INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE ROYCE FUND
(ROYCE SPECIAL EQUITY FUND)
AND
ROYCE & ASSOCIATES, INC.
Agreement made this day of 1998, by and between
THE ROYCE FUND, a Deleware business trust (the "Fund"), and ROYCE
& ASSOCIATES, INC., a New York corporation (the "Adviser").
The Fund and the Adviser hereby agree as follows in respect
of ROYCE SPECIAL EQUITY FUND, a series of the Fund (the
"Series"):
1. Duties of the Adviser. The Adviser shall, during the
term and subject to the provisions of this Agreement, (a)
determine the composition of the portfolio of the Series, the
nature and timing of the changes therein and the manner of
implementing such changes, and (b) provide the Series with such
investment advisory, research and related services as the Series
may, from time to time, reasonably require for the investment of
its funds. The Adviser shall perform such duties in accordance
with the applicable provisions of the Fund's Declaration of
Trust, By-Laws and current prospectus and any directions it may
receive from the Fund's Trustees.
2. Expenses Payable by the Series. Except as otherwise
provided in Paragraphs 1 and 3 hereof, the Fund shall be responsi
ble for effecting sales and redemptions of the Series' shares,
for determining the net asset value thereof and for all of the
Series' other operations and shall cause the Series to pay all
administrative and other costs and expenses attributable to its
operations and transactions, including, without limitation,
transfer agent and custodian fees; legal, administrative and
clerical services; rent for office space and facilities;
auditing; preparation, printing and distribution of its
prospectuses, proxy statements, shareholders' reports and
notices; supplies and postage; Federal and state registration
fees; Federal, state and local taxes; non- affiliated Trustees'
fees; and brokerage commissions.
3. Expenses Payable by the Adviser. The Adviser shall
furnish, without expense to the Fund or to the Series, the
services of those of its executive officers and full-time
employees who may be duly elected executive officers or Trustees
of the Fund, subject to their individual consent to serve and to
any limitations imposed by law, and shall pay all the
compensation and expenses of such persons. For
purposes of this Agreement, only a president, a treasurer or a
vice-president in charge of a principal business function shall
be deemed to be an executive officer. The Adviser shall also pay
all expenses which it may incur in performing its duties under
Paragraph 1 hereof and shall reimburse the Fund for any space
leased by the Fund and occupied by the Adviser. In the event the
Fund shall qualify shares of the Series for sale in any
jurisdiction, the applicable statutes or regulations of which
expressly limit the amount of the Series' total annual expenses,
the Adviser agrees to reduce its annual investment advisory fee
for the Series, to the extent that such total annual expenses
(other than brokerage commissions and other capital items,
interest, taxes, distribution fees, extraordinary items and other
excludable items, charges, costs and expenses) exceed the
limitations imposed on the Series by the most stringent
regulations of any such jurisdiction.
4. Compensation of the Adviser. The Fund agrees to cause the Series to
pay to the Adviser, and the Adviser agrees to accept as compensation for the
services provided by the Adviser hereunder, a fee equal to 1.00% per annum of
the average net assets of the Series at the close of business on each day that
the value of its net assets is computed during the year. However, the Fund and
the Adviser may agree in writing to temporarily or permanently reduce such fee.
Such compensation shall be accrued on the Series' books at the close of business
on each day that the value of its net assets is computed during each year and
shall be payable to the Adviser monthly, on the last day of each month, and
adjusted as of year-end if required.
5. Excess Brokerage Commissions. The Adviser is hereby authorized, to the
fullest extent now or hereafter permitted by law, to cause the Series to pay a
member of a national securities exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of such exchange, broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and/or research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or its overall
responsibilities with respect to all portfolio series of the Fund and/or the
Series.
6. Limitations on the Employment of the Adviser. The services of the
Adviser to the Series shall not be deemed exclusive, and the Adviser may engage
in any other business or render similar or different services to others so long
as its services to the Series hereunder are not impaired thereby, and nothing in
this Agreement shall limit or restrict the right of any director, officer or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to any other business, whether of a similar or dissimilar
nature. So long as this Agreement or any extension, renewal or amendment
remains in effect, the Adviser shall be the only investment adviser for the
Series, subject to the Adviser's right to enter into sub-advisory agreements.
The Adviser assumes no responsibility under this Agreement other than to render
the services called for hereunder, and shall not be responsible for any action
of or directed by the Fund's Trustees, or any committee thereof, unless such
action has been caused by the Adviser's gross negligence, willful malfeasance,
bad faith or reckless disregard of its obligations and duties under this
Agreement.
7. Responsibility of Dual Directors, Officers and/or Employees. If any
person who is a director, officer or employee of the Adviser is or becomes a
Trustee, officer and/or employee of the Fund and acts as such in any business of
the Fund pursuant to this Agreement, then such director, officer and/or employee
of the Adviser shall be deemed to be acting in such capacity solely for the
Fund, and not as a director, officer or employee of the Adviser or under the
control or direction of the Adviser, although paid by the Adviser.
8. Protection of the Adviser. The Adviser shall not be liable to the
Fund or to any portfolio series thereof for any action taken or omitted to be
taken by the Adviser in connection with the performance of any of its duties or
obligations under this Agreement or otherwise as an investment adviser of the
Fund or such series, and the Fund or each portfolio series thereof involved, as
the case may be, shall indemnify the Adviser and hold it harmless from and
against all damages, liabilities, costs and expenses (including reasonable
attorneys' fees and amounts reasonably paid in settlement) incurred by the
Adviser in or by reason of any pending, threatened or completed action, suit,
investigation or other proceeding (including an action or suit by or in the
right of the Fund or any portfolio series thereof or its security holders)
arising out of or otherwise based upon any action actually or allegedly taken or
omitted to be taken by the Adviser in connection with the performance of any of
its duties or obligations under this Agreement or otherwise as an investment
adviser of the Fund or such series. Notwithstanding the preceding sentence of
this Paragraph 8 to the contrary, nothing contained herein shall protect or be
deemed to protect the Adviser against or entitle or be deemed to entitle the
Adviser to indemnification in respect of, any liability to the Fund or to any
portfolio series thereof or its security holders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its duties and obligations under this Agreement.
Determinations of whether and the extent to which the Adviser is entitled
to indemnification hereunder shall be made by reasonable and fair means,
including (a) a final decision on the merits by a court or other body before
whom the action, suit or other proceeding was brought that the Adviser was not
liable by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties, or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the Adviser was not liable
by reason of such misconduct by (i) the vote of a majority of a quorum of the
Trustees of the Fund who are neither "interested persons" of the Fund (as
defined in Section 2(a)(19) of the Investment Company Act of 1940) nor parties
to the action, suit or other proceeding, or (ii) an independent legal counsel in
a written opinion.
9. Effectiveness, Duration and Termination of Agreement. This Agreement
shall become effective immediately upon approval by a majority of the
outstanding voting securities of the Series, and the Investment Advisory
Agreement made September 24, 1992 by and between the Fund and the Adviser shall
not apply as to the Series. This Agreement shall remain in effect until April
30, 1999, and thereafter shall continue automatically for successive annual
periods, provided that such continuance is specifically approved at least
annually by (a) the vote of the Fund's Trustees, including a majority of such
Trustees who are not parties to this Agreement or "interested persons" (as such
term is defined in Section 2(a)(19) of the Investment Company Act of 1940) of
any such party, cast in person at a
meeting called for the purpose of voting on such approval, or (b) the vote of a
majority of the outstanding voting securities of the Series and the vote of the
Fund's Trustees, including a majority of such Trustees who are not parties to
this Agreement or "interested persons" (as so defined) of any such party. This
Agreement may be terminated at any time, without the payment of any penalty, on
60 days' written notice by the vote of a majority of the outstanding voting
securities of the Series, or by the vote of a majority of the Fund's Trustees or
by the Adviser, and will automatically terminate in the event of its
"assignment" (as such term is defined for purposes of Section 15(a)(4) of the
Investment Company Act of 1940); provided, however, that the provisions of
Paragraph 8 of this Agreement shall remain in full force and effect, and the
Adviser shall remain entitled to the benefits thereof, notwithstanding any such
termination. The Adviser or Xxxxxxx X. Xxxxx may, upon termination of this
Agreement, require the Fund to refrain from using the name "Royce" in any form
or combination in its name or in its business, and the Fund shall, as soon as
practicable following its receipt of any such request from the Adviser or
Xxxxxxx X. Xxxxx, so refrain from using such name.
Any notice under this Agreement shall be given in writing, addressed and
delivered or mailed, postage prepaid, to the other party at its principal
office.
10. Shareholder Liability. Notice is hereby given that this Agreement is
entered into on the Fund's behalf by an officer of the Fund in his capacity as
an officer and not individually and that the obligations of or arising out of
this Agreement are not binding upon any of the Fund's Trustees, officers,
employees, agents or shareholders individually, but are binding only upon the
assets and property of the Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
THE ROYCE FUND
By: _______________________________
Xxxxxxx X. Xxxxx, President
ROYCE & ASSOCIATES, INC.
By: _______________________________
Xxxxxxx X. Xxxxx, President
