STEWART R. HOREJSI
                               200 South Santa Fe
                                Salina, KS 67401

                                 August 2, 2002



To the Board of Directors of First Financial Fund, Inc.:

     I have previously written you in connection with the Fund's bylaw provision
which requires a 50% vote of shareholders to elect directors, and requested that
the Board of Directors take action to remove the provision. I requested that you
respond by August 2, but have never  received the  courtesy of a response.  I am
reiterating our request that the board remove the 50% bylaw provision.

     The bylaw has a number of defects. First, it permits incumbent directors to
continue in office on a perpetual  basis even after losing an election.  Indeed,
the bylaw would permit an incumbent  director to continue in office even if that
director  did not receive a single vote at the annual  shareholders  meeting and
was opposed by every single  shareholder who voted. An opposing  candidate could
receive 11.8 million votes from  shareholders,  and the Fund would simply ignore
those shareholders and retain the incumbent director.

     I have  heard the bylaw  defended  on the  grounds  that it has been in the
Fund's  bylaws  for a number of years.  Frankly I think that  argument  entirely
misses  the  point.  Errors  of  omission  are  equally  offensive  as errors of
commission. The Board of Directors is fully empowered to amend the Fund's bylaws
and failure to take action simply  because the Fund's lawyers - many years ago -
took it upon  themselves  to include this bylaw is  inexcusable.  The only thing
that is suggested by the fact that this  provision has been in the Fund's bylaws
for many  years is that the  Fund  may not  have  complied  with SEC  guidelines
requiring  corporate  provisions with an  anti-takeover  effect be identified as
such to shareholders.

     You  should  also  focus on the fact that the Fund's  bylaws  prohibit  the
Fund's  shareholders  from  amending  the 50% bylaw  without  an 80% vote of all
outstanding shareholders. You will recall that the Fund had difficulty achieving
a 50% vote a few years ago and had to adjourn the shareholders' meeting in order
to round up a few more votes. Needless to say, a requirement for an 80% vote is,
quite  simply,  impossible  to achieve and is intended to be  impossible  by the
drafters of the  provision.  This  restriction on the ability to amend the bylaw
simply confirms that the Fund's bylaws are being used to build a fortress around
the incumbent directors and officers.

     Interestingly,  I have not heard the bylaw  defended on grounds of fairness
and no one seems to be arguing that the bylaw ensures a fair  election  process.
In meeting its fiduciary responsibility to shareholders, the board should not be
distracted from this fundamental issue. The board cannot avoid its obligation to
set fair  election  rules by hiding  behind the fact that the bylaws were around
before this board came into office.

     We are  convinced  that the bylaw,  if it must be tested in court,  will be
overthrown.  The Fund is using the authority  granted by  Maryland's  statute to
accomplish a result that is precisely a result the Maryland  legislature  sought
to avoid  when it  passed  the  current  version  of the  statute.  Indeed,  the
legislative  history describes such results as `bizarre.' Their words, not mine,
but I think  the  characterization  is the right  one.  If no  director  nominee
receives 50% of the outstanding  vote at the Fund's annual  meeting,  the Fund's
bylaw will create questions  concerning the legitimacy of the Fund's board under
both Maryland law and federal  securities laws, and these questions will have to
be resolved in court, casting a cloud over the Fund.

     Already the incumbent directors have a legacy at the Fund that is tarnished
by unnecessary  costs of a proxy contest and more unnecessary  costs for a court
case to defend a losing  position on the NOBO list. In the end I am puzzled that
a director of the Fund would be willing to further  tarnish his legacy as a Fund
director  by making the Fund pay for  litigation  so the  director  can cling to
office even after losing an election.

     So far the only result of the board's  pathway over the last few months has
been to enrich lawyers at the expense of the Fund's  shareholders.  If the board
continues to take this approach,  I can promise you that the Fund's shareholders
will hold the board personally responsible for the results of their action.

     I look forward to your reply at your earliest convenience.

                                            Sincerely,

                                            /s/ Stewart R. Horesji

                                            Stewart R. Horejsi