<DOCUMENT>
<TYPE>EX-99.H.1
<SEQUENCE>11
<FILENAME>y93068a1exv99whw1.txt
<DESCRIPTION>FORM OF DEALER MANAGEMENT AGREEMENT
<TEXT>
<PAGE>

                                                               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
299 Park Avenue
New York, New York 10171-0026

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

<PAGE>

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

                                        2

<PAGE>

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

                                       3

<PAGE>

                           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

                                       4

<PAGE>

                           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

<PAGE>
                           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

<PAGE>

                           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

<PAGE>

                           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

<PAGE>

                           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

<PAGE>

         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

<PAGE>

                  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

<PAGE>

                           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.

                                       12

<PAGE>

         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

<PAGE>

                           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

                                       14

<PAGE>

                  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

                                       15

<PAGE>

                  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

<PAGE>

                           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

<PAGE>

                           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

<PAGE>

                           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

<PAGE>

                           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

<PAGE>

                  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

<PAGE>

                  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 Sullivan & Cromwell 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

<PAGE>

                                    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

<PAGE>

                                    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

<PAGE>

                                    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

<PAGE>

                                    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

<PAGE>

                           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 [Bruce A. Rosenblum, 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

<PAGE>

                                    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

<PAGE>

                                    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

<PAGE>

                           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, Meagher & Flom 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

<PAGE>

                           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

<PAGE>

                  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

<PAGE>

                  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

<PAGE>

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

<PAGE>

                  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

<PAGE>

                  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

<PAGE>

                  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

<PAGE>

                  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

<PAGE>

                  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

<PAGE>

                  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

<PAGE>

         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

<PAGE>

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, 299 Park
         Avenue, New York, New York 10171-0026, 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, One South Street, BAL01-1806, Baltimore,
         Maryland 21202, Attention: Bruce A. Rosenblum, 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

<PAGE>

         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

<PAGE>

                  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:_______________________________

<PAGE>

The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.

UBS Securities LLC

By:______________________________________
   Name:_________________________________
   Title:________________________________

By:______________________________________
   Name:_________________________________
   Title:________________________________

<PAGE>

                                                                       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
299 Park Avenue
New York, New York 10171-0026

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.

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

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, 299 Park Avenue, New York,
                  New York 10171-0026, Attn: Syndicate Department.

         10.      This Agreement will be governed by the internal laws of the
                  State of New York.

<PAGE>

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:_________________________________

<PAGE>

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:

<PAGE>

                                                                       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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

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, 299 Park Avenue, New York, New York
10171-0026, Attn: Syndicate Department.

<PAGE>

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:

</TEXT>
</DOCUMENT>
