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<SEC-DOCUMENT>0000950172-01-500372.txt : 20010613
<SEC-HEADER>0000950172-01-500372.hdr.sgml : 20010613
ACCESSION NUMBER:		0000950172-01-500372
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20010612

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GABELLI EQUITY TRUST INC
		CENTRAL INDEX KEY:			0000794685
		STANDARD INDUSTRIAL CLASSIFICATION:	 []
		IRS NUMBER:				222736509
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		
		SEC FILE NUMBER:	333-59874
		FILM NUMBER:		1659340

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		
		SEC FILE NUMBER:	811-04700
		FILM NUMBER:		1659341

	BUSINESS ADDRESS:	
		STREET 1:		ONE CORP CENTER
		CITY:			RYE
		STATE:			NY
		ZIP:			10580
		BUSINESS PHONE:		9149215070
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>gabelli2.txt
<DESCRIPTION>N-2/A - AMENDMENT #2
<TEXT>


         As filed with the Securities and Exchange Commission on June 12, 2001
                                              Securities Act File No. 333-59874
                                      Investment Company Act File No. 811-4700
- -------------------------------------------------------------------------------



                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549
                          ------------------------

                                  FORM N-2
                          ------------------------


[X] Registration Statement under the Securities Act of 1933
[X] Pre-Effective Amendment No. 2
[ ] Post-Effective Amendment No.


                                   and/or


[X] Registration Statement under the Investment Company Act of 1940
[X] Amendment No. 25


                      (Check Appropriate Box or Boxes)
                          ------------------------

                       THE GABELLI EQUITY TRUST INC.
             (Exact Name of Registrant as Specified in Charter)
                          ------------------------

                            One Corporate Center
                          Rye, New York 10580-1434
                  (Address of Principal Executive Offices)

     Registrant's Telephone Number, Including Area Code: (800) 422-3554

                              Bruce N. Alpert
                       The Gabelli Equity Trust Inc.
                            One Corporate Center
                          Rye, New York 10580-1434
                               (914) 921-5100
                  (Name and Address of Agent for Service)
                          ------------------------

                                 Copies to:

Richard T. Prins, Esq.      James E. McKee, Esq.         Cynthia Cobden, Esq.
 Skadden, Arps, Slate,       The Gabelli Equity      Simpson Thacher & Bartlett
  Meagher & Flom LLP            Trust Inc.              425 Lexington Avenue
   Four Times Square       One Corporate Center        New York, New York
New York, New York 10036      Rye, New York                  10017
    (212) 735-3000              10580-1434               (212) 455-2000
                             (914) 921-5100


                          ------------------------
          Approximate date of proposed public offering: As soon as
practicable after the effective date of this Registration Statement.

         If any securities being registered on this form will be offered on
a delayed or continuous basis in reliance on Rule 415 under the Securities
Act of 1933, as amended, other than securities offered in connection with a
dividend reinvestment plan, check the following box. [ ]

         It is proposed that this filing will become effective (check
appropriate box)

         [X] When declared effective pursuant to section 8(c).

         If appropriate, check the following box:

         [ ] This [post-effective] amendment designates a new effective
date for a previously filed [post-effective amendment] [registration
statement].


         [ ] This form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act and the
Securities Act registration statement number of the earlier effective
registration statement for the same offering is.


         If delivery of the prospectus is expected to be made pursuant to
         Rule 434, please check the following box. [ ]
                          ------------------------

      CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
===============================================================================


                                      Proposed     Proposed
                                       Maximum     Maximum
                         Amount       Offering    Aggregate     Amount of
    Title of             Being          Price      Offering    Registration
    Securities         Registered     Per Share     Price (1)      Fee(2)
- --------------------  --------------  ----------   ---------  -------------
__% Tax Advantaged            0          $ 25            0           0
    Series B
    Cumulative
    Preferred Stock

(1) Estimated solely for the purpose of calculating the registration fee.

(2) $31,250.00 previously paid in connection with the Fund's May 1, 2001 and
    June 11, 2001 filings.
                          ------------------------


         The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said section 8(a), may determine.



                           CROSS-REFERENCE SHEET

       N-2 Item Number                           Location in Part A (Caption)
- -----------------------------------------------------------------------------

PART A
1.  Outside Front Cover.......................   Outside Front Cover Page

2.  Inside Front and Outside Back Cover
      Page....................................   Outside Front Cover Page;
                                                 Inside Front Cover Page

3.  Fee Table and Synopsis....................   Not Applicable

4.  Financial Highlights......................   Financial Highlights

5.  Plan of Distribution......................   Outside Front Cover Page;
                                                 Prospectus Summary;
                                                 Underwriting

6.  Selling Shareholders......................   Not Applicable

7.  Use of Proceeds...........................   Use of Proceeds; Investment
                                                 Objectives and Policies

8.  General Description of the
      Registrant..............................   Outside Front Cover Page;
                                                 Prospectus Summary; The
                                                 Fund; Investment
                                                 Objectives and Policies;
                                                 Other Investments;
                                                 Special Investment
                                                 Methods; Risk Factors &
                                                 Special Considerations;
                                                 Description of Series B
                                                 Cumulative Preferred
                                                 Stock; Certain Provisions of
                                                 the Charter and By Laws

9.  Management................................   Outside Front Cover Page;
                                                 Prospectus Summary;
                                                 Management of the Fund;
                                                 Custodian, Transfer Agent
                                                 and Dividend-Disbursing
                                                 Agent

10. Capital Stock, Long-Term Debt,
      and Other Securities....................   Outside Front Cover Page;
                                                 Prospectus Summary;
                                                 Investment Objectives and
                                                 Policies; Description of
                                                 Series B Cumulative
                                                 Preferred Stock;
                                                 Description of Capital
                                                 Stock and Other
                                                 Securities; Taxation

11. Defaults and Arrears on Senior
      Securities..............................   Not Applicable

12. Legal Proceedings.........................   Not Applicable

13. Table of Contents of the Statement
      of Additional Information...............   Table of Contents of the
                                                 Statement of Additional
                                                 Information


PART B                                           Location in Statement of
                                                 Additional Information
- ---------------------------------------------------------------------------


14. Cover Page................................   Outside Front Cover Page

15. Table of Contents.........................   Outside Front Cover Page

16. General Information and History...........   The Fund

17. Investment Objectives and
      Policies................................   Investment Objectives and
                                                 Policies; Investment
                                                 Restrictions

18. Management................................   Management of the Fund

19. Control Persons and Principal
      Holders of Securities...................   Management of the Fund;
                                                 Beneficial Owners

20. Investment Advisory and Other
      Services................................   Management of the Fund

21. Brokerage Allocation and Other
      Practices...............................   Portfolio Transactions

22. Tax Status................................   Taxation

23. Financial Statements......................   Financial Statements

PART C

         Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C to this Registration
Statement.


[FLAG]

The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.



               SUBJECT TO COMPLETION, DATED _________, 2001

                                  PART A
                                PROSPECTUS


         Part A to this Pre-Effective Amendment No. 2 to the Registrant's
Registration Statement on Form N-2 is hereby incorporated by reference from
the Registrant's Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-2, File Nos. 333-59874 and 811-4700, as
filed with the Securities and Exchange Commission on June 11, 2001 (EDGAR
Accession No. 0000950172-01-500365).


                                  PART B
                    STATEMENT OF ADDITIONAL INFORMATION


         Part B to this Pre-Effective Amendment No. 2 to the Registrant's
Registration Statement on Form N-2 is hereby incorporated by reference from
the Registrant's Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-2, File Nos. 333-59874 and 811-4700, as
filed with the Securities and Exchange Commission on June 11, 2001 (EDGAR
Accession No. 0000950172-01-500365), with the exception of the audited
financial statements included in the Registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 2000, which are
incorporated herein by reference from the Registrant's Annual Report to
Shareholders filed with the Securities and Exchange Commission on March 7,
2001.


                                   PART C
                             OTHER INFORMATION

Item 24. Financial Statements and Exhibits

     (1) Financial Statements:

         Financial Statements included in Part A (Prospectus) of this
         Registration Statement and Amendment:

         (a) Financial Highlights for each of the years ended December 31,
             1991-2000.

         Financial Statements included in Part B (Statement of Additional
         Information) of this Registration Statement and Amendment:

         (b) Portfolio of Investments, December 31, 2000.(1)
         (c) Statement of Assests and Liabilities, December 31, 2000(1)
         (d) Statement of Operations for the Year Ended December 31, 2000.(1)
         (e) Statement of Changes in Net Assets.(1)
         (f) Notes to Financial Statements.(1)
         (g) Report of Independent Accountants.


     (2) (a) (1)    Articles of Incorporation(2)
             (2)    (A) Articles Supplementary relating to 7.25% Tax
                        Advantaged Cumulative Preferred Stock(2)
                    (B) Form of Articles of Amendment to The Gabelli Equity
                        Trust Inc. relating to the 7.25% Tax Advantaged
                        Cumulative Preferred Stock(6)
             (3)    Articles Supplementary relating to ___% Tax Advantaged
                    Series B Cumulative Preferred Stock(6)
         (b) Amended and Restated By Laws as of May 16, 2001(6)
         (c) Not Applicable
         (d) Specimen Stock Certificate:
             ___ % Tax Advantaged Series B Cumulative Preferred Stock(6)
         (e) Automatic Dividend Reinvestment and Voluntary Cash Purchase
             Plan(2)
         (f) Not Applicable
         (g) Investment Advisory Agreement between the Fund and Gabelli Funds
             LLC(4)
         (h) Form of Underwriting Agreement(3)
         (i) Not Applicable
         (j) Custodial Contract between the Fund and Boston Safe Deposit and
             Trust Company(2)
         (k) (1)   Registrar, Transfer Agency and Service Agreement between
                   the Fund and State Street Bank and Trust Company(4)
             (2)   Transfer Agent and Registrar Services Fee Agreement between
                    the Fund and State Street Bank and Trust Company(4)
         (l) Opinion and Consent of Counsel(3)
         (m) Not Applicable
         (n) Consent of PricewaterhouseCoopers LLP(3)
         (o) Not Applicable
         (p) Purchase Agreement between the Fund and The Gabelli Equity Trust
             Inc. (2)
         (q) Not Applicable
         (r) Code of Ethics(5)
         (s) Power of Attorney (6)


- ---------
(1)  Incorporated by reference from Registrant's Annual Report for the year
     ended December 31, 2000, File No. 811-4700, as filed with the
     Securities and Exchange Commission on March 7, 2001.

(2)  Incorporated by reference from the Registrant's Pre-Effective
     Amendment No. 2 to the Fund's Registration Statement on Form N-2 Nos.
     333-45951 and 811-4700; as filed with the Securities and Exchange
     Commission on February 10, 1998 (EDGAR Accession No.
     0000950123-99-003497).


(3)  Filed herewith.


(4)  Incorporated by reference from the Registrant's Pre-Effective
     Amendment No. 1 to the Fund's Registration Statement on Form N-2, File
     Nos. 333-62323 and 811-4700, as filed with the Securities and Exchange
     Commission on October 13, 1995 (EDGAR Accession No.
     0000950123-95-002829).

(5)  Incorporated by reference from Registrant's Pre-Effective Amendment
     No. 2 to the Fund's Registration Statement on Form N-2, File Nos.
     333-47012 and 811-4700; as filed with the Securities and Exchange
     Commission on December 12, 2000 (EDGAR Accession No.
     0000950123-00-011158).


(6)  Incorporated by reference from Registrant's Pre-Effective Amendment
     No. 1 to the Registrant's Registration Statement on Form N-2, File Nos.
     333-59874 and 811-4700; as filed with the Securities and Exchange
     Commission on June 11, 2001 (EDGAR Accession No. 0000950172-01-500365).



Item 25. Marketing Arrangements

     See Exhibit 2(h) to this Registration Statement.


Item 26.  Other Expenses of Issuance and Distribution

     The following table sets forth the estimated expenses to be incurred
in connection with the offering described in this Registration Statement:

         Securities and Exchange Commission Registration fees....    $   31,250

         New York Stock Exchange listing fee.....................    $   47,800

         Moody's rating fee......................................    $   31,250

         Printing and engraving expenses.........................    $  100,000

         Auditing fees and expenses..............................    $   50,000

         Legal fees and expenses.................................    $  150,000

         Blue Sky fees and expenses..............................    $   20,000

         Miscellaneous...........................................    $   10,000

                  Total..........................................    $  440,300
                                                                  =============



Item 27. Persons Controlled by or Under Common Control with Registrant

         Insofar as the following have substantially identical boards of
directors or trustees they may be deemed with Registrant to be under common
control: The Gabelli Asset Fund, The Gabelli Growth Fund and The Gabelli
Westwood Funds, each a Massachusetts Business Trust, The Gabelli Money
Market Funds, a Delaware Business Trust, The Gabelli Global Multimedia
Trust Inc., The Gabelli Value Fund Inc., The Gabelli Investor Fund, Inc.,
Gabelli Capital Series Funds, Inc., The Gabelli Global Series Funds, Inc.,
The Gabelli Convertible Securities Fund, Inc., Gabelli International Growth
Fund, Inc., Gabelli Gold Fund, Inc. and Gabelli Equity Series Funds, Inc.,
each a Maryland corporation.


Item 28.  Number of Holders of Securities as of March 31, 2001

                                                                    Number of
         Title of Class                                          Record Holders
         --------------                                          --------------

         Common Stock, par value $.001 per share................     77,313

         7.25% Tax Advantaged Cumulative
           Preferred Stock, par value $.001 per share...........      6,428


Item 29.  Indemnification

         The response of this Item is incorporated by reference to the
caption "Capital Stock - Limitation of Officers' and Directors' Liability"
set forth in the prospectus.

         Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"), may be permitted
to the directors, officers and controlling persons of the Fund, pursuant to
the foregoing provisions or otherwise, the Fund has been advised that in
the opinion of the Securities Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities under the Securities Act (other than payment by the Fund of
expenses incurred or paid by a director, officer or controlling person of
the Fund in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Fund will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.


Item 30. Business and Other Connections of the Investment Adviser

         Registrant is fulfilling the requirement of this Item 30 to
provide a list of the officers and directors of its Investment Adviser,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by that entity or those of
its officers and directors during the past two years, by incorporating by
reference the information contained in the Form ADV filed with the
Securities and Exchange Commission pursuant to the Investment Advisers Act
of 1940 by Gabelli Funds, LLC (SEC File No. 333-42780).


Item 31. Location of Accounts and Records

         Gabelli Funds, LLC
         One Corporate Center
         Rye, New York  10580
           (with respect to its services as Investment Adviser)

         State Street Bank and Trust Company
         Two Heritage Drive
         Quincy, Massachusetts  02171
           (with respect to its services as transfer agent, dividend
            disbursing agent and registrar)

         Boston Safe Deposit and Trust Company
         One Boston Place
         Boston, Massachusetts  02108
           (with respect to its services as custodian)

         PFPC, Inc.
         101 Federal Street
         Boston, Massachusetts  02110
           (with respect to its services as sub-Administrator)


Item 32. Management Services

         Not applicable.


Item 33. Undertakings

         1.    Registrant undertakes to suspend the offering of shares
               until the prospectus is amended, if subsequent to the
               effective date of this registration statement, its net asset
               value declines more than ten percent from its net asset
               value, as of the effective date of the registration
               statement or its net asset value increases to an amount
               greater than its net proceeds as stated in the prospectus.

         2.    Not applicable.

         3.    Not applicable.

         4.    Not applicable.

         5.    Registrant undertakes that, for the purpose of determining
               any liability under the Securities Act, the information
               omitted from the form of prospectus filed as part of the
               Registration Statement in reliance upon Rule 430A and
               contained in the form of prospectus filed by the Registrant
               pursuant to Rule 497(h) will be deemed to be a part of the
               Registration Statement as of the time it was declared
               effective.

               Registrant undertakes that, for the purpose of determining
               any liability under the Securities Act, each post-effective
               amendment that contains a form of prospectus will be deemed
               to be a new Registration Statement relating to the
               securities offered therein, and the offering of such
               securities at that time will be deemed to be the initial
               bona fide offering thereof.

         6.    Registrant undertakes to send by first class mail or other
               means designed to ensure equally prompt delivery, within two
               business days of receipt of a written or oral request, any
               SAI constituting Part B of this Registration Statement.


                                 SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933 and
Investment Company Act of 1940, the Registrant has duly caused this
amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Rye, State of New York
on the 12th day of June, 2001.

                                            THE GABELLI EQUITY TRUST INC.

                                            By:   /s/ BRUCE N. ALPERT
                                            -----------------------------


                                            Bruce N. Alpert
                                            Principal Executive Officer









Name                                    Title                           Date
- ----                                    -----                           ----

         *
- ----------------------                  Chairman of the Board,   12 June, 2001
Mario J. Gabelli                        President & Chief
                                        Investment Officer

         *
- --------------------------              Director                 12 June, 2001
Dr. Thomas E. Bratter


         *
- ----------------------                  Director                 12 June, 2001
Anthony J. Colavita


         *
- ----------------------                  Director                 12 June, 2001
James P. Conn


         *
- -----------------------------           Director                 12 June, 2001
Frank J. Fahrenkopf, Jr.


         *
- ----------------------                  Director                 12 June, 2001
Karl Otto Pohl

         *
- ----------------------                  Director                 12 June, 2001
Anthony R. Pustorino


         *
- ----------------------                  Director                 12 June, 2001
Salvatore J. Zizza

/s/ Bruce N. Alpert
- ----------------------                  Vice President &         12 June, 2001
Bruce N. Alpert                         Treasurer


/s/ Bruce N. Alpert
- ----------------------                                           12 June, 2001
Bruce N. Alpert
   as attorney in fact


* Pursuant to a Power of Attorney incorporated by reference as Exhibit S to
  the Registrant's Pre-Effective Amendment No. 1 to the Registrant's
  Registration Statement on Form N-2, File Nos. 333-59874 and 811-4700; as
  filed with the Securities and Exchange Commission on June 11, 2001 (EDGAR
  Accession No. 0000950172-01-500365).



                      SCHEDULE OF EXHIBITS TO FORM N-2
Exhibit                                                                   Page
Number      Exhibit                                                      Number
- ------      -------                                                      ------


Exhibit A   (1)    Articles of Incorporation*..................................
            (2)(A) Articles Supplementary relating to 7.25%
                   Tax Advantaged Cumulative Preferred Stock*..................
               (B) Form of Articles of Amendment of The Gabelli Equity Trust
                   Inc. relating to the 7.25% Tax Advantaged Cumulative
                   Preferred Stock*............................................
            (3)    Form of Articles Supplementary relating to ___%
                   Tax Advantaged Series B Cumulative Preferred Stock*.........
Exhibit B   Amended and Restated By Laws as of May 16, 2001*...................
Exhibit C   Not Applicable.....................................................
Exhibit D   Specimen Stock Certificate ___% Tax Advantaged Series B
            Cumulative Preferred Stock*........................................
Exhibit E   Automatic Dividend Reinvestment and Voluntary Cash
            Purchase Plan*.....................................................
Exhibit F   Not Applicable.....................................................
Exhibit G   Investment Advisory Agreement*.....................................
Exhibit H   Form of Underwriting Agreement.....................................
Exhibit I   Not Applicable.....................................................
Exhibit J   Custodian Agreement*...............................................
Exhibit K   Not Applicable.....................................................
Exhibit L   Opinion and Consent of Counsel.....................................
Exhibit M   Not Applicable.....................................................
Exhibit N   Consent of PricewaterhouseCoopers LLP..............................
Exhibit O   Not Applicable.....................................................
Exhibit P   Not Applicable.....................................................
Exhibit Q   Not Applicable.....................................................
Exhibit R   Code of Ethics*....................................................
Exhibit S   Power of Attorney*.................................................
- ---------
*    Previously filed and incorporated by reference.




Exhibit H



                             [5,000,000] Shares

                       THE GABELLI EQUITY TRUST INC.

          [__]% Tax Advantaged Series B Cumulative Preferred Stock

                    Liquidation Preference $25 Per Share

                           UNDERWRITING AGREEMENT

                                                                June [__], 2001

SALOMON SMITH BARNEY INC.
MERRILL LYNCH, PIERCE, FENNER
   & SMITH INCORPORATED
GABELLI & COMPANY, INC.

As Representatives of the Several Underwriters
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Dear Ladies and Gentleman:

         The Gabelli Equity Trust Inc., a Maryland corporation (the
"Fund"), proposes, upon the terms and conditions set forth herein, to issue
and sell an aggregate of [5,000,000] shares (the "Shares") of its [__]% Tax
Advantaged Series B Cumulative Preferred Stock, liquidation preference $25
per share, $.001 par value per share (the "Series B Preferred"), to the
several Underwriters named in Schedule I hereto (the "Underwriters"). The
Shares will be authorized by, and subject to the terms and conditions of,
the Articles Supplementary to be adopted in connection with the issuance of
the Shares (the "Articles Supplementary").

         The Fund and its investment adviser, Gabelli Funds, LLC, a New
York limited liability company (the "Adviser"), wish to confirm as follows
their agreement with you (the "Representatives") and the other several
Underwriters on whose behalf you are acting, in connection with the several
purchases of the Shares by the Underwriters.

         The Fund has entered into an investment advisory agreement with
the Adviser, a custodian agreement with Boston Safe Deposit and Trust
Company, and a registrar, transfer agency and dividend reinvestment plan
with State Street Bank and Trust Company. Such agreements are hereinafter
referred to as the "Investment Advisory Agreement", the "Custodian
Agreement" and the "Transfer Agency Agreement", respectively. Collectively,
the Investment Advisory Agreement, the Custodian Agreement and the Transfer
Agency Agreement are hereinafter referred to as the "Fund Agreements". This
Underwriting Agreement is hereinafter referred to as the "Agreement".

         1. Registration Statement and Prospectus. The Fund has prepared in
conformity with the provisions of the Securities Act of 1933, as amended
(the "1933 Act"), the Investment Company Act of 1940, as amended (the "1940
Act") and the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated under the 1933 Act (the "1933 Act
Rules and Regulations") and the 1940 Act (the "1940 Act Rules and
Regulations" and, together with the 1933 Act Rules and Regulations, the
"Rules and Regulations") a registration statement on Form N-2 (File Nos.
333- 59874 and 811-4700) under the 1933 Act and the 1940 Act (the
"registration statement"), including a prospectus relating to the Shares ,
and has filed the registration statement and prospectus in accordance with
the 1933 Act and the 1940 Act. The Fund also has filed a notification of
registration of the Fund as an investment company under the 1940 Act on
Form N-8A (the "1940 Act Notification"). The term "Registration Statement"
as used in this Agreement means the registration statement (including all
financial schedules and exhibits), as amended at the time it becomes
effective under the 1933 Act or, if the registration statement became
effective under the 1933 Act prior to the execution of this Agreement, as
amended or supplemented at the time it became effective, prior to the
execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed under the 1933 Act and must be declared effective
before the offering of the Shares may commence, the term "Registration
Statement" as used in this Agreement means the registration statement as
amended by said post-effective amendment. If the Fund has filed an
abbreviated registration statement to register an additional amount of
Shares pursuant to Rule 462(b) under the 1933 Act (the "Rule 462
Registration Statement"), then any reference herein to the term
"Registration Statement" shall include such Rule 462 Registration
Statement. The term "Prospectus" as used in this Agreement means the
prospectus and statement of additional information in the forms included in
the Registration Statement or, if the prospectus and statement of
additional information included in the Registration Statement omits
information in reliance on Rule 430A under the 1933 Act Rules and
Regulations and such information is included in a prospectus and statement
of additional information filed with the Commission pursuant to Rule 497(h)
under the 1933 Act Rules and Regulations, the term "Prospectus" as used in
this Agreement means the prospectus and statement of additional information
in the form included in the Registration Statement as supplemented by the
addition of the information contained in the prospectus filed with the
Commission pursuant to Rule 497(h). The term "Prepricing Prospectus" as
used in this Agreement means the prospectus and statement of additional
information subject to completion in the form included in the registration
statement at the time of filing of amendment No. [ ] to the registration
statement with the Commission on [ ] __, 2001 and as such prospectus and
statement of additional information shall have been amended from time to
time prior to the date of the Prospectus, together with any other
prospectus and statement of additional information relating to the Fund
other than the Prospectus, approved in writing by or directly or indirectly
prepared by the Fund or the Adviser; it being understood that the
definition of Prepricing Prospectus above shall not include any Prepricing
Prospectus prepared by any Underwriter unless approved in writing by the
Fund or Adviser. The terms "Registration Statement", "Prospectus" and
"Prepricing Prospectus" shall also include any financial statements
incorporated by reference therein.

         The Fund has furnished the Representatives with copies of such
Registration Statement, each amendment to such Registration Statement filed
with the Commission and each Prepricing Prospectus.

         2. Agreements to Sell and Purchase. The Fund hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell
to each Underwriter and, upon the basis of the representations, warranties
and agreements of the Fund and the Adviser herein contained and subject to
all the terms and conditions set forth herein, each Underwriter agrees,
severally and not jointly, to purchase from the Fund, at a purchase price
of $[ ] per Share, the number of Shares set forth opposite the name of such
Underwriter in Schedule I hereto.

         3. Terms of Public Offering. The Fund and the Adviser have been
advised by you that the Underwriters propose to make a public offering of
their respective portions of the Shares as soon after the Registration
Statement and this Agreement have become effective as in your judgment is
advisable and initially to offer the Shares upon the terms set forth in the
Prospectus.

         4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Shares shall be made at the office of
Salomon Smith Barney Inc., 388 Greenwich Street, New York, New York 10013,
at 10:00 A.M., New York City time, on June [ ], 2001 (the "Closing Date").
The place of closing for the Shares and the Closing Date may be varied by
agreement between you and the Fund.

         Certificates for the Shares shall be registered in such names and
in such denominations as you shall request prior to 9:30 A.M., New York
City time, on the second business day preceding the Closing Date. Such
certificates shall be made available to you in New York City for inspection
and packaging not later than 9:30 A.M., New York City time, on the business
day next preceding the Closing Date. The certificates evidencing the Shares
shall be delivered to you on the Closing Date against payment of the
purchase price therefor in immediately available funds.

         5. Agreements of the Fund and the Adviser. The Fund and the
Adviser, jointly and severally, agree with the several Underwriters as
follows:

         (a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective under the 1933 Act before the offering of
the Shares may commence, the Fund will endeavor to cause the Registration
Statement or such post-effective amendment to become effective under the
1933 Act as soon as possible and will advise you promptly and, if requested
by you, will confirm such advice in writing when the Registration Statement
or such post-effective amendment has become effective.

         (b) The Fund will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request made by the
Commission for amendment of or a supplement to the Registration Statement,
any Prepricing Prospectus or the Prospectus (or any amendment or supplement
to any of the foregoing) or for additional information, (ii) of the
issuance by the Commission, the National Association of Securities Dealers,
Inc. (the "NASD"), any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official of any order
suspending the effectiveness of the Registration Statement, prohibiting or
suspending the use of the Prospectus, any Prepricing Prospectus or any
sales material (as hereinafter defined), of any notice pursuant to Section
8(e) of the 1940 Act, of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation or contemplated
initiation of any proceeding for any such purposes, (iii) of receipt by the
Fund, the Adviser, any affiliate of the Fund or the Adviser or any
representative or attorney of the Fund or the Adviser of any other material
communication from the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court or
any other governmental, regulatory, self-regulatory or administrative
agency or any official relating to the Fund (if such communication relating
to the Fund is received by such person within three years after the date of
this Agreement), the Registration Statement, the 1940 Act Notification, the
Prospectus, any Prepricing Prospectus, any sales material (as hereinafter
defined) (or any amendment or supplement to any of the foregoing), this
Agreement or any of the Fund Agreements and (iv) within the period of time
referred to in paragraph (f) below, of any material adverse change in the
condition (financial or other), business, prospects, properties, net assets
or results of operations of the Fund or the Adviser or of the happening of
any event which makes any statement of a material fact made in the
Registration Statement, the Prospectus, any Prepricing Prospectus or any
sales material (as herein defined) (or any amendment or supplement to any
of the foregoing) untrue or which requires the making of any additions to
or changes in the Registration Statement, the Prospectus, any Prepricing
Prospectus or any sales materials (as herein defined) (or any amendment or
supplement to any of the foregoing) in order to state a material fact
required by the 1933 Act, the 1940 Act or the Rules and Regulations to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading or of
the necessity to amend or supplement the Registration Statement, the
Prospectus, any Prepricing Prospectus or any sales material (as herein
defined) (or any amendment or supplement to any of the foregoing) to comply
with the 1933 Act, the 1940 Act, the Rules and Regulations or any other law
or order of any court or regulatory body. If at any time the Commission,
the NASD, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official shall issue any
order suspending the effectiveness of the Registration Statement,
prohibiting or suspending the use of the Prospectus or any sales material
(as hereinafter defined) (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the Shares for offering or
sale in any jurisdiction, the Fund will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible time.

         (c) The Fund will furnish to you, without charge, three signed
copies of the registration statement and the 1940 Act Notification as
originally filed with the Commission and of each amendment thereto,
including financial statements and all exhibits thereto and will also
furnish to you, without charge, such number of additional copies of the
registration statement and of each amendment thereto, but without exhibits,
as you may request.

         (d) The Fund will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus, any
Prepricing Prospectus or any sales material (as hereinafter defined) of
which you shall not previously have been advised or to which you shall
object after being so advised or (ii) so long as, in the opinion of counsel
for the Underwriters, a Prospectus is required by the 1933 Act to be
delivered in connection with sales by any Underwriter or dealer, file any
information, documents or reports pursuant to the Securities Exchange Act
of 1934, as amended (the "1934 Act"), without delivering a copy of such
information, documents or reports to you, as Representatives of the
Underwriters, prior to or concurrently with such filing.

         (e) Prior to the execution and delivery of this Agreement, the
Fund has delivered to you, without charge, in such quantities as you have
requested, copies of the form of the Prepricing Prospectus. The Fund
consents to the use, in accordance with the provisions of the 1933 Act and
with the state securities or blue sky laws of the jurisdictions in which
the Shares are offered by the several Underwriters and by dealers, prior to
the date of the Prospectus, of each Prepricing Prospectus so furnished by
the Fund.

         (f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion
of counsel for the Underwriters a prospectus is required by the 1933 Act to
be delivered in connection with sales by any Underwriter or dealer, the
Fund will expeditiously deliver to each Underwriter and each dealer,
without charge, as many copies of the Prospectus (and of any amendments or
supplements thereto) as you may request. The Fund consents to the use of
the Prospectus (and of any amendment or supplement thereto) in accordance
with the provisions of the 1933 Act and with the state securities or blue
sky laws of the jurisdictions in which the Shares are offered by the
several Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of
time thereafter as the Prospectus is required by the 1933 Act to be
delivered in connection with sales by any Underwriter or dealer. If during
such period of time any event shall occur that in the judgment of the Fund
or in the opinion of counsel for the Underwriters is required to be set
forth in the Registration Statement or the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the
Registration Statement or the Prospectus to comply with the 1933 Act, the
1940 Act, the Rules and Regulations or any other federal law, rule or
regulation, or any state securities or blue sky disclosure laws, rules or
regulations, the Fund will forthwith prepare and, subject to the provisions
of paragraph (d) above, promptly file with the Commission an appropriate
supplement or amendment thereto, and will expeditiously furnish to the
Underwriters and dealers, without charge, a reasonable number of copies
thereof. In the event that the Fund and you, as Representatives of the
several Underwriters, agree that the Registration Statement or the
Prospectus is to be amended or supplemented, the Fund, if requested by you,
will promptly issue a press release announcing or disclosing the matters to
be covered by the proposed amendment or supplement. (g) The Fund will make
generally available to its security holders an earnings statement, which
need not be audited, covering a twelve-month period ending not later than
15 months after the effective date of the Registration Statement, as soon
as practicable after the end of such period, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act and Rule 158 of the 1933
Act Rules and Regulations.

         (h) During the period of five years hereafter, the Fund will
furnish to you (i) as soon as available, a copy of each report of the Fund
mailed to stockholders or filed with the Commission or furnished to the New
York Stock Exchange (the "NYSE") other than reports on Form N-SAR, and (ii)
from time to time such other information concerning the Fund as you may
request.

         (i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 11 hereof or by notice given by you terminating
this Agreement pursuant to Section 11 or Section 12 hereof) or if this
Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Fund or the Adviser to comply with the terms or
fulfill any of the conditions of this Agreement required to be complied
with or fulfilled by them, the Fund or, in the case of a failure or refusal
by the Fund, the Adviser, agrees to reimburse the Representatives for all
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.

         (j) The Fund will apply the net proceeds from the sale of the
Shares in accordance with the description set forth in the Prospectus and
in such a manner as to comply with the investment objectives, policies and
restrictions of the Fund as described in the Prospectus.

         (k) The Fund will timely file the requisite copies of the
Prospectus with the Commission pursuant to Rule 497(c) or Rule 497(h) of
the 1933 Act Rules and Regulations, whichever is applicable or, if
applicable, will timely file the certification permitted by Rule 497(j) of
the 1933 Act Rules and Regulations and will advise you of the time and
manner of such filing.

         (l) Except as provided in this Agreement, the Fund will not sell,
contract to sell, or otherwise dispose of any senior securities of the
Fund, or grant any options or warrants to purchase senior securities of the
Fund, for a period of 180 days after the date of the Prospectus, without
the prior written consent of Salomon Smith Barney Inc.

         (m) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, neither the Fund nor the Adviser has taken, nor
will it take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation
of the price of any securities issued by the Fund to facilitate the sale or
resale of the Shares; it being understood that the Underwriters include
certain affiliates of the Adviser and that stabilization or other activity
by the Representatives on behalf of the Underwriters shall not be deemed to
be violative of this representation.

         (n) The Fund will use its best efforts to have the Shares listed,
subject to notice of issuance, on the NYSE on or before June [ ], 2001.

         (o) The Fund will use its best efforts to cause the Series B
Preferred, prior to the Closing Date, to be assigned a rating of `aaa' by
Moody's Investors Service, Inc. (the "Rating Agency").

         (p) The Fund and the Adviser will use their best efforts to
perform all of the agreements required of them and discharge all conditions
to closing as set forth in this Agreement.

         (q) The Fund will furnish to you, on the date on which delivery is
made to the Rating Agency, the Accountant's Confirmation (as defined in the
Articles Supplementary) corresponding to the Basic Maintenance Report (as
defined in the Articles Supplementary) for the first Valuation Date (as
defined in the Articles Supplementary) following the Closing Date.

         6. Representations and Warranties of the Fund and the Adviser. The
Fund and the Adviser, jointly and severally, represent and warrant to each
Underwriter that:


         (a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 497 of the 1933 Act Rules and
Regulations, complied when so filed in all material respects with the
provisions of the 1933 Act, the 1940 Act and the Rules and Regulations. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.

         (b) The Registration Statement in the form in which it became or
becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective and the Prospectus
and any amendment or supplement thereto when filed with the Commission
under Rule 497 of the 1933 Act Rules and Regulations and the 1940 Act
Notification when originally filed with the Commission and any amendment or
supplement thereto when filed with the Commission, complied or will comply
in all material respects with the provisions of the 1933 Act, the 1940 Act
and the Rules and Regulations and did not or will not at any such times
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except that this representation and warranty does
not apply to statements in or omissions from the Registration Statement or
the Prospectus (or any amendment or supplement thereto) made in reliance
upon and in conformity with information relating to any Underwriter
furnished to the Fund in writing by or on behalf of any Underwriter through
you expressly for use therein.

         (c) All the outstanding shares of capital stock of the Fund have
been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; the Shares have been duly
authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights and will conform to the description thereof in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them); and the capital stock of the Fund conforms to the description
thereof in the Registration Statement and the Prospectus (and any amendment
or supplement to either of them).

         (d) The Fund is a corporation duly organized and validly existing
in good standing under the laws of the State of Maryland, with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification, except
where the failure so to register or qualify does not have a material
adverse effect on the condition (financial or other), business, prospects,
properties, net assets or results of operations of the Fund; and the Fund
has no subsidiaries.

         (e) There are no legal or governmental proceedings pending or
threatened, against the Fund, or to which the Fund or any of its properties
is subject, that are required to be described in the Registration Statement
or the Prospectus (and any amendment or supplement to either of them) but
are not described as required, and there are no agreements, contracts,
indentures, leases or other instruments that are required to be described
in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) or to be filed as an exhibit to the
Registration Statement that are not described or filed as required by the
1933 Act, the 1940 Act or the Rules and Regulations.

         (f) The Fund is not in violation of its articles of incorporation
or by-laws, or other organizational documents, or of any law, ordinance,
administrative or governmental rule or regulation applicable to the Fund or
of any decree of the Commission, the NASD, any state securities commission,
any national securities exchange, any arbitrator, any court or governmental
agency, body or official having jurisdiction over the Fund, or in default
in any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any contract required to be included as an exhibit to
the Registration Statement (each, a "Material Fund Agreement").

         (g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Fund Agreements by
the Fund, nor the consummation by the Fund of the transactions contemplated
hereby or thereby (A) requires any consent, approval, authorization or
other order of or registration or filing with, the Commission, the NASD,
any state securities commission, any national securities exchange, any
arbitrator, any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may have been
obtained prior to the date hereof and such as may be required for
compliance with the state securities or blue sky laws of various
jurisdictions which have been or will be effected in accordance with this
Agreement) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the articles of incorporation,
including the Articles Supplementary, or by-laws, or other organizational
documents, of the Fund or (B) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument to which the Fund is a
party or by which it or any of its properties may be bound, or violates or
will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Fund or any of its
properties, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant to
the terms of any agreement or instrument to which it is a party or by which
it may be bound or to which any of its property or assets is subject. The
Fund is not subject to any order of any court or of any arbitrator,
governmental authority or administrative agency.

         (h) The accountants, PriceWaterhouseCoopers LLP, who have
certified or shall certify the financial statements included or
incorporated by reference in the Registration Statement and the Prospectus
(or any amendment or supplement to either of them) are independent public
accountants as required by the 1933 Act, the 1940 Act and the Rules and
Regulations.

         (i) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement
and the Prospectus (and any amendment or supplement to either of them),
present fairly the financial position, results of operations and changes in
financial position of the Fund on the basis stated or incorporated by
reference in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and
statistical information and data included in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them) are
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Fund.

         (j) The execution and delivery of, and the performance by the Fund
of its obligations under, this Agreement and the Fund Agreements have been
duly and validly authorized by the Fund, and this Agreement and the Fund
Agreements have been duly executed and delivered by the Fund and constitute
the valid and legally binding agreements of the Fund, enforceable against
the Fund in accordance with their terms, except as rights to indemnity and
contribution hereunder and thereunder may be limited by federal or state
securities laws.

         (k) Except as disclosed in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), subsequent
to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), the Fund has not incurred any liability or obligation,
direct or contingent, or entered into any transaction, not in the ordinary
course of business, that is material to the Fund, and there has not been
any change in the capital stock, or material increase in the short-term
debt or long-term debt, of the Fund, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, prospects, properties, net assets or results of operations of the
Fund, whether or not arising in the ordinary course of business, it being
understood that a change of up to 15% of the aggregate market value of the
Fund's assets shall not cause this representation to be untrue.

         (l) The Fund has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted
by the 1933 Act, the 1940 Act or the Rules and Regulations.

         (m) The Fund has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto),
subject to such qualifications as may be set forth in the Prospectus; the
Fund has fulfilled and performed all its material obligations with respect
to such permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the Fund under any such
permit, subject in each case to such qualification as may be set forth in
the Prospectus (and any amendment or supplement thereto); and, except as
described in the Prospectus (and any amendment or supplement thereto), none
of such permits contains any restriction that is materially burdensome to
the Fund.

         (n) The Fund maintains and will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization and with the applicable requirements of the 1940
Act, the 1940 Act Rules and Regulations and the Internal Revenue Code of
1986, as amended (the "Code"); (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets
and to maintain compliance with the books and records requirements under
the 1940 Act and the 1940 Act Rules and Regulations; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

         (o) To the Fund's knowledge, neither the Fund nor any employee or
agent of the Fund has made any payment of funds of the Fund or received or
retained any funds, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.

         (p) The Fund has filed all tax returns required to be filed, which
returns are complete and correct, and the Fund is not in material default
in the payment of any taxes which were payable pursuant to said returns or
any assessments with respect thereto.

         (q) No holder of any security of the Fund has any right to require
registration of any shares of capital stock or any other security of the
Fund because of the filing of the Registration Statement or consummation of
the transactions contemplated by this Agreement.

         (r) The Fund, subject to the Registration Statement having been
declared effective and the filing of the Prospectus under Rule 497 under
the Rules and Regulations, has taken all required action under the 1933
Act, the 1940 Act and the Rules and Regulations to make the public offering
and consummate the sale of the Shares as contemplated by this Agreement.

         (s) The conduct by the Fund of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee of
any patents, patent licenses, trademarks, service marks or trade names
which it does not own, possess or license.

         (t) The Fund is duly registered under the 1940 Act as a closed-end
non-diversified management investment company and the 1940 Act Notification
has been duly filed with the Commission and, at the time of filing thereof
and any amendment or supplement thereto, conformed in all material respects
with all applicable provisions of the 1940 Act and the Rules and
Regulations. The Fund is, and at all times through the completion of the
transactions contemplated hereby, will be, in compliance in all material
respects with the terms and conditions of the 1933 Act and the 1940 Act. No
person is serving or acting as an officer, director or investment adviser
of the Fund except in accordance with the provisions of the 1940 Act and
the 1940 Act Rules and Regulations and the Investment Advisers Act of 1940,
as amended (the "Advisers Act"), and the rules and regulations of the
Commission promulgated under the Advisers Act (the "Advisers Act Rules and
Regulations").

         (u) Except as stated in this Agreement and in the Prospectus (and
any amendment or supplement thereto), the Fund has not taken, nor will it
take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in stabilization or manipulation
of the price of any securities issued by the Fund to facilitate the sale or
resale of the Shares, and the Fund is not aware of any such action taken or
to be taken by any affiliates of the Fund.

         (v) The Fund has filed in a timely manner each document or report
required to be filed by it pursuant to the 1934 Act and the rules and
regulations of Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed
conformed to the requirements of the 1934 Act and the 1934 Act Rules and
Regulations; and none of such documents or reports contained an untrue
statement of any material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.

         (w) All advertising, sales literature or other promotional
material (including "prospectus wrappers," "broker kits," "road show
slides" and "road show scripts"), whether in printed or electronic form,
authorized in writing by or prepared by the Fund or the Adviser for use in
connection with the offering and sale of the Shares (collectively, "sales
material") complied and comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act, the Rules and Regulations and
the rules and interpretations of the NASD and no such sales material
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.

         (x) Each of the Fund Agreements and the Fund's and the Adviser's
obligations under this Agreement and each of the Fund Agreements comply in
all material respects with all applicable provisions of the 1940 Act, the
1940 Act Rules and Regulations, the Advisers Act the Advisers Act Rules and
Regulations.

         (y) At all times since its inception, as required by Subchapter M
of the Code, the Fund has complied with the requirements to qualify as a
regulated investment company under the Code.

         (z) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no director
of the Fund is an "interested person" (as defined in the 1940 Act) of the
Fund or an "affiliated person" (as defined in the 1940 Act) of any
Underwriter.

         7. Representations and Warranties of the Adviser. The Adviser
represents and warrants to each Underwriter as follows:

         (a) The Adviser is a limited liability company duly organized and
validly existing in good standing under the laws of the State of New York,
with full limited liability company power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
to qualify does not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net assets or
results of operations of the Adviser and its subsidiaries, taken as a
whole, or on the ability of the Adviser to perform its obligations under
this Agreement and the Investment Advisory Agreement.

         (b) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act or the
1940 Act Rules and Regulations from acting under the Investment Advisory
Agreement for the Fund as contemplated by the Prospectus (or any amendment
or supplement thereto). There does not exist any proceeding or any facts or
circumstances the existence of which could lead to any proceeding which
might adversely affect the registration of the Adviser with the Commission.

         (c) There are no legal or governmental proceedings pending or, to
the knowledge of the Adviser, threatened against the Adviser, or to which
the Adviser or any of its properties is subject, that are required to be
described in the Registration Statement or the Prospectus (or any amendment
or supplement to either of them) but are not described as required or that
may reasonably be expected to involve a prospective material adverse
change, in the condition (financial or other), business, prospects,
properties, net assets or results of operations of the Adviser and its
subsidiaries, taken as a whole, or on the ability of the Adviser to perform
its obligations under this Agreement and the Investment Advisory Agreement.

         (d) Neither the execution, delivery or performance of this
Agreement or the Investment Advisory Agreement by the Adviser, nor the
consummation by the Adviser of the transactions contemplated hereby or
thereby (A) requires the Adviser to obtain any consent, approval,
authorization or other order of or registration or filing with, the
Commission, the NASD, any state securities commission, any national
securities exchange, any arbitrator, any court, regulatory body,
administrative agency or other governmental body, agency or official or
conflicts or will conflict with or constitutes or will constitute a breach
of or a default under the certificate of incorporation or by-laws, or other
organizational documents of the Adviser or (B) conflicts or will conflict
with or constitutes or will constitute a breach of or a default under, any
agreement, indenture, lease or other instrument to which the Adviser is a
party or by which it or any of its properties may be bound, or violates or
will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Adviser or any of its
properties or will result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Adviser pursuant to the
terms of any agreement or instrument to which it is a party or by which it
may be bound or to which any of the property or assets of the Adviser is
subject. The Adviser is not subject to any order of any court or of any
arbitrator, governmental authority or administrative agency except for (a)
an Order of the Securities and Exchange Commission, dated August 17, 1988
and (b) an Order of the Federal Communications Commission, dated December
2, 1992.

         (e) The execution and delivery of, and the performance by the
Adviser of its obligations under, this Agreement and the Investment
Advisory Agreement have been duly and validly authorized by the Adviser,
and this Agreement and the Investment Advisory Agreement have been duly
executed and delivered by the Adviser and each constitutes the valid and
legally binding agreement of the Adviser, enforceable against the Adviser
in accordance with its terms except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws.

         (f) The Adviser has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Prospectus (or any amendment or supplement thereto) and
under this Agreement and the Investment Advisory Agreement.

         (g) The description of the Adviser in the Registration Statement
and the Prospectus (and any amendment or supplement thereto) complied and
comply in all material respects with the provisions the 1933 Act, the 1940
Act, the Advisers Act, the Rules and Regulations and the Advisers Act Rules
and Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

         (h) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent
to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
to either of them), the Adviser has not incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in
the ordinary course of business, that is material to the Adviser and its
subsidiaries, taken as a whole, and that is required to be disclosed in the
Registration Statement or in the Prospectus and there has not been any
material adverse change, or any development involving or which may
reasonably be expected to involve, a prospective material adverse change,
in the condition (financial or other), business, prospects, properties, net
assets or results of operations of the Adviser and its subsidiaries, taken
as a whole, whether or not arising in the ordinary course of business, or
which, in each case, could have a material adverse effect on the ability of
the Adviser to perform its obligations under this Agreement and the
Investment Advisory Agreement.

         (i) The Adviser has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto); the
Adviser has fulfilled and performed all its material obligations with
respect to such permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the Adviser under
any such permit; and, except as described in the Prospectus (and any
amendment or supplement thereto), none of such permits contains any
restriction that is materially burdensome to the Adviser.

         (j) Except as stated in this Agreement and in the Prospectus (and
in any amendment or supplement thereto), the Adviser has not taken, nor
will it take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, stabilization or manipulation
of the price of any securities issued by the Fund to facilitate the sale or
resale of the Shares, and the Adviser is not aware of any such action taken
or to be taken by any affiliates of the Adviser; it being understood that
the Underwriters include certain affiliates of the Adviser and that
stabilization or other activity by the Representatives on behalf of the
Underwriters shall not be deemed to be violative of this representation.

         (k) Mario J. Gabelli is the validly appointed Chief Investment
Officer of the Adviser and the portfolio manager of the Fund; Mr. Gabelli
has not given notice nor made known an intention to give notice of
termination of his employment and the Adviser knows of no reason why Mr.
Gabelli should be unable to serve as portfolio manager to the Fund.

         8. Indemnification and Contribution.

         (a) The Fund and the Adviser, jointly and severally, agree to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act from and against any and
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation), joint or several, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, the Prospectus, any Prepricing Prospectus,
any sales material (or any amendment or supplement to any of the
foregoing), or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to such Underwriter
furnished in writing to the Fund by or on behalf of any Underwriter through
you expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to any
Prepricing Prospectus shall not inure to the benefit of any Underwriter (or
to the benefit of any person controlling such Underwriter) on account of
any such loss, claim, damage, liability or expense arising from the sale of
the Shares by such Underwriter to any person if a copy of the Prospectus
shall not have been delivered or sent to such person within the time
required by the 1933 Act and the 1933 Act Rules and Regulations, and the
untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus, provided that the Fund has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely
basis to permit such delivery or sending. The foregoing indemnity agreement
shall be in addition to any liability which the Fund or the Adviser may
otherwise have.

         (b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Fund or the Adviser, such Underwriter
or such controlling person shall promptly notify the Fund or the Adviser,
and the Fund or the Adviser shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Such
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate
in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Underwriter or such controlling person unless (i)
the Fund or the Adviser has agreed in writing to pay such fees and
expenses, (ii) the Fund and the Adviser have failed to assume the defense
and employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Underwriter
or such controlling person and the Fund or the Adviser and such Underwriter
or such controlling person shall have been advised by its counsel that
representation of such indemnified party and the Fund or the Adviser by the
same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same
counsel has been proposed) due to actual or potential differing interests
between them (in which case the Fund and the Adviser shall not have the
right to assume the defense of such action, suit or proceeding on behalf of
such Underwriter or such controlling person). It is understood, however,
that the Fund and the Adviser shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable
fees and expenses of only one separate firm of attorneys (in addition to
any local counsel) at any time for all such Underwriters and controlling
persons not having actual or potential differing interests with you or
among themselves, which firm shall be designated in writing by Salomon
Smith Barney Inc., and that all such fees and expenses shall be reimbursed
as they are incurred. The Fund and the Adviser shall not be liable for any
settlement of any such action, suit or proceeding effected without its
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding,
the Fund and the Adviser agree to indemnify and hold harmless any
Underwriter, to the extent provided in the preceding paragraph, and any
such controlling person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment.

         (c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Fund and the Adviser, their directors, any
officers who sign the Registration Statement, and any person who controls
the Fund or the Adviser within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, to the same extent as the foregoing indemnity
from the Fund and the Adviser to each Underwriter, but only with respect to
information relating to such Underwriter furnished in writing by or on
behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Fund or the Adviser, any of their directors, any such
officer, or any such controlling person based on the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against
any Underwriter pursuant to this paragraph (c), such Underwriter shall have
the rights and duties given to the Fund and the Adviser by paragraph (b)
above (except that if the Fund or the Adviser shall have assumed the
defense thereof such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Underwriter's
expense), and the Fund and the Adviser, their directors, any such officer,
and any such controlling person shall have the rights and duties given to
the Underwriters by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which the Underwriters may otherwise
have.

         (d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an 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, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and the Adviser on the one hand
(treated jointly for this purpose as one person) and the Underwriters 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 Adviser on the one hand (treated jointly for this purpose as one
person) and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Fund and the Adviser on the one hand
(treated jointly for this purpose as one person) and the Underwriters on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Fund
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault of the Fund and the Adviser on the one
hand (treated jointly for this purpose as one person) and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Fund and the Adviser on the one hand (treated
jointly for this purpose as one person) or by the Underwriters on the other
hand and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

         (e) The Fund, the Adviser and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by a pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities and expenses referred
to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of
the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 8 are several in proportion to the respective numbers of
Shares set forth opposite their names in Schedule I hereto and not joint.

         (f) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened action, suit or 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 action, suit or proceeding.

         (g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Fund and the
Adviser set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, the Fund, the
Adviser, their directors or officers, or any person controlling the Fund or
the Adviser, (ii) acceptance of any Shares and payment therefor hereunder,
and (iii) any termination of this Agreement. A successor to any Underwriter
or any person controlling any Underwriter, or to the Fund, the Adviser,
their directors or officers, or any person controlling the Fund or the
Adviser, shall be entitled to the benefits of the indemnity, contribution,
and reimbursement agreements contained in this Section 8.

         9. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Shares hereunder are
subject to the following conditions:

         (a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Registration Statement or such post-effective amendment shall
have become effective not later than 5:30 P.M., New York City time, on the
date hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rules 497 and 430A
under the 1933 Act and the 1933 Act Rules and Regulations shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement or order pursuant to Section 8(e) of the 1940 Act shall have been
issued and no proceeding for those purposes shall have been instituted or,
to the knowledge of the Fund, the Adviser or any Underwriter, threatened by
the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the prospectus
or otherwise) shall have been complied with to your satisfaction.

         (b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change (other than a change of up to 15% of
the aggregate market value of the Fund's assets) or any development
involving a prospective change, in or affecting the condition (financial or
other), business, prospects, properties, net assets, or results of
operations of the Fund or the Adviser and its subsidiaries, taken as a
whole, not contemplated by the Prospectus, which in your opinion, as
Representatives of the several Underwriters, would materially, adversely
affect the market for the Shares , or (ii) any event or development
relating to or involving the Fund or the Adviser or any officer or director
of the Fund or the Adviser which makes any statement made in the Prospectus
untrue or which, in the opinion of the Fund and its counsel or the
Underwriters and their counsel, requires the making of any addition to or
change in the Prospectus in order to state a material fact required by the
1933 Act, the 1940 Act or the Rules and Regulations or any other law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Prospectus to reflect such
event or development would, in your opinion, as Representatives of the
several Underwriters, materially adversely affect the market for the
Shares.

         (c) The Fund shall have furnished to you a report showing
compliance with the asset coverage requirements of the 1940 Act and a Basic
Maintenance Report (as defined in the Articles Supplementary), each dated
the Closing Date and in form and substance satisfactory to you. Each such
report may use portfolio holdings and valuations as of the close of
business of any day not more than the six business days preceding the
Closing Date; provided, however, that the Fund represents in such report
that its total net assets as of the Closing Date have not declined by 5% or
more from such valuation date.

         (d) You shall have received on the Closing Date, an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Fund, dated the
Closing Date and addressed to you, as Representatives of the several
Underwriters, to the effect that:

                  (i) The Fund is duly registered and qualified to conduct
         its business and is in good standing in the State of New York
         (which is the only jurisdiction identified by management of the
         Fund to such counsel in which the Fund owns property, has
         operations or conducts business);

                  (ii) The authorized and outstanding capital stock of the
         Fund is as set forth under the caption "Capitalization" in the
         Prospectus; and the authorized capital stock of the Fund
         (including the Series B Preferred) conforms in all material
         respects as to legal matters to the description thereof contained
         in the Prospectus under the captions "Description of Capital Stock
         and Other Securities" and "Description of Series B Preferred";

                  (iii) To the extent the due authorization and valid
         issuance of the Shares is dependent upon the Fund having the
         authority to issue such Shares under Section 8(b)(1)(C) or Section
         13(a)(2) of the 1940 Act, based on our review of the Fund's proxy
         statements dated April 3, 1997 and April 29, 1998 and the results
         of the meetings of stockholders referred to therein, the Fund has
         such authority;

                  (iv) Such counsel has been orally advised that the
         Registration Statement has become effective under the 1933 Act
         and, to the best knowledge of such counsel after reasonable
         inquiry, no stop order suspending the effectiveness of the
         Registration Statement or order pursuant to Section 8(e) of the
         1940 Act has been issued and no proceedings for that purpose are
         pending before or contemplated by the Commission; and any required
         filing of the Prospectus pursuant to Rule 497 has been made in
         accordance with Rule 497;

                  (v) Each of this Agreement and the Fund Agreements has
         been duly executed and delivered by the Fund and is a valid, legal
         and binding agreement of the Fund, enforceable against the Fund in
         accordance with its terms, except to the extent that (A)
         enforcement hereof and thereof may be limited by (i) bankruptcy,
         insolvency, reorganization, moratorium or other similar laws now
         or hereafter in effect relating to creditors' rights generally, or
         (ii) general principles of equity (regardless of whether
         enforceability is considered in a proceeding at law or in equity)
         and (B) enforcement of rights to indemnity and contribution
         hereunder and thereunder may be limited by Federal or state
         securities laws or principles of public policy;

                  (vi) Neither the offer, sale or delivery of the Shares,
         the execution, delivery or performance of this Agreement and the
         Fund Agreements by the Fund, compliance by the Fund with the
         provisions hereof or thereof nor consummation by the Fund of the
         transactions contemplated hereby or thereby conflicts or will
         conflict with or constitutes or will constitute a breach of, or a
         default under any Material Fund Agreement, or will result in the
         creation or imposition of any lien, charge or encumbrance upon any
         property or assets of the Fund under any Material Fund Agreement,
         nor will any such action result in any violation of (a) any
         provision of the New York Business Corporation Law and those laws,
         rules and regulations of the State of New York and the United
         States of America that, in the experience of such counsel, are
         normally applicable to entities such as the Fund and transactions
         of the type contemplated by this Agreement, but without having
         made any special investigation concerning any other laws, rules or
         regulations (collectively, "Applicable Fund Laws"); provided, that
         the term "Applicable Fund Laws" does not include (1) the rules and
         regulations of the NASD, (2) any federal or state securities or
         blue sky laws, (3) any antifraud laws or (4) any law, rule or
         regulation that may have become applicable to the Fund as a result
         of the Underwriters' involvement with the transactions
         contemplated hereby or because of any facts specifically
         pertaining to the Underwriters, or (b) any judgment, order or
         decree of any New York or federal executive, legislative,
         judicial, administrative or regulatory body under Applicable Fund
         Laws and the NYSE (each, a "Governmental Fund Authority")
         identified in an officer's certificate;

                  (vii) No consent, approval, license, authorization, order
         or validation of, or filing, recording or registration with, any
         Governmental Fund Authority pursuant to Applicable Fund Laws
         (each, a "Governmental Fund Approval") is required for the valid
         issuance and sale of the Shares to the Underwriters or the
         execution, delivery and performance by the Fund of this Agreement
         and the Fund Agreements or the consummation of the transactions
         contemplated hereby and thereby except such Governmental Fund
         Approvals as have been obtained;

                  (viii) The 1940 Act Notification, the Registration
         Statement, the Prospectus and the Fund's Registration Statement on
         Form 8-A under the 1934 Act and any supplements or amendments
         thereto (except for the financial statements and the notes thereto
         and the schedules and other financial and statistical data
         included therein, as to which such counsel need not express any
         opinion) comply as to form in all material respects with the
         requirements of the 1933 Act, the 1940 Act, the Rules and
         Regulations, the 1934 Act and the rules and regulations
         promulgated thereunder;

                  (ix) To the actual knowledge of such counsel after
         reasonable inquiry, other than as described or contemplated in the
         Registration Statement or Prospectus (or any supplement thereto),
         there are (A) no legal or governmental proceedings in the State of
         New York or, to the actual knowledge of such counsel, any other
         state, pending or threatened against the Fund, or to which the
         Fund or any of its properties is subject, which are required to be
         described in the Registration Statement or Prospectus (or any
         amendment or supplement to either of them) that are not described
         as required and (B) no agreements, contracts, indentures, leases
         or other instruments that are required to be described in the
         Registration Statement or the Prospectus (or any amendment or
         supplement to either of them) or to be filed as an exhibit to the
         Registration Statement, that are not described or filed as
         required, as the case may be;

                  (x) The statements in the Registration Statement,
         Prospectus and statement of additional information under the
         caption "Taxation", insofar as they refer to statements of law or
         legal conclusions, are accurate and present fairly the information
         required to be shown;

                  (xi) Each of the Fund Agreements and the Fund's and the
         Adviser's obligations under each of this Agreement and the Fund
         Agreements comply as to form in all material respects with all
         applicable provisions of the 1933 Act, the 1940 Act, the Advisers
         Act, the Rules and Regulations and the Advisers Act Rules and
         Regulations;

                  (xii) The Fund is duly registered with the Commission
         under the 1940 Act as a closed-end non-diversified management
         investment company; and the provisions of the Fund's articles of
         incorporation, including the Articles Supplementary, and by-laws,
         and the investment policies and restrictions described in the
         Registration Statement and the Prospectus under the captions "The
         Fund", "Investment Objectives and Policies", "Risk Factors and
         Special Considerations" and "Investment Restrictions" (in the
         statement of additional information) comply in all material
         respects with the requirements of the 1940 Act, and all action has
         been taken by the Fund as is required of the Fund by the 1933 Act
         and the 1940 Act and the Rules and Regulations in connection with
         the issuance and sale of the Shares to make the public offering
         and consummate the sale of the Shares as contemplated by this
         Agreement;

                  (xiii) The Fund has all necessary governmental
         authorizations, approvals, orders, licenses, certificates,
         franchises and permits of and from all governmental regulatory
         officials and bodies required under Applicable Fund Law (except
         where the failure so to have any such authorizations, approvals,
         orders, licenses, certificates, franchises or permits,
         individually or in the aggregate, would not have a material
         adverse effect on the business, properties, operations or
         financial condition of the Fund), to own its properties and to
         conduct business, as described in the Prospectus;

                  (xiv) To the actual knowledge of such counsel after
         reasonable inquiry, except as described in the Prospectus, there
         is no holder of any security of the Fund or any other person who
         has the right, contractual or otherwise pursuant to any Material
         Fund Agreement, to cause the Fund to sell or otherwise issue to
         them, or to permit them to underwrite the sale of, the Shares or
         the right to have any securities of the Fund included in the
         registration statement or the right, as a result of the filing of
         the registration statement, to require registration under the 1933
         Act of any securities of the Fund;

                  (xv) If the Fund operates as described in the Prospectus,
         the Fund will qualify as a regulated investment company under the
         Code; and

                  (xvi) Such counsel shall also state that they have
         participated in conferences with officers and employees of the
         Fund, representatives of the independent accountants for the Fund,
         Maryland counsel to the Fund, the Underwriters and counsel for the
         Underwriters at which the contents of the Registration Statement
         and the Prospectus and related matters were discussed and,
         although they are not passing upon, and do not assume any
         responsibility for, the accuracy, completeness or fairness of the
         statements contained in the Registration Statement or the
         Prospectus except to the limited extent otherwise covered by
         paragraphs (ii), (ix), (x) and (xii), and have made no independent
         check or verification thereof, on the basis of the foregoing, no
         facts have come to their attention that would have led them to
         believe that the Registration Statement or any amendment or
         supplement thereto, at the time it became effective, contained an
         untrue statement of a material fact or omitted to state any
         material fact required to be stated therein or necessary to make
         the statements contained therein not misleading or that the
         Prospectus or any amendment or supplement thereto, as of its issue
         date and as of the Closing Date, contained or contains an untrue
         statement of a material fact or omitted or omits to state a
         material fact required to be stated therein or necessary to make
         the statements contained therein, in light of the circumstances
         under which they were made, not misleading, except that they
         express no belief with respect to the financial statements,
         schedules and other financial information and statistical data
         included therein or excluded therefrom or the exhibits to the
         Registration Statement.

         (e) You shall have received on the Closing Date, an opinion of
[_______], Maryland counsel for the Fund, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, to the
effect that:

                  (i) The Fund is a corporation duly incorporated, validly
         existing and in good standing under the laws of the State of
         Maryland with full corporate power to own, lease and operate its
         properties and to conduct its business as described in the
         Registration Statement and the Prospectus (and any amendment or
         supplement to either of them);

                  (ii) The authorized capital stock of the Fund is as set
         forth under the caption "Capitalization" in the Prospectus; and
         the authorized capital stock of the Fund conforms in all material
         respects as to legal matters to the description thereof contained
         in the Prospectus under the caption "Description of Capital Stock
         and Other Securities";

                  (iii) The Shares have been duly authorized and, when
         issued and delivered to the Underwriters against payment therefor
         in accordance with the terms hereof, will be validly issued, fully
         paid and nonassessable. The issuance of the Shares will not be
         subject to preemptive or other similar rights entitling any person
         to purchase or acquire any of the Shares upon the issuance thereof
         by the Fund which arise by operation of the laws of the State of
         Maryland or under the articles of incorporation or by-laws of the
         Fund;

                  (iv) The Shares conform in all material respects to the
         description thereof contained in the Prospectus under the caption
         "Description of Series B Preferred";

                  (v) The form of certificates for the Shares conforms to
         the requirements of the Maryland General Corporation Law;

                  (vi) The Fund has the requisite corporate power and
         authority to enter into and execute and deliver this Agreement and
         to issue, sell and deliver the Shares to the Underwriters as
         provided for herein;

                  (vii) This Agreement has been duly authorized by the
         Fund. Neither the offer, sale or delivery of the Shares, the
         execution, delivery or performance of this Agreement by the Fund,
         compliance by the Fund with the provisions hereof nor consummation
         by the Fund of the transactions contemplated hereby conflicts or
         will conflict with or constitutes or will constitute a breach of,
         or a default under, the articles of incorporation, including the
         Articles Supplementary, or by-laws of the Fund;

                  (viii) The Fund has full corporate power and to the
         knowledge of such counsel, all governmental authorizations,
         approvals, orders, licenses, certificates, franchises and permits
         necessary or required under the laws of the State of Maryland for
         the Fund to own its properties and to conduct its business as it
         now is being conducted as described in the Prospectus (except in
         cases where the failure so to have any such authorizations,
         approvals, orders, licenses, certificates, franchises or permits,
         individually or in the aggregate, would not have a material
         adverse effect on the business, properties, operations or
         financial conditions of the Fund); and

                  (ix) No consent, approval, authorization or other order
         of, or registration or filing with, any securities commission,
         court, regulatory body, administrative agency or other
         governmental body, agency, or official of the State of Maryland is
         required on the part of the Fund for the valid issuance and sale
         of the Shares to the Underwriters as contemplated by this
         Agreement, the execution and delivery by the Fund of this
         Agreement and the performance by the Fund of its obligations
         hereunder or the consummation of the transactions contemplated
         hereby by the Fund, except those as may be required under the
         securities or blue sky laws of the State of Maryland; it being
         understood that such counsel do not express any opinion as to any
         such consent, approval, authorization or other order of, or
         registration or filing, which may be required as a result of the
         involvement of any other parties to this Agreement.

         (f) You shall have received on the Closing Date an opinion of
James E. McKee, general counsel for the Adviser, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, to the
effect that:

                  (i) The Fund is not in violation of its articles of
         incorporation, including the Articles Supplementary, or by-laws
         and, to the actual knowledge of such counsel after reasonable
         inquiry, is not in default in the performance of any material
         obligation, agreement or condition in any bond, debenture, note or
         other evidence of indebtedness, except as may be disclosed in the
         Prospectus;

                  (ii) The Fund is not in violation of any Material Fund
         Agreement; and

                  (iii) To the actual knowledge of such counsel after
         reasonable inquiry, the Fund is not in violation of (A) any
         provision of the New York Business Corporation Law and those laws,
         rules and regulations of the State of New York and the United
         States of America that, in the experience of such counsel, are
         normally applicable to entities such as the Fund and transactions
         of the type contemplated by this Agreement, but without having
         made any special investigation concerning any other laws, rules or
         regulations; provided, that such laws, rules and regulations do
         not include (1) the rules and regulations of the NASD, (2) any
         federal or state securities or blue sky laws other than the 1933
         Act, the 1934 Act and the 1940 Act and the rules and regulations
         thereunder to the extent not excluded by item (3) below, (3) any
         antifraud laws under the 1933 Act or the 1934 Act as they apply to
         the Prospectus and the Registration Statement or (4) any law, rule
         or regulation that may have become applicable to the Fund as a
         result of the Underwriters' involvement with the transactions
         contemplated by this Agreement or because of any facts
         specifically pertaining to the Underwriters or (B) any order,
         judgment or decree of any New York or federal executive,
         legislative, judicial, administrative or regulatory body under the
         laws, rules and regulations referred to in clause (A) of this
         paragraph and the NYSE.

         (g) You shall have received on the Closing Date an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for the Adviser,
dated the Closing Date and addressed to you, as Representatives of the
several Underwriters, to the effect that:

                  (i) The Adviser is a limited liability company duly
         organized and validly existing in good standing under the laws of
         the State of New York with full limited liability company power
         and authority to own, lease and operate its properties and to
         conduct its business as described in the Registration Statement
         and the Prospectus (and any amendment or supplement to either of
         them), it being understood that the opinion with respect to good
         standing is based solely upon such counsel's review of a
         certificate of the Secretary of State and a telephonic
         confirmation;

                  (ii) The Adviser is duly registered with the Commission
         as an investment adviser under the Advisers Act and is not
         prohibited by the Advisers Act, the Advisers Act Rules and
         Regulations, the 1940 Act or the 1940 Act Rules and Regulations
         from acting under the Investment Advisory Agreement for the Fund
         as contemplated by the Prospectus (or any amendment or supplement
         thereto).

                  (iii) The Adviser has limited liability company power and
         authority to enter into this Agreement and the Investment Advisory
         Agreement, and this Agreement and the Investment Advisory
         Agreement have been duly authorized, executed and delivered by the
         Adviser and each is a valid, legal and binding agreement of the
         Adviser, enforceable against the Adviser in accordance with its
         terms except to the extent that (A) enforcement hereof and thereof
         may be limited by (i) bankruptcy, insolvency, reorganization,
         moratorium or other similar laws now or hereafter in effect
         relating to creditors' rights generally, or (ii) general
         principles of equity (regardless of whether enforceability is
         considered in a proceeding at law or in equity) and (B)
         enforcement of rights to indemnity and contribution hereunder and
         thereunder may be limited by Federal or state securities laws or
         principles of public policy;

                  (iv) Neither the execution, delivery or performance of
         this Agreement or the Investment Advisory Agreement by the
         Adviser, compliance by the Adviser with the provisions hereof or
         thereof nor consummation by the Adviser of the transactions
         contemplated hereby or thereby conflicts or will conflict with, or
         constitutes or will constitute a breach of or default under, the
         certificate of incorporation or by-laws, or other organizational
         documents, of the Adviser or any contract or agreement to which
         the Adviser is a party which has been identified to such counsel
         by the Adviser as material or as one which could have an effect on
         the types of transactions contemplated by this Agreement (each, an
         "Material Adviser Agreement"), or will result in the creation or
         imposition of any lien, charge or encumbrance upon any property or
         assets of the Adviser under any Material Adviser Agreement, nor
         will any such action result in any violation of any provision of
         the New York Business Corporation Law and those laws, rules and
         regulations of the State of New York and the United States of
         America that, in the experience of such counsel, are normally
         applicable to entities such as the Adviser and transactions of the
         type contemplated by this Agreement, but without having made any
         special investigation concerning any other laws, rules or
         regulations (collectively, "Applicable Adviser Laws"); provided,
         that the term "Applicable Adviser Laws" does not include (1) the
         rules and regulations of the NASD, (2) any federal or state
         securities or blue sky laws, (3) any antifraud laws or (4) any
         law, rule or regulation that may have become applicable to the
         Adviser as a result of the Underwriters' involvement with the
         transactions contemplated hereby or because of any facts
         specifically pertaining to the Underwriters;

                  (v) No consent, approval, license, authorization or
         validation of, or filing, recording or registration with, any New
         York or federal executive, legislative, judicial, administrative
         or regulatory body under Applicable Adviser Laws (each, a
         "Governmental Adviser Approval") is required on the part of the
         Adviser for the execution, delivery and performance by it of this
         Agreement and the Investment Advisory Agreement to which it is a
         party or the consummation by it of the transactions contemplated
         hereby and thereby except such Governmental Adviser Approvals as
         have been obtained;

                  (vi) To the actual knowledge of such counsel after
         reasonable inquiry, there are no legal or governmental proceedings
         pending or threatened against the Adviser or to which the Adviser
         or any of its properties is subject, which are required to be
         described in the Registration Statement or the Prospectus (or any
         amendment or supplement to either of them) but are not described
         as required or which could reasonably be expected to adversely
         affect the ability of the Adviser to perform its obligations under
         this Agreement or the Investment Advisory Agreement;

                  (vii) The obligations of the Adviser under this Agreement
         and the Investment Advisory Agreement comply in all material
         respects with all applicable provisions of the 1940 Act, the 1940
         Act Rules and Regulations, the Advisers Act and the Advisers Act
         Rules and Regulations;

                  (viii) The Adviser has full limited liability company
         power and authority, and all necessary governmental
         authorizations, approvals, orders, licenses, certificates,
         franchises and permits of and from all governmental regulatory
         officials and bodies required under Applicable Adviser Law (except
         where the failure so to have any such authorizations, approvals,
         orders, licenses, certificates, franchises or permits,
         individually or in the aggregate, would not have a material
         adverse effect on the business, properties, operations or
         financial condition of the Adviser and its subsidiaries), to own
         its properties and to conduct its business, including specifically
         its business of acting as investment adviser to registered
         investment companies and as otherwise described in the Prospectus,
         and to perform its obligations under the Investment Advisory
         Agreement;

                  (ix) Such counsel shall also state that such counsel has
         been advised by the Adviser that it is not registered or qualified
         to conduct its business as a foreign corporation in any
         jurisdiction and that it believes there is no such jurisdiction
         where the nature of its properties or the conduct of its business
         requires such registration or qualification and where the failure
         to register or qualify would have a material adverse effect on the
         operations of the Adviser or on the ability of the Adviser to
         perform its obligations under this Agreement or the Investment
         Advisory Agreement; and

                  (x) Such counsel shall also state that they have
         participated in conferences with officers and employees of the
         Adviser and the Fund, representatives of the independent
         accountants for the Adviser and the Fund and the Underwriters and
         counsel for the Underwriters at which the contents of the
         Registration Statement and the Prospectus and related matters were
         discussed and, although they are not passing upon, and do not
         assume any responsibility for, the accuracy, completeness or
         fairness of the statements contained in the Registration Statement
         or the Prospectus and have made no independent check or
         verification thereof, on the basis of the foregoing, no facts have
         come to their attention that would have led them to believe that
         the Registration Statement or any amendment or supplement thereto,
         at the time it became effective, contained an untrue statement of
         a material fact or omitted to state any material fact required to
         be stated therein or necessary to make the statements contained
         therein not misleading or that the Prospectus or any amendment or
         supplement thereto, as of its issue date and as of the Closing
         Date, contained or contains an untrue statement of a material fact
         or omitted or omits to state a material fact required to be stated
         therein or necessary to make the statements contained therein, in
         light of the circumstances under which they were made, not
         misleading, except that they express no belief with respect to the
         financial statements, schedules and other financial information
         and statistical data included therein or excluded therefrom or the
         exhibits to the Registration Statement.

         (h) You shall have received on the Closing Date an opinion of
Simpson Thacher & Bartlett, counsel for the Underwriters, dated the Closing
Date and addressed to you, as Representatives of the several Underwriters,
with respect to such matters as the Underwriters may reasonably request.

         (i) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and
the Closing Date from PriceWaterhouseCoopers LLP, independent certified
public accountants, substantially in the forms heretofore approved by you.

         (j) (i) No order suspending the effectiveness of the registration
statement or the Registration Statement or prohibiting or suspending the
use of the Prospectus (or any amendment or supplement thereto) or any
Prepricing Prospectus or any sales material shall have been issued and no
proceedings for such purpose or for the purpose of commencing an
enforcement action against the Fund, the Adviser or, with respect to the
transactions contemplated by the Prospectus (or any amendment or supplement
thereto) and this Agreement, any Underwriter, may be pending before or, to
the knowledge of the Fund, the Adviser or any Underwriter or in the
reasonable view of counsel to the Underwriters, shall be threatened or
contemplated by the Commission at or prior to the Closing Date and that any
request for additional information on the part of the Commission (to be
included in the Registration Statement, the Prospectus or otherwise) be
complied with to the satisfaction of the Representatives; (ii) there shall
not have been any change in the capital stock of the Fund nor any material
increase in the short-term or long-term debt of the Fund (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or Supplement
thereto); (iii) there shall not have been, subsequent to the respective
dates as of which information is given in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), except as may
otherwise be stated in the Registration Statement and Prospectus (or any
amendment or supplement thereto), any material adverse change in the
condition (financial or other), business, prospects, properties, net assets
or results of operations of the Fund or the Adviser; (iv) the Fund shall
not have any liabilities or obligations, direct or contingent (whether or
not in the ordinary course of business), that are material to the Fund,
other than those reflected in the Registration Statement or the Prospectus
(or any amendment or supplement to either of them) and other than
liabilities for payment for securities in accordance with the Fund's
investment objective and policies; and (v) all the representations and
warranties of the Fund and the Adviser contained in this Agreement shall be
true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received
a certificate, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of each of the Fund and the Adviser
(or such other officers as are acceptable to you), to the effect set forth
in this Section 9(j) and in Section 9(k) hereof.

         (k) That neither the Fund nor the Adviser shall have failed at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with
by it hereunder at or prior to the Closing Date.


         (l) The Fund shall have delivered and you shall have received
evidence satisfactory to you that the Shares are rated at least `aaa' by
the Rating Agency as of the Closing Date, and there shall not have been
given any notice of any intended or potential downgrading, or of any review
for a potential downgrading, in the rating accorded to the Shares by the
Rating Agency.

         (m) The Fund and the Adviser shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
requested.

         All such opinions, certificates, letters and other documents will
be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and your counsel.

         Any certificate or document signed by any officer of the Fund or
the Adviser and delivered to you, as Representatives of the Underwriters,
or to counsel for the Underwriters, shall be deemed a representation and
warranty by the Fund or the Adviser to each Underwriter as to the
statements made therein.

         10. Expenses. The Fund agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it
of its obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the 1940 Act Notification, the Prospectus and each amendment or
supplement to any of them (including, without limitation, the filing fees
prescribed by the 1933 Act, the 1940 Act and the Rules and Regulations);
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of
the Registration Statement, each Prepricing Prospectus, the Prospectus, any
sales material and all amendments or supplements to any of them as may be
reasonably requested for use in connection with the offering and sale of
the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in
connection with the original issuance and sale of the Shares; (iv) the
printing (or reproduction) and delivery of this Agreement, any dealer
agreements, the preliminary and supplemental blue sky memoranda and all
other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Shares; (v) the registration of the
Shares under the Exchange Act and the listing of the Shares on the New York
Stock Exchange; (vi) the qualification of the Shares for offer and sale
under the state securities or blue sky laws of the several states
(including the reasonable fees, expenses and disbursements of counsel for
the Underwriters relating to the preparation, printing or reproduction, and
delivery of the preliminary and supplemental blue sky memoranda and such
registration and qualification); (vii) fees paid to the Rating Agency;
(viii) the transportation and other expenses incurred by or on behalf of
Fund representatives in connection with presentations to prospective
purchasers of the Shares; and (ix) the fees and expenses of the Fund's
accountants and the fees and expenses of counsel (including local and
special counsel) for the Fund and of the transfer agent.

         Except as provided in this Section 10, the Underwriters agree to
pay their own costs and expenses of the underwriting, including the fees
and expenses of their counsel.

         11. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Agreement is executed and delivered,
it is necessary for the registration statement or a post-effective
amendment thereto to be declared effective before the offering of the
Shares may commence, when notification of the effectiveness of the
registration statement or such post-effective amendment has been released
by the Commission. Until such time as this Agreement shall have become
effective, it may be terminated by the Fund, by notifying you, or by you,
as Representatives of the several Underwriters, by notifying the Fund.

         If any one or more of the Underwriters shall fail or refuse to
purchase the Shares which it or they are obligated to purchase hereunder on
the Closing Date, and the aggregate number of the Shares which such
defaulting Underwriter or Underwriters are obligated but fail or refuse to
purchase is not more than one-tenth of the aggregate number of Shares which
the Underwriters are obligated to purchase on the Closing Date, each
non-defaulting Underwriter shall be obligated, severally, in the proportion
which the number of Shares set forth opposite its name in Schedule I hereto
bears to the aggregate number of such Shares set forth opposite the names
of all non-defaulting Underwriters or in such other proportion as you may
specify in accordance with Section 20 of the Master Agreement Among
Underwriters of Salomon Smith Barney Inc., to purchase the Shares which
such defaulting Underwriter or Underwriters are obligated, but fail or
refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase the Shares which it or they are obligated to purchase on
the Closing Date and the aggregate number of Shares with respect to which
such default occurs is more than one-tenth of the aggregate number of
Shares which the Underwriters are obligated to purchase on the Closing Date
and arrangements satisfactory to you and the Fund for the purchase of such
Shares by one or more non-defaulting Underwriters or other party or parties
approved by you and the Fund are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Fund. In any such case which does not
result in a termination of this Agreement either you or the Fund shall have
the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any
such Underwriter under this Agreement. The term "Underwriter" as used in
this Agreement includes, for all purposes of this Agreement, any party not
listed in Schedule I hereto who, with your approval and the approval of the
Fund, purchases Shares which a defaulting Underwriter is obligated, but
fails or refuses, to purchase.

         Any notice under this Section 11 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.

         12. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of
any Underwriter to the Fund or the Adviser, by notice to the Fund or the
Adviser, if prior to the Closing Date (i) trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York shall have
been declared by either federal or state authorities, or (iii) there shall
have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial
markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the
Shares at the offering price to the public set forth on the cover page of
the Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Fund by
telegram, telecopy or telephone and shall be subsequently confirmed by
letter.

         13. Information Furnished by the Underwriters. The statements set
forth in the last paragraph of the cover page, the stabilization legend on
the inside cover page, and the statements in the first, third and fourth
paragraphs under the caption "Underwriting" in any Prepricing Prospectus
and in the Prospectus, constitute the only information furnished by or on
behalf of the Underwriters through you as such information is referred to
in Sections 6(b) and 8 hereof.

         14. Miscellaneous. Except as otherwise provided in Sections 5, 11
and 12 hereof, notice given pursuant to any provision of this Agreement
shall be in writing and shall be delivered (i) if to the Fund or the
Adviser, at the office of the Fund at One Corporate Center, Rye, New York
10580-1434, Attention: Bruce N. Alpert; or (ii) if to you, as
Representatives of the several Underwriters, care of Salomon Smith Barney
Inc., 388 Greenwich Street, New York, New York 10013, Attention: Manager,
Investment Banking Division.

         This Agreement has been and is made solely for the benefit of the
several Underwriters, the Fund, the Adviser, their directors and officers,
and the other controlling persons referred to in Section 8 hereof and their
respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Shares in his status as such purchaser.

         15. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New
York.

         This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart
hereof shall have been executed and delivered on behalf of each party
hereto.



         Please confirm that the foregoing correctly sets forth the
agreement between the Fund and the several Underwriters.


                                    Very truly yours,

                                    THE GABELLI EQUITY TRUST INC.



                                    By:



                                    GABELLI FUNDS, LLC



                                    By:



Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.

SALOMON SMITH BARNEY INC.
MERRILL LYNCH, PIERCE, FENNER
   & SMITH INCORPORATED
GABELLI & COMPANY, INC.

 As Representatives of the
  Several Underwriters

By  SALOMON SMITH BARNEY INC.



By:
   ---------------------------
   Title:
   Name:



                                 SCHEDULE I

                       THE GABELLI EQUITY TRUST INC.

- -------------------------------------------------------------------------------
Underwriter                                                  Number of Shares
- -------------------------------------------------------------------------------
Salomon Smith Barney Inc.
- -------------------------------------------------------------------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
- -------------------------------------------------------------------------------
Gabelli & Company, Inc.
- -------------------------------------------------------------------------------




Exhibit L




                                            June 12, 2001



The Gabelli Equity Trust Inc.
One Corporate Center
Rye, New York 10580-1434

Ladies and Gentlemen:

         In connection with the registration under the Securities Act of
1933 (the "Act") of the Tax Advantaged Series B Cumulative Preferred Stock,
$.001 par value per share (the "Series B Preferred Stock"), of The Gabelli
Equity Trust Inc., a Maryland corporation (the "Fund"), on its Registration
Statement on Form N-2 (Registration Nos. 333-59874 and 811-4700) filed with
the Securities and Exchange Commission (together with all amendments
thereto, the "Registration Statement"), we have examined such corporate
records, certificates and documents as we deemed necessary for the purpose
of this opinion. Based on that examination, we advise you that in our
opinion the Series B Preferred Stock to be offered by the Fund, when issued
and sold under the circumstances contemplated in the Registration
Statement, will be legally issued, fully paid and non-assessable.

         We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement. In giving our consent, we do not thereby admit
that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission thereunder. The opinion expressed herein is limited to
the matters set forth in this letter and no other opinion should be
inferred beyond the matters expressly stated.

                                                     Very truly yours,

                                                     Miles & Stockbridge P.C.


                                                     By: /s/ John B. Frisch
                                                        -----------------------
                                                           Principal





Exhibit N



                     CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the use in this Registration Statement on Form N-2 of
our report dated February 14, 2001, relating to the financial statements
and financial highlights of The Gabelli Equity Trust Inc. which appear in
the December 31, 2000 Annual Report to Shareholders of The Gabelli Equity
Trust Inc. which is also incorporated by reference into the Registration
Statement, and relating to the senior securities table for the Series A
Preferred shares which appears in such Registration Statement. We also
consent to the references to us under the headings "Financial Highlights",
"Experts", "Counsel and Independent Accountants" and "Financial Statements"
in such Registration Statement.




PricewaterhouseCoopers LLP
New York, New York
June 8, 2001


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