[ROYCE & ASSOCIATES, INC. LETTERHEAD]
December 16, 1999
The Royce Fund
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Re: Fee Waiver and Expense Reimbursement - Royce GiftShares Fund (Consultant
Class)
Gentlemen:
Reference is made to the Investment Advisory Agreement dated December
15, 1995 and amended May 28, 1997 (the "Agreement") by and between The Royce
Fund (the "Fund") on behalf of Royce GiftShares Fund (the "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, 2000 in an amount, if any, necessary so that the Series' "Annual
Operating Expenses" for its Consultant Class of shares (the "Class") are not
more than 2.49% of the Class' 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 with
respect to the Class, then the Adviser will reimburse the Series with respect
to the Class to the extent necessary to cause the Series' Annual Operating
Expenses for the Class to be not more than 2.49% of the Class' 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,
2000, 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 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 with respect to the Class for each
subsequent calendar year through the year ending December 31, 2009 (but not
for any calendar year thereafter) in an amount, if any, necessary so that the
Series' Annual Operating Expenses for the Class are not more than 2.99% of
the Class' 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 with respect to the Class to the extent necessary
to cause the Series' Annual Operating Expenses for the Class to be not more
than 2.99% of average net assets for such calendar year.
The Adviser's obligations to reimburse the Series with respect to the
Class hereunder will not apply for any period when the Adviser is not
rendering services to such Series under the Agreement. This
letter agreement replaces the letter agreement between the Fund, on behalf of
the Series, and the Adviser dated April 29, 1999.
The Series' "Annual Operating Expenses" for the Class means and will
consist only of the following operating expenses of the Series for the Class
that are, under generally accepted accounting principles, accruable and
deductible from the Series' assets with respect to the Class 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 with respect to
the Class 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" for the Class 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 with respect to the Class 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:
THE ROYCE FUND
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
President
