<DOCUMENT>
<TYPE>EX-99.2H
<SEQUENCE>3
<FILENAME>ex99-2hi.txt
<DESCRIPTION>EXHIBIT 99.2H(I)
<TEXT>


<PAGE>


                         [FORM OF PURCHASE AGREEMENT]

                 Cohen & Steers Quality Income Realty Fund, Inc.
                            (a Maryland corporation)

                            [        ] Common Shares
                           (Par Value $.001 Per Share)

                               PURCHASE AGREEMENT

                                                              February   , 2002

Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
               Incorporated
A.G. Edwards & Sons, Inc.
Prudential Securities Incorporated
Raymond James & Associates, Inc.
CIBC World Markets Corp.
Deutsche Banc Alex. Brown Inc.
First Union Securities, Inc.
Legg Mason Wood Walker, Incorporated
U.S. Bancorp Piper Jaffray Inc.
Wells Fargo Securities, LLC
Robert W. Baird & Co. Incorporated
Fahnestock & Co. Inc.
Janney Montgomery Scott LLC
Morgan Keegan & Company, Inc.
Quick & Reilly, Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated
North Tower
World Financial Center
New York, New York 10080

Ladies and Gentlemen:

Cohen & Steers Quality Income Realty Fund, Inc., a Maryland corporation (the
"Fund"), and the Fund's investment manager, Cohen & Steers Capital Management,
Inc., a New York corporation (the "Investment Manager"), each confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and A.G. Edwards & Sons, Inc., Prudential
Securities Incorporated, Raymond James & Associates, Inc., CIBC World Markets
Corp., Deutsche Banc Alex. Brown Inc., First Union Securities, Inc., Legg Mason
Wood Walker, Incorporated, U.S. Bancorp Piper Jaffray Inc., Wells Fargo
Securities, LLC, Robert W. Baird & Co. Incorporated, Fahnestock & Co. Inc.,
Janney Montgomery Scott LLC, Morgan Keegan & Company, Inc., Quick & Reilly, Inc.
and each of the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch and A.G.
Edwards & Sons, Inc., Prudential Securities Incorporated, Raymond James &
Associates, Inc., CIBC World Markets Corp., Deutsche Banc Alex. Brown Inc.,
First Union Securities, Inc., Legg







<PAGE>



Mason Wood Walker, Incorporated, U.S. Bancorp Piper Jaffray Inc., Wells Fargo
Securities, LLC, Robert W. Baird & Co. Incorporated, Fahnestock & Co. Inc.,
Janney Montgomery Scott LLC, Morgan Keegan & Company, Inc. and Quick & Reilly,
Inc. are acting as representatives (in such capacity, the "Representatives"),
with respect to the issue and sale by the Fund and the purchase by the
Underwriters, acting severally and not jointly, of the respective number of
common shares, par value $.001 per share, of the Fund ("Common Shares") set
forth in said Schedule A, and with respect to the grant by the Fund to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of [        ] additional Common
Shares to cover over-allotments, if any. The aforesaid [        ] Common Shares
(the "Initial Securities") to be purchased by the Underwriters and all or any
part of the [                ] Common Shares subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities."

         The Fund understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.

         The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-68150 and No.
811-10481) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933 Act and the 1940 Act (the "Rules and Regulations"). Promptly after
execution and delivery of this Agreement, the Fund will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A")
of the Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497")
of the Rules and Regulations or (ii) if the Fund has elected to rely upon Rule
434 ("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A Information or the Rule 434 Information,
that was used after such effectiveness and prior to the execution and delivery
of this Agreement, including in each case any statement of additional
information incorporated therein by reference, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the Rules and Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the Securities, including the statement of additional information
incorporated therein by reference, is herein called the "Prospectus." If Rule
434 is relied on, the term "Prospectus" shall refer to the preliminary
prospectus dated January 25, 2002 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").

         All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial




                                       2






<PAGE>


statements and schedules and other information which is incorporated by
reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.

         SECTION 1. Representations and Warranties.

         (a) Representations and Warranties by the Fund and the Investment
Manager. The Fund and the Investment Manager jointly and severally represent and
warrant to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(d) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agree with each Underwriter, as follows:

              (i) Compliance with Registration Requirements. Each of the
         Registration Statement and any Rule 462(b) Registration Statement has
         become effective under the 1933 Act and no stop order suspending the
         effectiveness of the Registration Statement or any Rule 462(b)
         Registration Statement has been issued under the 1933 Act, or order of
         suspension or revocation of registration pursuant to Section 8(e) of
         the 1940 Act, and no proceedings for any such purpose have been
         instituted or are pending or, to the knowledge of the Fund or the
         Investment Manager, are contemplated by the Commission, and any request
         on the part of the Commission for additional information has been
         complied with.

              At the respective times the Registration Statement, any Rule
         462(b) Registration Statement and any post-effective amendments thereto
         became effective and at the Closing Time (and, if any Option Securities
         are purchased, at the Date of Delivery), the Registration Statement,
         the Rule 462(b) Registration Statement, the notification of Form N-8A
         and any amendments and supplements thereto complied and will comply in
         all material respects with the requirements of the 1933 Act, the 1940
         Act and the 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 not misleading. Neither the Prospectus nor any amendments or
         supplements thereto, at the time the Prospectus or any such amendment
         or supplement was issued and at the Closing Time (and, if any Option
         Securities are purchased, at the Date of Delivery), included or will
         include an untrue statement of a material fact or omitted or will omit
         to state a material fact necessary in order to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading (except that this representation and warranty does not
         apply to statements in or omissions from the Registration Statement or
         the Prospectus made in reliance upon and in conformity with information
         relating to the Underwriters furnished to the Fund by or on behalf of
         the Underwriters expressly for use therein). If Rule 434 is used, the
         Fund will comply with the requirements of Rule 434 and the Prospectus
         shall not be "materially different", as such term is used in Rule 434,
         from the prospectus included in the Registration Statement at the time
         it became effective.

              Each preliminary prospectus and the prospectus filed as part of
         the Registration Statement as originally filed or as part of any
         amendment thereto, or filed pursuant to Rule 497 under the 1933 Act,
         complied when so filed in all material respects with the Rules and
         Regulations and each preliminary prospectus and the Prospectus
         delivered to the Underwriters for use in connection with this offering
         was identical to the electronically transmitted copies thereof filed
         with the Commission pursuant to EDGAR, except to the extent permitted
         by Regulation S-T.

              If a Rule 462(b) Registration Statement is required in connection
         with the offering and sale of the Securities, the Fund has complied or
         will comply with the requirements of Rule 111 under the 1933 Act
         Regulations relating to the payment of filing fees thereof.




                                       3






<PAGE>


              (ii) Independent Accountants. The accountants who certified the
         statement of assets and liabilities included in the Registration
         Statement have represented to the Fund that they are independent public
         accountants as required by the 1933 Act and the Rules and Regulations.

              (iii) Financial Statements. The statement of assets and
         liabilities included in the Registration Statement and the Prospectus,
         together with the related notes, presents fairly the financial position
         of the Fund at the date indicated; said statement has been prepared in
         conformity with generally accepted accounting principles ("GAAP").

              (iv) No Material Adverse Change. Since the respective dates as of
         which information is given in the Registration Statement and the
         Prospectus, except as otherwise stated therein, (A) there has been no
         material adverse change in the condition, financial or otherwise, or in
         the earnings, business affairs or business prospects (other than as a
         result of a change in the financial markets generally) of the Fund,
         whether or not arising in the ordinary course of business (a "Material
         Adverse Effect"), (B) there have been no transactions entered into by
         the Fund, other than those in the ordinary course of business, which
         are material with respect to the Fund, and (C) there has been no
         dividend or distribution of any kind declared, paid or made by the Fund
         on any class of its capital stock.

              (v) Good Standing of the Fund. The Fund has been duly organized
         and is validly existing as a corporation in good standing under the
         laws of the State of Maryland and has corporate power and authority to
         own, lease and operate its properties and to conduct its business as
         described in the Prospectus and to enter into and perform its
         obligations under this Agreement; and the Fund is duly qualified as a
         foreign corporation to transact business and is in good standing in
         each other jurisdiction in which such qualification is required,
         whether by reason of the ownership or leasing of property or the
         conduct of business, except where the failure so to qualify or to be in
         good standing would not result in a Material Adverse Effect.

              (vi) No Subsidiaries. The Fund has no subsidiaries.


              (vii) Investment Company Status. The Fund is duly registered with
         the Commission under the 1940 Act as a closed-end, non-diversified
         management investment company, and to the Fund's knowledge no order of
         suspension or revocation of such registration has been issued or
         proceedings therefor initiated or threatened by the Commission.

              (viii) Officers and Directors. No person is serving or acting as
         an officer, director or investment manager of the Fund except in
         accordance with the provisions of the 1940 Act and the 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"). 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 listed in Schedule A hereto.

              (ix) Capitalization. The authorized, issued and outstanding common
         shares of the Fund is as set forth in the Prospectus as of the date
         thereof under the caption "Description of Shares." All issued and
         outstanding common shares of the Fund have been duly authorized and
         validly issued and are fully paid and non-assessable and have been
         offered and sold or exchanged by the Fund in compliance with all
         applicable laws (including, without limitation, federal and state
         securities laws); none of the outstanding common shares of the Fund was
         issued in violation of the preemptive or other similar rights of any
         securityholder of the Fund.

              (x) Authorization and Description of Securities. The Securities to
         be purchased by the Underwriters from the Fund have been duly
         authorized for issuance and sale to the




                                       4






<PAGE>



         Underwriters pursuant to this Agreement and, when issued and delivered
         by the Fund pursuant to this Agreement against payment of the
         consideration set forth herein, will be validly issued and fully paid
         and non-assessable. The Common Shares conform to all statements
         relating thereto contained in the Prospectus and such description
         conforms to the rights set forth in the instruments defining the same;
         no holder of the Securities will be subject to personal liability by
         reason of being such a holder; and the issuance of the Securities is
         not subject to the preemptive or other similar rights of any
         securityholder of the Fund.

              (xi) Absence of Defaults and Conflicts. The Fund is not in
         violation of its articles of incorporation or by-laws, or in default in
         the performance or observance of any obligation, agreement, covenant or
         condition contained in any contract, indenture, mortgage, deed of
         trust, loan or credit agreement, note, lease or other 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 Fund is subject
         (collectively, "Agreements and Instruments") except for such violations
         or defaults that would not result in a Material Adverse Effect; and the
         execution, delivery and performance of this Agreement, the Investment
         Management Agreement, the Administration Agreement, the
         Sub-Administration Agreement, the Custodian Agreement and the Transfer
         Agent and Service Agreement referred to in the Registration Statement
         (as used herein, the "Management Agreement," the "Administration
         Agreement", the "Sub-Administration Agreement", the "Custodian
         Agreement" and the "Transfer Agency Agreement," respectively) and the
         consummation of the transactions contemplated herein and in the
         Registration Statement (including the issuance and sale of the
         Securities and the use of the proceeds from the sale of the Securities
         as described in the Prospectus under the caption "Use of Proceeds") and
         compliance by the Fund with its obligations hereunder have been duly
         authorized by all necessary corporate action and do not and will not,
         whether with or without the giving of notice or passage of time or
         both, conflict with or constitute a breach of, or default or Repayment
         Event (as defined below) under, or result in the creation or imposition
         of any lien, charge or encumbrance upon any property or assets of the
         Fund pursuant to, the Agreements and Instruments (except for such
         conflicts, breaches or defaults or liens, charges or encumbrances that
         would not result in a Material Adverse Effect), nor will such action
         result in any violation of the provisions of the articles of
         incorporation or by-laws of the Fund or any applicable law, statute,
         rule, regulation, judgment, order, writ or decree of any government,
         government instrumentality or court, domestic or foreign, having
         jurisdiction over the Fund or any of its assets, properties or
         operations. As used herein, a "Repayment Event" means any event or
         condition which gives the holder of any note, debenture or other
         evidence of indebtedness (or any person acting on such holder's behalf)
         the right to require the repurchase, redemption or repayment of all or
         a portion of such indebtedness by the Fund.

              (xii) Absence of Proceedings. There is no action, suit,
         proceeding, inquiry or investigation before or brought by any court or
         governmental agency or body, domestic or foreign, now pending, or, to
         the knowledge of the Fund or the Investment Manager, threatened,
         against or affecting the Fund, which is required to be disclosed in the
         Registration Statement (other than as disclosed therein), or which
         might reasonably be expected to result in a Material Adverse Effect, or
         which might reasonably be expected to materially and adversely affect
         the properties or assets of the Fund or the consummation of the
         transactions contemplated in this Agreement or the performance by the
         Fund of its obligations hereunder. The aggregate of all pending legal
         or governmental proceedings to which the Fund is a party or of which
         any of its property or assets is the subject which are not described in
         the Registration Statement, including ordinary routine litigation
         incidental to the business, could not reasonably be expected to result
         in a Material Adverse Effect.




                                       5






<PAGE>


              (xiii) Accuracy of Exhibits. There are no contracts or documents
         which are required to be described in the Registration Statement or the
         Prospectus or to be filed as exhibits thereto by the 1933 Act, the 1940
         Act or by the Rules and Regulations which have not been so described
         and filed as required.

              (xiv) Absence of Further Requirements. No filing with, or
         authorization, approval, consent, license, order, registration,
         qualification or decree of, any court or governmental authority or
         agency is necessary or required for the performance by the Fund of its
         obligations hereunder, in connection with the offering, issuance or
         sale of the Securities hereunder or the consummation of the
         transactions contemplated by this Agreement, except such as have been
         already obtained or as may be required under the 1933 Act, the 1940
         Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
         or state securities laws.

              (xv) Possession of Licenses and Permits. The Fund possesses such
         permits, licenses, approvals, consents and other authorizations
         (collectively, "Governmental Licenses") issued by the appropriate
         federal, state, local or foreign regulatory agencies or bodies
         necessary to operate its properties and to conduct the business as
         contemplated in the Prospectus; the Fund is in compliance with the
         terms and conditions of all such Governmental Licenses, except where
         the failure so to comply would not, singly or in the aggregate, have a
         Material Adverse Effect; all of the Governmental Licenses are valid and
         in full force and effect, except when the invalidity of such
         Governmental Licenses or the failure of such Governmental Licenses to
         be in full force and effect would not have a Material Adverse Effect;
         and the Fund has not received any notice of proceedings relating to the
         revocation or modification of any such Governmental Licenses which,
         singly or in the aggregate, if the subject of an unfavorable decision,
         ruling or finding, would result in a Material Adverse Effect.

              (xvi) Advertisements. Any advertising, sales literature or other
         promotional material (including "prospectus wrappers", "broker kits,"
         "road show slides" and "road show scripts") authorized in writing by or
         prepared by the Fund or the Investment Manager used in connection with
         the public offering of the Securities (collectively, "sales material")
         does 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 not misleading. Moreover, all sales
         material complied and will 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 National
         Association of Securities Dealers, Inc. ("NASD").

              (xvii) Subchapter M. The Fund intends to direct the investment of
         the proceeds of the offering described in the Registration Statement in
         such a manner as to comply with the requirements of Subchapter M of the
         Internal Revenue Code of 1986, as amended ("Subchapter M of the Code"
         and the "Code," respectively), and intends to qualify as a regulated
         investment company under Subchapter M of the Code.

              (xviii) Material Agreements. This Agreement, the Management
         Agreement, the Administration Agreement, the Sub-Administration
         Agreement, the Custodian Agreement and the Transfer Agency Agreement
         have each been duly authorized by all requisite action on the part of
         the Fund, executed and delivered by the Fund, as of the dates noted
         therein and each complies with all applicable provisions of the 1940
         Act. Assuming due authorization, execution and delivery by the other
         parties thereto with respect to the Sub-Administration Agreement, the
         Custodian Agreement and the Transfer Agency Agreement, each of the
         Management Agreement, the Administration Agreement, the
         Sub-Administration Agreement, the Custodian Agreement and the Transfer
         Agency Agreement constitutes a valid and binding agreement of the Fund,
         enforceable in accordance with its terms, except as affected by
         bankruptcy, insolvency, fraudulent conveyance, reorganization,
         moratorium and other similar laws relating to or affecting creditors'




                                       6






<PAGE>


         rights generally, general equitable principles (whether considered in a
         proceeding in equity or at law).

              (xix) Registration Rights. There are no persons with registration
         rights or other similar rights to have any securities registered
         pursuant to the Registration Statement or otherwise registered by the
         Fund under the 1933 Act.

              (xx) NYSE Listing. The Securities have been duly authorized for
         listing, upon notice of issuance, on the New York Stock Exchange
         ("NYSE") and the Fund's registration statement on Form 8-A under the
         1934 Act has become effective.

         (b) Representations and Warranties by the Investment Manager. The
Investment Manager represents and warrants to each Underwriter as of the date
hereof, as of the Closing Time referred to in Section 2(d) hereof, and as of
each Date of Delivery (if any) referred to in Section 2(b) hereof as follows:

              (i) Good Standing of the Investment Manager. The Investment
         Manager has been duly organized and is validly existing and in good
         standing as a corporation under the laws of the State of New York with
         full corporate power and authority to own, lease and operate its
         properties and to conduct its business as described in the Prospectus
         and is duly qualified as a foreign corporation to transact business and
         is in good standing in each other jurisdiction in which such
         qualification is required except where the failure so to register or to
         qualify does not have a material adverse effect on the condition
         (financial or other), business, business prospects, properties, net
         assets or results of operations of the Investment Manager or on the
         ability of the Investment Manager to perform its obligations under this
         Agreement and the Management Agreement.

              (ii) Investment Manager Status. The Investment Manager is duly
         registered and in good standing with the Commission as an investment
         manager under the Advisers Act, and is not prohibited by the Advisers
         Act or the 1940 Act, or the rules and regulations under such acts, from
         acting under the Management Agreement or Administration Agreement for
         the Fund as contemplated by the Prospectus.

              (iii) Description of Investment Manager. The description of the
         Investment Manager in the Registration Statement and the Prospectus
         (and any amendment or supplement to either of them) complied and comply
         in all material respects with the provisions of the 1933 Act, the 1940
         Act, the Advisers Act, the Rules and Regulations and the Advisers Act
         Rules and Regulations and is true and correct and does not contain any
         untrue statement of a material fact or omit to state any material fact
         required to be stated therein or necessary in order to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading.

              (iv) Capitalization. The Investment Manager has the financial
         resources available to it necessary for the performance of its services
         and obligations as contemplated in the Prospectus, this Agreement and
         under the Management Agreement and Administration Agreement to which it
         is a party.

              (v) Authorization of Agreements; Absence of Defaults and
         Conflicts. This Agreement, the Management Agreement and the
         Administration Agreement have each been duly authorized, executed and
         delivered by the Investment Manager, and the Management Agreement and
         the Administration Agreement each constitute a valid and binding
         obligation of the Investment Manager, enforceable in accordance with
         its terms, except as affected by bankruptcy, insolvency, fraudulent
         conveyance, reorganization, moratorium and other similar laws relating
         to or affecting creditors' rights generally and general equitable
         principles (whether considered in a proceeding in equity or at law);
         and neither the execution and delivery of this Agreement, the
         Management Agreement or the Administration Agreement nor the
         performance by the Investment




                                       7






<PAGE>


         Manager of its obligations hereunder or thereunder will conflict with,
         or result in a breach of any of the terms and provisions of, or
         constitute, with or without the giving of notice or lapse of time or
         both, a default under, any agreement or instrument to which the
         Investment Manager is a party or by which it is bound, the certificate
         of incorporation, the by-laws or other organizational documents of the
         Investment Manager, or to the Investment Manager's knowledge, by any
         law, order, decree, rule or regulation applicable to it of any
         jurisdiction, court, federal or state regulatory body, administrative
         agency or other governmental body, stock exchange or securities
         association having jurisdiction over the Investment Manager or its
         properties or operations; and no consent, approval, authorization or
         order of any court or governmental authority or agency is required for
         the consummation by the Investment Manager of the transactions
         contemplated by this Agreement, the Management Agreement or the
         Administration Agreement, except as have been obtained or may be
         required under the 1933 Act, the 1940 Act, the 1934 Act or state
         securities laws.

              (vi) No Material Adverse Change. Since the respective dates as of
         which information is given in the Registration Statement and the
         Prospectus, except as otherwise stated therein, there has not occurred
         any event which should reasonably be expected to have a material
         adverse effect on the ability of the Investment Manager to perform its
         obligations under this Agreement and the Management Agreement and
         Administration Agreement to which it is a party.

              (vii) Absence of Proceedings. There is no action, suit,
         proceeding, inquiry or investigation before or brought by any court or
         governmental agency or body, domestic or foreign, now pending, or, to
         the knowledge of the Investment Manager, threatened against or
         affecting the Investment Manager or any "affiliated person" of the
         Investment Manager (as such term is defined in the 1940 Act) or any
         partners, directors, officers or employees of the foregoing, whether or
         not arising in the ordinary course of business, which might reasonably
         be expected to result in any material adverse change in the condition,
         financial or otherwise, or earnings, business affairs or business
         prospects of the Investment Manager, materially and adversely affect
         the properties or assets of the Investment Manager or materially impair
         or adversely affect the ability of the Investment Manager to function
         as an investment manager or perform its obligations under the
         Management Agreement or the Administration Agreement, or which is
         required to be disclosed in the Registration Statement and the
         Prospectus.

              (viii) Absence of Violation or Default. The Investment Manager is
         not in violation of its certificate of incorporation, by-laws or other
         organizational documents or in default under any agreement, indenture
         or instrument except for such violations or defaults that would not
         result in a material adverse change in the condition, financial or
         otherwise, or in the earnings, business affairs or business prospects
         of the Investment Manager or the Fund.

         (c) Officer's Certificates. Any certificate signed by any officer of
the Fund or the Investment Manager delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Fund or the Investment Manager, as the case may be, to each Underwriter as
to the matters covered thereby.

         SECTION 2. Sale and Delivery to Underwriters; Closing.

         (a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Fund agrees to sell to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Fund, at the price per share set forth in Schedule B, the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.





                                       8






<PAGE>


         (b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Fund hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional [        ] Common Shares in the
aggregate at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Fund and payable
on the Initial Securities but not payable on the Option Securities. The option
hereby granted will expire 45 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Fund setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as Merrill Lynch in its discretion shall make to eliminate any sales
or purchases of a fractional number of Option Securities.

         (c) Direct Placements. The Fund may use the proceeds paid by the
Underwriters for the Initial Securities to purchase, concurrently with the
Closing Time, real estate investment trust ("REIT") common stocks issued in
transactions for which Merrill Lynch serves as placement agent for the REIT
issuers ("Direct Placements"). Merrill Lynch, in its individual capacity and not
as a representative of the Underwriters, shall at the Closing Time pay to the
Underwriters, in immediately available funds, an amount equal to 100/115 of 4.5%
of the aggregate purchase price of the Direct Placements of REIT common stock,
and at any Date of Delivery shall pay to the Underwriters, in immediately
available funds, an amount equal to 15/115 of 4.5% of the aggregate purchase
price of the Direct Placements of REIT common stock. The Fund and Merrill Lynch
acknowledge that the aggregate of such amount to be paid by Merrill Lynch
pursuant to this Section at the Closing Time or any Date of Delivery will not
exceed 2.5% of the aggregate offering price of the Initial Securities or the
Option Securities being delivered on that Date of Delivery, respectively.

         (d) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Clifford Chance Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166,
or at such other place as shall be agreed upon by the Representatives and the
Fund, at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 10), or
such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Fund (such time and date of payment
and delivery being herein called "Closing Time").

         In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Fund, on each Date of Delivery as specified in the notice from the
Representatives to the Fund.

         Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it



                                       9






<PAGE>


has agreed to purchase. Merrill Lynch, individually and not as representative of
the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial Securities or the Option Securities, if any, to
be purchased by any Underwriter whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.

         (e) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.

         SECTION 3. Covenants.

         (a) The Fund and the Investment Manager, jointly and severally,
covenant with each Underwriter as follows:

              (i) Compliance with Securities Regulations and Commission
         Requests. The Fund, subject to Section 3(a)(ii), will comply with the
         requirements of Rule 430A or Rule 434, as applicable, and will notify
         the Representatives immediately, and confirm the notice in writing, (i)
         when any post-effective amendment to the Registration Statement shall
         become effective, or any supplement to the Prospectus or any amended
         Prospectus shall have been filed, (ii) of the receipt of any comments
         from the Commission, (iii) of any request by the Commission for any
         amendment to the Registration Statement or any amendment or supplement
         to the Prospectus or for additional information, and (iv) of the
         issuance by the Commission of any stop order suspending the
         effectiveness of the Registration Statement or of any order preventing
         or suspending the use of any preliminary prospectus, or of the
         suspension of the qualification of the Securities for offering or sale
         in any jurisdiction, or of the initiation or threatening of any
         proceedings for any of such purposes. The Fund will promptly effect the
         filings necessary pursuant to Rule 497 and will take such steps as it
         deems necessary to ascertain promptly whether the form of prospectus
         transmitted for filing under Rule 497 was received for filing by the
         Commission and, in the event that it was not, it will promptly file
         such prospectus. The Fund will make every reasonable effort to prevent
         the issuance of any stop order, or order of suspension or revocation of
         registration pursuant to Section 8(e) of the 1940 Act, and, if any such
         stop order or order of suspension or revocation of registration is
         issued, to obtain the lifting thereof at the earliest possible moment.

              (ii) Filing of Amendments. The Fund will give the Representatives
         notice of its intention to file or prepare any amendment to the
         Registration Statement (including any filing under Rule 462(b)), any
         Term Sheet or any amendment, supplement or revision to either the
         prospectus included in the Registration Statement at the time it became
         effective or to the Prospectus, will furnish the Representatives with
         copies of any such documents a reasonable amount of time prior to such
         proposed filing or use, as the case may be, and will not file or use
         any such document to which the Representatives or counsel for the
         Underwriters shall reasonably object.

              (iii) Delivery of Registration Statements. The Fund has furnished
         or will deliver to the Representatives and counsel for the
         Underwriters, without charge, signed copies of the Registration
         Statement as originally filed and of each amendment thereto (including
         exhibits filed therewith or incorporated by reference therein) and
         signed copies of all consents and certificates of experts, and will
         also deliver to the Representatives, without charge, a conformed copy
         of the





                                       10







<PAGE>



         Registration Statement as originally filed and of each amendment
         thereto (without exhibits) for each of the Underwriters. The copies of
         the Registration Statement and each amendment thereto furnished to the
         Underwriters will be identical to the electronically transmitted copies
         thereof filed with the Commission pursuant to EDGAR, except to the
         extent permitted by Regulation S-T.

              (iv) Delivery of Prospectuses. The Fund has delivered to each
         Underwriter, without charge, as many copies of each preliminary
         prospectus as such Underwriter reasonably requested, and the Fund
         hereby consents to the use of such copies for purposes permitted by the
         1933 Act prior to the date of the Prospectus. The Fund will furnish to
         each Underwriter, without charge, during the period when the Prospectus
         is required to be delivered under the 1933 Act or the 1934 Act, such
         number of copies of the Prospectus (as amended or supplemented) as such
         Underwriter may reasonably request. The Prospectus and any amendments
         or supplements thereto furnished to the Underwriters will be identical
         to the electronically transmitted copies thereof filed with the
         Commission pursuant to EDGAR, except to the extent permitted by
         Regulation S-T.

              (v) Continued Compliance with Securities Laws. If at any time when
         a prospectus is required by the 1933 Act to be delivered in connection
         with sales of the Securities, any event shall occur or condition shall
         exist as a result of which it is necessary, in the opinion of counsel
         for the Underwriters or for the Fund, to amend the Registration
         Statement or amend or supplement the Prospectus in order that the
         Prospectus will not include any untrue statements of a material fact or
         omit to state a material fact necessary in order to make the statements
         therein not misleading in the light of the circumstances existing at
         the time it is delivered to a purchaser, or if it shall be necessary,
         in the opinion of such counsel, at any such time to amend the
         Registration Statement or amend or supplement the Prospectus in order
         to comply with the requirements of the 1933 Act or the Rules and
         Regulations, the Fund will promptly prepare and file with the
         Commission, subject to Section 3(a)(ii), such amendment or supplement
         as may be necessary to correct such statement or omission or to make
         the Registration Statement or the Prospectus comply with such
         requirements, and the Fund will furnish to the Underwriters such number
         of copies of such amendment or supplement as the Underwriters may
         reasonably request.

              (vi) Blue Sky Qualifications. The Fund will use its best efforts,
         in cooperation with the Underwriters, to qualify the Securities for
         offering and sale under the applicable securities laws of such states
         and other jurisdictions of the United States as the Representatives may
         designate and to maintain such qualifications in effect for a period of
         not less than one year from the later of the effective date of the
         Registration Statement and any Rule 462(b) Registration Statement;
         provided, however, that the Fund shall not be obligated to file any
         general consent to service of process or to qualify as a foreign
         corporation or as a dealer in securities in any jurisdiction in which
         it is not so qualified or to subject itself to taxation in respect of
         doing business in any jurisdiction in which it is not otherwise so
         subject. In each jurisdiction in which the Securities have been so
         qualified, the Fund will file such statements and reports as may be
         required by the laws of such jurisdiction to continue such
         qualification in effect for a period of not less than one year from the
         effective date of the Registration Statement and any Rule 462(b)
         Registration Statement.

              (vii) Rule 158. The Fund will timely file such reports pursuant to
         the 1934 Act as are necessary in order to make generally available to
         its securityholders as soon as practicable an earnings statement for
         the purposes of, and to provide the benefits contemplated by, the last
         paragraph of Section 11(a) of the 1933 Act.

              (viii) Use of Proceeds. The Fund will use the net proceeds
         received by it from the sale of the Securities in the manner specified
         in the Prospectus under "Use of Proceeds".





                                       11






<PAGE>


              (ix) Listing. The Fund will use commercially reasonable efforts to
         effect the listing of the Securities on the NYSE, subject to notice of
         issuance, concurrently with the effectiveness of the Registration
         Statement.

              (x) Restriction on Sale of Securities. During a period of 180 days
         from the date of the Prospectus, the Fund will not, without the prior
         written consent of Merrill Lynch, (A) directly or indirectly, offer,
         pledge, sell, contract to sell, sell any option or contract to
         purchase, purchase any option or contract to sell, grant any option,
         right or warrant to purchase or otherwise transfer or dispose of Common
         Shares or any securities convertible into or exercisable or
         exchangeable for Common Shares or file any registration statement under
         the 1933 Act with respect to any of the foregoing or (B) enter into any
         swap or any other agreement or any transaction that transfers, in whole
         or in part, directly or indirectly, the economic consequence of
         ownership of the Common Shares, whether any such swap or transaction
         described in clause (A) or (B) above is to be settled by delivery of
         Common Shares or such other securities, in cash or otherwise. The
         foregoing sentence shall not apply to (1) the Securities to be sold
         hereunder or (2) Common Shares issued pursuant to any dividend
         reinvestment plan.

              (xi) Reporting Requirements. The Fund, during the period when the
         Prospectus is required to be delivered under the 1933 Act or the 1934
         Act, will file all documents required to be filed with the Commission
         pursuant to the 1940 Act and the 1934 Act within the time periods
         required by the 1940 Act and the Rules and Regulations and the 1934 Act
         and the rules and regulations of the Commission thereunder,
         respectively.

              (xii) Subchapter M. The Fund will use its best efforts to comply
         with the requirements of Subchapter M of the Code to qualify as a
         regulated investment company under the Code.

              (xiii) No Manipulation of Market for Securities. The Fund will not
         (a) take, directly or indirectly, any action designed to cause or to
         result in, or that might reasonably be expected to constitute, the
         stabilization or manipulation of the price of any security of the Fund
         to facilitate the sale or resale of the Securities, and (b) until the
         Closing Date, or the Date of Delivery, if any, (i) sell, bid for or
         purchase the Securities or pay any person any compensation for
         soliciting purchases of the Securities or (ii) pay or agree to pay to
         any person any compensation for soliciting another to purchase any
         other securities of the Fund.

              (xiv) Rule 462(b) Registration Statement. If the Fund elects to
         rely upon Rule 462(b), the Fund shall file a Rule 462(b) Registration
         Statement with the Commission in compliance with Rule 462(b) by 10:00
         P.M., Washington, D.C. time, on the date of this Agreement, and the
         Fund shall at the time of filing either pay to the Commission the
         filing fee for the Rule 462(b) Registration Statement or give
         irrevocable instructions for the payment of such fee pursuant to Rule
         111(b) under the 1933 Act.

         SECTION 4. Payment of Expenses.

         (a) Expenses. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Fund's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(a)(vi) hereof, including filing fees



                                       12






<PAGE>


and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, Prospectus and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters (up to $10,000) in connection with,
the review by the NASD of the terms of the sale of the Securities, (x) the fees
and expenses incurred in connection with the listing of the Securities on the
NYSE and (xi) the printing of any sales material. The Investment Manager has
agreed to pay organizational expenses and offering costs (other than sales load)
of the Fund that exceed $.03 per Common Share.

         (b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and the Investment Manager, jointly and severally, agree that
they shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.

         SECTION 5. Conditions of Underwriters' Obligations.

         The obligations of the several Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Fund and the
Investment Manager contained in Section 1 hereof or in certificates of any
officer of the Fund or the Investment Manager delivered pursuant to the
provisions hereof, to the performance by the Fund and the Investment Manager of
their respective covenants and other obligations hereunder, and to the following
further conditions:

         (a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act, no notice or
order pursuant to Section 8(e) of the 1940 Act shall have been issued, and no
proceedings with respect to either shall have been initiated or threatened by
the Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 497 (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if the
Fund has elected to rely upon Rule 434, a Term Sheet shall have been filed with
the Commission in accordance with Rule 497.

         (b) Opinion of Counsel for Fund and the Investment Manager. At Closing
Time, the Representatives shall have received the favorable opinions, dated as
of Closing Time, of Simpson Thacher & Bartlett, counsel for the Fund and of
Lawrence B. Stoller, Esq., internal counsel for the Investment Manager, in form
and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letters for each of the other Underwriters
substantially to the effect set forth in Exhibit A hereto and to such further
effect as counsel to the Underwriters may reasonably request. Insofar as the
opinions expressed above relate to or are dependent upon matters governed by
Maryland law, Simpson Thacher & Bartlett will be permitted to rely on the
opinion of Venable, Baetjer and Howard, LLP.

         (c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Clifford Chance Rogers & Wells LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (A) (i), (ii),
(vi), (vii) (solely as to preemptive or other similar rights arising by
operation of law or under the charter or by-laws of the Fund), (viii) through
(x), inclusive, (xii), (xiv) (solely as to the information in the Prospectus
under "Description of Shares") and the last paragraph of Exhibit A hereto. In
giving such opinion such counsel may rely, as




                                       13






<PAGE>


to all matters governed by the laws of jurisdictions other than the law of the
State of New York and the federal law of the United States, upon the opinions of
counsel satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Fund and
certificates of public officials.

         (d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of a duly authorized officer
of the Fund and of the chief financial or chief accounting officer of the Fund
and of the President or a Vice President or Managing Director of the Investment
Manager, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Sections
1(a) and (b) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the Fund and the
Investment Manager, respectively, has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) to the knowledge of such officers, no stop order suspending the
effectiveness of the Registration Statement, or order of suspension or
revocation of registration pursuant to Section 8(e) of the 1940 Act, has been
issued and no proceedings for any such purpose have been instituted or are
pending or are contemplated by the Commission.

         (e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information to the
effect that:

              (i) They are independent certified public accountants with respect
         to the Fund within the meaning of the 1933 Act and 1940 Act, and the
         applicable rules and regulations thereunder adopted by the Commission;

              (ii) In their opinion, the financial statements of the Fund
         audited by them and included in the Registration Statement comply as to
         form in all material respects with the applicable accounting
         requirements of the 1933 Act and 1940 Act and the related rules and
         regulations adopted by the Commission;

              (iii) on the basis of procedures (but not an audit in accordance
         with generally accepted auditing standards) consisting of:

                    a. Reading the minutes of meetings of the Board of Directors
                       of the Fund as set forth in the minute books through a
                       specified date not more than three business days prior to
                       the date of delivery of such letter;

                    b. Making inquiries of certain officials of the Fund who
                       have responsibility for financial and accounting matters
                       regarding changes in the capital stock, net assets or
                       long-term liabilities of the Fund as compared with the
                       amounts shown in the latest balance sheet included in the
                       Registration Statement or for the period from the date of
                       the latest income statement included in the Registration
                       Statement to a specified date not more than three
                       business days prior to the delivery of such letter.

              (iv) The letter shall also state that the information set forth
         under the captions "Summary of Fund Expenses", "Use of Leverage" and
         "Description of Shares" which is expressed in dollars (or percentages
         derived from such dollar amounts) and has been obtained from accounting
         records which are subject to controls over financial reporting or which
         has been derived directly from such accounting records by analysis or
         computation, is in agreement with




                                       14






<PAGE>


         such records or computations made therefrom, and such other procedures
         as the Representatives may request and PricewaterhouseCoopers LLP are
         willing to perform and report upon.

         (f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.

         (g) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the NYSE, subject only to official notice of
issuance.

         (h) No Objection. The NASD has not raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.

         (i) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Fund contained herein and the statements in any certificates furnished by
the Fund hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Representatives shall have received:

              (i) Officers' Certificates. Certificates, dated such Date of
         Delivery, of a duly authorized officer of the Fund and of the chief
         financial or chief accounting officer of the Fund and of the President
         or a Vice President or Managing Director of the Investment Manager
         confirming that the information contained in the certificate delivered
         by each of them at the Closing Time pursuant to Section 5(d) hereof
         remains true and correct as of such Date of Delivery.

              (ii) Opinions of Counsel for the Fund and the Investment Manager.
         The favorable opinion of Simpson Thacher & Bartlett, counsel for the
         Fund and of Lawrence B. Stoller, Esq., internal counsel for the
         Investment Manager, in form and substance satisfactory to counsel for
         the Underwriters, dated such Date of Delivery, relating to the Option
         Securities to be purchased on such Date of Delivery and otherwise to
         the same effect as the opinion required by Section 5(b) hereof.

              (iii) Opinion of Counsel for the Underwriters. The favorable
         opinion of Clifford Chance Rogers & Wells LLP, counsel for the
         Underwriters, dated such Date of Delivery, relating to the Option
         Securities to be purchased on such Date of Delivery and otherwise to
         the same effect as the opinion required by Section 5(c) hereof.

              (iv) Bring-down Comfort Letter. A letter from
         PricewaterhouseCoopers LLP, in form and substance satisfactory to the
         Representatives and dated such Date of Delivery, substantially in the
         same form and substance as the letter furnished to the Representatives
         pursuant to Section 5(f) hereof, except that the "specified date" in
         the letter furnished pursuant to this paragraph shall be a date not
         more than five days prior to such Date of Delivery.

         (j) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Fund and the Investment Manager in connection with the organization
and registration of the Fund under the 1940 Act and the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and substance to
the Representatives and counsel for the Underwriters.





                                       15






<PAGE>


         (k) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Fund at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7, 8 and 13
shall survive any such termination and remain in full force and effect.

         SECTION 6. Indemnification.

         (a) Indemnification of Underwriters. The Fund and the Investment
Manager, jointly and severally, agree to indemnify and hold harmless each
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, as follows:

              (i) against any and all loss, liability, claim, damage and expense
         whatsoever, as incurred, arising out of any untrue statement or alleged
         untrue statement of a material fact contained in the Registration
         Statement (or any amendment thereto), including the Rule 430A
         Information and the Rule 434 Information, if applicable, or the
         omission or alleged omission therefrom of a material fact required to
         be stated therein or necessary to make the statements therein not
         misleading or arising out of any untrue statement or alleged untrue
         statement of a material fact included in any preliminary prospectus or
         the Prospectus (or any amendment or supplement thereto), or the
         omission or alleged omission therefrom of a material fact necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were made, not misleading;

              (ii) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, to the extent of the aggregate amount
         paid in settlement of any litigation, or any investigation or
         proceeding by any governmental agency or body, commenced or threatened,
         or of any claim whatsoever based upon any such untrue statement or
         omission, or any such alleged untrue statement or omission; provided
         that (subject to Section 6(e) below) any such settlement is effected
         with the written consent of the Fund; and

              (iii) against any and all expense whatsoever, as incurred
         (including the fees and disbursements of counsel chosen by Merrill
         Lynch), reasonably incurred in investigating, preparing or defending
         against any litigation, or any investigation or proceeding by any
         governmental agency or body, commenced or threatened, or any claim
         whatsoever based upon any such untrue statement or omission, or any
         such alleged untrue statement or omission, to the extent that any such
         expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Investment Manager by any Underwriter through Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); provided,
however, that the indemnification contained in this paragraph (a) with respect
to any preliminary 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
Securities by such Underwriter to any person if the Fund sustains the burden of
proof that a copy of the Prospectus has not been delivered or sent by the
Underwriters as required to such person within the time required by the 1933 Act
and the 1933 Act Rules and Regulations, and the




                                       16






<PAGE>



untrue statement or alleged untrue statement or omission or alleged omission of
a material fact contained in such preliminary prospectus was corrected in such
Prospectus.

         (b) Indemnification of Fund, Investment Manager, Directors and
Officers. Each Underwriter severally agrees to indemnify and hold harmless the
Fund and the Investment Manager, their respective directors, each of the Fund's
officers who signed the Registration Statement, and each person, if any, who
controls the Fund or the Investment Manager within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Fund or the Investment
Manager by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).

         (c) Indemnification for Marketing Materials. In addition to the
foregoing indemnification, the Fund and the Investment Manager also, jointly and
severally, agree to indemnify and hold harmless each 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, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the proviso set forth therein, with respect to any sales material.

         (d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Fund and the Investment Manager. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.

         (e) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into




                                       17






<PAGE>


more than 45 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.

         SECTION 7. Contribution.

         If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund and the Investment Manager on
the one hand and the Underwriters on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Fund and the Investment Manager on the
one hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.

         The relative benefits received by the Fund and the Investment Manager
on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Fund and the total underwriting discount received by the Underwriters
(whether from the Fund or otherwise), in each case as set forth on the cover of
the Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Securities as
set forth on such cover.

         The relative fault of the Fund and the Investment Manager on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Fund or the Investment Manager or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

         The Fund, the Investment Manager and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any 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.




                                       18






<PAGE>


         For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Fund and each director of the Investment Manager,
respectively, each officer of the Fund who signed the Registration Statement,
and each person, if any, who controls the Fund or the Investment Manager, within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Fund and the Investment Manager,
respectively. The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial Securities set
forth opposite their respective names in Schedule A hereto and not joint.

         SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.

         All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Fund or the Investment Manager
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Fund or the Investment Manager,
and shall survive delivery of the Securities to the Underwriters.

         SECTION 9. Termination of Agreement.

         (a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Investment
Manager, whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in the Common Shares of the Fund has been
suspended or materially limited by the Commission or the NYSE, or if trading
generally on the American Stock Exchange or the NYSE or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the NASD
or any other governmental authority, or a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, or (iv) if a banking moratorium has been declared by either Federal or
New York authorities.

         (b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, 8 and 13 shall survive such termination and remain in full force and
effect.

         SECTION 10. Default by One or More of the Underwriters.

         If one or more of the Underwriters shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:




                                       19






<PAGE>


         (a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or

         (b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Fund to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.

         No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.

         In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Securities, as
the case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.

         SECTION 11. Notices.

         All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, c/o Merrill Lynch & Co., North Tower, World Financial Center,
New York, New York 10080, attention of Equity Capital Markets; and notices to
the Fund or the Investment Manager shall be directed, as appropriate, to the
office of Cohen & Steers Capital Management, Inc. at 757 Third Avenue, New York,
New York 10017, Attention: Robert H. Steers.

         SECTION 12. Parties.

         This Agreement shall each inure to the benefit of and be binding upon
the Underwriters, the Fund, the Investment Manager and their respective partners
and successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Investment Manager and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Fund, the
Investment Manager and their respective partners and successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.

         SECTION 13. GOVERNING LAW AND TIME.

         THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.




                                       20






<PAGE>


         SECTION 14. Effect of Headings.

         The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.




                                       21







<PAGE>


         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Fund and the Investment Manager in accordance with its
terms.

                                     Very truly yours,

                                     Cohen & Steers Quality Income Realty
                                         Fund, Inc.

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

                                     Cohen & Steers Capital Management, Inc.

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


CONFIRMED AND ACCEPTED, as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
          INCORPORATED

A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
CIBC WORLD MARKETS CORP.
DEUTSCHE BANC ALEX. BROWN INC.
FIRST UNION SECURITIES, INC.
LEGG MASON WOOD WALKER, INCORPORATED
U.S. BANCORP PIPER JAFFRAY INC.
WELLS FARGO SECURITIES, LLC
ROBERT W. BAIRD & CO. INCORPORATED
FAHNESTOCK & CO. INC.
JANNEY MONTGOMERY SCOTT LLC
MORGAN KEEGAN & COMPANY, INC.
QUICK & REILLY, INC.

By: MERRILL LYNCH, PIERCE, FENNER & SMITH
             INCORPORATED

By:
   ------------------------------------------------
   Authorized Signatory

For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.





                                       22






<PAGE>


                                   SCHEDULE A

<TABLE>
<CAPTION>
                                                                                    Number of
                               Name of Underwriter                              Initial Securities
                               -------------------                              ------------------
<S>                                                                            <C>
Merrill Lynch, Pierce, Fenner & Smith
          Incorporated...................................................
A.G. Edwards & Sons, Inc.................................................
Prudential Securities Incorporated.......................................
Raymond James & Associates, Inc..........................................
CIBC World Markets Corp..................................................
Deutsche Banc Alex. Brown Inc............................................
First Union Securities, Inc..............................................
Legg Mason Wood Walker, Incorporated.....................................
U.S. Bancorp Piper Jaffray Inc...........................................
Wells Fargo Securities, LLC..............................................
Robert W. Baird & Co. Incorporated.......................................
Fahnestock & Co. Inc.....................................................
Janney Montgomery Scott LLC..............................................
Morgan Keegan & Company, Inc.............................................
Quick & Reilly, Inc......................................................

         Total...........................................................          [          ]
                                                                                   ============
</TABLE>



                                    Sch A-1








<PAGE>



                                   SCHEDULE B

                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
                      [              ] Common Shares
                           (Par Value $.001 Per Share)

         1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $15.00.

         2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[       ], being an amount equal to the initial
public offering price set forth above less $[0. ] per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Fund
and payable on the Initial Securities but not payable on the Option Securities.




                                      A-24






<PAGE>



                                                                       Exhibit A

               FORM OF OPINION OF FUND'S AND INVESTMENT MANAGER'S
                       COUNSEL TO BE DELIVERED PURSUANT TO
                                  SECTION 5(b)

With respect to the Fund:

         1. The Fund (A) has been duly incorporated and is validly existing and
in good standing as a corporation under the laws of the State of Maryland with
full corporate power and authority to conduct its business as described in the
Registration Statement and the Prospectus and to enter into and perform its
obligations under the Purchase Agreement, and (B) 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 us
in which the Fund owns or leases property or operates or conducts its business);

         2. The statements made in the Prospectus under the caption "Description
of Shares", insofar as they purport to constitute summaries of the terms of the
Fund's common stock, constitute accurate summaries of the terms of such common
stock in all material respects;

         3. All outstanding shares of capital stock of the Fund have been duly
authorized and validly issued by the Fund, and are fully paid and nonassessable;

         4. The Shares have been duly authorized and, when issued and delivered
to the Underwriters against payment therefor in accordance with the terms of the
Purchase Agreement, will be validly issued by the Fund, fully paid and
nonassessable. There are no preemptive rights under federal or New York law or
under the Maryland General Corporation Law to subscribe for or purchase shares
of the Fund's capital stock. There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the issuance, voting or
transfer of, any shares of the Fund's capital stock pursuant to the Fund's
charter or by-laws or any agreement or other instrument filed or incorporated by
reference as an exhibit to the Registration Statement;

         5. The Shares have been authorized for listing, subject to notice of
issuance, on the New York Stock Exchange (the "NYSE"); the form of the
certificate for the Shares conforms to the requirements of the Maryland General
Corporation Law and the NYSE;

         6. The Registration Statement and all post-effective amendments, if
any, have become effective under the 1933 Act and the 1933 Act Rules and
Regulations and, to our knowledge, 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 threatened
by the Commission; and any required filing of the Prospectus pursuant to Rule
497 of the 1933 Act Rules and Regulations has been made in accordance with Rule
497;

         7. (A) The Purchase Agreement and each of the Advisory Agreement dated
as of _________, 2002 between the Fund and the Investment Manager and the Fee
Waiver Agreement dated as of _________, 2002 between the Fund and the Investment
Manager (collectively, the "Advisory Agreement"), the Administration Agreement
dated as of _________, 2002 between the Fund and the Investment Manager (the
"Administration Agreement"), the Master Custodian Agreement dated as of
_________, 2002 and effective with respect to Fund as of _________, 2002 between
the Fund and State Street Bank and Trust Company (the "Custodian Agreement"),
the agreement dated as of _________, 2002 and effective with respect to Fund as
of _________, 2002 between the Fund and State Street Bank





                                      A-25






<PAGE>


and Trust Company (the "Sub-Administration Agreement"), and the Stock Transfer
Agent Services Agreement dated as of _________, 2002 between the Fund and
Equiserve Trust Company, NA (the "Transfer Agent Agreement"; collectively with
the Advisory Agreement, Administration Agreement, Custodian Agreement and
Sub-Administration Agreement, the "Fund Agreements") have been duly authorized,
executed and delivered by the Fund and (B) the Advisory Agreement, assuming that
the Advisory Agreement is the valid and legally binding obligations of the other
parties thereto, is a valid and legally binding agreement of the Fund,
enforceable against the Fund in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing;

         8. The issue and sale of the Shares by the Fund and the compliance by
the Fund with the provisions of the Purchase Agreement and the Fund Agreements
will not breach or result in a default under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Fund pursuant to any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument filed or incorporated by reference as an exhibit to the
Registration Statement, nor will such action violate the charter or by-laws of
the Fund or any federal or New York statute or any rule or regulation thereunder
or the Maryland General Corporation Law or any rule or regulation thereunder or
order known to us issued pursuant to any federal or New York statute or the
Maryland General Corporation Law by any court or governmental agency or body
having jurisdiction over the Fund or any of its properties;

         9. No consent, approval, authorization, order, registration, filing or
qualification of or with any federal or New York governmental agency or body or
any Maryland governmental agency or body acting pursuant to the Maryland General
Corporation Law or, to our knowledge, any federal or New York court or any
Maryland court acting pursuant to the Maryland General Corporation Law is
required for the issue and sale of the Shares by the Fund and the compliance by
the Fund with all of the provisions of the Purchase Agreement and the Fund
Agreements, except for the registration of the Shares under the 1933 Act and the
1940 Act pursuant to the Registration Statement and under the Securities
Exchange Act of 1934, as amended, pursuant to the Fund's Registration Statement
on Form 8-A, both of which have been filed and have become effective, and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;

         10. To our knowledge, (A) other than as described or contemplated in
the Registration Statement or Prospectus, 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 and (B) there are no agreements, contracts,
indentures, leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that are not described or filed as required, as the case
may be;

         11. The statements made in the Prospectus under the caption "Management
of the Fund", "Description of Shares - Common Shares" and in the Registration
Statement under Item 29 (Indemnification), insofar as they purport to constitute
summaries of the terms of the Maryland General Corporation Law or any federal
statutes, rules and regulations thereunder or contracts and other documents,
constitute accurate summaries of the terms of such statutes, rules and
regulations or contracts and other documents in all material respects;

         12. The statements made in the Prospectus under the caption "Taxation"
insofar as they purport to constitute summaries of matters of United States
federal tax law and regulations or legal




                                      A-26






<PAGE>


conclusions with respect thereto, constitute accurate summaries of the matters
described therein in all material respects;

         13. Each of the Fund Agreements complies as to form with all applicable
provisions of the 1933 Act, 1940 Act, the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), the 1933 Rules and Regulations and the rules and
regulations under the Advisers Act;

         14. The Fund is duly registered with the Commission under the 1940 Act
and the rules and regulations under the 1940 Act (the "1940 Act Rules and
Regulations") as a closed-end, non-diversified management investment company
and, to our knowledge, no order of suspension or revocation of such registration
under the 1940 Act and the 1940 Act Rules and Regulations has been issued or
proceedings therefor initiated or threatened by the Commission; the provisions
of the charter and by-laws do not violate the provisions of the 1940 Act or the
1940 Act Rules and Regulations; and the provisions of the charter and the
by-laws and the investment policies and restrictions described in the
Registration Statement and the Prospectus under the captions "Investment
Objectives and Policies", "Principal Risks of the Fund", "Additional Risk
Considerations" and "Investment Restrictions" (in the Prospectus and the
statement of additional information incorporated by reference therein) comply in
all material respects with the requirements of the 1933 Act, 1940 Act and the
applicable 1933 Act Rules and Regulations and 1940 Act Rules and Regulations;

         15. Except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and we do not
know of any commitment, plan or arrangement to issue (other than in connection
with the reinvestment of dividends) any shares of capital stock of the Fund or
any security convertible into or exchangeable or exercisable for shares of
capital stock of the Fund or to otherwise register such securities for sale.

         Insofar as the opinions expressed herein relate to or are dependent
upon matters governed by the laws of the State of Maryland, we have relied upon
the opinion of Venable, Baetjer and Howard, LLP.

         We have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement or the
Prospectus and take no responsibility therefor, except as and to the extent set
forth in paragraphs 2, 11 and 12 above. In the course of the preparation by the
Fund of the Registration Statement and the Prospectus, we participated in
conferences with certain officers and employees of the Fund and the Investment
Manager, with representatives of PricewaterhouseCoopers LLP and with counsel to
the Investment Manager. Based upon our examination of the Registration Statement
and the Prospectus, our investigations made in connection with the preparation
of the Registration Statement and the Prospectus and our participation in the
conferences referred to above, (i) we are of the opinion that the Registration
Statement, as of its effective date, the Prospectus, as of its date, and the
notification on Form N-8A, complied as to form in all material respects with the
requirements of the 1933 Act and the 1940 Act and the applicable rules and
regulations of the Commission thereunder, except that in each case we express no
opinion with respect to the financial statements or other financial data
contained or incorporated by reference in the Registration Statement or the
Prospectus, and (ii) we have no reason to believe that the Registration
Statement, at the time the Registration Statement became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that in each case we express no belief with respect
to the financial statements or other financial data contained or incorporated by
reference in the Registration Statement or the Prospectus.



                                      A-27






<PAGE>



With respect to the Investment Manager:

         1. The Investment Manager (A) has been duly incorporated and is validly
existing as a corporation under the laws of the State of New York with full
corporate power and authority to conduct its business as described in the
Registration Statement and the Prospectus and (B) 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 in which the Investment Manager owns or
leases property or operates or conducts its business).

         2. The Investment Manager is duly registered with the Commission as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") and is not prohibited by the Advisers Act, the rules and
regulations under the Advisers Act (the "Advisers Act Rules and Regulations"),
the 1940 Act, the rules and regulations under the 1940 Act from acting under the
Advisory Agreement dated as of February __, 2002 between the Fund and the
Investment Manager and the Fee Waiver Agreement dated as of February __, 2002
between the Fund and the Investment Manager (collectively, the "Advisory
Agreement") or the Administration Agreement between the Investment Manager and
the Fund dated as of February __, 2002 (the "Administration Agreement"), for the
Fund as contemplated by the Prospectus; and to my knowledge, no order of
suspension or revocation of such registration under the Advisers Act and the
Advisers Act Rules and Regulations has been issued and no proceedings for that
purpose are pending before or threatened by the Commission;

         3. Each of this Agreement, the Advisory Agreement and the
Administration Agreement has been duly authorized, executed and delivered by the
Investment Manager and assuming that each is the valid and legally binding
agreement of the other parties thereto, each is a valid and legally binding
agreement of the Investment Manager, enforceable against the Investment Manager
in accordance with its terms subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing;

         4. Neither the execution, delivery or performance of this Agreement,
the Advisory Agreement or the Administration Agreement by the Investment Manager
or compliance by the Investment Manager with the provisions of this Agreement,
the Advisory Agreement or the Administration Agreement nor consummation by the
Investment Manager of the transactions contemplated hereby and thereby will
breach or result in a default under or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Investment
Manager pursuant to any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Investment Manager is a party or by
which its properties are bound except where breach or default would not
reasonably be expected to have a material adverse effect on the ability of the
Investment Manager to perform its obligations under this Agreement, the Advisory
Agreement or the Administration Agreement, nor will such action violate the
charter or by-laws of the Investment Manager or any federal or New York statute
or any rules or regulations thereunder or order known to me issued pursuant to
any federal or New York statute by any court or governmental agency or body
having jurisdiction over the Investment Manager or any of its properties;

         5. No consent, approval, authorization, order, registration, filing or
qualification of or with any federal or New York governmental agency or body or,
to my knowledge, any federal or New York court is required on the part of the
Investment Manager for the execution, delivery and performance by the Investment
Manager of this Agreement, the Advisory Agreement or the Administration



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<PAGE>



Agreement, except such consents, approvals, authorizations, orders,
registrations, filings or qualifications as have been obtained or made prior to
the date hereof;

         6. To the best of my knowledge, no person is serving as an officer,
director or investment manager of the Fund except in accordance with the 1940
Act and the Rules and Regulations and the Advisers Act and the Advisers Act
Rules and Regulations. Except as disclosed in the Registration Statement and
Prospectus (of any amendment or supplement to either of them), to the best of my
knowledge, 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
an Underwriter listed on Schedule A to the Purchase Agreement.

         7. To my knowledge, there are no legal or governmental proceedings
pending or threatened against the Investment Manager, or to which the Investment
Manager or any of its properties is subject, which are required to be described
in the Registration Statement or Prospectus that are not described as required
or which may reasonably be expected to involve a prospective material adverse
change in the ability of the Investment Manager to perform its obligations under
this Agreement, the Advisory Agreement and the Administration Agreement.

         I have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement or the
Prospectus and take no responsibility therefor. In the course of the preparation
by the Fund of the Registration Statement and the Prospectus, I participated in
conferences with certain officers and employees of the Fund and the Investment
Manager, with representatives of PricewaterhouseCoopers LLP and with counsel to
the Fund. Based upon my examination of the Registration Statement and the
Prospectus, my investigations made in connection with the preparation of the
Registration Statement and the Prospectus and my participation in the
conferences referred to above, I have no reason to believe that the Registration
Statement, at the time the Registration Statement became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus contains any untrue statement of material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except I express no belief with respect to the financial statements
or other financial data contained or incorporated by reference in the
Registration Statement or the Prospectus.






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</TEXT>
</DOCUMENT>
