EXHIBIT (2)(h)(2)
LETTER 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"), has appointed UBS Securities LLC to act as
dealer manager (the "Dealer Manager") in connection with the issuance by the
Fund to the holders of record (the "Holders") at the close of business on the
record date set forth in the Prospectus (as defined herein) (the "Record Date")
of transferable rights entitling 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.
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"). The
term "Registration Statement" means the registration statement, as amended, at
the time it becomes or became effective, including financial statements and all
exhibits and all documents, if any, incorporated therein by reference, and any
information deemed to be included by Rule 430A. The term "Prospectus" means the
final prospectus and final statement of additional
information in the forms filed with the Commission pursuant to Rule 497(c), (e),
(h) or (j) of the Rules and Regulations, as the case may be, as from time to
time amended or supplemented pursuant to the Securities Act.
Deutsche Asset Management International GmbH, a German limited
liability company (the "Investment Adviser") acts as investment adviser to the
Fund pursuant to an Investment Advisory Agreement dated as of January 31, 1990
between the Fund and the Investment Adviser. The Investment Adviser is not a
party to the Dealer Manager Agreement (the "Dealer Manager Agreement") pursuant
to which the Fund is appointing or will appoint the Dealer Manager to act in
such capacity in connection with the Offer. As a further inducement to the
Dealer Manager to enter into the Dealer Manager Agreement and to act as Dealer
Manager in connection with the Offer, the Investment Adviser has executed and
delivered to the Dealer Manager this Letter Agreement (""Agreement""). This
Agreement will become effective upon execution of the Dealer Manager Agreement,
as notified to the Investment Adviser by the Dealer Manager.
1. Representations and Warranties; Agreements.
a. The Investment Adviser represents and warrants to, and agrees
with, the Dealer Manager as of the date hereof and as of the
date of the commencement of the Offer that:
i. The Investment Adviser has been duly organized and is
validly existing as a limited liability company under
the laws of the Federal Republic of Germany, has full
power and authority (corporate and other) to own its
properties and conduct its business as described in
the Registration Statement and the Prospectus, and is
duly qualified to do business as a foreign
corporation in each jurisdiction wherein it owns or
leases real property or in which the conduct of its
business requires such qualification, except where
the failure to be so qualified does not involve a
material adverse effect upon the Investment Adviser's
business, properties, financial position or
operations.
ii. The Investment Adviser is duly registered as an
investment adviser under the Investment Advisers Act
of 1940, as amended (the "Advisers Act'), and is not
prohibited by the Advisers Act or the Investment
Company Act, or the rules and regulations under such
Acts, from acting as investment adviser for the Fund
as contemplated in the Prospectus and the Investment
Advisory Agreement.
iii. This Agreement has been duly authorized, executed and
delivered by the Investment Adviser. The Investment
Advisory Agreement has been duly authorized, executed
and delivered by the Investment Adviser, and complies
with all applicable provisions of
2
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 Adviser,
subject to the qualification that the enforceability
of the Investment Adviser's obligations thereunder
may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws of
general applicability relating to or affecting
creditors' rights, to general principles of equity
(regardless of whether enforceability is considered
in a proceeding in equity or at law) and to
termination under the Investment Company Act.
iv. Neither the execution, delivery, performance and
consummation by the Investment Adviser of its
obligations under this Agreement or the Investment
Advisory Agreement nor the consummation of the
transactions contemplated herein or therein or in
connection with the Offer will conflict with or
violate the charter, by-laws or similar
organizational documents of the Investment Adviser,
or conflict with, result in a breach of, or
constitute a default or an event of default under, or
result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets
of the Investment Adviser under the charter, bylaws
or similar organizational document, the terms and
provisions of any material agreement, indenture,
mortgage, loan agreement, note, insurance or surety
agreement, lease or other instrument to which the
Investment Adviser is a party or by which it may be
bound or to which any of the property or assets of
the Investment Adviser is subject, nor will such
action result in any violation of any order, law,
rule or regulation of any court or governmental
agency or body having jurisdiction over the
Investment Adviser or any of its properties.
v. There is no pending or, to the best of the Investment
Adviser's knowledge, threatened action, suit or
proceeding affecting the Investment Adviser or to
which the Investment Adviser is a party before or by
any court or governmental agency, authority or body
or any arbitrator which would disqualify the
Investment Adviser pursuant to Section 9(a) of the
Investment Company Act from acting as investment
adviser to the Fund or is otherwise reasonably likely
to result in any material adverse change in the
Investment Adviser's ability to perform its services
under the Investment Advisory Agreement.
vi. No consent, approval, authorization, notification or
order of, or filing with, or the issuance of any
license or permit by, any court or governmental
agency or body is required for the consummation by
the Investment Adviser of the transactions
contemplated by
3
Investment Advisory Agreement or in connection with
the offer to be consummated by the Investment
Adviseor 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 Adviser (A) has not taken, directly or
indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably
be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund
to facilitate the issuance of the Rights or the sale
or resale of the Rights and the Shares, (B) has not
since the filing of the Registration Statement sold,
bid for or purchased, or paid anyone any compensation
for soliciting purchases of, Common Shares of the
Fund (except for the solicitation of exercises of the
Rights pursuant to this Agreement) and (C) will not,
until the later of the expiration of the Rights or
the completion of the distribution (within the
meaning of the anti-manipulation rules under the
Exchange Act) of the Shares, sell, bid for or
purchase, pay or agree to pay any person any
compensation for soliciting another to purchase any
other securities of the Fund (except for the
solicitation of exercises of the Rights pursuant to
this Agreement); provided that any action in
connection with the Fund's dividend reinvestment and
cash purchase plan will not be deemed to be within
the terms of this Section 1.a.vii.
b. The Investment Adviser agrees to notify promptly in writing,
from the date of this Agreement through the expiration date of
the Offer set forth in the Prospectus, as it may be extended
as provided for in the Prospectus (the "Expiration Date"), if
any representation, warranty or agreement of the Investment
Adviser set forth in Section 1.a. of this Agreement shall be
untrue or incorrect in any material respect.
2. Representations, Warranties and Agreements to Survive Delivery. The
agreements, representations and warranties of the Investment Adviser
set forth in or made pursuant to this Agreement shall survive the
Expiration Date and will remain in full force and effect, regardless of
any investigation made by or on behalf of Dealer Manager or any of the
officers, directors or controlling persons referred to in Section 7 of
the Dealer Manager Agreement, and will survive delivery of and payment
for the Shares pursuant to the Offer.
4
3. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Dealer Manager, will be mailed,
delivered or telegraphed and confirmed to UBS Securities LLC, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attn: Syndicate Department.
4. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
5. Submission to Jurisdiction. Except as set forth below, no claim (a
"Claim") may be commenced, prosecuted or continued in any court other
than the courts of the State of New York located in the City and County
of New York or in the United States District Court for the Southern
District of New York, which courts shall have jurisdiction over the
adjudication of such matters, and the Investment Adviser consents to
the jurisdiction of such courts and personal service with respect
thereto. The Investment Adviser hereby consents to personal
jurisdiction, service and venue in any court in which any Claim arising
out of or in any way relating to this Agreement is brought by any third
party against UBS Securities. Each of UBS Securities and the Investment
Adviser (on its behalf and, to the extent permitted by applicable law,
on behalf of its stockholders and affiliates) waives all right to trial
by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to
this Agreement. The Investment Adviser agrees that a final judgment in
any such action, proceeding or counterclaim brought in any such court
shall be conclusive and binding upon the Investment Adviser and may be
enforced in any other courts in the jurisdiction of which the
Investment Adviser is or may be subject, by suit upon such judgment.
6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of
our agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the
Investment Adviser and the Dealer Manager.
Very truly yours,
Deutsche Asset Management International GmbH
By:_________________________________________
Name:____________________________________
Title:___________________________________
5
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
UBS Securities LLC
By:_________________________________
Name:____________________________
Title:___________________________
By:_________________________________
Name:____________________________
Title:___________________________
6
