Exhibit (h)(2)
LETTER AGREEMENT
New York, New York
December __, 2005
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
We understand that The Central Europe and Russia Fund, Inc., a
Maryland corporation (the "Fund"), has appointed UBS Securities LLC to act as
dealer manager (the "Dealer Manager") in connection with the issuance by the
Fund to the holders of record (the "Holders") at the close of business on the
record date set forth in the Prospectus (as defined herein) (the "Record Date")
of transferable rights entitling their holders to subscribe for up to 3,417,070
shares (each a "Share" and, collectively, the "Shares") of the Fund's common
stock, par value $0.001 per share (the "Common Shares"), of the Fund (the
"Offer"). Pursuant to the terms of the Offer, the Fund is issuing each Holder
one transferable right (each a "Right" and, collectively, the "Rights") for each
Common Share held by such Holder on the Record Date. Such Rights entitle their
holders to acquire during the subscription period set forth in the Prospectus
(the "Subscription Period"), at the price set forth in such Prospectus (the
"Subscription Price"), one Share for each three Rights exercised (except that
any Holder who is issued fewer than three Rights will be able to subscribe for
one full Share pursuant to the primary subscription), on the terms and
conditions set forth in such Prospectus. No fractional shares will be issued.
Any Holder who fully exercises all Rights initially issued to such Holder (other
than those Rights that cannot be exercised because they represent the right to
acquire less than one Share) will be entitled to subscribe for, subject to
allocation, additional Shares (the "Over-Subscription Privilege") on the terms
and conditions set forth in the Prospectus. The Rights are transferable and are
expected to be listed on the New York Stock Exchange, Inc. (the "New York Stock
Exchange").
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (Nos. 333-129644 and
811-06041) and a related preliminary prospectus and preliminary statement of
additional information under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations of the Commission under the
Investment Company Act and the Securities Act (the "Rules and Regulations"). The
term "Registration Statement" means the registration statement, as amended, at
the time it becomes or became effective, including financial statements and all
exhibits and all documents, if any, incorporated therein by reference, and any
information deemed to be included by Rule 430A. The term "Prospectus" means the
final prospectus and final statement of additional information in the forms
filed with the Commission pursuant to Rule 497(c), (e), (h) or (j)
of the Rules and Regulations, as the case may be, as from time to time amended
or supplemented pursuant to the Securities Act.
Deutsche Asset Management International GmbH, a German limited
liability company (the "Investment Adviser"), acts as investment adviser to the
Fund pursuant to an Investment Advisory Agreement dated as of March 6, 1990
between the Fund and the Investment Adviser. The Investment Adviser is not a
party to the Dealer Manager Agreement (the "Dealer Manager Agreement") pursuant
to which the Fund is appointing or will appoint the Dealer Manager to act in
such capacity in connection with the Offer. As a further inducement to the
Dealer Manager to enter into the Dealer Manager Agreement and to act as Dealer
Manager in connection with the Offer, the Investment Adviser has executed and
delivered to the Dealer Manager this Letter Agreement ("Agreement"). This
Agreement will become effective upon execution of the Dealer Manager Agreement,
as notified to the Investment Adviser by the Dealer Manager.
1. Representations and Warranties; Agreements.
a. The Investment Adviser represents and warrants to, and agrees with,
the Dealer Manager as of the date hereof and as of the date of the
commencement of the Offer that:
i. The Investment Adviser has been duly organized and is validly
existing as a limited liability company under the laws of the
Federal Republic of Germany, has full power and authority
(corporate and other) to own its properties and conduct its
business as described in the Registration Statement and the
Prospectus, and is duly qualified to do business as a foreign
corporation in each jurisdiction wherein it owns or leases
real property or in which the conduct of its business requires
such qualification, except where the failure to be so
qualified does not involve a material adverse effect upon the
Investment Adviser's business, properties, financial position
or operations.
ii. The Investment Adviser is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and is not prohibited by the Advisers
Act or the Investment Company Act, or the rules and
regulations under such Acts, from acting as investment adviser
for the Fund as contemplated in the Prospectus and the
Investment Advisory Agreement.
iii. This Agreement has been duly authorized, executed and
delivered by the Investment Adviser. The Investment Advisory
Agreement has been duly authorized, executed and delivered by
the Investment Adviser, and complies with all applicable
provisions of the Investment Company Act, the Advisers Act and
the rules and regulations under such Acts, and is, assuming
due authorization, execution and delivery by the other party
thereto, a legal, valid,
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binding and enforceable obligation of the Investment Adviser,
subject to the qualification that the enforceability of the
Investment Adviser's obligations thereunder may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights, to general principles of equity (regardless
of whether enforceability is considered in a proceeding in
equity or at law) and to termination under the Investment
Company Act.
iv. Neither the execution, delivery, performance and consummation
by the Investment Adviser of its obligations under the
Investment Advisory Agreement nor the consummation of the
transactions contemplated therein or in connection with the
Offer will conflict with or violate the charter, by-laws or
similar organizational documents of the Investment Adviser, or
conflict with, result in a breach of, or constitute a default
or an event of default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
properties or assets of the Investment Adviser under the
charter, bylaws or similar organizational document, the terms
and provisions of any material agreement, indenture, mortgage,
loan agreement, note, insurance or surety agreement, lease or
other instrument to which the Investment Adviser is a party or
by which it may be bound or to which any of the property or
assets of the Investment Adviser is subject, nor will such
action result in any violation of any order, law, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Investment Adviser or any of its
properties.
v. There is no pending or, to the best of the Investment
Adviser's knowledge, threatened action, suit or proceeding
affecting the Investment Adviser or to which the Investment
Adviser is a party before or by any court or governmental
agency, authority or body or any arbitrator which would
disqualify the Investment Adviser pursuant to Section 9(a) of
the Investment Company Act from acting as investment adviser
to the Fund or is otherwise reasonably likely to result in any
material adverse change in the Investment Adviser's ability to
perform its services under the Investment Advisory Agreement.
vi. No consent, approval, authorization, notification or order of,
or filing with, or the issuance of any license or permit by,
any court or governmental agency or body is required for the
consummation by the Investment Adviser of the transactions
contemplated by the Investment Advisory Agreement or in
connection with the Offer to be consummated by the Investment
Advisor except such as have been obtained, or if the
registration statement filed with respect to the Shares is not
effective under the Securities Act as of the time of
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execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Investment
Company Act, the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or by the
National Association of Securities Dealers, Inc., the New York
Stock Exchange or the Frankfurt Stock Exchange.
vii. The Investment Adviser (A) has not taken, directly or
indirectly, any action designed to cause or to result in, or
that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of
any security of the Fund to facilitate the issuance of the
Rights or the sale or resale of the Rights and the Shares, (B)
has not since the filing of the Registration Statement sold,
bid for or purchased, or paid anyone any compensation for
soliciting purchases of, Common Shares of the Fund (except for
the solicitation of exercises of the Rights pursuant to this
Agreement) and (C) will not, until the later of the expiration
of the Rights or the completion of the distribution (within
the meaning of the anti-manipulation rules under the Exchange
Act) of the Shares, sell, bid for or purchase, pay or agree to
pay any person any compensation for soliciting another to
purchase any other securities of the Fund (except for the
solicitation of exercises of the Rights pursuant to this
Agreement); provided that any action in connection with the
Fund's dividend reinvestment and cash purchase plan will not
be deemed to be within the terms of this Section 1(a)(vii).
b. The Investment Adviser agrees to notify promptly in writing, from
the date of this Agreement through the expiration date of the Offer
set forth in the Prospectus, as it may be extended as provided for
in the Prospectus (the "Expiration Date"), if any representation,
warranty or agreement of the Investment Adviser set forth in Section
1(a) of this Agreement shall be untrue or incorrect in any material
respect.
2. Representations, Warranties and Agreements to Survive Delivery. The
agreements, representations and warranties of the Investment Adviser set
forth in or made pursuant to this Agreement shall survive the Expiration
Date and will remain in full force and effect, regardless of any
investigation made by or on behalf of Dealer Manager or any of the
officers, directors or controlling persons referred to in Section 7 of the
Dealer Manager Agreement, and will survive delivery of and payment for the
Shares pursuant to the Offer.
3. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Dealer Manager, will be mailed,
delivered or telegraphed and confirmed to UBS Securities LLC, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attn: Young Yu, Syndicate
Department.
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4. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
5. Submission to Jurisdiction. Except as set forth below, no claim (a
"Claim") may be commenced, prosecuted or continued in any court other than
the courts of the State of New York located in the City and County of New
York or in the United States District Court for the Southern District of
New York, which courts shall have jurisdiction over the adjudication of
such matters, and the Investment Adviser consents to the jurisdiction of
such courts and personal service with respect thereto. The Investment
Adviser hereby consents to personal jurisdiction, service and venue in any
court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against UBS Securities. Each of
UBS Securities and the Investment Adviser (on its behalf and, to the
extent permitted by applicable law, on behalf of its stockholders and
affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way
arising out of or relating to this Agreement. The Investment Adviser
agrees that a final judgment in any such action, proceeding or
counterclaim brought in any such court shall be conclusive and binding
upon the Investment Adviser and may be enforced in any other courts in the
jurisdiction of which the Investment Adviser is or may be subject, by suit
upon such judgment.
6. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
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If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the
Investment Adviser and the Dealer Manager.
Very truly yours,
Deutsche Asset Management International GmbH
By: _______________________________________
Name: ____________________________________
Title: ___________________________________
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
UBS Securities LLC
By: _______________________________________
Name: ____________________________________
Title: ___________________________________
By: _______________________________________
Name: ____________________________________
Title: ___________________________________
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