THIS AGREEMENT is made on 1 March, 1996 BETWEEN:
(1) TEMPLETON RUSSIAN AND EASTERN EUROPEAN DEBT FUND having its
Registered Office at 13 Rue Goethe, L-1637 Luxembourg, Grand- Duchy of Luxembourg (hereinafter called "the
Company") of the first part,
(2) TEMPLETON INVESTMENT MANAGEMENT LIMITED, incorporated under the Companies Acts and
having its Registered Office at Plumtree Court, London EC4A 4HT (hereinafter called "TIML") of the second
(A) The Company wishes to appoint TIML as investment manager of the Company on the terms and conditions
hereinafter set forth.
(B) TIML is a member of IMRO and as such regulated by IMRO in the conduct of investment business.
NOW THEREFORE THE PARTIES HEREBY AGREE as follows:-
1.01 The Company hereby appoints TIML as investment manager of the Company and its subsidiaries and
TIML agrees to such appointment ("appointment"). In this capacity TIML shall manage the assets of the
Company and its subsidiaries ("the Assets").
1.02 TIML agrees to act as investment manager on the terms of this Agreement.
1.03 This Agreement shall commence on 12 March, 1996 (the "Commencement Date") notwithstanding the date
of this Agreement and shall take immediate effect with respect to the Assets the initial value of which shall be
equal to the net proceeds of the placing of up to 20,000,000 shares in the Company pursuant to a prospectus to
be issued by the Company and dated 1 March 1996 ("the Prospectus").
2. AUTHORITY OF TIML
2.01 During the continuance of TIML's appointment hereunder, TIML shall have full authority without prior
reference to the Company to manage, invest, realise and reinvest the Assets in accordance with the Investment
Objective and Policies, Investment Restrictions and Dividend Policy as set out in the Prospectus and subject to
any restrictions set out in the Prospectus or in the Articles of Incorporation of the Company or imposed by
Luxembourg law and further subject to any amendment or variat