[ROYCE & ASSOCIATES, INC. LETTERHEAD]
April 26, 1999
Royce Capital Fund
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Re: Fee Waiver and Expense Reimbursement - Royce Capital Fund
Gentlemen:
Reference is made to the Investment Advisory Agreement dated December 1,
1996 (the "Agreement") by and between Royce Capital Fund (the "Fund") on
behalf of Xxxxx Premier Portfolio, Royce Total Return Portfolio and Royce
Micro-Cap Portfolio (each a "Series") and Royce & Associates, Inc. (the
"Adviser").
Notwithstanding the provisions of Section 4 (Compensation of the
Adviser) of the Agreement, the Adviser hereby waives compensation for
services provided by it under the Agreement for the calendar year ending
December 31, 1999 in an amount, if any, necessary so that each Series'
"Annual Operating Expenses" are not more than 1.35% of such Series' average
net assets for such calendar year. If, after giving effect to the provisions
of the preceding sentence, the Adviser is not entitled to receive any
compensation for such calendar year, then the Adviser will reimburse the
Series to the extent necessary to cause the Series' Annual Operating Expenses
to be not more than 1.35% of average net assets for such calendar year. This
Waiver and Expense Reimbursement will also be effective for the calendar year
or years ending after December 31, 1999, unless the Adviser notifies the Fund
in writing at least 10 days prior to the end of the then current calendar
year that this Waiver and Expense Reimbursement will cease to be effective as
to one or more or all of the Series for the next and any and all subsequent
calendar years.
In the event that the Adviser delivers such a notice to the Fund, then
the Adviser hereby nevertheless waives compensation for services provided by
it under the Agreement to the Series involved for each subsequent calendar
year through the year ending December 31, 2008 (but not for any calendar year
thereafter) in an amount, if any, necessary so that the Series' Annual
Operating Expenses are not more than 1.99% of such Series' average net assets
for such calendar year. If, after giving effect to the provisions of the
preceding sentence, the Adviser is not entitled to receive any compensation
for such calendar year, then the Adviser will reimburse the Series to the
extent necessary to cause the Series' Annual Operating Expenses to be not
more than 1.99% of average net assets for such calendar year.
The Adviser's obligations to reimburse each Series hereunder will not
apply for any period when the Adviser is not rendering services to such
Series under the Agreement.
Each Series' "Annual Operating Expenses" means and will consist only of
the following operating expenses of the Series that are, under generally
accepted accounting principles, accruable and deductible from the Series'
assets for the calendar year involved: (i) investment advisory fees, if any;
(ii) Rule 12b-1 distribution fees, if any; and (iii) custodian fees,
shareholder servicing fees, administrative and office facilities expenses,
professional fees, trustees' fees and any other operating expenses of the
Series that are recorded or includable in the Series' statement of operations
in accordance with generally accepted accounting principles. Notwithstanding
the provisions of the immediately preceding sentence, the Series' "Annual
Operating Expenses" do not include interest and dividends on securities sold
short, amortization of organization expenses, taxes, brokerage commissions,
litigation and indemnification expenses or any costs or expenses of or for
the Series that are "extraordinary" as determined under generally accepted
accounting principles (see Accounting Principles Board Opinion No. 30).
Very truly yours,
ROYCE & ASSOCIATES, INC.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
President
ACCEPTED:
ROYCE CAPITAL FUND
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
President
