[Royce & Associates, Inc. letterhead]
December 16, 1998
Royce Capital Fund
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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 ▇▇▇▇▇ 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
for the next and any and all subsequent calendar years. However, the
Adviser's obligation to reimburse each Series under this Waiver and Expense
Reimbursement 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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President
ACCEPTED:
ROYCE CAPITAL FUND
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President
