EXHIBIT (h)(1)
3,417,070 Shares of Common Stock
Issuable Upon Exercise of Rights
to Subscribe for such Shares
DEALER MANAGER AGREEMENT
New York, New York
December [__], 2005
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Each of The Central Europe and Russia Fund, Inc., a Maryland
corporation (the "Fund"), and Deutsche Investment Management Americas Inc., a
Delaware corporation (the "Investment Manager"), hereby confirms the agreement
with and appointment of 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") transferable rights entitling
their holders to subscribe for up to 3,417,070 shares (each a "Share" and,
collectively, the "Shares") of 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") under the symbol "CEE.RT".
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"), and
has filed such amendments to such registration statement on Form N-2, if any,
and such amended preliminary prospectuses and preliminary statements of
additional information as may have been required to the date hereof. If the
registration statement has not become effective, a further amendment to such
registration statement, including forms of a final prospectus and final
statement of additional information necessary to permit such registration
statement to become effective, will promptly be filed by the Fund with the
Commission. If the registration statement has become effective and any
prospectus or statement of additional information contained therein omits
certain information at the time of effectiveness pursuant to Rule 430A of the
Rules and Regulations, a final prospectus and final statement of additional
information containing such omitted information will promptly be filed by the
Fund with the Commission in accordance with Rule 497(h) of 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.
The Prospectus and letters to owners of Common Shares of the Fund,
subscription certificates and other forms used to exercise rights, brochures,
wrappers, any letters from the Fund to securities dealers, commercial banks and
other nominees and any newspaper announcements, press releases and other
offering materials and information that the Fund may use, approve, prepare or
authorize for use in
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connection with the Offer, are collectively referred to hereinafter as the
"Offering Materials".
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1. Representations and Warranties.
a. Each of the Fund and the Investment Manager represents and warrants
to, and agrees with, the Dealer Manager as of the date hereof, as of
the date of the commencement of the Offer (such later date being
hereinafter referred to as the "Representation Date") and as of the
Expiration Date (as defined below) that:
i. The Fund meets the requirements for use of Form N-2 under the
Securities Act and the Investment Company Act and the Rules
and Regulations. At the time the Registration Statement became
or becomes effective, the Registration Statement did or will
contain all statements required to be stated therein in
accordance with and did or will comply in all material
respects with the requirements of the Securities Act, the
Investment Company Act and the Rules and Regulations and did
not or will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading. From the time the Registration Statement became or
becomes effective through the expiration date of the Offer set
forth in the Prospectus, as it may be extended as provided in
the Prospectus (the "Expiration Date"), the Prospectus and the
other Offering Materials will not contain an untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that
the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration
Statement, Prospectus or Offering Materials made in reliance
upon and in conformity with information relating to the Dealer
Manager furnished to the Fund in writing by the Dealer Manager
expressly for use in the Registration Statement, Prospectus or
other Offering Materials.
ii. The Fund has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Maryland, has full corporate power and authority to conduct
its business as described in the Registration Statement and
the
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Prospectus, and is duly qualified to do business 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 Fund's business, properties,
financial position or results of operations. The Fund has no
subsidiaries.
iii. The Fund is duly registered with the Commission under the
Investment Company Act as a closed-end, non-diversified
management investment company, no order of suspension or
revocation of such registration has been issued or proceedings
therefor initiated or, to the best of its knowledge,
threatened by the Commission, and the provisions of the Fund's
articles of incorporation and by-laws comply as to form in all
material respects with the requirements of the Investment
Company Act and the Rules and Regulations.
iv. PricewaterhouseCoopers LLP, the accountants who certified the
financial statements of the Fund set forth or incorporated by
reference in the Registration Statement and the Prospectus,
are independent public accountants as required by the
Investment Company Act and the Rules and Regulations.
v. The financial statements of the Fund set forth or incorporated
by reference in the Registration Statement and the Prospectus
present fairly in all material respects the financial
condition of the Fund as of the dates or for the periods
indicated in conformity with generally accepted accounting
principles applied on a consistent basis; and the information
set forth in the Prospectus under the headings "Fee Table" and
"Financial Highlights" presents fairly in all material
respects the information stated therein.
vi. The Fund has an authorized capitalization as set forth in the
Prospectus; the outstanding Common Shares have been duly
authorized and are validly issued, fully paid and
non-assessable and conform in all material respects to the
description thereof in the Prospectus under the heading
"Description of Common Stock"; the Rights have been duly
authorized by all
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requisite action on the part of the Fund for issuance pursuant
to the Offer; the Shares have been duly authorized by all
requisite action on the part of the Fund for issuance and sale
pursuant to the terms of the Offer and, when issued and
delivered by the Fund upon exercise of the Rights pursuant to
the terms of the Offer against payment of the consideration
set forth in the Prospectus, will be validly issued, fully
paid and non-assessable; the Shares and the Rights conform in
all material respects to the descriptions thereof contained in
the Registration Statement, the Prospectus and the other
Offering Materials; and the issuance of each of the Rights and
the Shares is not subject to any preemptive rights.
vii. Except as set forth in the Prospectus, subsequent to the
respective dates as of which information is given in the
Registration Statement and the Prospectus, (A) the Fund has
not incurred any liabilities or obligations, direct or
contingent, other than in the ordinary course of investment
operations, that are material to the Fund, (B) there has not
been any material change in the Common Shares or long-term
debt of the Fund, or any material adverse change, or any
development involving a prospective material adverse change,
in the condition (financial or other), business, prospects,
net worth or results of operations of the Fund (excluding
fluctuations in the Fund's net asset value due to investment
activities in the ordinary course of operations, and changes
in the market price per share of the Common Shares and
discount or premium of such market price per share to net
asset value per share) and (C) except for the dividend on the
outstanding Common Shares declared to holders of record on
December 15, 2005 and payable on December 30, 2005, there have
been no dividends or distributions paid or declared in respect
of the Fund's Common Shares.
viii. This agreement (the "Agreement") has been duly authorized,
executed and delivered by the Fund. Each of the Subscription
Agency Agreement (the "Subscription Agency Agreement") dated
as of December 13, 2005 between the Fund and Colbent
Corporation (the "Subscription Agent"), the Information Agent
Agreement (the "Information Agent Agreement") dated as of
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December 13, 2005 between the Fund and Xxxxxxxxx Shareholder
Communications, Inc. (the "Information Agent"), the Management
Agreement dated as of March 6, 1990 between the Fund and the
Investment Manager (the "Investment Management Agreement"),
the Agreement Regarding Transfer of the Management Agreement,
dated as of September 1, 2004 between Deutsche Bank Securities
Inc. and Deutsche Investment Management Americas Inc., the
Investment Advisory Agreement dated as of March 6, 1990
between the Fund and Deutsche Asset Management International
GmbH, the investment adviser (the "Investment Adviser") for
the Fund ("the Investment Advisory Agreement"), the Amended
and Restated Custodian Agreement dated as of July 23,1993
between the Fund and Investors Bank & Trust Company (the
"Custodian Agreement"), and the Transfer Agency and Service
Agreement dated as of July 23, 1993 between the Fund and
Investors Bank & Trust Company (the "Transfer Agency
Agreement") (collectively, all the foregoing agreements set
forth in this sentence are the "Fund Agreements"), has been
duly authorized, executed and delivered by the Fund; each of
the Fund Agreements complies with all applicable provisions of
the Investment Company Act, the Investment Advisers Act of
1940, as amended (the "Advisers Act") and the rules and
regulations under such Acts; and, assuming due authorization,
execution and delivery by the other parties thereto, each of
the Fund Agreements constitutes a legal, valid, binding and
enforceable obligation of the Fund, subject to the
qualification that the enforceability of the Fund'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, in the case of the Investment Management Agreement
and the Investment Advisory Agreement, to termination under
the Investment Company Act.
ix. Neither the issuance of the Rights, nor the issuance and sale
of the Shares pursuant to exercise of the Rights, nor the
execution, delivery, performance and consummation by the Fund
of any other of the transactions contemplated in the Fund
Agreements, nor the consummation of the transactions
con-
7
templated in this Agreement or in the Registration Statement
nor the fulfillment of the terms hereof or thereof will
conflict with or violate the articles of incorporation or
by-laws of the Fund, or conflict with, result in a breach or
violation 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
Fund under the articles of incorporation or by-laws of the
Fund, or under the terms and provisions of any material
agreement, indenture, mortgage, loan agreement, note,
insurance or surety agreement, lease or other instrument to
which the Fund is a party or by which it may be bound or to
which any of the property or assets of the Fund 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 Fund or any of its
properties.
x. Except as set forth in the Registration Statement, there is no
pending or, to the knowledge of the Fund or the Investment
Manager, threatened action, suit or proceeding affecting the
Fund or to which the Fund is a party before or by any court or
governmental agency, authority or body or any arbitrator which
might result in any material adverse change in the condition
(financial or other), business prospects, net worth or
operations of the Fund, or which might materially and
adversely affect the properties or assets thereof of a
character required to be disclosed in the Registration
Statement or the Prospectus.
xi. There are no franchises, contracts or other documents of the
Fund that are material or otherwise required to be described
in the Registration Statement or the Prospectus or to be filed
or incorporated by reference as exhibits which are not
described or filed or incorporated by reference therein as
permitted by the Securities Act, the Investment Company Act or
the Rules and Regulations.
xii. 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
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consummation by the Fund of the transactions contemplated by
this Agreement, the Subscription Agency Agreement, the Rights
and the Offer or the Registration Statement, 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 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.
xiii. The Common Shares have been duly listed on the New York Stock
Exchange and prior to their issuance the Shares and the Rights
will have been duly approved for listing, subject to official
notice of issuance, on the New York Stock Exchange.
xiv. The Fund (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 to 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)(xiv).
xv. The Fund has complied in all previous tax years, except for
9
tax years for which the applicable statute of limitations has
expired, and intends to direct the investment of the proceeds
of the offering described in the Registration Statement and
the Prospectus in such a manner as to continue to comply, with
the requirements of Subchapter M of the Internal Revenue Code
of 1986, as amended ("Subchapter M of the Code"), and has
qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Code.
xvi. The Fund has complied in the last five years, and intends to
direct the investment of the proceeds of the offering
described in the Registration Statement and the Prospectus in
such a manner as to continue to comply, with the asset
coverage and other applicable requirements of the Investment
Company Act.
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b. The Investment Manager represents and warrants to, and agrees with,
the Dealer Manager as of the date hereof, as of the Representation
Date and as of the Expiration Date that:
i. The Investment Manager has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, 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 Manager's business, properties, financial position
or operations.
ii. The Investment Manager is duly registered as an investment
adviser under 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 Management Agreement.
iii. This Agreement has been duly authorized, executed and
delivered by the Investment Manager. The Investment Management
Agreement has been duly authorized, executed and delivered by
the Investment Manager, 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, binding and enforceable obligation of
the Investment Manager, subject to the qualification that the
enforceability of the Investment Manager'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.
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iv. Neither the execution, delivery, performance and consummation
by the Investment Manager of its obligations under this
Agreement or the Investment Management Agreement nor the
consummation of the transactions contemplated herein or
therein or in the Registration Statement nor the fulfillment
of the terms thereof will conflict with or violate the
certificate of incorporation or by-laws of the Investment
Manager, or conflict with, result in a breach or violation 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
Manager under its certificate of incorporation or by-laws, 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 Manager is a
party or by which it may be bound or to which any of the
property or assets of the Investment Manager 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 Manager or any of its
properties.
v. There is no pending or, to the best of the Investment
Manager's knowledge, threatened action, suit or proceeding
affecting the Investment Manager or to which the Investment
Manager is a party before or by any court or governmental
agency, authority or body or any arbitrator which would
disqualify the Investment Manager 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 Manager's ability to
perform its services under the Investment Management
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 Manager of the transactions
contemplated by this Agreement or the Investment Management
Agreement to be consummated by the
12
Investment Manager 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
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 Exchange Act, or by
the National Association of Securities Dealers, Inc., the New
York Stock Exchange or the Frankfurt Stock Exchange.
vii. The Investment Manager (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(b)(vii).
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c. Any certificate required by this Agreement that is signed by any
officer of the Fund on behalf of the Fund or the Investment Manager
on behalf of the Investment Manager and delivered to the Dealer
Manager or counsel for the Dealer Manager shall be deemed a
representation and warranty by the Fund or the Investment Manager,
as the case may be, to the Dealer Manager, as to the matters covered
thereby.
2. Agreement to Act as Dealer Manager.
a. On the basis of the representations and warranties contained herein,
and subject to the terms and conditions of the Offer:
i. The Fund hereby appoints the Dealer Manager to solicit the
exercise of Rights and authorizes the Dealer Manager to sell
Shares purchased by the Dealer Manager from the Fund through
the exercise of Rights as described herein; the Fund hereby
authorizes the Dealer Manager to form and manage a group of
selling broker-dealers (each a "Selling Group Member" and
collectively the "Selling Group") that enter into a Selling
Group Agreement with the Dealer Manager in the form attached
hereto as Exhibit A to solicit the exercise of Rights and to
sell Shares purchased by the Selling Group Member from the
Dealer Manager as described herein; and the Fund hereby
authorizes other soliciting broker-dealers (each a "Soliciting
Dealer" and collectively the "Soliciting Dealers") that enter
into a Soliciting Dealer Agreement with the Dealer Manager in
the form attached hereto as Exhibit B to solicit the exercise
of Rights. The Dealer Manager hereby agrees to solicit the
exercise of Rights in accordance with the Securities Act, the
Investment Company Act and the Exchange Act, and its customary
practice subject to the terms and conditions of this
Agreement, the procedures described in the Registration
Statement, the Prospectus and, where applicable, the terms and
conditions of such Selling Group Agreement or Soliciting
Dealer Agreement; and the Dealer Manager hereby agrees to form
and manage the Selling Group to solicit the exercise of Rights
and to sell Shares to the Selling Group purchased by the
Dealer Manager from the Fund through the exercise of Rights as
described herein in accordance with the Securities
14
Act, the Investment Company Act and the Exchange Act, and its
customary practice subject to the terms and conditions of this
Agreement, the procedures described in the Registration
Statement, the Prospectus and, where applicable, the terms and
conditions of the Selling Group Agreement.
ii. The Fund hereby authorizes the Dealer Manager to buy and
exercise Rights, including unexercised Rights delivered to the
Subscription Agent for resale and Rights of Holders as of the
Record Date whose record addresses are outside the United
States (as defined in the Prospectus) held by the Subscription
Agent for which no instructions are received, on the terms and
conditions set forth in such Prospectus, and to sell Shares to
the public or to Selling Group Members at the offering price
set by the Dealer Manager from time to time. Sales of Shares
by the Dealer Manager or Selling Group Members shall not be at
a price higher than the offering price set by the Dealer
Manager from time to time.
b. To the extent permitted by applicable law, the Fund agrees to
furnish, or cause to be furnished, to the Dealer Manager, lists, or
copies of those lists, showing the names and addresses of, and
number of Common Shares held by, Holders as of the Record Date, and
the Dealer Manager agrees to use such information only in connection
with the Offer, and not to furnish the information to any other
person except for securities brokers and dealers that have been
requested by the Dealer Manager to solicit exercises of Rights.
c. The Dealer Manager agrees to provide to the Fund, in addition to the
services described in Section 2(a), financial advisory and marketing
services in connection with the Offer. No advisory fee, other than
the fees provided for in Section 3 of this Agreement and the
reimbursement of the Dealer Manager's out-of-pocket expenses as
described in Section 5 of this Agreement, will be payable by the
Fund, or any other party hereto, to the Dealer Manager in connection
with the financial advisory and marketing services provided by the
Dealer Manager pursuant to this Section 2(c).
d. The Fund and the Dealer Manager agree that the Dealer Manager is an
independent contractor with respect to the solicitation of the
15
exercise of Rights and the performance of financial advisory and
marketing services for the Fund contemplated by this Agreement.
e. In rendering the services contemplated by this Agreement, the Dealer
Manager acknowledges that it is not authorized to (i) use any
solicitation material other than the Prospectus (as supplemented or
amended, if applicable) and the other Offering Materials or (ii) to
make any representation, oral or written, to any shareholders or
prospective shareholders of the Fund that is not contained in the
Prospectus (as supplemented or amended, if applicable) or the other
Offering Materials, in each case unless previously authorized to do
so in writing by the Fund.
f. In rendering the services contemplated by this Agreement, the Dealer
Manager will not be subject to any liability to the Fund or the
Investment Manager or the Investment Adviser or any of their
affiliates, for any act or omission on the part of any soliciting
broker or dealer (except with respect to the Dealer Manager acting
in such capacity) or any other person, and the Dealer Manager will
not be liable for acts or omissions in performing its obligations
under this Agreement, except for any losses, claims, damages,
liabilities and expenses that are finally judicially determined to
have resulted primarily from the bad faith, willful misconduct or
gross negligence of the Dealer Manager or by reason of the reckless
disregard of the obligations and duties of the Dealer Manager under
this Agreement.
3. Dealer Manager Fees. In full payment for the financial advisory, marketing
and soliciting services rendered and to be rendered hereunder by the
Dealer Manager, the Fund agrees to pay the Dealer Manager a fee (the
"Dealer Manager Fee") equal to 3.75% of the aggregate Subscription Price
for the Shares issued pursuant to the exercise of Rights and the
Over-Subscription Privilege. In full payment for the soliciting efforts to
be rendered, the Dealer Manager agrees to reallow selling fees (the
"Selling Fees") to Selling Group Members equal to 2.50% of the
Subscription Price per Share for each Share issued pursuant to either (a)
the exercise of Rights and the Over-Subscription Privilege where such
Selling Group Member is so designated on the subscription form or (b) the
purchase for resale from the Dealer Manager in accordance with the Selling
Group Agreement. In full payment for the soliciting efforts to be
rendered, the Dealer Manager agrees to reallow soliciting fees
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(the "Solicitation Fees") to Soliciting Dealers equal to 0.50% of the
Subscription Price per Share for each Share issued pursuant to the
exercise of Rights and the Over-Subscription Privilege where such
Soliciting Dealer is so designated on the subscription form, subject to a
maximum fee based on the number of Common Shares held by such Soliciting
Dealer through The Depository Trust Company ("DTC") on the Record Date.
The Dealer Manager agrees to pay the Selling Fees or Solicitation Fees, as
the case may be, to the broker-dealer designated on the applicable portion
of the form used by the holder to exercise Rights and the
Over-Subscription Privilege, and if no broker-dealer is so designated or a
broker-dealer is otherwise not entitled to receive compensation pursuant
to the terms of the Selling Group Agreement or Soliciting Dealer
Agreement, then the Dealer Manager shall retain such Selling Fee or
Solicitation Fee for Shares issued pursuant to the exercise of Rights and
the Over-Subscription Privilege. Payment to the Dealer Manager by the Fund
will be in the form of a wire transfer of same day funds to an account or
accounts identified by the Dealer Manager. Such payment will be made on
each date on which the Fund issues Shares after the Expiration Date.
Payment to a Selling Group Member or Soliciting Dealer will be made by the
Dealer Manager directly to such Selling Group Member or Soliciting Dealer
by check to an address identified by such broker-dealer. Such payments
shall be made on or before the tenth business day following the day the
Fund issues Shares after the Expiration Date.
4. Other Agreements.
a. The Fund covenants with the Dealer Manager as follows:
i. The Fund will use its best efforts to cause the Registration
Statement to become effective and maintain its effectiveness
under the Securities Act.
ii. The Fund will notify, and confirm the notice in writing to,
the Dealer Manager immediately (A) of the effectiveness of the
Registration Statement and any amendment thereto (including
any post-effective amendment), (B) of the receipt of any
additional comments from the Commission, (C) of any request by
the Commission for any further amendment to the Registration
Statement or any amendment or supplement to the Prospectus or
for additional information and (D) of the
17
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation
of any proceedings for that purpose. The Fund will make every
reasonable effort to prevent the issuance of any stop order
described in subsection (D) hereunder and, if any such stop
order is issued, to obtain the lifting thereof at the earliest
possible moment.
iii. The Fund will give the Dealer Manager notice of its intention
to file any amendment to the Registration Statement (including
any post-effective amendment) or any amendment or supplement
to the Prospectus (including any revised prospectus which the
Fund proposes for use by the Dealer Manager in connection with
the Offer, which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes
effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 497(c), (e) or (h) of the Rules
and Regulations), whether pursuant to the Investment Company
Act, the Securities Act, or otherwise, and will furnish the
Dealer Manager with copies of any such amendment or supplement
a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will give due consideration to
not filing or to revising any such proposed amendment or
supplement to which the Dealer Manager or counsel for the
Dealer Manager shall reasonably object.
iv. The Fund will, without charge, deliver to the Dealer Manager,
as soon as practicable, the number of copies (one of which is
manually executed) of the Registration Statement as originally
filed and of each amendment thereto as it may reasonably
request, in each case with the exhibits filed therewith.
v. The Fund will, without charge, furnish to the Dealer Manager,
from time to time during the period when the Prospectus is
required to be delivered under the Securities Act, such number
of copies of the Prospectus (as amended or supplemented) as
the Dealer Manager may reasonably request for the purposes
contemplated by the Securities Act or the Rules and
Regulations.
18
vi. If any event shall occur as a result of which it is necessary
or appropriate to amend or supplement the Registration
Statement or the Prospectus in order to make the Prospectus
not misleading in the light of the circumstances existing at
the time it is delivered to a Holder, the Fund will forthwith
amend or supplement the Prospectus by preparing for filing
with the Commission (and furnishing to the Dealer Manager a
reasonable number of copies of) an amendment or amendments of
the Registration Statement or an amendment or amendments of or
a supplement or supplements to the Prospectus (in a manner
consistent with Section 4(a)(iii) above), at the Fund's
expense, which will amend or supplement the Registration
Statement or the Prospectus so that the Prospectus will not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances existing at the time the Prospectus
is delivered to a Holder, not misleading.
vii. The Fund will endeavor, in cooperation with the Dealer Manager
and its counsel, to confirm that the Rights and the Shares are
not required to be qualified for offering and sale under the
applicable securities laws of such states and other
jurisdictions of the United States as the Dealer Manager may
designate.
viii. The Fund will make generally available to its security holders
as soon as practicable, but no later than 60 days after the
end of the Fund's fiscal semi-annual or fiscal year-end period
covered thereby, an earnings statement (which need not be
audited) (in form complying with the provisions of Rule 158 of
the Rules and Regulations of the Securities Act) covering a
twelve-month period beginning not later than the first day of
the Fund's fiscal semi-annual period next following the
"effective" date (as defined in said Rule 158) of the
Registration Statement.
ix. For a period of 180 days from the date of this Agreement, the
Fund will not, without the prior consent of the Dealer
Manager, offer or sell, or enter into any agreement to sell,
any equity or equity related securities of the Fund or
securities convert-
19
ible into such securities, other than the Rights and the
Shares and the Common Shares issued in reinvestment of
dividends or distributions.
x. The Fund will use the net proceeds from the Offer as set forth
under "Use of Proceeds" in the Prospectus.
xi. The Fund will use its best efforts to cause the Rights and the
Shares to be duly authorized for listing by the New York Stock
Exchange, subject to official notice of issuance, prior to the
time the Rights are issued.
xii. The Fund will use its best efforts to maintain its
qualification as a regulated investment company under
Subchapter M of the Code.
xiii. The Fund will apply the net proceeds from the Offer in such a
manner as to continue to comply with the requirements of the
Prospectus and the Investment Company Act.
xiv. The Fund will advise or cause the Subscription Agent (A) to
advise the Dealer Manager and, only where specifically noted,
each Selling Group Member who specifically requests, from day
to day during the period of, and promptly after the
termination of, the Offer, as to the names and addresses (to
the extent permitted by applicable law) of all Holders
exercising Rights, the total number of Rights exercised by
each Holder (to the extent permitted by applicable law) during
the immediately preceding day, indicating the total number of
Rights verified to be in proper form for exercise, rejected
for exercise and being processed and, for the Dealer Manager
and each Selling Group Member, the number of Rights exercised
on subscription certificates indicating the Dealer Manager or
such Selling Group Member, as the case may be, as the
broker-dealer with respect to such exercise, and as to such
other information as the Dealer Manager may reasonably
request; and will notify the Dealer Manager and each Selling
Group Member, not later than 5:00 P.M., New York City time, on
the first business day following the Expiration Date, of the
total number of Rights exercised and Shares related thereto,
the total number of Rights verified to be in proper form for
exer-
20
cise, rejected for exercise and being processed and, for the
Dealer Manager and each Selling Group Member, the number of
Rights exercised on subscription certificates indicating the
Dealer Manager or such Selling Group Member, as the case may
be, as the broker-dealer with respect to such exercise, and as
to such other information as the Dealer Manager may reasonably
request; (B) to sell any Rights received for resale from
Holders exclusively to or through the Dealer Manager, which
may, at its election, purchase such Rights as principal or act
as agent for the resale thereof; and (C) to issue Shares upon
the Dealer Manager's exercise of Rights no later than the
close of business on the business day following the day that
full payment for such Shares has been received by the
Subscription Agent.
b. Neither the Fund nor the Investment Manager will take, 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 or the Shares; provided that any action in
connection with the Fund's dividend reinvestment and cash purchase
plan will not be deemed to be within the meaning of this Section
4(b).
5. Payment of Expenses.
a. The Fund will pay all expenses incident to the performance of its
obligations under this Agreement, including, but not limited to,
expenses relating to (i) the printing and filing of the Registration
Statement as originally filed and of each amendment thereto, (ii)
the preparation, issuance and delivery of the certificates for the
Shares and subscription certificates relating to the Rights, (iii)
the fees and disbursements of the Fund's counsel (including the fees
and disbursements of local counsel) and accountants, (iv) the
printing or other production and delivery to the Dealer Manager of
copies of the Registration Statement as originally filed and of each
amendment thereto and of the Prospectus and any amendments or
supplements thereto, (v) the fees and expenses incurred with respect
to filing with the National Association of Securities Dealers, Inc.,
(vi) the fees and
21
expenses incurred in connection with the listing of the Shares on
the New York Stock Exchange, (vii) the printing or other production,
mailing and delivery expenses incurred in connection with Offering
Materials and (viii) the fees and expenses incurred with respect to
the Subscription Agent and the Information Agent. The Fund agrees to
pay the foregoing expenses whether or not the transactions
contemplated under this Agreement are consummated.
b. In addition to any fees that may be payable to the Dealer Manager
under this Agreement, the Fund agrees to reimburse the Dealer
Manager upon request made from time to time for its reasonable
expenses incurred in connection with its activities under this
Agreement, including the reasonable fees and disbursements of its
legal counsel (excluding blue sky filing fees which are paid
directly by the Fund), in an amount up to $100,000.
c. If this Agreement is terminated by the Dealer Manager in accordance
with the provisions of Section 6 or Section 9(a)(i), 9(a)(ii) or
9(a)(iii), the Fund agrees to reimburse the Dealer Manager for all
of its reasonable out-of-pocket expenses incurred in connection with
its performance hereunder, including the reasonable fees and
disbursements of counsel for the Dealer Manager. In the event the
transactions contemplated hereunder are not consummated for reasons
other than as described in the previous sentence, the Fund agrees to
pay all of the costs and expenses set forth in Section 5(b) which
the Fund would have paid if such transactions had been consummated.
6. Conditions of the Dealer Manager's Obligations. The obligations of the
Dealer Manager hereunder are subject to the accuracy of the respective
representations and warranties of the Fund and the Investment Manager
contained herein, to the performance by the Fund and the Investment
Manager of their respective obligations hereunder, and to the following
further conditions:
a. The Registration Statement shall have become effective not later
than 5:30 P.M., New York City time, on the Record Date, or at such
later time and date as may be approved by the Dealer Manager; the
Prospectus and any amendment or supplement thereto shall have been
22
filed with the Commission in the manner and within the time period
required by Rule 497(c), (e), (h) or (j), as the case may be, under
the Securities Act; no stop order suspending the effectiveness of
the Registration Statement or any amendment thereto shall have been
issued, and no proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the Fund, the
Investment Manager or the Dealer Manager, shall be contemplated by
the Commission; and the Fund shall have complied with any request of
the Commission for additional information (to be included in the
Registration Statement, the Prospectus or otherwise).
b. On the Representation Date and the Expiration Date, the Dealer
Manager shall have received:
i. The opinions, dated the Representation Date and the Expiration
Date, of Xxxxxxxx & Xxxxxxxx LLP, counsel for the Fund, in
form and substance reasonably satisfactory to counsel for the
Dealer Manager to the effect that:
(1) The Fund has been duly incorporated and is validly
existing as a corporation in good standing under the
laws of the State of Maryland, has full corporate power
and authority to 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 Fund's business, properties, financial
position or results of operations.
(2) The Fund is registered with the Commission under the
Investment Company Act as a closed-end, non-diversified
management investment company, to the knowledge of such
counsel after reasonable investigation, no order of
suspension or revocation of such registration has been
issued or proceedings therefor initiated or, threatened
by the Commission, all
23
required action has been taken under the Securities Act
and the Investment Company Act to make the public
offering and consummate the issuance of the Rights and
the issuance and sale of the Shares by the Fund upon
exercise of the Rights, and the provisions of the Fund's
articles of incorporation and by-laws do not conflict
with the requirements of the Investment Company Act and
the Rules and Regulations.
(3) The Fund's authorized share capital is as set forth in
the Prospectus; the outstanding Common Shares have been
duly authorized and are validly issued, fully paid and
non-assessable; the outstanding Common Shares conform,
and when issued pursuant to the terms of the Offer the
Shares will conform, in all material respects to the
description thereof in the Prospectus under the heading
"Description of Common Stock"; the Rights have been duly
authorized by all requisite action on the part of the
Fund for issuance pursuant to the Offer; the Shares have
been duly authorized by all requisite action on the part
of the Fund for issuance and sale pursuant to the terms
of the Offer and, when issued and delivered by the Fund
pursuant to the terms of the Offer against payment of
the consideration set forth in the Prospectus, will be
validly issued, fully paid and non-assessable; the
Rights conform in all material respects to the
descriptions thereof contained in the Prospectus under
the sub-headings "Terms of the Offer," "Transferability
and Sale of Rights," and "The Subscription Price" each
under the heading "Our Rights Offering" insofar as such
descriptions relate to the form of Subscription
Certificate in the Registration Statement; and under
Maryland General Corporate Law, to such counsel's
knowledge, the issuance of the Rights and the Shares is
not subject to any preemptive rights.
(4) This Agreement and each of the Fund Agreements has been
duly authorized, executed and delivered by the Fund;
each of this Agreement and the Fund
24
Agreements complies with all applicable provisions of
the Investment Company Act, the Advisers Act and the
rules and regulations under such Acts; and, assuming due
authorization, execution and delivery by the other
parties thereto, each of the Fund Agreements constitutes
a valid and legally binding obligation of the Fund,
enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors'
rights, to general equity and (with respect to the
Investment Management Agreement and the Investment
Advisory Agreement) to termination under the Investment
Company Act.
(5) The issuance of the Rights, the issuance and sale of the
Shares upon exercise of the Rights and the execution,
delivery and performance by the Fund of any other of the
transactions contemplated in this Agreement, or, to the
extent relevant to the Rights or the Shares, in the Fund
Agreements, will not violate the articles of
incorporation or by-laws of the Fund, or result in a
breach of, or constitute a default under, any of the
Fund Agreements or any other agreement, indenture,
mortgage, loan agreement, note, insurance or surety
agreement, lease or other instrument specifically
identified to such counsel by an appropriate officer of
the Fund (the "Identified Agreements") as those
agreements and other such instruments to which the Fund
is a party or by which it may be bound or to which any
of the property or assets of the Fund is subject and
that are, based solely upon the statements of such
officer, material to the Fund, nor will such action by
the Fund result in any violation of any U.S. Federal or
New York State law or published rule or regulation or
the Maryland General Corporation Law; provided, however,
that solely for purposes of this paragraph (5) and not
for purposes of the opinions expressed in other
paragraphs, such counsel need express no opinion with
respect to Federal or state securities laws, laws
25
governing fiduciary relationships, fraudulent transfer
laws, antitrust laws, the Employee Retirement Income
Security Act of 1974 or laws governing the solicitation
of deposits; and provided, further, that insofar as
performance by the Fund of its obligations under this
Agreement, the Fund Agreements and any Identified
Agreement is concerned, such counsel need express no
opinion as to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability
relating to or affecting creditors' rights.
(6) To the best knowledge of such counsel after reasonable
inquiry, no consent, approval, authorization,
notification or order of, license or permit issued by,
or filing with, any court or governmental agency or body
is required under the Maryland General Corporation Law,
the laws of the State of New York or U.S. Federal law
for the consummation by the Fund of the transactions
contemplated by this Agreement, the Subscription Agency
Agreement or the Rights, except (A) such as have been
obtained and (B) such as may be required under the blue
sky laws of any jurisdiction in connection with the
transactions contemplated hereby.
(7) The Registration Statement has become effective under
the Securities Act; to the knowledge of such counsel
after reasonable inquiry, no stop order suspending the
effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been
instituted or threatened by the Commission; and the
Registration Statement, as it may be amended, and the
Prospectus, as it may be amended or supplemented, (other
than the financial statements, schedules, the notes
thereto and the schedules and other financial, economic
and statistical data contained or incorporated by
reference therein or omitted therefrom, as to which such
counsel need express no opinion) as of their respective
effective or issue dates appeared on their face to be
appropriately responsive in all material respects to the
requirements of the Securities Act and
26
the Investment Company Act and the Rules and
Regulations.
(8) The statements in the Prospectus under the headings "Our
Rights Offering -- Federal Income Tax Consequences" and
"Taxation" fairly summarize the matters described
therein.
In rendering such opinion, such counsel may rely, as to
matters of Maryland law or the law of any jurisdiction other
than the Federal law of the United States and the laws of the
State of New York, on the opinion of other counsel of good
standing whom they believe to be reliable and who are
satisfactory to counsel for the Dealer Manager and, as to
matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Fund, the
Investment Manager, the Investment Adviser and public
officials.
In a separate letter, such counsel shall also have stated
that, while they have not themselves checked the accuracy and
completeness of or otherwise verified, and are not passing
upon and assume no responsibility for the accuracy,
completeness or fairness of, the statements contained in the
Registration Statement or the Prospectus, except to the
limited extent stated in paragraphs (3) and (8) above, in the
course of their review and discussion of the contents of the
Registration Statement and Prospectus with certain officers
and employees of the Fund, the Investment Manager, the
Investment Adviser and the Fund's independent accountants,
nothing has come to their attention which caused them to
believe that the Registration Statement, as of its effective
date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated
therein or necessary to make the statements contained therein
not misleading or that the Prospectus (as it may have been
supplemented), as of its date and on the Representation Date
or the Expiration Date, as the case may be, contained any
untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading (except that such counsel
27
need not express any statement or belief with respect to the
financial statements, schedules or other financial or
statistical data included or incorporated by reference in the
Registration Statement or Prospectus). In addition, such
counsel shall also have stated that they do not know of any
litigation or any governmental proceeding instituted or
threatened against the Fund that would be required to be
disclosed in the Prospectus and is not so disclosed. Also,
such counsel shall have stated that they do not know of any
documents that are required to be filed as exhibits to the
Registration Statement and are not so filed or of any
documents that are required to be summarized in the Prospectus
and are not so summarized.
28
ii. The opinions, dated the Representation Date and the Expiration
Date, of Xxxxxx Xxxxxxx, internal counsel for the Investment
Manager, in form and substance satisfactory to counsel for the
Dealer Manager to the effect that:
(1) The Investment Manager has been duly incorporated and is
validly existing as a corporation in good standing under
the laws of the State of Delaware, has full corporate
power and authority 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 Manager's
business, properties, financial position or operations.
(2) The Investment Manager is registered as an investment
adviser under 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
Investment Management Agreement.
(3) Each of this Agreement and the Investment Management
Agreement has been duly authorized, executed and
delivered by the Investment Manager and complies with
all applicable provisions of the Investment Company Act,
the Advisers Act and the rules and regulations under
such Acts; the Investment Management Agreement is,
assuming due authorization, execution and delivery by
the other party thereto, a valid and legally binding
obligation of the Investment Manager enforceable in
accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability
relating to or affecting creditors' rights, to general
equity principles and to
29
termination under the Investment Company Act.
(4) The execution, delivery and performance by the
Investment Manager of its obligations under this
Agreement and the Investment Management Agreement will
not violate the certificate of incorporation or by-laws
of the Investment Manager, or result in a material
breach of, or constitute a material default under, or
result in the creation or imposition of any material
lien, charge or encumbrance upon any properties or
assets of the Investment Manager under 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 Manager is a party or by which it may be
bound or to which any of the property or assets of the
Investment Manager is subject, nor will such action by
the Investment Manager result in any material violation
of any U.S. Federal or New York State law or published
rule or regulation or the Delaware General Corporation
Law; provided, however, that solely for purposes of this
paragraph (4) and not for purposes of the opinions
expressed in other paragraphs, such counsel need express
no opinion with respect to Federal or state securities
laws, laws governing fiduciary relationships, fraudulent
transfer laws, antitrust laws, the Employee Retirement
Income Security Act of 1974 or laws governing the
solicitation of deposits; and provided, further, that
insofar as performance by the Investment Manager of its
obligations under this Agreement and the Investment
Management Agreement is concerned, such counsel need
express no opinion as to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors'
rights.
(5) To the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding to
which the Investment Manager is a party before or by
30
any U.S. Federal, or New York or Delaware court or
governmental agency, authority or body (a)(i) that might
result in any material adverse change in the Investment
Manager's condition (financial or other), business
prospects, net worth or operations or (ii) which might
materially and adversely affect the properties or assets
thereof and (b) that is of a character required to be
disclosed in the Registration Statement or Prospectus.
(6) To the best knowledge of such counsel after reasonable
inquiry, no consent, approval, authorization,
notification or order of, license or permit issued by,
or filing with any court or governmental agency or body
is required under the Delaware General Corporation Law,
the laws of the State of New York or U.S. Federal law
for the consummation by the Investment Manager of the
transactions contemplated by this Agreement or the
Investment Management Agreement except (A) such as have
been obtained and (B) such as may be required under the
blue sky laws of any jurisdiction in connection with the
transactions contemplated hereby.
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Fund, the
Investment Manager, the Investment Adviser, their affiliates
and public officials.
c. The Dealer Manager shall have received from Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, counsel for the Dealer Manager, such opinion or
opinions, dated the Representation Date and the Expiration Date,
with respect to the Offer, the Registration Statement, the
Prospectus and other related matters as the Dealer Manager may
reasonably require, and the Fund shall have furnished to such
counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
d. The Fund shall have furnished to the Dealer Manager a certificate of
31
the Fund, signed by the President, the Treasurer, the Assistant
Treasurer, the Secretary, the Assistant Secretary or a Vice
President of the Fund, dated the Representation Date and the
Expiration Date, to the effect that the signer of such certificate
carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that, to the
best of the signer's knowledge:
i. the representations and warranties of the Fund in this
Agreement are true and correct in all material respects on and
as of the Representation Date or the Expiration Date, as the
case may be (except that references to the Registration
Statement or Prospectus shall be to such documents as they may
have been amended or supplemented at the date of such
certificate), with the same effect as if made on the
Representation Date or the Expiration Date, as the case may
be, and the Fund has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Representation Date or the
Expiration Date, as the case may be;
ii. no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or, to the Fund's knowledge, threatened;
and
iii. since the date of the most recent balance sheet included or
incorporated by reference in the Prospectus, there has been no
material adverse change in the condition (financial or other),
business, prospects, net worth or results of operations of the
Fund (excluding fluctuations in the Fund's net asset value due
to investment activities in the ordinary course of operations,
and changes in the market price per share of the Common Shares
and discount or premium of such market price per share to net
asset value per share), except as set forth in or contemplated
in the Prospectus (as it may be amended or supplemented at the
date of such certificate).
e. The Investment Manager shall have furnished to the Dealer Manager
32
certificates of the Investment Manager, signed by the President,
Treasurer, Secretary or Vice President or any other senior officer
of comparable authority, dated the Representation Date and the
Expiration Date, to the effect that the signer of such certificate
has read the Registration Statement, the Prospectus, any supplement
to the Prospectus and this Agreement and, to the best knowledge of
such signer, the representations and warranties of the Investment
Manager in this Agreement are true and correct in all material
respects on and as of the Representation Date or the Expiration
Date, as the case may be, with the same effect as if made on the
Representation Date or the Expiration Date, as the case may be
(except that references to the Registration Statement or Prospectus
shall be to such documents as they may have been amended or
supplemented at the date of such certificate).
f. PricewaterhouseCoopers LLP shall have furnished to the Dealer
Manager letters, dated the Representation Date and the Expiration
Date, in form and substance satisfactory to the Dealer Manager
stating in effect that:
i. they are independent accountants with respect to the Fund
within the meaning of the Securities Act and the applicable
Rules and Regulations;
ii. in their opinion, the audited financial statements examined by
them and included or incorporated by reference in the
Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act and the Investment Company Act and the
respective Rules and Regulations with respect to registration
statements on Form N-2;
iii. they have performed specified procedures, not constituting an
audit in accordance with generally accepted auditing
standards, including a reading of the latest available
unaudited financial information of the Fund, a reading of the
minute books of the Fund, and inquiries of officials of the
Fund responsible for financial and accounting matters and on
the
33
basis of such inquiries and procedures nothing came to their
attention that caused them to believe that at a specified date
not more than five business days prior to the Representation
Date or the Expiration Date, as the case may be, there was any
change in the common shares, any decrease in net assets or any
increase in long-term debt of the Fund as compared with
amounts shown in the most recent statement of assets and
liabilities included or incorporated by reference in the
Registration Statement, except as the Registration Statement
discloses has occurred or may occur, or they shall state any
specific changes, increases or decreases; and
iv. in addition to the procedures referred to in clause (iii)
above, they have compared certain dollar amounts (or
percentages as derived from such dollar amounts) and other
financial information regarding the operations of the Fund
appearing in the Registration Statement, which have previously
been specified by the Dealer Manager and which shall be
specified in such letter, and have found such items to be in
agreement with, the accounting and financial records of the
Fund.
g. Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall not
have been (i) any change, increase or decrease specified in the
letter or letters referred to in Section 6(f), or (ii) any change,
or any development involving a prospective change, in or affecting
the business or properties of the Fund, the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the judgment of
the Dealer Manager, so material and adverse as to make it
impractical or inadvisable to proceed with the Offer as contemplated
by the Registration Statement and the Prospectus.
h. Prior to the Representation Date, the Fund shall have furnished to
the Dealer Manager such further information, certificates and
documents as the Dealer Manager may reasonably request.
34
i. If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this
Agreement or waived by the Dealer Manager, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement
shall not be in all material respects reasonably satisfactory in
form and substance to the Dealer Manager and its counsel, this
Agreement and all obligations of the Dealer Manager hereunder may be
canceled at, or at any time prior to, the Expiration Date by the
Dealer Manager. Notice of such cancellation shall be given to the
Fund in writing or by telephone confirmed in writing.
7. Indemnity and Contribution.
a. Each of the Fund and the Investment Manager, jointly and severally,
agrees to indemnify, defend and hold harmless the Dealer Manager,
its partners, directors and officers, and any person who controls
the Dealer Manager within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and the successors
and assigns of all of the foregoing persons from and against any
loss, damage, expense, liability or claim (including the reasonable
cost of investigation) which the Dealer Manager or any such person
may incur under the Securities Act, the Exchange Act, the Investment
Company Act, the Advisers Act, the common law or otherwise, insofar
as such loss, damage, expense, liability or claim arises out of or
is based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment
thereof by the Fund) or in a Prospectus (the term Prospectus for the
purpose of this Section 7 being deemed to include any preliminary
prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Fund), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be
stated in either such Registration Statement or Prospectus or
necessary to make the statements made therein not misleading, except
insofar as any such loss, damage, expense, liability or claim arises
out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with
information furnished in writing by or on behalf of the Dealer
Manager to the Fund or the Investment Manager
35
expressly for use with reference to the Dealer Manager in such
Registration Statement or such Prospectus or arises out of or is
based upon any omission or alleged omission to state a material fact
in connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such
information not misleading.
If any action, suit or proceeding (together, a "Proceeding") is
brought against the Dealer Manager or any such person in respect of
which indemnity may be sought against the Fund or the Investment
Manager pursuant to the foregoing paragraph, the Dealer Manager or
such person shall promptly notify the Fund or the Investment
Manager, as the case may be, in writing of the institution of such
Proceeding and the Fund or the Investment Manager shall assume the
defense of such Proceeding, including the employment of counsel
reasonably satisfactory to such indemnified party and payment of all
fees and expenses; provided, however, that the omission to so notify
the Fund or the Investment Manager shall not relieve the Fund or the
Investment Manager from any liability which the Fund or the
Investment Manager may have to the Dealer Manager or any such person
or otherwise. The Dealer Manager or such person shall have the right
to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of the Dealer
Manager or of such person unless the employment of such counsel
shall have been authorized in writing by the Fund or the Investment
Manager, as the case may be, in connection with the defense of such
Proceeding or the Fund or the Investment Manager shall not have,
within a reasonable period of time in light of the circumstances,
employed counsel to have charge of the defense of such Proceeding or
such indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are
different from, additional to or in conflict with those available to
the Fund or the Investment Manager (in which case the Fund or the
Investment Manager shall not have the right to direct the defense of
such Proceeding on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the
Fund or the Investment Manager and paid as incurred (it being
understood, however, that the Fund or the Investment Manager shall
not be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of
related Proceedings
36
in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). Neither the Fund nor the Investment
Manager shall be liable for any settlement of any Proceeding
effected without its written consent but if settled with the written
consent of the Fund or the Investment Manager, the Fund or the
Investment Manager, as the case may be, agrees to indemnify and hold
harmless the Dealer Manager and any such person from and against any
loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that
it shall be liable for any settlement of any Proceeding effected
without its written consent if (i) such settlement is entered into
more than 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not
have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least
30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened Proceeding
in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that
are the subject matter of such Proceeding and does not include an
admission of fault, culpability or a failure to act, by or on behalf
of such indemnified party.
b. The Dealer Manager agrees to indemnify, defend and hold harmless the
Fund and the Investment Manager, its directors and officers, and any
person who controls the Fund or the Investment Manager within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing
persons from and against any loss, damage, expense, liability or
claim (including the reasonable cost of investigation) which,
jointly or severally, the Fund or the Investment Manager or any such
person may incur under the Securities Act, the Exchange Act, the
Investment Company Act, the Advisers Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim
arises out of
37
or is based upon any untrue statement or alleged untrue statement of
a material fact contained in and in conformity with information
furnished in writing by or on behalf of the Dealer Manager to the
Fund or the Investment Manager expressly for use with reference to
the Dealer Manager in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment
thereof by the Fund) or in a Prospectus, or arises out of or is
based upon any omission or alleged omission to state a material fact
in connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such
information not misleading.
If any Proceeding is brought against the Fund, the Investment
Manager or any such person in respect of which indemnity may be
sought against the Dealer Manager pursuant to the foregoing
paragraph, the Fund, the Investment Manager or such person shall
promptly notify the Dealer Manager in writing of the institution of
such Proceeding and the Dealer Manager shall assume the defense of
such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and
expenses; provided, however, that the omission to so notify the
Dealer Manager shall not relieve the Dealer Manager from any
liability which the Dealer Manager may have to the Fund, the
Investment Manager or any such person or otherwise. The Fund, the
Investment Manager or such person shall have the right to employ its
own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Fund, the Investment Manager
or such person, as the case may be, unless the employment of such
counsel shall have been authorized in writing by the Dealer Manager
in connection with the defense of such Proceeding or the Dealer
Manager shall not have, within a reasonable period of time in light
of the circumstances, employed counsel to have charge of the defense
of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or
them which are different from or additional to or in conflict with
those available to the Dealer Manager (in which case the Dealer
Manager shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties, but the
Dealer Manager may employ counsel and participate in the defense
thereof but the fees and expenses of such counsel shall be at the
38
expense of the Dealer Manager), in any of which events such fees and
expenses shall be borne by the Dealer Manager and paid as incurred
(it being understood, however, that the Dealer Manager shall not be
liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The Dealer
Manager shall not be liable for any settlement of any such
Proceeding effected without the written consent of the Dealer
Manager but if settled with the written consent of the Dealer
Manager, the Dealer Manager agrees to indemnify and hold harmless
the Fund, the Investment Manager and any such person from and
against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement
of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after receipt
by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement
and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such Proceeding.
c. If the indemnification provided for in this Section 7 is unavailable
to an indemnified party under subsections (a) and (b) of this
Section 7 in respect of any losses, damages, expenses, liabilities
or claims referred to therein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party
as a result of such losses, damages, expenses, liabilities or claims
(i) in such proportion as is appropriate
39
to reflect the relative benefits received by the Fund and the
Investment Manager on the one hand and the Dealer Manager on the
other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault
of the Fund and the Investment Manager on the one hand and of the
Dealer Manager on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses,
liabilities or claims, as well as any other relevant equitable
considerations. The relative benefits received by the Fund or the
Investment Manager on the one hand and the Dealer Manager on the
other shall be deemed to be in the same respective proportions as
the total proceeds from the offering (net of the Dealer Manager Fee
but before deducting expenses) received by the Fund and the total
underwriting discounts and commissions received by the Dealer
Manager, bear to the aggregate public offering price of the Shares.
The relative fault of the Fund and the Investment Manager on the one
hand and of the Dealer Manager on the other shall be determined by
reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged
omission relates to information supplied by the Fund or the
Investment Manager or by the Dealer Manager and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be
deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing
to defend or defending any Proceeding.
d. The Fund and the Investment Manager and the Dealer Manager agree
that it would not be just and equitable if contribution pursuant to
this Section 7 were determined by pro rata allocation or by any
other method of allocation that does not take account of the
equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 7, the Dealer Manager
shall not be required to contribute any amount in excess of the fees
received by it. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution
40
from any person who was not guilty of such fraudulent
misrepresentation.
e. Notwithstanding any other provisions in this Section 7, no party
shall be entitled to indemnification or contribution under this
Dealer Manager Agreement against any loss, claim, liability, expense
or damage arising by reason of such person's willful misfeasance, or
gross negligence in the performance of its duties hereunder.
f. The indemnity and contribution agreements contained in this Section
7 and the covenants, warranties and representations of the Fund
contained in this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of the Dealer
Manager, its partners, directors or officers or any person
(including each partner, officer or director of such person) who
controls the Dealer Manager within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, or by or on behalf
of the Fund or the Investment Manager, its directors or officers or
any person who controls the Fund or the Investment Manager within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or
the issuance and delivery of the Rights. The Fund or the Investment
Manager and the Dealer Manager agree promptly to notify each other
of the commencement of any Proceeding against it and, in the case of
the Fund or the Investment Manager, against any of the Fund's or the
Investment Manager's officers or directors in connection with the
issuance of the Rights, or in connection with the Registration
Statement or Prospectus.
g. The Fund and the Investment Manager acknowledge that the statements
under the caption "Our Rights Offering -- Distribution Arrangements"
in the Prospectus constitute the only information furnished in
writing to the Fund by the Dealer Manager expressly for use in such
document, and the Dealer Manager confirms that such statements are
correct in all material respects.
8. Representations, Warranties and Agreements to Survive Delivery. The
41
respective agreements, representations, warranties, indemnities and other
statements of the Fund or its officers, of the Investment Manager and of
the Dealer Manager 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
the Fund or any of the officers, directors or controlling persons referred
to in Section 7 hereof, and will survive delivery of and payment for the
Shares pursuant to the Offer. The provisions of Sections 5 and 7 hereof
shall survive the termination or cancellation of this Agreement.
9. Termination of Agreement.
a. This Agreement shall be subject to termination in the absolute
discretion of the Dealer Manager, by notice given to the Fund prior
to the expiration of the Offer, if prior to such time (i) financial,
political, economic, currency, banking or social conditions in the
United States shall have undergone any material change the effect of
which on the financial markets makes it, in the Dealer Manager's
judgment, impracticable or inadvisable to proceed with the Offer,
(ii) there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the
Dealer Manager's judgment, impracticable or inadvisable to proceed
with the Offer, (iii) trading in the Common Shares or in the Rights
shall have been suspended by the Commission or the New York Stock
Exchange, (iv) trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or (v) a banking
moratorium shall have been declared either by Federal or New York
State authorities.
b. If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other
party except as provided in Section 5.
10. 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
42
York, New York 10171-0026, Attn: Young Yu, Syndicate Department, and, if
to the Fund or the Investment Manager, shall be sufficient in all respects
if delivered or sent to the Fund or the Investment Manager c/o Deutsche
Asset Management, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxxxxx.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and will inure to
the benefit of the officers and directors and controlling persons referred
to in Section 7 hereof, and no other person will have any right or
obligation hereunder.
12. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
13. 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 each of the Fund and the Investment Manager consents to
the jurisdiction of such courts and personal service with respect thereto.
Each of the Fund and the Investment Manager 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 or any indemnified party. Each of UBS
Securities, the Fund (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) and the
Investment Manager (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. Each of the Fund and the Investment Manager
agrees that a final judgment in any such action, proceeding or
counterclaim brought in any such court shall be conclusive and binding
upon the Fund or the Investment Manager, as the case may be, and may be
enforced in any other courts in the jurisdiction of which the Fund or the
Investment Manager is or may be subject, by suit upon such judgment.
14. Counterparts. This Agreement may be executed in one or more counterparts,
43
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
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 among the Fund, the
Investment Manager and the Dealer Manager.
Very truly yours,
The Central Europe and Russia Fund, Inc.
By: ___________________________________________
Name: ________________________________________
Title: _______________________________________
Deutsche Investment Management Americas Inc.
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: _______________________________________
Exhibit A
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
3,417,070 Shares of Common Stock
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares
SELLING GROUP AGREEMENT
New York, New York
[ ], 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"), proposes to issue to 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") transferable rights entitling
such Holders to subscribe for up to 3,417,070 shares (each a "Share" and,
collectively, the "Shares") of the Fund's shares of 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 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 (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 such
Prospectus.
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 2
Rights Offer Expiring January 20, 2006, unless extended
The Rights are transferable and are expected to be listed on the New York Stock
Exchange, Inc.
We further understand that the Fund has appointed UBS Securities LLC
to act as the dealer manager (the "Dealer Manager") in connection with the Offer
and has authorized the Dealer Manager to form and manage a group of
broker-dealers (each a "Selling Group Member" and collectively the "Selling
Group") to solicit the exercise of Rights and to sell Shares purchased by the
Dealer Manager from the Fund through the exercise of Rights.
We hereby express our interest in participating in the Offer as a
Selling Group Member.
We hereby agree with you as follows:
1. We have received and reviewed the Fund's prospectus dated [ ], 2005
(the "Prospectus") relating to the Offer and we understand that
additional copies of the Prospectus (or of the Prospectus as it may
be subsequently supplemented or amended, if applicable) and any
other solicitation materials authorized by the Fund relating to the
Offer ("Offering Materials") will be supplied to us in reasonable
quantities upon our request therefor to you. We agree that we will
not use any solicitation material other than the Prospectus (as
supplemented or amended, if applicable) and such Offering Materials
and we agree not to make any written representations concerning the
Fund to any holders or prospective holders of Shares or Rights other
than those contained in the Offering Materials or otherwise
previously authorized in writing by the Fund or otherwise permitted
by applicable law.
2. From time to time during the period (the "Subscription Period")
commencing on December 22, 2005 and ending at 5:00 p.m., New York
City time, on the Expiration Date (the term "Expiration Date" means
January 20, 2006, unless and until the Fund shall, in its sole
discretion, have extended the period for which the Offer is open, in
which event the term "Expiration Date" with respect to the Offer
will mean the latest time and date on which the Offer, as so
extended by the Fund, will expire), we
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 3
Rights Offer Expiring January 20, 2006, unless extended
may solicit the exercise of Rights in connection with the Offer. We
will be entitled to receive fees in the amounts and at the times
described in Section 4 of this Agreement with respect to Shares
purchased pursuant to the exercise of Rights and with respect to
which Equiserve (the "Subscription Agent") has received, no later
than 5:00 p.m., New York City time, on the Expiration Date, either
(i) a properly completed and executed Subscription Certificate
identifying us as the broker-dealer having been instrumental in the
exercise of such Rights, and full payment for such Shares or (ii) a
Notice of Guaranteed Delivery guaranteeing to the Subscription Agent
by the close of business of the third business day after the
Expiration Date of a properly completed and duly executed
Subscription Certificate, similarly identifying us, and full payment
for such Shares. We understand that we will not be paid these fees
with respect to Shares purchased pursuant to an exercise of Rights
for our own account or for the account of any of our affiliates. We
also understand and agree that we are not entitled to receive any
fees in connection with the solicitation of the exercise of Rights
other than pursuant to the terms of this Agreement and, in
particular, that we will not be entitled to receive any fees under
the Fund's Soliciting Dealer Agreement. We agree to solicit the
exercise of Rights in accordance with the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Investment Company Act of
1940, as amended, and the rules and regulations under each such Act,
any applicable securities laws of any state or jurisdiction where
such solicitations may be lawfully made, the applicable rules and
regulations of any self-regulatory organization or registered
national securities exchange and customary practice and subject to
the terms of the Subscription Agent Agreement between the Fund and
the Subscription Agent and the procedures described in the Fund's
registration statement on Form N-2 (File Nos. 333-129644 and
811-06041), as amended (the "Registration Statement").
3. From time to time during the Subscription Period, we may indicate
interest in purchasing Shares from the Dealer Manager. We understand
that from time to time the Dealer Manager intends to offer Shares
obtained or to be obtained by the Dealer Manager through the
exercise
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 4
Rights Offer Expiring January 20, 2006, unless extended
of Rights to Selling Group Members who have so indicated interest at
prices which shall be determined by the Dealer Manager (the
"Offering Price"). We agree that with respect to any such Shares
purchased by us from the Dealer Manager the sale of such Shares to
us shall be irrevocable and we will offer them to the public at the
Offering Price at which we purchase them from the Dealer Manager.
Shares not sold by us at such Offering Price may be offered by us
after the next succeeding Offering Price is set at the latest
Offering Price set by the Dealer Manager. The Dealer Manager agrees
that, if requested by any Selling Group Member, and subject to
applicable law, the Dealer Manager will set a new Offering Price
prior to 4:00 p.m., New York City time, on any business day. We
agree to advise the Dealer Manager from time to time upon request,
prior to the termination of this Agreement, of the number of Shares
remaining unsold which were purchased by us from the Dealer Manager
and, on the Dealer Manager's request, we will resell to the Dealer
Manager any of such Shares remaining unsold at the purchase price
thereof if in the Dealer Manager's opinion such Shares are needed to
make delivery against sales made to other Selling Group Members. Any
shares purchased hereunder from the Dealer Manager shall be subject
to regular way settlement through the facilities of the Depository
Trust Company.
4. We understand that you will remit to us on or before the tenth
business day following the day the Fund issues Shares after the
Expiration Date, following receipt by you from the Fund of the
Dealer Manager Fee, a selling fee equal to 2.50% of the Subscription
Price per Share for (A) each Share issued pursuant to the exercise
of Rights or the Over-Subscription Privilege pursuant to each
Subscription Certificate upon which we are designated, as certified
to you by the Subscription Agent, as a result of our solicitation
efforts in accordance with Section 2 and (B) each Share sold by the
Dealer Manager to us in accordance with Section 3 less any Shares
resold to the Dealer Manager in accordance with Section 3. Your only
obligation with respect to payment of the foregoing selling fee to
us is to remit to us amounts owing to us and actually received by
you from the Fund. Except as aforesaid, you shall be under no
liability to make any payments to us pursuant to this Agreement.
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 5
Rights Offer Expiring January 20, 2006, unless extended
5. We agree that you, as Dealer Manager, have full authority to take
such action as may seem advisable to you in respect of all matters
pertaining to the Offer. You are authorized to approve on our behalf
any amendments or supplements to the Registration Statement or the
Prospectus.
6. We represent that we are a member in good standing of the the
National Association of Securities Dealers, Inc. (the "NASD") and,
in making sales of Shares, agree to comply with all applicable rules
of the NASD including, without limitation, NASD Conduct Rules 2420,
2730, 2740, 2750 and 2790. We understand that no action has been
taken by you or the Fund to permit the solicitation of the exercise
of Rights or the sale of Shares in any jurisdiction (other than the
United States) where action would be required for such purpose. We
agree that we will not, without your approval in advance, buy, sell,
deal or trade in, on a when-issued basis or otherwise, the Rights or
the Shares or any other option to acquire or sell Shares for our own
account or for the accounts of customers, except as provided in
Sections 2 and 3 hereof and except that we may buy or sell Rights or
Shares in brokerage transactions on unsolicited orders which have
not resulted from activities on our part in connection with the
solicitation of the exercise of Rights and which are executed by us
in the ordinary course of our brokerage business. We will keep an
accurate record of the names and addresses of all persons to whom we
give copies of the Registration Statement, the Prospectus, any
preliminary prospectus (or any amendment or supplement thereto) or
any Offering Materials and, when furnished with any subsequent
amendment to the Registration Statement and any subsequent
prospectus, we will, upon your request, promptly forward copies
thereof to such persons.
7. Nothing contained in this Agreement will constitute the Selling
Group Members partners with the Dealer Manager or with one another
or create any association between those parties, or will render the
Dealer Manager or the Fund liable for the obligations of any Selling
Group Member. The Dealer Manager will be under no liability to make
any payment to any Selling Group Member other than as provided in
Section 4 of this
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 6
Rights Offer Expiring January 20, 2006, unless extended
Agreement, and will be subject to no other liabilities to any
Selling Group Member, and no obligations of any sort will be
implied. We agree to indemnify and hold harmless you and each other
Selling Group Member and each person, if any, who controls you and
any such Selling Group Member within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, against
loss or liability caused by any breach by us of the terms of this
Agreement.
8. We agree to pay any transfer taxes which may be assessed and paid on
account of any sales or transfers for our account.
9. All communications to you relating to the Offer will be addressed
to: UBS Securities LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, Attn: Xxxxxxx Xxxxxx, Syndicate Department.
10. This Agreement will be governed by the internal laws of the State of
New York.
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 7
Rights Offer Expiring January 20, 2006, unless extended
A signed copy of this Selling Group Agreement will be promptly returned to
the Selling Group Member at the address set forth below.
Very truly yours,
UBS Securities LLC
By: _______________________________________
Name: ____________________________________
Title: ___________________________________
PLEASE COMPLETE THE INFORMATION BELOW:
______________________ ____________________________
Printed Firm Name Address
______________________
Contact at Selling Group Member
______________________ ____________________________
Authorized Signature Area Code and Telephone
Number
______________________ ____________________________
Name and Title Facsimile Number
Dated: ______________________
Payment of the Selling Fee shall be mailed
by check to the following address:
Exhibit B
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Rights Offering for Shares of Common Stock
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
JANUARY 20, 2006, UNLESS EXTENDED
To Securities Dealers and Brokers:
The Central Europe and Russia Fund, Inc., (the "Fund") is issuing to
its shareholders of record ("Record Date Shareholders") as of the close of
business on December 22, 2005 (the "Record Date") transferable rights ("Rights")
to subscribe for an aggregate of up to 3,417,070 shares (the "Shares") of the
Fund's shares common stock, par value $0.001 per share (the "Common Shares"), of
the Fund upon the terms and subject to the conditions set forth in the Fund's
Prospectus (the "Prospectus") dated February 17, 2004 (the "Offer"). Each such
Record Date Shareholder is being issued one Right for each full Common Share
owned on the Record Date. Such Rights entitle holders to acquire during the
Subscription Period (as hereinafter defined) at the Subscription Price (as
hereinafter defined), one Share for each three Rights (except that any Record
Date Shareholder 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 Record Date Shareholder 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 such Prospectus. Shares
acquired pursuant to the Over-Subscription Privilege are subject to allotment,
as more fully described in the Prospectus. The Rights are transferable and are
expected to be
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 2
Rights Offer Expiring January 20, 2006, unless extended
listed on the New York Stock Exchange, Inc. The Subscription Price will be as
set forth in the Prospectus. The Subscription Period will commence on December
22, 2005 and end at 5:00 p.m., New York City time on the Expiration Date (the
term "Expiration Date" means January 20, 2006, unless and until the Fund shall,
in its sole discretion, have extended the period for which the Offer is open, in
which event the term "Expiration Date" with respect to the Offer will mean the
latest time and date on which the Offer, as so extended by the Fund, will
expire).
For the duration of the Offer, the Fund has authorized and the
Dealer Manager has agreed to reallow a Solicitation Fee to any qualified broker
or dealer executing a Soliciting Dealer Agreement who solicits the exercise of
Rights and the Over-Subscription Privilege in connection with the Offer and who
complies with the procedures described below (a "Soliciting Dealer"). Upon
timely delivery to Colbent Corporation, the Fund's Subscription Agent for the
Offer, of payment for Shares purchased pursuant to the exercise of Rights and
the Over-Subscription Privilege and of properly completed and executed
documentation as set forth in this Soliciting Dealer Agreement, a Soliciting
Dealer will be entitled to receive the Solicitation Fee equal to 0.50% of the
Subscription Price per Share so purchased subject to a maximum fee based on the
number of Common Shares held by such Soliciting Dealer through The Depository
Trust Company ("DTC") on the Record Date; provided, however, that no payment
shall be due with respect to the issuance of any Shares until payment therefor
is actually received. A qualified broker or dealer is a broker or dealer which
is a member of a registered national securities exchange in the United States or
the National Association of Securities Dealers, Inc. ("NASD") or any foreign
broker or dealer not eligible for membership who agrees to conform to the Rules
of Fair Practice of the NASD, including Sections 2730, 2740, 2420 and 2750
thereof, in making solicitations in the United States to the same extent as if
it were a member thereof.
The Fund has authorized and the Dealer Manager has agreed to pay the
Solicitation Fees payable to the undersigned Soliciting Dealer and to indemnify
such Soliciting Dealer on the terms set forth in the Dealer Manager Agreement,
dated [ ], 2005, among UBS Securities LLC as the dealer manager (the "Dealer
Manager"), the Fund and others (the "Dealer Manager Agreement"). Solicitation
and other activities by Soliciting Dealers may be undertaken only in accordance
with the applicable rules and regulations of the Securities and Exchange
Commission and
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 3
Rights Offer Expiring January 20, 2006, unless extended
only in those states and other jurisdictions where such solicitations and other
activities may lawfully be undertaken and in accordance with the laws thereof.
Compensation will not be paid for solicitations in any state or other
jurisdiction in which, in the opinion of counsel to the Fund or counsel to the
Dealer Manager, such compensation may not lawfully be paid. No Soliciting Dealer
shall be paid Solicitation Fees with respect to Shares purchased pursuant to an
exercise of Rights and the Over-Subscription Privilege for its own account or
for the account of any affiliate of the Soliciting Dealer. No Soliciting Dealer
or any other person is authorized by the Fund or the Dealer Manager to give any
information or make any representations in connection with the Offer other than
those contained in the Prospectus and other authorized solicitation material
furnished by the Fund through the Dealer Manager. No Soliciting Dealer is
authorized to act as agent of the Fund or the Dealer Manager in any connection
or transaction. In addition, nothing herein contained shall constitute the
Soliciting Dealers partners with the Dealer Manager or with one another, or
agents of the Dealer Manager or of the Fund, or create any association between
such parties, or shall render the Dealer Manager or the Fund liable for the
obligations of any Soliciting Dealer. The Dealer Manager shall be under no
liability to make any payment to any Soliciting Dealer, and shall be subject to
no other liabilities to any Soliciting Dealer, and no obligations of any sort
shall be implied.
In order for a Soliciting Dealer to receive Solicitation Fees, the
Subscription Agent must have received from such Soliciting Dealer no later than
5:00 p.m., New York City time, on the Expiration Date, either (i) a properly
completed and duly executed Subscription Certificate with respect to Shares
purchased pursuant to the exercise of Rights and the Over-Subscription Privilege
and full payment for such Shares; or (ii) a Notice of Guaranteed Delivery
guaranteeing delivery to the Subscription Agent by close of business on the
third business day after the Expiration Date, of (a) full payment for such
Shares and (b) a properly completed and duly executed Subscription Certificate
with respect to Shares purchased pursuant to the exercise of Rights.
Solicitation Fees will only be paid after receipt by the Subscription Agent of a
properly completed and duly executed Soliciting Dealer Agreement and a
Subscription Certificate designating the Soliciting Dealer in the applicable
portion hereof. In the case of a Notice of Guaranteed Delivery, Solicitation
Fees will only be paid after delivery in accordance with such Notice of
Guaranteed Delivery has been effected. Solicitation Fees will be paid by the
Fund (through the Subscription Agent) to the Soliciting Dealer by check to an
address
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 4
Rights Offer Expiring January 20, 2006, unless extended
designated by the Soliciting Dealer below by the tenth business day following
the day the Fund issues Shares after the Expiration Date.
All questions as to the form, validity and eligibility (including
time of receipt) of this Soliciting Dealer Agreement will be determined by the
Fund, in its sole discretion, which determination shall be final and binding.
Unless waived, any irregularities in connection with a Soliciting Dealer
Agreement or delivery thereof must be cured within such time as the Fund shall
determine. None of the Fund, the Dealer Manager, the Subscription Agent, the
Information Agent for the Offer or any other person will be under any duty to
give notification of any defects or irregularities in any Soliciting Dealer
Agreement or incur any liability for failure to give such notification.
The acceptance of Solicitation Fees from the Fund by the undersigned
Soliciting Dealer shall constitute a representation by such Soliciting Dealer to
the Fund that: (i) it has received and reviewed the Prospectus; (ii) in
soliciting purchases of Shares pursuant to the exercise of the Rights and the
Over-Subscription Privilege, it has complied with the applicable requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
applicable rules and regulations thereunder, any applicable securities laws of
any state or jurisdiction where such solicitations were made, and the applicable
rules and regulations of any self-regulatory organization or registered national
securities exchange; (iii) in soliciting purchases of Shares pursuant to the
exercise of the Rights and the Over-Subscription Privilege, it has not
published, circulated or used any soliciting materials other than the Prospectus
and any other authorized solicitation material furnished by the Fund through the
Dealer Manager and has not made any written representations concerning the Fund
to any holders or prospective holders of Shares or Rights other than those
contained in such materials or otherwise previously authorized in writing by the
Fund or otherwise permitted by applicable law; (iv) it has not purported to act
as agent of the Fund or the Dealer Manager in any connection or transaction
relating to the Offer; (v) the information contained in this Soliciting Dealer
Agreement is, to its best knowledge, true and complete; (vi) it is not
affiliated with the Fund; (vii) it will not accept Solicitation Fees paid by the
Fund pursuant to the terms hereof with respect to Shares purchased by the
Soliciting Dealer pursuant to an exercise of Rights and the Over-Subscription
Privilege for its own account; (viii) it will not remit, directly or indirectly,
any part of Solicitation Fees paid by the Fund pursuant
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 5
Rights Offer Expiring January 20, 2006, unless extended
to the terms hereof to any beneficial owner of Xxxxxx purchased pursuant to the
Offer; and (ix) it has agreed to the amount of the Solicitation Fees and the
terms and conditions set forth herein with respect to receiving such
Solicitation Fees. By returning a Soliciting Dealer Agreement and accepting
Solicitation Fees, a Soliciting Dealer will be deemed to have agreed to
indemnify the Fund and the Dealer Manager against losses, claims, damages and
liabilities to which the Fund may become subject as a result of the breach of
such Soliciting Dealer's representations made herein and described above. In
making the foregoing representations, Soliciting Dealers are reminded of the
possible applicability of the anti-manipulation rules under the Exchange Act if
they have bought, sold, dealt in or traded in any Shares for their own account
since the commencement of the Offer.
Upon expiration of the Offer, no Solicitation Fees will be payable
to Soliciting Dealers with respect to Xxxxxx purchased thereafter.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Dealer Manager Agreement or, if not defined
therein, in the Prospectus.
This Soliciting Dealer Agreement will be governed by the laws of the
State of New York.
Please execute this Soliciting Dealer Agreement below accepting the
terms and conditions hereof and confirming that you are a member firm of the
NASD or a foreign broker or dealer not eligible for membership who has conformed
to the Rules of Fair Practice of the NASD, including Sections 2730, 2740, 2420
and 2750 thereof, in making solicitations of the type being undertaken pursuant
to the Offer in the United States to the same extent as if you were a member
thereof, and certifying that you have solicited the purchase of the Shares
pursuant to exercise of the Rights, all as described above, in accordance with
the terms and conditions set forth in this Soliciting Dealer Agreement. Please
forward two executed copies of this Soliciting Dealer Agreement to: UBS
Securities LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attn: Xxxxxxx
Xxxxxx, Syndicate Department.
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 6
Rights Offer Expiring January 20, 2006, unless extended
A signed copy of this Soliciting Dealer Agreement will be promptly
returned to the Soliciting Dealer at the address set forth below.
Very truly yours,
UBS Securities LLC
By: _______________________________________
Name: ____________________________________
Title: ___________________________________
PLEASE COMPLETE THE INFORMATION BELOW:
______________________ ____________________________
Printed Firm Name Address
______________________
Contact at Soliciting Dealer
______________________ ____________________________
Authorized Signature Area Code and Telephone
Number
______________________ ____________________________
Name and Title Facsimile Number
Dated: ______________________
Payment of the Solicitation Fee shall be mailed
by check to the following address:
