwise  ceased to carry on its businesses (or
          where the LFL Event of  Termination  set out in paragraph  (g) of that
          definition   occurs)  then  in  any  such  case,  the  Fund  and  each
          Distributor  acknowledges  and agrees that it shall not be entitled to
          take any action  (whether by way of court  proceedings  or  otherwise)
          against LFL arising out of the failure to satisfy this condition (e).

6.4  DOCUMENTS  TO BE DELIVERED TO LFL.  TGSS shall  procure that the  documents
     listed in Schedule E (which shall be in form and substance  satisfactory to
     TGSS and LFL) are delivered to LFL within 30 days of the date hereof.

                                    ARTICLE 7

                                    COVENANTS

7.1   COVENANTS OF THE  DISTRIBUTORS  AND THE FUND. Each of the Distributors and
      the Fund  covenants  and agrees  (but only as to  itself)  with LFL to the
      extent applicable that prior to the termination of this Agreement:

     (a)  COMPLIANCE WITH ADVISORY  AGREEMENTS - Each of the Distributors  shall
          conduct annual reviews with each investment advisor under the Advisory
          Agreements in order to ensure that such investment advisor has kept in
          full force and effect  and  intends to keep in full force and  effect,
          all licences,  registrations and  authorisations  necessary to conduct
          its respective  business  under the  applicable  terms in the relevant
          Advisory Agreement.

     (b)  TERMINATION OF A NEW B SHARE SUB-FUND - Each of the  Distributors  and
          the Fund shall not,  unless  compelled  to do so (i) by any  competent
          regulatory  authority;  or (ii) pursuant to any applicable law, at any
          time while LFL is entitled to receive payment of any amount hereunder,
          take any action,  omit to take any action or initiate  any  proceeding
          which  may,   indirectly   or  directly,   trigger  the   termination,
          reorganisation  or  winding-up  of a  New B  Share  Sub-Fund  if  such
          termination,  reorganisation  or  winding-up  has  an  Adverse  Effect
          without the prior consent of LFL, such consent not to be  unreasonably
          withheld.

     (c)  MAINTENANCE  OF BOOKS AND RECORDS - Each of the  Distributors  and the
          Fund shall keep  proper  books and records in  accordance  with normal
          business practice in which full and appropriate  entries shall be made
          of all transactions in relation to its business  activity which relate
          in any manner to the transactions contemplated by this Agreement.

     (d)  DISCLOSURE OF MATERIAL CHANGES - Each of the Distributors and the Fund
          (upon  becoming  aware  thereof) shall promptly give written notice to
          LFL of (i) any LFL  Event  of  Termination  or event  which,  with the
          passage of time or the giving of notice or both,  would  constitute an
          LFL Event of Termination;  (ii) any material litigation or proceedings
          with  respect  to TGSS,  TGAL,  any  investment  adviser of any of the
          Sub-Funds or the Fund or any of their respective  assets or properties
          which, if adversely determined,  could give rise to an Adverse Effect;
          (iii) the  failure of any  representation  or  warranty  of any of the
<PAGE>

          Distributors  or the Fund  contained in this  Agreement to be true and
          correct in all  material  respects as of the date  given;  or (iv) the
          failure  of  any of  the  Distributors  or the  Fund  to  perform  any
          obligation  which  is  required  to  be  performed  by it  under  this
          Agreement  in any  material  respect  on a timely  basis;  and (v) any
          material change in the management or structure of the Fund.

     (e)  FURTHER  INSTRUMENTS  AND  DOCUMENTS - Each of the TGSS,  TGAL and the
          Fund shall  promptly  at its  expense  execute and deliver to LFL such
          further  instruments and documents and take such further action as LFL
          may from time to time reasonably request in order to further carry out
          the intent and purpose of this  Agreement and to establish and protect
          the rights,  interests and remedies  created or intended to be created
          hereby and thereby,  provided  however,  that TGSS,  TGAL and the Fund
          shall not be obligated to execute and deliver such further instruments
          and documents if they would thereby incur any material  obligations or
          liabilities not contemplated by this Agreement.

     (f)  RIGHTS OF  INSPECTION  - Each of TGSS,  TGAL and the Fund shall permit
          LFL or any Permitted Designee reasonably acceptable to it to visit and
          inspect the  properties,  files,  books and records of the Fund (other
          than those subject to  confidentiality  rules under Luxembourg  laws),
          TGAL and TGSS relating to the Fees, this Agreement,  the  transactions
          contemplated hereby and the financial condition, results of operations
          and  cash  flows of the Fund and to  discuss  the  foregoing  with the
          officers,  partners,  employees, legal advisers and accountants of the
          Fund,  TGAL and TGSS, all at such reasonable  times during  reasonable
          business hours and as often as LFL may reasonably request.

     (g)  MAINTENANCE  OF  PROSPECTUS  -  Insofar  as  reasonably  within  their
          respective  control and except with the consent of LFL,  such  consent
          not to be unreasonably  withheld or delayed,  each of the Fund and the
          Distributors shall maintain the Prospectus Documents in full force and
          effect so that the  Deferred  Sales  Charge  Shares may be offered for
          sale to the public in the relevant jurisdictions where such Shares are
          being sold  during the period in which LFL has the  obligation  to pay
          Selling  Commissions in respect of the  distribution of Deferred Sales
          Charge Shares hereunder.

     (h)  DELIVERY  OF LENDER  NOTICES  - The  Distributors  and the Fund  shall
          deliver to LFL a copy of all notices or waivers of default,  delivered
          by any  lenders  to the  Fund  and of all  agreements  and  amendments
          entered into with such lenders.

     (i)  CHANGE TO  INVESTMENT  OBJECTIVE  OF A NEW B SHARE  SUB-FUND  - In the
          event  that the  investment  objective  of a New B Share  Sub-Fund  is
          amended (or will be amended) and such  amendment  will have a material
          adverse  effect  upon (a) the  timing or amount of any  payment of any
          Fee, (b) the timely receipt by LFL of any Fees, (c) the ability of the
          Fund,  TGAL or TGSS to pay or perform its  obligations  hereunder in a
          timely  manner or (d) the  remedies and other rights of LFL under this
          Agreement,  then each of TGSS,  TGAL and the Fund  agree  (subject  to
          approval by the Luxembourg  supervisory  authority) to consult in good
          faith  with LFL for a  period  of 60 days  from  the time  that LFL is
          notified  of such  amendment  or  potential  amendment  with a view to
          reaching  agreement on a method of amending the Monthly Fee payable to
          LFL under this  Agreement (or otherwise  amending or varying the terms
          of the  agreements  between  them and LFL) in  order to  preserve  the
          economic  return to LFL as if such amendment had not occurred (or were
          not to occur, in the case of a potential amendment).
<PAGE>

     (j)  PAYMENT  OF FUNDS - If either  TGAL or TGSS or any  designee  or agent
          thereof shall receive any of the Fees from the Fund, it shall hold (or
          procure that such  designee or agent holds) such Fees in trust for LFL
          (acknowledging  that such Fees do not  constitute  its  property)  and
          immediately  following  receipt of any such Fees,  it shall,  or shall
          cause  such  designee  or agent to,  remit the same to LFL in the form
          received  and ensure that such amounts are not  commingled  with other
          funds.

     (k)  PROVISION OF INFORMATION - All information provided by or on behalf of
          TGSS, TGAL or the Fund including information provided by FRI or one of
          its Affiliates after the date hereof to LFL or any Permitted  Designee
          for  purposes  of  or  in  connection  with  this  Agreement,  or  the
          transactions  contemplated  hereby, will be true, correct and complete
          in all respects material to the Fees and the transactions contemplated
          by this  Agreement,  provided that this  covenant  shall apply only to
          such  misrepresentations or omissions as would give rise to an Adverse
          Effect.

     (l)  STATUS  OF FEES - Except to the  extent  expressly  permitted  by this
          Agreement,  none of TGSS,  TGAL or the Fund shall  permit to exist any
          Lien on or attempt to  transfer  or grant a security  interest  in any
          interest in any Fees.

     (m)  FEE  PAYMENT  BY THE  FUND - If at any  time  after  the  date of this
          Agreement an Insolvency Event occurs or TGAL (or its Affiliate) ceases
          to be the Principal  Distributor or TGSS (or its Affiliate)  ceases to
          be the Distribution Controller,  the Fund agrees that as and from such
          date the Fund shall continue to be responsible  for and shall continue
          to pay to LFL the amounts required to be paid by the Fund to LFL under
          this  Agreement  and the Fund shall cause the  successor  Distribution
          Controller or Principal Distributor, as appropriate, to become a party
          to this  Agreement  and (if  requested  by LFL)  to  agree  to  become
          responsible for the payment of amounts payable to LFL hereunder.

     (n)  MAINTENANCE  OF FEES - Other than to permit Free  Redemptions  or Free
          Exchanges as contemplated by the Prospectus  Documents of the relevant
          Sub-Fund on the date  hereof,  each of the Fund,  TGSS and TGAL hereby
          agrees with LFL that it will not, without the prior written consent of
          LFL,  unless  compelled  to do so  (i)  by  any  competent  regulatory
          authority or (ii)  pursuant to any  applicable  law, at any time while
          LFL is entitled to receive payment of any amount hereunder, consent to
          or agree to a reduction in the Deferred  Sales Charge for  Distributed
          Shares  or  any  alteration  in  the  manner  or as  to  the  time  of
          calculation  of the  Deferred  Sales  Charge  or  effect  any  action,
          amendment  or change of any  nature  whatsoever  if the effect of such
          reduction,  alteration, action, amendment or change would be to reduce
          the  amounts  payable  to LFL or  adversely  affect  the timing of the
          receipt  of such  amounts  payable  pursuant  to  Article  4.  For the
          avoidance of doubt, the provisions of this Article 7.1(n) restrict the
          ability of Fund, TGSS and TGAL to make retroactive  changes (including
          changes in respect of New B Shares which have already been issued) but
          will not  prevent  any of them  from  making  prospective  changes  in
          respect of the offering of New B Shares which are not Transfer Shares,
          Reinvested  Shares and with respect to which LFL has no  obligation to
          pay Selling Commissions.

     (o)  PAYMENT OF TAXES - Each of the  Distributors  and the Fund shall cause
          to be paid and discharged all taxes,  assessments and other charges or
          levies of any  authority  imposed upon it or upon any of its income or
          assets,  prior to the day on which penalties are attached thereto,  if
          the failure to pay and discharge  such tax assessment or other charges
          or levies could give rise to an Adverse Effect.
<PAGE>

     (p)  CLIENT  AND  NEW B  SHARE  SUB-FUND  REPORTING  - TGSS  shall  provide
          shareholder and portfolio reporting to LFL. Shareholder reporting will
          consist   of  the   administration   package  of  reports  on  monthly
          shareholder  activity derived from the Fund's transfer agent's system.
          Portfolio reporting will consist of a monthly balance sheet (statement
          of  condition)  inclusive of price and shares (with CUSIP and/or SIDOL
          numbers)  reported  to LFL in  respect  of each  New B Share  Sub-Fund
          separately.  The portfolio  reports shall be in substantially the same
          form  as  those  currently  generated  by  TGSS's  accountants  daily,
          provided  always  that  TGSS  shall not be  required  to  provide  any
          information to LFL under this Article where such provision  would,  in
          the reasonable opinion of TGSS, be in breach of any applicable laws of
          Luxembourg relating to data protection.

7.2  COVENANT OF LFL. LFL covenants  and agrees with each of TGSS,  TGAL and the
     Fund  to the  extent  applicable  that  prior  to the  termination  of this
     Agreement it will provide such  information  as each of them may reasonably
     request from time to time.

7.3  COMPLIANCE  WITH  LUXEMBOURG  LAW.  Nothing  contained in Article 7.1 shall
     prevent  the Fund from  acting (a) in  accordance  with the terms of future
     instructions  from the  Luxembourg  supervisory  authorities  or (b)  where
     compelled  to do so  pursuant  to  the  Articles  of  Incorporation  or any
     applicable law or (c) in accordance with the terms of any resolution of the
     shareholders  of the Fund (where  such  resolution  has been  proposed by a
     shareholder or  shareholders  in either case not affiliated with any of the
     parties hereto).

                                    ARTICLE 8

                               TERMINATION EVENTS

8.1  LFL  TERMINATION   EVENTS.  The  obligation  of  LFL  to  pay  the  Selling
     Commissions  pursuant to Article 3 may be terminated by LFL if an LFL Event
     of Termination  shall occur and be continuing.  Such  termination  shall be
     effected  by the  giving  of  written  notice  to the  Fund and each of the
     Distributors,  declaring an LFL Event of  Termination  to have occurred (in
     which case the Termination  Date shall be deemed to have occurred as of the
     date such  notice is given  pursuant  to the  provisions  of Article  11.6)
     provided that upon the occurrence of any event (without the requirement for
     the passage of time or the giving of notice, or both) described in Articles
     (e) and (h) of the definition of LFL Event of Termination,  the Termination
     Date shall be deemed to have automatically occurred;

     and  provided  further  that,  in the case of the  occurrence  of an event
     described in Articles (a), (b), (c), (d) and (i) if (1) such event affects
     only New B Share Sub-Funds which are not Substantial Funds, and (2) EITHER
     the Fund and/or the  Distributors  or either of them is able to  segregate
     the  Deferred  Sales  Charges  related  to Shares  affected  by such event
     (including  any Shares of other  Sub-Funds into which such Shares may have
     been  exchanged  in Free  Exchanges)  in respect of which LFL has not paid
     Selling  Commissions  from the Deferred Sales Charges related to Shares of
     the  affected  New B  Share  Sub-Funds  and  any  unaffected  New B  Share
     Sub-Funds  in respect of which LFL has paid Selling  Commissions  (and any
     Shares  of any  other  Sub-Funds  into  which  such  New B  Shares  may be
     exchanged  in Free  Exchanges)  and the Fund's  ability to  segregate  the
     Deferred  Sales  Charges as  described  in above is certified to LFL by an
     independent   accounting  firm  of  international   standing,   reasonably
     acceptable to LFL, OR the Fund, the  Distributors  and LFL reach agreement
     upon an allocation  procedure  which will preserve the economic  return to
<PAGE>

     LFL (as if such event had not  occurred),  THEN such Event of  Termination
     will only relate to LFL's  obligations  hereunder  related to the affected
     New B Shares Fund(s),  and such Event of Termination will not affect LFL's
     obligations   hereunder  with  respect  to  the  unaffected  New  B  Share
     Sub-Funds;

     and provided  further that upon the  occurrence of any event  described in
     Articles (d) and (i) of the  definition of LFL Event of  Termination,  the
     Termination  Date shall be deemed to have occurred as of the date which is
     six (6) months  from the date such  notice is  effective  pursuant  to the
     provisions of Article 11.6; and The parties agree that upon the occurrence
     of any event  described in Articles  (d), and (i) of the  definition of an
     LFL  Event  of  Termination,   the  parties  shall  use  their  respective
     commercially  reasonable  efforts  during  such six (6)  month  period  to
     restructure  the  distribution  arrangements  contemplated  by the Program
     Documents  in  order  to  attempt  to   accommodate   and  facilitate  the
     continuance of such arrangements notwithstanding such change.

8.2  FUND TERMINATION RIGHTS.

     (a)  Provided  that a LFL  Event of  Termination  has not  occurred  and is
          continuing,  LFL's role as exclusive  Commission Payer with respect to
          the  Deferred   Sales  Charge  Shares  under  this  Agreement  may  be
          terminated  by the  Fund  if LFL  fails  to  pay  Selling  Commissions
          pursuant to Article 3 and such failure is continuing. Such termination
          shall be effective by the giving of written  notice to LFL by the Fund
          giving LFL 15 Business  Days to cure such breach  during  which period
          the Fund shall not have any right to terminate LFL's role as exclusive
          Commission Payer. If such breach continues uncured,  at the expiration
          of such notice  period,  the Fund may give a second  written notice to
          LFL declaring that the Termination  Date has occurred (in which case a
          Termination  Date  shall be deemed to have  occurred  on the date such
          second notice is given).

     (b)  If a Fund Event of  Termination  shall occur and be  continuing,  TGSS
          shall  promptly  notify LFL in writing (and the other parties  hereto)
          thereof and the parties hereto shall, during the period of 60 Business
          Days after such  notification  (the "Discussion  Period"),  consult in
          order to mitigate the effect of such circumstances.  If, at the end of
          that  period,  the parties  have not reached  agreement on a method of
          mitigation,  the Fund may terminate LFL's role as exclusive Commission
          Payer and the  Termination  Date  shall be deemed to occur on the date
          such notice is given.  On the date of receipt of such  notification by
          LFL, LFL shall be entitled to suspend its  obligations  to pay Selling
          Commissions  hereunder  as and from such  date.  In the event that the
          parties hereto subsequently agree on a method of mitigation during the
          applicable  Discussion Period, then LFL shall promptly pay all Selling
          Commissions  in respect of the sales of Deferred  Sales Charge  Shares
          which occurred during such period.

8.3  COSTS  AND  EXPENSES  OF LFL.  All costs and  expenses  incurred  by LFL in
     connection with the enforcement of this Agreement  against the Distributors
     or the Fund  shall be paid by the  Distributors  or the Fund  forthwith  on
     demand  therefor by LFL. The obligations of the  Distributors  and the Fund
     under this Article 8.3 shall be several.

8.4  COSTS AND EXPENSES OF TGSS AND THE FUND. All costs and expenses incurred by
     TGSS in connection  with the  enforcement of this Agreement  against LFL as
     set out in Article 8.2(a) shall be paid by LFL forthwith on demand therefor
     by TGSS.
<PAGE>

8.5  TRANSACTION  EXPENSES.  LFL shall reimburse each of TGSS, TGAL and the Fund
     for all reasonable costs and expenses  (including legal fees) together with
     any  VAT  thereon   incurred  by  each  of  them  in  connection  with  the
     negotiation,  preparation  and  execution  of  this  Agreement,  any  other
     document   referred  to  in  this  Agreement  and  the  completion  of  the
     transactions herein contemplated.

                                    ARTICLE 9

                                 INDEMNIFICATION

9.1  Each of the  Distributors  on their own  behalf  and on behalf of the Fund,
     separately  and not jointly,  agrees to indemnify and hold harmless LFL and
     each of its Affiliates and their respective officers, directors, employees,
     agents,  advisors of, and any Person controlling any of the foregoing (each
     an  "Indemnified  Party")  from  and  against  (collectively,  but  without
     duplication) any and all Liabilities that may be incurred by or asserted or
     awarded against an Indemnified Party, in each case arising out of, relating
     to or by reason  of,  any claim  brought  by any Person not a party to this
     Agreement  in  connection  with  the   transactions   contemplated   hereby
     (including,  without  limitation,  any act or omission of or breach of this
     Agreement by the Fund);  PROVIDED,  HOWEVER,  the Distributors shall not be
     required to indemnify any Indemnified  Party in respect of any Liability if
     and  to  the  extent  such  Liability  resulted  primarily  from  (i)  such
     Indemnified Party's gross negligence or willful misconduct,  or (ii) in the
     case of an  Indemnified  Party which is LFL,  any failure of LFL to perform
     its covenants if any, set forth herein or in the other Program Documents to
     which it is a party,  or any  failure of any of LFL's  representations  and
     warranties,  if any, set forth herein or in the other Program  Documents to
     which  it  is a  party,  to  be  true  and  correct  as of  the  time  such
     representation or warranty spoke.  Furthermore,  the Distributors shall not
     be  required  to  indemnify  any  Indemnified  Party in  respect of (a) any
     liability  under  applicable  securities  laws  arising  out  of a  Takeout
     Transaction,  except to the extent such  liability  is  attributable  to or
     would not have  occurred but for (i) the violation at the time of, or prior
     to, such Takeout  Transaction of any covenant,  representation  or warranty
     made by the  Distributors  or the Funds  contained in this Agreement or any
     other Program Document,  or (ii) any information  furnished by or on behalf
     of the  Distributors  or the Fund being false or misleading in any material
     respect,  or (b) any  Liabilities  arising  as a  result  of a claim  by an
     Indemnified Party against the Distributors or as a result of a claim by the
     Distributors  against an Indemnified  Party where it is determined that the
     position  of the  Distributors  in  respect of such claim is correct in all
     material respects.

9.2  LFL agrees to indemnify and hold harmless  TGAL,TGSS and the Fund,  each of
     their  Affiliates  and their  respective  officers,  directors,  employees,
     agents,  advisors  of, and any  Person  controlling  any of, the  foregoing
     (collectively, the "Templeton Indemnitees") from and against (collectively,
     but without duplication) any and all Liabilities that may be incurred by or
     asserted or awarded  against a Templeton  Indemnitee,  in each case arising
     out of,  relating to or by reason of, any claim brought by any person not a
     party to this Agreement in connection  with the  transactions  contemplated
     hereby;  PROVIDED,  however,  LFL  shall not be  required  to  indemnify  a
     Templeton  Indemnitee  in  respect  of any  Liability  to the  extent  such
     Liability resulted from (i) such Templeton Indemnitee's gross negligence or
     willful misconduct, or (ii) in the case of a Templeton Indemnitee that is a
     party to any Program Document,  any failure of such Templeton Indemnitee to
     perform its covenants  set forth in the Program  Documents to which it is a
     party or any failure of any of its representations and warranties set forth
     in the Program  Documents  to which it is a party to be true and correct in
     all material respects at the time such representation or warranty spoke.
<PAGE>

9.3  ACTUAL   LOSSES.   For  the  purposes  of  this  Article  9,  each  party's
     indemnification  obligations  hereunder  shall be in  respect  of only such
     Liabilities that are reasonably  forseeable as likely to arise by reason of
     the occurrence of the relevant event in respect of which indemnification is
     sought and, for the avoidance of doubt, such indemnification obligations do
     not extend to cover  indirect  or  consequential  losses of any party.  The
     parties  agree that it is  expected  that LFL will (a) enter  into  hedging
     transactions in order to hedge the risks associated with the Deferred Sales
     Charges, the Selling Commissions and the other transactions contemplated by
     this  Agreement,  and  (b)  rely  on the  representations,  warranties  and
     covenants  provided  herein in making  representations  and  warranties  in
     Takeout  Transactions,  and that losses  related to the foregoing are, with
     the exception of losses in hedging  transactions which are not attributable
     to a breach of the representations,  warranties and covenants given herein,
     a  reasonably  foreseeable  result  of  any  breach  by  the  Fund  or  the
     Distributors  of this  Agreement  or other  Program  Document to which is a
     party.

                                   ARTICLE 10

                              ADDITIONAL SUB-FUNDS

10.1 ADDITIONAL SUB-FUNDS.
     (a)  In the event that the Fund adds an  Additional  Sub-Fund  LFL shall be
          given the  opportunity to serve as the exclusive  Commission  Payer to
          such  Additional  Sub-Fund.  If LFL  agrees  to  act as the  exclusive
          Commission Payer to such Additional Sub-Fund,  then the parties hereto
          agree  that such  Additional  Sub-Fund  shall be deemed to be a "New B
          Share Sub-Fund" within the meaning hereof and the New B Shares of such
          Additional  Sub-Fund  which are sold on a deferred  sales charge basis
          shall be  deemed  to be  "Deferred  Sales  Charge  Shares"  and "New B
          Shares" within the meaning hereof and the terms and conditions of this
          Agreement shall be applicable to such Additional Sub-Fund. Each of the
          parties  hereto  shall  execute and deliver  such  amendments  to this
          Agreement as shall be  necessary to give effect to this Article  10.1.
          If an  Additional  Sub-Fund is added but does not become a New B Share
          Sub-Fund,  then  the  allocation  procedures  at  Schedule  D shall be
          amended so as to  allocate  External  Shares and  External  Reinvested
          Shares and the charges relating thereto to Monthly Pools.

     (b)  The Fund  shall  provide  notice  to LFL on or about the time when the
          Fund  files  a  prospectus   supplement  or  prospectus  addendum  (as
          appropriate) for a New B Share Sub-Fund.


                                   ARTICLE 11

                                     GENERAL

11.1 AMENDMENT OF  AGREEMENT.  This  Agreement  may be amended from time to time
     only by written consent of the Fund, TGSS, TGAL and LFL.

11.2 TERMINATION OF LFL AS EXCLUSIVE COMMISSION PAYER. If LFL is unable to carry
     out its  obligations  hereunder  (which  may  occur if LFL is unable to pay
     Selling  Commissions  for all of the Original Charge Shares sold during the
     period of its appointment as Commission Payer under this  Agreement),  TGSS
     may terminate LFL's exclusive right to pay Selling Commissions and may: (i)
     pay Selling  Commissions  directly;  (ii) enter into  agreements with other
<PAGE>

     parties  to pay  Selling  Commissions;  or (iii)  limit,  by  allotment  or
     otherwise, sales of Deferred Sales Charge Shares.

11.3 ASSIGNMENT

     (a)  This Agreement shall be binding upon, and inure to the benefit of, the
          parties hereto and their respective  permitted successors and assigns;
          provided  however that except in the case of TGSS or TGAL,  where such
          assignment is to an Affiliate of TGSS or TGAL (as the case may be) and
          where such Affiliate  assignee is of equal  financial  standing to the
          assignor, each of the Fund, TGAL and TGSS may not assign its rights or
          obligations hereunder or in connection herewith or any interest herein
          or under any other Program Document or with respect to any Fees or the
          proceeds thereof without LFL's prior written consent, such consent not
          to be  unreasonably  withheld;  and provided  further that,  except as
          provided in Articles  11.3(b)  and  11.3(c),  LFL shall be entitled to
          assign its rights or obligations  hereunder or under any other Program
          Document or in respect of any Fees or the proceeds  thereof,  provided
          it gives TGSS, TGAL and the Fund 30 days notice (the "Notice  Period")
          If LFL does not,  within the Notice  Period,  receive a notice stating
          that consent is withheld,  it shall be deemed to have the authority to
          effect such an assignment.  It shall be reasonable for the Fund,  TGAL
          and TGSS to refuse to give its  consent  under  this  Article  11.3(a)
          where, in its reasonable opinion,  its obligations or liabilities will
          be increased or otherwise adversely affected.

     (b)  The  rights  and  obligations  of LFL under  this  Agreement  shall be
          assignable in  connection  with any merger,  consolidation  or sale or
          disposition  of all or  substantially  all  of  the  assets  of or the
          general and limited  partnership or corporate interests in LFL with or
          to another entity,  provided that the surviving  entity shall (i) be a
          corporation or other entity organised under the laws of any country in
          Europe, the United States of America or any State thereof or of Canada
          or any province  thereof;  (ii) expressly  assume the due and punctual
          performance  and  observance of all  covenants and  conditions of this
          Agreement and all other Program  Documents to be performed or observed
          by LFL, by agreement reasonably  satisfactory in form and substance to
          TGSS and the Fund; and (iii) prior to the Termination Date, have a net
          worth prior to the Termination Date at least equal to that of LFL, and
          access to funding  sources for purposes of making  payments of Selling
          Commissions  hereunder  equivalent  in an amount to those to which LFL
          had access, immediately prior to such merger, consolidation or sale or
          disposition of assets or interests.

          Notwithstanding  any other  provision of this  agreement  (apart from
          Article  11.3(c)  below),  LFL may, at any time (provided that it has
          given 30 Business  Days' notice to the Fund,  TGAL and TGSS),  assign
          (whether  absolutely  or by way of security) all or any of its rights
          and benefits  under this  Agreement or any other Program  Document to
          any  Person  (and  the  Fund,  TGAL and TGSS  will,  as  appropriate,
          acknowledge receipt of any such notice and comply with the directions
          as to payment set out in such notice) and,  without  prejudice to the
          generality of the  foregoing,  LFL may (i) pledge or otherwise  grant
          security over all of its rights or benefits  under this  Agreement or
          any  other  Program  Document  to a major  financial  institution  as
          security for money borrowed;  (ii) make representations or warranties
          and  grant  indemnities  to  another  Person,  as a  part  of  and in
          connection  with a  Takeout  Transaction,  which are  similar  to the
<PAGE>

          representations,  warranties and  indemnities  agreed to by the Fund,
          TGSS and TGAL in this  Agreement or any other  Program  Document;  or
          (iii) assign the right to receive the proceeds of any indemnification
          provided hereunder.

     (c)  LFL shall not have the right to assign  any of its  rights  under this
          Agreement to any of the top five mutual fund  management  companies in
          each  of  Europe,   Canada  and  the  U.S.  (and  TGSS  shall,  acting
          reasonably,  determine the  identities of such  companies from time to
          time).  This exclusion  shall not apply to Affiliates or associates of
          such  fund  companies  that are not  involved  in the  management  and
          distribution of retail investment funds.

11.4 LIABILITY.  LFL shall not be liable  for any error of  judgment  or for any
     loss  suffered  by the  Fund or the  Distributors  in  connection  with the
     matters to which  this  Agreement  relates,  except a loss  resulting  from
     misfeasance,  bad faith or negligence on its part in the performance of, or
     reckless disregard by it of, its obligations hereunder.

11.5 CONFIDENTIALITY.  Unless otherwise  required by applicable law, TGSS, TGAL,
     the Fund and LFL agree to maintain the  confidentiality  of this  Agreement
     (and all drafts  thereof),  the  transactions  contemplated  hereby and all
     confidential, material, non-public information concerning the other parties
     to this  Agreement,  which  information  has been provided by such party by
     another party and was not also  available to such party through other means
     (collectively,  "Confidential Information");  provided that nothing in this
     Article 11.5 shall prohibit  disclosure of Confidential  Information by any
     such Person as follows:

     (a)  pursuant to an order under applicable law or pursuant to a subpoena or
          other legal process;

     (b)  to the  officers,  directors,  partners,  employees,  legal counsel or
          auditors of, or lenders to, such Person,  who shall also be instructed
          to maintain it as confidential;

     (c)  in the case of the Fund,  to any then  current  directors of the Fund,
          Fund counsel,  independent  accountants or officers, who shall also be
          instructed to maintain it as confidential;

     (d)  to any permitted  assignee or permitted  pledgee of all or any portion
          of such  Person's  right,  title or interest in this  Agreement or the
          Fees,  provided  that such  permitted  assignee  or pledgee  agrees in
          writing  delivered  to and  for the  benefit  of all  parties  to this
          Agreement to be bound by the terms of this Article 11.5; or

     (e)  to any proposed  permitted assignee or permitted pledgee of all or any
          portion of such Person's  right,  title and interest in this Agreement
          or the Fees, provided that such Person advises such proposed permitted
          assignee or pledgee in writing that such  Confidential  Information is
          confidential,  non-public  information and requests that such proposed
          permitted assignee or pledgee keep it confidential and use it only for
          purposes of  evaluating  the  proposed  assignment  or pledge and such
          proposed  permitted  assignee or pledgee agrees in a writing delivered
          to and for the benefit of all parties to this Agreement to be bound by
          the provisions of this Article 11.5.

     Notwithstanding anything to the contrary contained herein, LFL shall keep,
     and shall use its commercially  reasonable  efforts to cause its officers,
<PAGE>

     directors, partners, employees, advisers, legal counsel, auditors, lenders
     and  affiliates  to  keep,   confidential  all  Confidential   Information
     concerning the Fund  delivered or made available by the TGSS,  TGAL or the
     Fund  to LFL or such  other  Persons,  including  without  limitation  the
     Program  Documents  (to the extent not  publicly  available),  shareholder
     records,  shareholder  transaction records and information  concerning the
     composition of their respective portfolios, and information concerning the
     financial condition of the TGSS, TGAL or their parents (and LFL shall not,
     and shall  cause  each of the  foregoing  other  Persons  not to, use such
     information  to sell shares to or  purchase  shares from the Fund or other
     investment  company or  recommend  such trading to any other Person on the
     basis of such information).

11.6 NOTICE.  Any notice  which is required or  permitted to be given under this
     Agreement  may be given in writing  by  delivery  in person or by  ordinary
     prepaid mail by addressing  the same to the party to whom it is to be given
     at the  address  set out below or at such  other  address as such party may
     designate by notice in the foregoing manner:

     (a)  in the case of LFL:
          c/o Chase Manhattan  (Ireland) plc,  Georges Dock, 1 IFSC,  Dublin
          1, Ireland
          Fax No: 00 353 1 6125777

     (b)  in the case of the Fund:
          26, boulevard Royal, L-2449, Luxembourg
          Attn:  General Manager
          Fax No: 00 352 4666 6711

     (c)  in the case of TGAL:
          PO Box N-7759, Nassau, Bahamas
          Attn:  Corporate Secretary
          Fax No: 001 242 3624 308

     (d)  in the case of TGSS:
          26, boulevard Royal, L-2449, Luxembourg
          Attn:  General Manager
          Fax No: 00 352 4666 6711

     Any  notice so given  shall be deemed to have been given on the day it is
     personally  delivered or on the day which is five days after it is mailed,
     as the case may be. All such notices shall be copied to:

          Franklin Resources Inc
          777 Mariners Island Boulevard
          San Mateo
          CA 94404
          USA
          Attn:  General Counsel
          Fax No:  001 650 5257279

          and to

          Constellation Financial Management Company, LLC
          52 Vanderbilt Avenue, 13th Floor
          New York, NY  10017
          USA
          Attn: David Steinmetz
<PAGE>

          and to

          Templeton Global Investors Limited
          Saltire Court
          20 Castle Terrace
          Edinburgh EH1 2EH
          Attn: Company Secretary

11.7 OVERDUE  AMOUNTS.  Any  amount  determined  to be  payable  by one party to
     another  shall be payable  with  interEst  calculated  at an annual rate on
     interest  reported by Chase  Manhattan  Bank as its "prime  rate",  for the
     period commencing from the date such payment was originally due to the date
     payment actually is made.

11.8 TAXES.

     (a)  The Distributors or the Fund, as applicable,  shall pay any present or
          future  sales,  value added or excise  taxes,  excluding  LFL's income
          taxes, imposed upon the supply of services by LFL under this Agreement
          (hereinafter   referred  to  as  "Sales  Taxes").  In  addition,   the
          Distributors  or the Fund,  as  applicable,  shall pay any  present or
          future  stamp or  documentary  taxes or any other  excise or  property
          taxes,   charges  or  similar  levies  which  arise  under  Luxembourg
          legislation  from  any  payment  made  by or on  behalf  of  the  Fund
          hereunder or from the  execution  or delivery  of, or  otherwise  with
          respect to this  Agreement or any other Program  Document to which the
          Distributors,  the Fund or any of  their  respective  Affiliates  is a
          party  (hereinafter  referred  to as  "Other  Taxes").  LFL  shall  be
          entitled  to  indemnification  for the full  amount of Sales  Taxes or
          Other Taxes (including  without  limitation,  any Sales Taxes or Other
          Taxes imposed on amounts  payable under this section  11.8(a)) paid by
          the Fund or either  Distributor (as the case may be) and any liability
          (including penalties, interest and expenses) arising therefrom or with
          respect  thereto,  whether or not such Sales Taxes or Other Taxes were
          correctly or legally asserted.

     (b)  LFL  shall  pay (and  indemnifies  TGSS,  TGAL  and the Fund  (each an
          "Indemnitee") in respect of) any present or future sales,  value-added
          or excise taxes,  excluding each  Indemnitee's  income taxes,  imposed
          upon the payments to be made by LFL under Article 3.1. In addition LFL
          shall pay any  present  or future  stamp or  documentary  taxes or any
          other excise or property taxes,  charges or similar levies which arise
          from any payments to be made by it hereunder.

     (c)  LFL shall pay (and indemnifies  TGSS, TGAL and the Fund in respect of)
          any  withholding  taxes that may become payable in connection with the
          payments to be made by LFL of Selling  Commissions to Approved Dealers
          pursuant to Article 3.1 hereof and LFL shall gross up any such payment
          so as to ensure  that,  after  making  all  required  deductions,  the
          Approved  Dealers  receive the full amount of the Selling  Commissions
          due to such Approved Dealers. Furthermore, the Fund shall pay the full
          amounts deducted to the relevant taxation authority or other authority

     (d)  The Fund shall pay any  withholding  taxes that may become  payable in
          connection with any and all payments to be made by the Fund under this
          Agreement and the Fund shall gross up any such payment so as to ensure
          that,  after  making all required  deductions,  LFL receives an amount
          equal to the amounts it would have  received  had no  deductions  been
          made and the Fund shall pay the full amounts  deducted to the relevant
          taxation  authority  or other  authority.  Notwithstanding  any  other
          provisions of this  Agreement,  in the event that the Fund is required
          to withhold any such taxes, it shall do so without any recourse by, or
<PAGE>

          claim against, the Fund by LFL. In the event that the Fund is assessed
          a  deficiency  by any taxing  authority  in respect of its  failure to
          withhold any such taxes,  then the Fund shall be permitted to withhold
          any such  deficiency  from any current or future payments or transfers
          to be made by it to LFL under this  Agreement  until  such  deficiency
          (but not including any interest and penalties  thereon) is paid by LFL
          and LFL shall have no recourse or claim  against  Fund with respect to
          any such payments or withholdings.

11.9 SEPARATE   LIABILITY  OF  FUND.  Save  where  otherwise  provided  in  this
     Agreement,  the liability and obligations of the Fund to TGAL, TGSS and LFL
     hereunder shall be separate and distinct from the liability and obligations
     of TGAL and TGSS,  and the Fund shall be not be liable or  responsible  for
     the action or  inaction  of TGAL and TGSS.  Notwithstanding  the  foregoing
     regardless of whether TGSS ceases to be the Distribution Controller or not,
     the  Fund  agrees  that  it  shall  provide  to LFL,  TGSS  and  TGAL  such
     information as may be required from time to time to determine the amount of
     the Fees payable pursuant to Article 4.

11.10 HEADINGS. In this Agreement, the headings are for convenience of reference
      only, do not form a part of this Agreement and are not to be considered in
      the  interpretation  of this Agreement. References to Articles,  sections,
      paragraphs,   subparagraphs   and clauses  are  to   Articles,   sections,
      paragraphs, subparagraphs and clauses of this Agreement.

11.11 GENDER AND NUMBER. In this Agreement, words importing the masculine gender
      include the feminine and neuter genders,  words importing  persons include
      all Persons, and words in the singular include the plural, and vice versa,
      wherever the context requires.

11.12 SEVERABILITY.  Every  provision  of  this  Agreement  is  intended  to  be
      severable.  If any term or provision  hereof is illegal or invalid for any
      reason  whatsoever,  such illegality  shall not affect the validity of the
      remainder of this Agreement.

11.13 FURTHER  ACTS.  The parties  hereto  agree to execute and deliver any such
      further and other  documents  and perform and cause to be  performed  such
      further  and other acts and things as may be  necessary  or  desirable  in
      order to give  full  effect to this  Agreement  and  every  part  thereof.
      Without limiting the generality of the foregoing,  the Fund agrees that it
      will provide to TGSS,  TGAL and LFL such  information  as to date of issue
      and  issue  price of its  Deferred  Sales  Charge  Shares  and such  other
      information  as shall be required to  facilitate  the  calculating  of any
      amounts which are payable hereunder.

11.14 CURRENCY. All amounts referred to in this Agreement or required to be paid
      hereunder shall be paid in the base currency of the applicable Sub-Fund.

11.15 COUNTERPARTS,  FACSIMILE  EXECUTION.  This  Agreement  may be  executed in
      several counterparts, each of which when so executed shall be deemed to be
      an original and such  counterparts  together shall  constitute one and the
      same  instrument,  which  shall  be  sufficiently  evidenced  by any  such
      original  counterpart.  This  Agreement  may be executed and  delivered by
      facsimile  and will be  considered  duly  executed  and  delivered  by the
      parties so executing  delivery on the day of its transmission by facsimile
      in executed  form to the other  parties.  A party so  executing  by way of
      facsimile shall promptly deliver to each other party an originally  signed
      counterpart.

11.16 ENTIRE  AGREEMENT.  This Agreement  constitutes the entire agreement among
      the parties  pertaining to the subject matter hereof and supersedes,  with
<PAGE>

      effect   from  the  date  of  this   Agreement,   all  prior   agreements,
      understandings  and negotiations  between the parties  including,  without
      limitation,  the Commission  Paying Agreement and those provisions only of
      the Fees  Side-Letter,  the  Distribution  Agreement and the  Distribution
      Agreement  Addendum which  expressly  conflict with the provisions of this
      Agreement. For the avoidance of doubt, the remaining provisions of each of
      the Fees  Side-Letter,  the  Distribution  Agreement and the  Distribution
      Agreement  Addendum which do not expressly conflict with the provisions of
      this Agreement shall remain in full force and uuvaried effect.

11.17 ENUREMENT. This Agreement is binding upon and enures to the benefit of the
      parties hereto and their respective successors and permitted assigns.

11.18 INSTRUCTIONS.  Any  instructions  to be given by LFL in the performance of
      its duties  hereunder  in respect of any of the matters  referred to in or
      contemplated by this Agreement ("Proper  Instructions")  shall be written,
      cabled,  telecopied or telexed  instructions and signed or purported to be
      signed by such  person  or  persons  as LFL  shall  from time to time have
      authorised  in writing to give the  particular  class of  instructions  in
      question.  Different  persons may be authorised to give  instructions  for
      different   purposes  and  such  persons  may  also  include  officers  of
      corporations other than LFL so authorised by LFL. For the purposes of this
      Agreement,  LFL shall furnish the other parties  hereto with a schedule of
      the names of the persons  authorised  from time to time  (either  alone or
      with others as specified) to give instructions  together with specimens of
      their  signatures.  LFL shall also furnish the other parties hereto with a
      certified  copy of a  resolution  of the  Directors  of LFL as  conclusive
      evidence of the  authority of any such person to act and the other parties
      hereto shall be entitled to rely on such resolution and authority as being
      in full force and effect until receipt of written notice to the contrary.

11.19 LAW AND JURISDICTION.

     (a)  This Agreement  shall be governed by and construed in accordance  with
          the laws of Ireland.

     (b)  Each of the  parties  hereto  irrevocably  agree  that the  courts  of
          Ireland shall have  non-exclusive  jurisdiction  to hear and determine
          any suit,  action or proceeding  and to settle any disputes  which may
          arise  out of or in  connection  with  this  Agreement  and  for  such
          purposes hereby irrevocably submit to the jurisdiction of such courts.

     (c)  Each party  irrevocably  waives any objection which it may have now or
          in the future to the courts of Ireland being nominated for the purpose
          of Article 11.19(b) and agrees not to claim that any such court is not
          a convenient or appropriate forum.

     (d)  Each of the Fund,  TGAL and TGSS  hereby  irrevocably  authorises  and
          appoints  Matsack Trust Limited as its process agent to accept service
          of all legal process  arising out of or connected  with this Agreement
          and service on Matsack Trust Limited (or any substitute  process agent
          appointed  in  accordance  with  this  Article)  shall be deemed to be
          service  on the  Fund,  TGAL or TGSS (as the case may be).  If for any
          reason  Matsack  Trust  Limited  (or  any  substitute   process  agent
          appointed in accordance with this Article 11.19 (d)) ceases to be able
          to act as process  agent or no longer has an address in Ireland,  each
          of the  Fund,  TGAL  or  TGSS  irrevocably  undertakes  to  appoint  a
          substitute  process agent  resident in Ireland and advise LFL thereof.
          Failing  such  appointment  each of the  Fund,  TGAL  or  TGSS  hereby
<PAGE>

          authorises  the Agent to  appoint an Agent on its  behalf.  Nothing in
          this Article  11.19 (d) shall affect the right to serve legal  process
          in any other manner permitted by law.

ACKNOWLEDGEMENT BY THE FUND AND TGSS

Without prejudice to the execution of the Agreement by the parties hereto,  each
of the Fund and TGSS expressly and specifically confirm their agreement with the
provisions of clause  11.19(b) of this Agreement for the purpose of article 1 of
the Protocol  annexed to the Convention on  jurisdiction  and the enforcement of
judgements in civil and  commercial  matters signed at Brussels on 27 September,
1968 as amended by the Convention of Lugano and San-Sebastian.

--------------------------------          ------------------------------

TEMPLETON GLOBAL STRATEGY                 TEMPLETON GLOBAL STRATEGIC
SERVICES SA FUNDS                         SERVICES SA FUNDS



AS WITNESS  WHEREOF the duly  authorised  representatives  of the parties hereto
have caused this  Agreement  to be duly  executed  the day and year first herein
written.


<PAGE>



                                   SCHEDULE A

                               ADVISORY AGREEMENTS

1.    Investment Management Agreement dated February 2, 1995 between the
      Fund and Templeton Investment Management Limited.

2.    Investment Management Agreement dated July 7, 1997 between the Fund
      and Franklin Mutual Advisers Inc.

3.    Investment  Management  Agreement dated February 15, 1996 between the Fund
      and  Franklin  Advisers  Inc (as  amended by an  amendment  between  those
      parties dated March 1, 1996).

4.    Investment Management Agreement dated February 2, 1995 between the
      Fund and Templeton Investment Management (Singapore) Pte. Ltd.

5.    Investment Management Agreement between the Fund and Templeton
      Galbraith & Hansberger Ltd (now TGSS).




                              PROSPECTUS DOCUMENTS

1.    The prospectus in relation to the Fund dated September 1997.

2.    The addenda thereto dated January 1, 1999 and January 8 1999
respectively.


<PAGE>



                                   SCHEDULE B

                            Intentionally left blank


<PAGE>



                                   SCHEDULE C

Templeton Global Growth Fund
Franklin Mutual Beacon Fund
Franklin U.S. Equity Fund
Templeton Emerging Markets Fund
Franklin Templeton High Yield Fund
Franklin Templeton U.S. Government Fund
Templeton Emerging Markets Fixed Income Fund
Templeton U.S. Dollar Liquid Reserve Fund


<PAGE>


                                   SCHEDULE D

                              ALLOCATION PROCEDURES

Deferred  Sales  Charge  Shares  shall  be  allocated  among  Monthly  Pools  in
accordance with the procedures set forth in these Allocation Procedures.

The parties agree that if (i) the  Sub-Funds or the  Sub-Funds'  transfer  agent
becomes able to supply records which  accurately  track Free Shares and Transfer
Shares to the Commission  Shares from which they were derived and the Fund, TGSS
or TGAL develops an alternative  allocation methodology which uses such tracking
information  (the "Alternate  Methodology")  and (ii) LFL reasonably  determines
that such  methodology  is at least as reliable and accurate as the  methodology
described below, then the parties agree that such Alternate  Methodology will be
substituted  for the  foregoing and this Schedule D will be amended to reflect a
mutually agreeable description of such Alternate Methodology.

Defined terms used in this Schedule D and not otherwise defined in this Schedule
D shall have the meanings  assigned to such terms.  As used herein the following
terms shall have the meanings indicated:

"COMMISSION SHARE" shall mean, in respect of any New B Share Sub-Fund,  each New
B Share of such  Sub-Fund  which  is  issued  under  circumstances  which  would
normally  give  rise to an  obligation  of the  holder  of such  Share  to pay a
Deferred  Sales  Charge  upon  redemption  of  such  Share,  including,  without
limitation,  any  Share  of  such  Sub-Fund  issued  in  connection  with a Free
Exchange,  and any such Share shall not cease to be a Commission  Share prior to
the  redemption  (including a redemption in connection  with a Free Exchange) or
conversion of such Share even though the  obligation  to pay the Deferred  Sales
Charge shall have expired or conditions for waivers thereof shall exist.

"DEFERRED SALES CHARGE" or "DSC" shall mean any deferred sales charge payable by
the holder of a Share of any  Sub-Fund  upon  redemption  of such Share,  either
directly or by withholding from the proceeds of such redemption.

"FREE  EXCHANGE"  shall mean the issuance of a Transfer Share upon the immediate
investment  of proceeds  realized on the  redemption  of a  Commission  Share of
another New B Share Sub-Fund.

"FREE SHARE" shall mean, in respect of any New B Share Sub-Fund, each Reinvested
Share of such Sub-Fund.

"MONTHLY POOL" shall mean, with respect to any Sub-Fund and any calendar month:

           (i)  each Original Charge Share issued by such Sub-Fund during
                such calendar month;

           (ii) Transfer  Shares  of such  Sub-Fund  issued  upon the  immediate
                reinvestment  of proceeds  realized on the  redemption of (a) an
                Original  Charge  Share  of  another  Sub-Fund  issued  by  such
                Sub-Fund  during  the  calendar  month  described  in clause (i)
                above;  (b) a  Reinvested  Share of another  Sub-Fund  issued in
                respect of Deferred Sales Charge Shares described in clause (ii)
                (a) above or this  clause  (ii)(b);  or (c) a Transfer  Share of
                another  Sub-Fund which relates to a Deferred Sales Charge Share
<PAGE>

                described  in clause  (ii)(a)  or (ii)(b)  above or this  clause
                (ii)(c); and

          (iii) Free  Shares  of  such  Sub-Fund   issued  upon  the   automatic
                reinvestment  of income  and capital  gains  distributions  with
                respect  to  Deferred  Sales  Charge  Shares  of  such  Sub-Fund
                described in clauses (i) or (ii) above, or this clause (iii).

"NET ASSET  VALUE"  shall mean,  with respect to any Share of a Sub-Fund and any
date of  determination,  the net asset value of such Share on such date computed
in the manner such value is  required  to be  computed  by such  Sub-Fund in its
reports to its shareholders.

"NON-OMNIBUS  COMMISSION  SHARE"  shall  mean  a  Commission  Share  that  is  a
Non-Omnibus Share.

"NON-OMNIBUS FREE SHARE" shall mean a Free Share that is a Non-Omnibus Share.

"NON-OMNIBUS SHARE" shall mean a Share that is not an Omnibus Share.

"OMNIBUS  COMMISSION  SHARE"  shall mean a  Commission  Share that is an Omnibus
Share.

"OMNIBUS FREE SHARE" shall mean a Free Share that is an Omnibus Share.

"OMNIBUS  SHARE"  shall  mean,  with  respect to any  Sub-Fund,  a Share of such
Sub-Fund  held in the name of a broker  dealer  street  account  on the  records
maintained by the Sub-Fund's Transfer Agent.

"SHARE" shall mean any Deferred Charge Share of any New B Share Sub-Fund.

ATTRIBUTION  OF SHARES:  Shares of each Sub-Fund  outstanding  from time to time
shall  be  attributed  to  Monthly  Pools  in  accordance   with  the  following
procedures:

1     NON-OMNIBUS SHARES

     (a)  COMMISSION SHARES

           Each  Sub-Fund's  Transfer Agent  maintains  records with which it is
           able to determine  the  original  issuance  date of each  outstanding
           Non-Omnibus  Commission Share, or in the case of a Transfer Share, of
           the Original  Charge Share from which such Transfer  Share is derived
           through  one or more  Free  Exchanges.  Using  such  data,  LFL  will
           attribute the following  Commission  Shares  outstanding from time to
           time to the  Monthly  Pool having its Sale Cutoff Date in a specified
           month:  (i)  Original  Charge  Shares sold  (whether or not  settled)
           during  such  month,  and (ii)  Transfer  Shares  which were  derived
           through one or more Free Exchanges  from Original  Charge Shares sold
           (whether or not settled)  during such month,  in each case determined
           in accordance with the records maintained by the Transfer Agent.
<PAGE>

     (b)  FREE SHARES

           Non-Omnibus  Free Shares of a Sub-Fund to be attributed among Monthly
           Pools  pursuant to this Section 1(b) will be  attributed by LFL using
           records  maintained  by  LFL  in  accordance  with  this  Section  1.
           information  supplied  by  such  Sub-Fund's  Transfer  Agent  and the
           following methodology:

           (1)  NON-OMNIBUS FREE SHARE ISSUANCES.  Non-Omnibus Free Shares
                --------------------------------
                issued on any day during any calendar month by such Sub-Fund
                shall be attributed:

                (i)  To Monthly Pools  originated prior to the month in question
                     using the following formula:

                          FS *          CSFS
                                --------------------------
                                  TCSFS + [NMCS * DD/DM]

                (ii) To the Monthly Pool originated during the month in question
                     using the following formula:

                          FS *          NMCS                    DD
                                --------------------------   *  ----
                                   TCSFS + [NMCS  * DD/DM]      DM

                (iii) For this purpose:

                          FS   =    The  number  of  Non-Omnibus  Free  Shares
                                    issued on such day during  such month  based
                                    on   information   provided  by  the  Fund's
                                    Transfer Agent.

                          CSFS =    The  number  of  Non-Omnibus   Commission
                                    Shares   and    Non-Omnibus    Free   Shares
                                    attributed  to such Monthly Pool in question
                                    and  outstanding as of the close of business
                                    on  the  last  business  day  of  the  month
                                    preceding the month in question.

                          TCSFS =   The total number of Non-Omnibus Commission
                                    Shares   and    Non-Omnibus    Free   Shares
                                    outstanding  as of the close of  business on
                                    the  last  day of the  month  preceding  the
                                    month in question.

                          NMCS =    The  number  of  Non-Omnibus   Commission
                                    Shares   attributed   to  the  Monthly  Pool
                                    originated  during the month in question and
                                    outstanding  as of the close of  business on
                                    the last business day of such month.
<PAGE>

                          DD   =    The  number  of  days  in  the  month  in
                                    question   prior   to  and   including   the
                                    ex-dividend  date  for  the  payment  of the
                                    dividend or other  distribution  giving rise
                                    to the issuance of Free Shares in question.

                          DM   =    The  number  of  days  in  the  month  in
                                    question.

           (2)  NON-OMNIBUS  FREE SHARE  CONVERSIONS.  The number of Non-Omnibus
                Free Shares of a Sub-Fund deemed  converted  during any calendar
                month will equal the sum of (i) the number of  Non-Omnibus  Free
                Shares of such  Sub-Fund  attributed as of the close of business
                on the last  business day preceding the month in question to the
                Monthly  Pool the  Anniversary  of the Sale Cutoff Date of which
                occurs  during such month,  plus (ii) the number of  Non-Omnibus
                Free Shares of such  Sub-Fund  attributed  to such  Monthly Pool
                with respect to the month in question pursuant to clause 1(b)(1)
                above.

           (3)  NON-OMNIBUS  FREE SHARE  REDEMPTIONS AND EXCHANGES.  Net changes
                during  any  calendar  month in the number of  Non-Omnibus  Free
                Shares of a Sub-Fund  that have not been  allocated  pursuant to
                clause  1(b)(1) or 1(b)(2) above (which  changes will  primarily
                result from  redemptions  or exchanges of such Shares)  shall be
                attributed  to Monthly  Pools as of the end of such month  using
                the following methodology:

                (i)  The aggregate amount of such changes during such month will
                     be computed as follows:

                             FSRE = FSO - FSI + FSC

                             where:

                          FSRE  =   The change during such  calendar  month in
                                    the number of outstanding  Non-Omnibus  Free
                                    Shares of the Sub-Fund in question  that has
                                    not  been   allocated   pursuant  to  clause
                                    1(b)(1) or 1(b)(2) above.

                          FSO   =   The  number  of  Non-Omnibus  Free  Shares
                                    outstanding  on the last business day of the
                                    calendar  month in question minus the number
                                    of  Non-Omnibus  Free Shares  outstanding on
                                    the  last  business  day  of  the  preceding
                                    calendar month.

                          FSI   =   The  number  of  Non-Omnibus  Free  Shares
                                    issued  during  the  month in  question  and
                                    attributed  to  Monthly  Pools  pursuant  to
                                    clause 1(b)(1) above.
<PAGE>

                          FSC   =   The  number  of  Non-Omnibus  Free  Shares
                                    deemed   converted   during   the  month  in
                                    question  and  attributed  to Monthly  Pools
                                    pursuant to clause 1(b)(2) above.

                     (ii) The aggregate amount of FSRE during such month will be
                          attributed to Monthly Pools as follows:

                          FSRE X      FS
                                    ----
                                     TFS

                          where:

                          FSRE  =   The amount of FSRE determined as
                                    provided in clause (i) above.

                          FS    =   The  number  of  Non-Omnibus  Free  Shares
                                    attributed  to such  Monthly  Pool as of the
                                    last  business  day  of the  calendar  month
                                    preceding the month in question.

                          TFS   =   The  total  number  of  Non-Omnibus  Free
                                    Shares  as of the last  business  day of the
                                    calendar   month   preceding  the  month  in
                                    question.

2     Omnibus Shares.

(a)   Alternative Methodologies.

      If the  conditions to broker  dealer  attribution  of Omnibus  Shares of a
      Sub-Fund  have been  satisfied,  then the Omnibus  Shares of such Sub-Fund
      will be attributed pursuant to Section 2(b).

      If the  conditions to broker  dealer  attribution  of Omnibus  Shares of a
      Sub-Fund have not been satisfied, then the Omnibus Shares of such Sub-Fund
      will be attributed pursuant to Section 2(c).

      The  conditions  to  broker  dealer  attribution  of  Omnibus  Shares of a
      Sub-Fund  will  have been  satisfied  if  certain  broker  dealer(s)  (the
      "Specified Broker Dealer(s)") can provide reliable data with which LFL can
      attribute  Omnibus  Shares  held  by the  Specified  Broker  Dealer(s)  to
      specific  Monthly  Pools using the  methodology  described in Section 1 as
      though all  references  in Section 1 to the  Transfer  Agent,  Non-Omnibus
      Shares,  Non-Omnibus  Commission  Shares and Non-Omnibus  Free Shares were
      references to the Specified  Broker  Dealer(s),  Omnibus  Shares,  Omnibus
      Commission Shares and Omnibus Free Shares, respectively.
<PAGE>

(b)   IF BROKER DEALER DATA IS AVAILABLE.

           If the conditions to broker dealer attribution of Omnibus Shares of a
           Sub-Fund have been  satisfied,  then the aggregate  number of Omnibus
           Shares attributed to each Monthly Pool as of the last business day of
           a calendar month shall equal:

           OSSBD X   TOS
                   -------
                    TOSSBD

           where:

           OSSBD     =    The number of Omnibus Shares of such
                          Sub-Fund held by the Specified Broker Dealer(s)
                          as of the last business day of the calendar month
                          in question and attributed to such Monthly Pool
                          using the methodology described in Section 1 with
                          respect to such Sub-Fund and the data supplied by
                          such Specified Broker Dealer(s) but without using
                          data supplied by the Sub-Fund's Transfer Agent.

           TOS       =    The total  number of  Omnibus  Shares as of the last
                          business  day  of  the  calendar   month  in  question
                          according to the Sub-Fund's Transfer Agent's records.

           TOSSBD    =    The total  number of  Omnibus  Shares as of the last
                          business day of the calendar month in question held by
                          the  Specified  Broker  Dealer(s)   according  to  the
                          Specified Broker Dealer(s)'s records.

           (c)  IF BROKER DEALER DATA IS NOT AVAILABLE.

           If the conditions to broker dealer attribution of Omnibus Shares of a
           Sub-Fund  have  not been  satisfied,  then the  aggregate  number  of
           Omnibus  Shares  attributed  to  each  Monthly  Pool  as of the  last
           business day of a calendar month shall equal:

           TOS X    NOS
                   ------
                    TNOS

           where:

           TOS      =     The total  number of  Omnibus  Shares as of the last
                          business  day  of  the  calendar   month  in  question
                          according to the Sub-Fund's Transfer Agent's records.

           NOS      =     The  number  of  Non-Omnibus  Shares  as of the last
                          business  day  of  the  calendar   month  in  question
                          attributed to the Monthly Pool in question.

           TNOS     =     The  total  number of  Non-Omnibus  Shares as of the
                          last business day of the calendar month in question.


<PAGE>


                                   SCHEDULE E

1.    An opinion of Luxembourg counsel.

2.    Certified  copies  of the  Articles  of  Incorporation  of the  Fund and a
      resolution of the board of directors of the Fund wherein, inter alia, they
      authorise the execution of this Agreement by the Fund and the  performance
      of its obligations hereunder.

3.    Certified copies of the Prospectus Documents, the Advisory Agreements,
      the Distribution Agreement, the Distribution Agreement Addendum, the
      Distribution Controller Agreement and the Fees Side-Letter.



<PAGE>



SIGNED for and on behalf of
LIGHTNING  FINANCE  COMPANY  LIMITED
by
Signature:   ____________________________

Print Name:  ____________________________


Title:       ____________________________
             DULY AUTHORISED OFFICER

in the presence of:

Signature:   _____________________________


Witness Name:_____________________________

Address:     _____________________________

SIGNED for and on behalf of
TEMPLETON GLOBAL STRATEGY FUNDS
by
Signature:   ____________________________


Print Name:  ____________________________


Title:       ____________________________
             DULY AUTHORISED OFFICER

in the presence of:

Signature:   _____________________________


Witness Name:_____________________________

Address:     _____________________________



<PAGE>



SIGNED for and on behalf of
TEMPLETON  GLOBAL  ADVISORS  LIMITED
by
Signature:   ____________________________

Print Name:  ____________________________

Title:       ____________________________
             DULY AUTHORISED OFFICER

in the presence of:

Signature:   _____________________________

Witness Name:_____________________________

Address:     _____________________________

SIGNED for and on behalf of
TEMPLETON GLOBAL STRATEGIC SERVICES S.A.

by

Signature:   ____________________________


Print Name:  ____________________________


Title:       ____________________________
             DULY AUTHORISED OFFICER

in the presence of:

Signature:   _____________________________


Witness Name:_____________________________

Address:     _____________________________