EXHIBIT (2)(h)(1)
[ ] Shares of Common Stock
Issuable Upon Exercise of Rights
to Subscribe for such Shares
DEALER MANAGER AGREEMENT
New York, New York
, 2004
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 Bank Securities, 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
such Holders to subscribe for up to [__________] shares (each a "Share" and,
collectively, the "Shares") of the Fund's common stock, par value $0.01 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 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. 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. 333-111828 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".
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 Offering Materials.
ii. The Fund has been duly incorporated and is validly
existing as
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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 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
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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 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 on
December 22, 2003 and payable to holders of record on
December [ ], 2003, 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")
5
dated as of [ ], 2004 between the Fund and [ ]
(the "Subscription Agent"), the Information Agent
Agreement (the "Information Agent Agreement") dated
as of [ ], 2004 between the Fund and [ ] (the
"Information Agent"), the Management Agreement dated
as of January 31, 1990 between the Fund and the
Investment Manager (the "Investment Management
Agreement"), the Investment Advisory Agreement dated
as of January 31, 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 contemplated in
this Agreement or in the Registration Statement
6
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 consummation by
the Fund of the transactions contemplated
7
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 tax years for which the applicable statute
of limitations has
8
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.
9
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.
10
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
11
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 Securities Exchange Act of
1934, as amended (the "Exchange Act"), or by the
National Association of Securities Dealers, Inc., the
New York Stock Exchange or the Frankfurt Stock
Exchange.
vii. The Investment 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 though 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
13
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 Foreign Record Date Shareholders (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 paragraph 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 exercise of Rights and the performance of financial
advisory and
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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 Offering
Materials or (ii) to make any representation, oral or written,
to any shareholders or prospective shareholders of the Fund
that are not contained in the Prospectus (as supplemented or
amended, if applicable) or the 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
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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 (the
"Soliciting 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 issuance by the Commission of any stop
order suspending the
16
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.
vi. If any event shall occur as a result of which it is
necessary or
17
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 paragraph 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
convertible into such securities, other than the
Rights and the Shares
18
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,
19
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 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; (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
20
expenses incurred in connection with the listing of the Shares
on the New York Stock Exchange, Inc., (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
$[________].
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 paragraph 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
21
and any amendment or supplement thereto shall have been 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
22
initiated or, threatened by the Commission,
all 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
Registation 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
23
Fund; each of this Agreement and the Fund
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 [other than the Invsestment
Advisory Agreement] 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
24
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 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
25
face to be appropriately responsive in all
material respects to the requirements of the
Securities Act and 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 (11)
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
26
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 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.
ii. The opinions, dated the Representation Date and the
Expiration Date, of [Xxxxx X. Xxxxxxxxx, Esq.],
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
27
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 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
28
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 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.
29
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 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
30
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 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:
31
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 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
32
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 paragraph
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.
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.
33
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 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
34
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 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
35
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 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
36
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 such 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 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
37
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 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,
38
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 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
39
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
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.
40
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, Inc., (iv)
trading in securities generally on the New York Stock
Exchange, Inc. 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.
41
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 Xxxx, Xxx Xxxx 00000-0000, Attn: 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, Xxx Xxxxx Xxxxxx, XXX00-0000, Xxxxxxxxx,
Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxxx, Esq.
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
42
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, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
43
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 Bank Securities, 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.
[ ] Shares of Common Stock
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares
SELLING GROUP AGREEMENT
New York, New York
[ ], 2004
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 [ ] shares (each a "Share" and,
collectively, the "Shares") of the Fund's shares of common stock, par value
$0.01 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 Rights are transferable and are expected to be listed on the New
York Stock Exchange, Inc.
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 3
Rights Offer Expiring [ ], 2004, unless extended
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
[ ], 2004 (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 are not authorized to (i)
use any solicitation material other than the Prospectus (as
supplemented or amended, if applicable) and the Offering
Materials or (ii) to make any representation, oral or written,
to any shareholders or prospective shareholders of the Fund
that are not contained in the Prospectus (as supplemented or
amended, if applicable) or the Offering Materials, in each
case unless previously authorized to do so in writing by the
Fund.
2. From time to time during the period (the "Subscription
Period") commencing on [ ], 2004 and ending at 5:00 p.m.,
New York City time, on the Expiration Date (the term
"Expiration Date" means [ ], 2004, 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 may solicit the exercise of Rights in
connection with the Offer. We will be
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 4
Rights Offer Expiring [ ], 2004, unless extended
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- 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 5
Rights Offer Expiring [ ], 2004, 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
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 6
Rights Offer Expiring [ ], 2004, unless extended
be under no liability to make any payments to us pursuant to
this Agreement.
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 NASD
and, in making sales of Shares, agree to comply with all
applicable rules of the National Association of Securities
Dealers, Inc. (the "NASD") including, without limitation, the
NASD's Interpretation with Respect to Free-Riding and
Withholding, as set forth in IM 2110-1 of the NASD's Conduct
Rules, and Rule 2740 of the NASD's Conduct Rules. 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
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 7
Rights Offer Expiring [ ], 2004, unless extended
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 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: 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 8
Rights Offer Expiring [ ], 2004, 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:_________________________________
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 9
Rights Offer Expiring [ ], 2004, unless extended
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,
[ ], 2004, 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 [ ], 2004 (the "Record Date") transferable rights
("Rights") to subscribe for an aggregate of up to [ ] shares (the "Shares")
of the Fund's shares common stock, par value $0.01 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 [ ], 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
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 2
Transferable Rights Offer Expiring [ ], 2004, unless extended
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 listed on the New York Stock Exchange, Inc.
The Subscription Price will be [ ]. The Subscription Period will commence on
[ ], 2004 and end at 5:00 p.m., New York City time on the Expiration Date
(the term "Expiration Date" means [ ], 2004, 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 [ ], 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 [ ], 2004, 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
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 3
Transferable Rights Offer Expiring [ ], 2004, unless extended
and regulations of the Securities and Exchange Commission and 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
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 designated by the Soliciting Dealer below
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 4
Transferable Rights Offer Expiring [ ], 2004, unless extended
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
acknowledges that it is not authorized to (a) use any solicitation material
other than the Prospectus (as supplemented or amended, if applicable) and the
Offering Materials or (b) to make any representation, oral or written, to any
shareholders or prospective shareholders of the Fund that are not contained in
the Prospectus (as supplemented or amended, if applicable) or the Offering
Materials, in each case unless previously authorized to do so in writing by the
Fund; (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 to the terms hereof to any beneficial owner of Shares
purchased pursuant to the Offer; and (ix) it has agreed to the amount of the
Solicitation
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 5
Transferable Rights Offer Expiring [ ], 2004, unless extended
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 Shares 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: Syndicate Department.
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 6
Transferable Rights Offer Expiring [ ], 2004, 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:
