EXHIBIT 10.4
SERVICE AGREEMENT
____________________
This Agreement has been made on 1st March, 1996
Between
1. TEMPLETON RUSSIAN AND EASTERN EUROPEAN DEBT FUND, a
Societe d'Investissement a Capital Variable,
incorporated under the laws of the Grand-Duchy of
Luxembourg and having its registered office in
Luxembourg, 30, Grand-Rue, (hereinafter called the
'Fund") on the one part,
and
2. TEMPLETON GLOBAL STRATEGIC SERVICES S.A., a Societe
Anonyme, incorporated under the laws of the Grand-Duchy
of Luxembourg and also having its registered office in
Luxembourg (hereinafter called the "Agent") on the
other part,
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 Board of Directors of the Fund has selected
the Agent to act as, registrar and transfer, corporate and
domiciliary agent for the Fund and to provide certain
administrative services;
(C) The Agent is ready and willing to act as registrar
and transfer, corporate and domiciliary agent and to provide
administrative services as aforesaid, subject to and in
accordance with the provisions of the law of 30th March 1988
(the "law') and the provisions set forth in this agreement
NOW IT IS HEREBY AGREED AS FOLLOWS:
I. Registrar and Transfer Agency
1.) Appointment
The Fund hereby appoints the Agent as its registrar and
transfer agent. subject to the provisions hereof, and will
deliver, or cause to be delivered, forthwith upon request to
the Agent all documents and papers necessary under
Luxembourg law, under the Articles of incorporation of the
Fund as from time to time amended, and as may be required
for the due performance of the duties of the Agent
hereunder, or for the due performance of such additional
duties as may from time to time be agreed upon between the
Agent and the Fund.
2.) Functions of the Registrar and Transfer Agent
As registrar and transfer agent the Agent shall have
and perform the following powers and duties:
A. Maintenance of Records
To keep safely and to maintain in current form, as
required by Luxembourg law, the register of shareholders of
the Fund as well as the certificates for shares of the Fund
to deal with requests for transfer of shares whether through
the Luxembourg Stock Exchange or otherwise and to maintain
and keep safely such other records as may, be required or
requested by proper instructions from time to time and as
may further be required by the laws of Luxembourg.
B. Disposition of Certificates
To keep safely all share certificates of the Fund, as
may be designated for safekeeping prior to issue from time
to time by the Fund; to accept or keep certificates,
tendered for exchange, replacement, repurchase or transfer
by the holders thereof in accordance with the provisions of
the Articles of Incorporation of the Fund and the
requirements of Luxembourg law; to accept and keep safely
such forms and documents as may be submitted to it in
connection with any such tender; to deliver as agent,
subject to the conditions set forth hereafter. share
certificates of the Fund, whether by way of original issue
to new shareholders or in exchange, replacement or further
to a transfer subject to the provisions of the Articles of
Incorporation of the Fund and to Luxembourg law.
C. Subscriptions and Repurchases
To handle the processing of subscriptions to shares in
the Fund, to deal with requests for repurchases and with
resales of repurchased shares and to make such transfers of
funds, or to give instructions with respect to such
transfers, and to rake such actions as shall be necessary in
order to effect such sales and repurchases. In this
connection the Agent shall have regard to the
specific provisions of the Prospectus relating to the issue,
transfer, redemption and holding of shares comprising, inter
alia, restrictions on ownership and minimum holding by
certain types of shareholders.
D. Conditions for Delivery and Repurchase
To deliver share certificates (i) by way of original
issue, or (ii) further to a transfer, conversion,
replacement or exchange only after receipt (x) by the
receiving bank designated by the Fund -from time to time of
payment therefor. or (y) of share certificates for an
equivalent number of shares. For this purpose cheques,
drafts and similar instruments of payment will be considered
as good funds if and when collected.
To make payment or to cause payment to be made of
repurchase proceeds only after all the conditions as
described by the Articles of incorporation of the Fund and
other valid documents, as amended from time to time, are
fully met.
E. Destruction of Certificates
To destroy by cremation or any other means share
certificates which have been cancelled or mutilated or which
are no longer of good delivery for any other reason. Such
destruction shall be evidenced by an affidavit duly signed
by two witnesses.
F. Circulars to Shareholders
To provide and supervise services with regard to the
dispatch of statements, reports, notices, announcements,
proxies and other documents to the shareholders of the Fund
and to maintain such records with regard thereto as may from
time to time be required by the Fund or by Luxembourg law.
II. Corporate and Domiciliary Agent Agreement
1 . The Agent allows the Fund to fix its registered office
at the address of the Agent at Centre Neuberg, 30,
Grand-Rue Luxembourg. The Agency will act as corporate
and domiciliary agent for the Fund and will provide
related services for the benefit of the Fund (in which
capacity the agent is hereinafter called the
"Domiciliary Agent").
2. The Fund will, on request, deliver or cause to be
delivered to the Agent all the books, records,
agreements, forms, papers, files and other corporate
documents required by Luxembourg law and the Articles
of Incorporation of the Fund necessary to the
Domiciliary Agent for the due performance of its
duties.
As Domiciliary Agent the Agent will have the following
duties:
a) To receive and keep safely any and all notices,
correspondence, telegrams, telex messages,
telephonic advice or ocher representations and
communications received for account of the Company
the Agent being authorized to open the mail no
received at its address and obtain knowledge of its
contents.
b) To provide such facilities as may from time to time
be necessary in the course of the day-to-day
administration of the Company, including such
meetings of its officers, directors and/or
shareholders as may be convened in Luxembourg.
c) To provide and supervise facilities and services for
the preparation and dispatch of statements, notices.
announcements, proxies and other documents to the
shareholders of the Fund and to maintain such
records with regard thereto as may from time to time
be required by the Company or by Luxembourg law.
d) To draw up the minutes of the general meetings, to
provide for legal publications and file any tax
returns. To perform such ocher services as may be
agreed upon from time to time between the Agent and
the Fund with regard to the maintenance of any and
all records or books required to be kept at the
principal office of the Fund.
e) To take, upon instruction of the Fund and at its
expense, all actions necessary to defend the Fund's
nationality and domicile.
3 . As compensation for the performance of its duties under
this agreement, the Agent will be entitled to charge
out of the Fund's assets a fee as may be agreed from
time to time among the parties hereto.
IV. Administrative Agency
The Fund appoints the Agent, and the Agent hereby
accepts such appointment, as Administrative Agent of
the Fund. In such capacity the Administrative Agent
shall perform the following Administrative services:
a) the bookkeeping of the Fund in accordance with general
accounting principles and legal provisions;
b) the determination of the net asset value of the shares
of the different Funds in accordance with the
provisions of the articles of incorporation and the
Prospectus issued from time to time by the Fund.
c) the preparation of the annual accounts and the
periodical financial statements and reports in
accordance with Luxembourg law and the requirements of
the Luxembourg Monetary Institute.
d) the liaison with the Independent Public Accountant.
V. General
1.) Use of the Agent's name
The Fund agrees not to use the Agent's name in any
document, publication or publicity material., including but
not limited to prospectuses, notices, circulars, sales
literature, stationery. advertisements etc. without the
prior consent of the Agent.
2.) Submission to Law
The Fund undertakes to submit to any and all applicable
laws, regulations and administrative rulings of the Grand
Duchy of Luxembourg and of any other country in which the
Fund conducts business.
3.) Right to receive advice
If the Agent shall at any time be in doubt as to any
action to be taken or omitted by it, it may, with the
consent of the Fund, request and receive advice, at the
expense of the Fund. from legal counsel selected by the
Fund, and may, but shall not be required to, act thereon.
4.) Proper Instructions
"Proper instructions" shall be deemed to have been
received by the Agent in respect of any of the matters
referred to in this Agreement upon receipt of written,
cabled or telexed Instructions given by any two directors or
by such one or more person or persons as the Board of
Directors of the Fund shall from time to time have
authorized to give the particular class of instructions in
question. A certified copy of a resolution of the Board of
Directors of the Fund may be received and accepted by the
Agent as conclusive evidence of the authority of any such
person or persons to act, and may be considered as in full
force and effect until receipt of written notice to the
contrary. The Agent shall not be liable for the execution
of instructions which the Agent will have accepted in good
faith as being proper instructions.
5.) Books and records
The books and records of the Agent relating to the
Fund's business shall be open to inspection and audited at
reasonable times by officers and auditors employed by the
Fund.
6.) Indemnification
The Fund agrees that it will indemnify and hold
harmless the Agent and its officers and directors from any
and all cost, liability and expense resulting from the fact
that the Agent has acted in accordance with the terms of
this Agreement pursuant to the receipt of proper
instructions.
The Agent shall be liable to the fund for any acts or
omissions involving an intentional or negligent failure to
exercise due care by the Agent or its employees, officers or
directors contrary to the terms of this Agreement, except
such acts or omissions as are required by court order or
other legal process or regulation of any governmental body.
The Agent agrees that it will indemnify and hold harmless
the Fund and its employees, officers and directors from any
and all loss, damage, liability and expense arising out of
negligence or intentional misconduct of the Agent, any of
its employees, officers or directors.
7.) Compensation
The Agent will be entitled to debit the Fund's accounts
in order to receive payment. as compensation for the
performance of its duties under this Agreement, for all fees
as may be agreed upon from
time to time.
8.) Lien
The Agent acknowledges that, unless otherwise agreed
from time to time with the Fund, it has no right to a lien
or to a right of retention over the documents of title or
certificates evidencing title to any of the assets of the
Fund.
9.) Disbursements
The Agent will be entitled to be refunded all expenses
properly incurred in the performance of its duties under
this Agreement. The Agent will from time to time give
details of such expenses to the Fund in writing.
10.) Termination
Either Party may terminate this Agreement by notice in
writing, delivered or dispatched by registered mail to the
other party hereto, not less than 60 days prior to the date
upon which such termination becomes effective. However,
breach of any clause contained in this Agreement by either
party shall entitle the other party to terminate this
Agreement upon thirty days' prior written notice unless such
breach is cured within such period. Upon termination hereof
the Fund shall pay to the Agent such compensation as may be
due as of the date of such termination and shall likewise
reimburse the Agent for its costs, expenses and
disbursements properly incurred. The Agent shall, in the
event of such termination, deliver or cause to be delivered
to the Fund, or as the Fund may direct, if so required by
proper instructions, all documents and papers of the Fund
then held hereunder. and all funds or other properties of
the Fund deposited with or held by it hereunder.
11.) Notices to the Fund
Notices may be delivered or dispatched by mail, or may
be cabled or telexed to the Fund's address in Luxembourg,
and such Fund then held hereunder, and all funds or other
properties of the fund deposited with or held by it
hereunder.
12.) Notices to the Agent
Notices may be delivered or dispatched by mail, or may
be telexed to the Agent's address in Luxembourg. Such
notices shall be deemed to have been properly delivered or
given hereunder and shall be effective and the date of
delivery if delivered, cabled or telexed or, if dispatched
by registered mail. on the day on which the same have been
tendered for delivery by the post.
13.) Proper Law
This Agreement shall be subject to and construed in
accordance with Luxembourg law.
This Agreement has been executed in two counterparts
and shall become effective on 1st March, 1996.
/s/ J. Mark Mobius
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J.Mark Mobius
TEMPLETON RUSSIAN AND
EASTERN EUROPEAN DEBT FUND
/s/ Charles E. Johnson
-----------------------
By: Charles E. Johnson
TEMPLETON RUSSIAN AND
EASTERN EUROPEAN DEBT FUND
/s/ D. B. Anderson
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D. B. Anderson
/s/ D. W. Adams
----------------
D. W. Adams