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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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SIGNATURE BRIAN SHISSEL
TITLE VICE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
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BUSINESS ADDRESS:
STREET 1: C/O MITCHELL HUTCHINS ASSET MANAGEMENT
STREET 2: 1285 AVE OF THE AMERICAS
CITY: NEW YORK
STATE: NY
ZIP: 10019
BUSINESS PHONE: 2127138392
MAIL ADDRESS:
STREET 1: ROYCE OTC MICRO -CAP FUND INC
STREET 2: 1285 AVE OF THE AMERICAS 15TH FLR
CITY: NEW YORK
STATE: NY
ZIP: 10019
ROYCE MICRO-CAP TRUST, INC.
1414 Avenue of the Americas
New York, New York 10019
1-800-221-4268
November 11, 1996
Dear Stockholder:
Enclosed is a Proxy Statement describing the new Investment Advisory
Agreement between the Fund and Quest Advisory Corp. to be voted on at the
Special Meeting of Stockholders.
The new Investment Advisory Agreement only changes the benchmark index,
against which the Fund's performance is measured, from the Nasdaq Composite
Index, which is heavily weighted to its many large capitalization stocks, to
the Russell 2000 Index, which we believe is more appropriate for determining
the Fund's relative performance. The new Agreement maintains the 1% basic
advisory fee, the (+ or -) 0.5% performance adjustment feature and the
trailing 36 month performance period, which will be re-started on
January 1, 1997.
At its inception in December 1993, the Fund chose the Nasdaq Composite
Index for performance benchmarking because, at that time, (i) the Fund's
focus was on over-the-counter micro-cap stocks traded on Nasdaq, (ii) the
Fund's name, Royce OTC Micro Cap Fund, emphasized the Fund's focus on over
-the-counter stocks and (iii) the Nasdaq Composite was a much more widely
recognized index than the Russell 2000. Since 1993, the Fund's focus has
broadened to include exchange-listed micro-cap stocks, the Fund has
changed its name to reflect this new focus and the Russell 2000 has become
a more widely recognized index. The Russell 2000 (weighted average market
cap of $540 million) is also much more representative of the Fund's
micro-cap area of investing (weighted average market cap of $155 million)
than the Nasdaq Composite (weighted average market cap of $9.4 billion).
In order to prevent any immediate benefit to Quest from the change, the fee
paid over the first 18 months of the new Agreement will be the lower of the
fee determined based on the new terms or the fee which would have been paid
under the current Agreement.
Your vote is very important! If the Fund does not receive a sufficient
number of votes prior to the meeting date, it will have additional expenses for
<PAGE>
proxy solicitation and the meeting may have to be postponed. Please complete,
sign and mail your proxy card as soon as possible. If you have any question
regarding the proxy material, please call Investor Information at
1-800-221-4268.
The Fund may retain an outside firm that specializes in proxy solicitation
to assist it with any necessary follow-up. If the Fund has not received your
vote as the meeting date approaches, you may receive a telephone call from
Shareholder Communications Corporation to ask for your vote. We hope that their
telephone call does not inconvenience you.
Sincerely,
CHARLES M. ROYCE
President
<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
ROYCE MICRO-CAP TRUST, INC.
To the Stockholders of
Royce Micro-Cap Trust, Inc.
Notice is hereby given that a Special Meeting of Stockholders of Royce
Micro-Cap Trust, Inc. (the "Fund") will be held at the offices of the Fund, 1414
Avenue of the Americas, New York, New York, on December 3, 1996 at 11:00 a.m.
(Eastern Time) for the following purposes:
1. To approve a new Investment Advisory Agreement between the Fund and
Quest Advisory Corp.
2. To transact such other business as may come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on November 5, 1996
as the record date for the determination of those stockholders entitled to vote
at the meeting, and only holders of record at the close of business on that day
will be entitled to vote.
The Fund's Annual Report to Stockholders for the year ended December 31,
1995 and Semi-Annual Report to Stockholders for the six months ended June 30,
1996 were previously mailed to stockholders, and copies of them are available
upon request, without charge, by writing to the Fund at 1414 Avenue of the
Americas, New York, New York 10019 or calling toll free at 1-800-221-4268.
IMPORTANT
To save the Fund the expense of additional proxy solicitation, please insert
your instructions on the enclosed Proxy, date and sign it and return it in the
enclosed envelope (which requires no postage if mailed in the United States),
even if you expect to be present at the meeting. The enclosed Proxy is solicited
on behalf of the Board of Directors, is revocable and will not affect your right
to vote in person in the event that you attend the meeting.
By order of the Board of Directors,
John E. Denneen
Secretary
November 11, 1996
<PAGE>
SPECIAL MEETING OF STOCKHOLDERS
OF
ROYCE MICRO-CAP TRUST, INC.
1414 Avenue of the Americas
New York, New York 10019
December 3, 1996
-----------------------------
P R O X Y S T A T E M E N T
-----------------------------
Accompanying this Proxy Statement is a Notice of Special Meeting of
Stockholders and a form of Proxy for the meeting, solicited on behalf of the
directors of Royce Micro-Cap Trust, Inc. (the "Fund").
The Proxy may be revoked at any time before it is exercised by written
instructions to the Fund or by filing a new Proxy with a later date, and any
stockholder attending the meeting may vote in person, whether or not he or she
has previously filed a Proxy. The shares represented by all properly executed
Proxies received in time for the meeting will be voted. Where a stockholder has
specified a choice on the Proxy with respect to Proposal 1 in the Notice of
Special Meeting, his or her shares will be voted accordingly. If no direction is
given, the stockholder's shares will be voted in favor of the Proposal. The cost
of soliciting proxies will be borne by the Fund, which will reimburse brokerage
firms, custodians, nominees and fiduciaries for their expenses in forwarding
proxy material to the beneficial owners of the Fund's shares. Some officers and
employees of the Fund and/or Quest Advisory Corp. ("Quest"), the Fund's
investment adviser, may solicit Proxies personally and by telephone, if deemed
desirable. In addition, the Fund may, if necessary, engage Shareholder
Communications Corporation to solicit Proxies on its behalf at an estimated cost
to the Fund of $5,000 plus out-of-pocket expenses.
On November 5, 1996, the record date for the meeting, there were 11,258,010
shares of Common Stock of the Fund outstanding. The stockholders entitled to
vote are those of record on that date. Each share is entitled to one vote on
each item of business at the meeting. Stockholders vote at the Special Meeting
by casting ballots (in person or by proxy), which are tabulated by one or two
persons appointed by the Board of Directors before the meeting, who serve as
Inspectors and Judges of Election at the meeting and who have executed an
Inspectors and Judges Oath. Neither abstentions nor broker non-votes are counted
in the tabulation of such votes.
The following persons were known to the Fund to be beneficial owners or
owners of record of 5% or more of its outstanding shares of Common Stock
as ofthe record date:
Name and Address Amount and Nature Percentage
of Owner of Ownership of Class
-------- ------------
Depository Trust Company .............. 10,733,721 shares-Record 95.3%
Cede & Co.
P.O. Box 20, Bowling Green Station
New York, NY 10274
<PAGE>
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT (Proposal 1)
At the meeting, it is proposed to replace the present Investment Advisory
Agreement between the Fund and Quest with a new Investment Advisory Agreement.
The only material difference between the present and the proposed Investment
Advisory Agreements is in the securities index against which the Fund's
investment performance is measured. The present Agreement uses the Nasdaq
Composite Index (the "Nasdaq Composite"); the proposed Agreement uses the
Russell 2000 Index (the "Russell 2000").
In deciding to recommend to stockholders that they approve the proposed
Investment Advisory Agreement with Quest, the Fund's Board of Directors
considered (i) the investment performance of the Fund over various periods, both
absolutely and in relation to the records of the Nasdaq Composite and the
Russell 2000 and relative to that of other open and closed-end funds with
similar investment objectives; (ii) Quest's approach to managing the Fund's
assets; and (iii) the costs and expenses of the Fund, both absolutely and
relative to these other funds. When addressing the changes made by the proposed
Agreement, the directors considered other factors, including (iv) the
differences between the Nasdaq Composite and the Russell 2000 and the relative
appropriateness of each index for the Fund; and (v) the impact on the Fund of
changing from the present to the proposed fee arrangement.
The directors concluded, among other things, (i) that because of the Fund's
concentration in micro-cap stocks, the Russell 2000, which is comprised of small
capitalization stocks, was a more appropriate index for the Fund than the Nasdaq
Composite, which is heavily weighted to large capitalization stocks, and (ii)
that the proposed Investment Advisory Agreement would not result in excessive
compensation to Quest or be unfair to the Fund.
Present Investment Advisory Agreement
The present Investment Advisory Agreement between the Fund and Quest is
dated, and has been in effect since the Fund commenced operations on December
14, 1993, and was approved by vote of the Fund's then sole stockholder prior to
that date. Continuance of the present Investment Advisory Agreement was approved
by the Fund's Board of Directors on April 18, 1996, and it will remain in effect
until April 30, 1997, unless it is terminated sooner or is replaced by the
proposed Agreement.
Under the present Agreement, Quest determines the composition of the Fund's
portfolio, the nature and timing of the changes in it and the manner of
implementing the changes; provides the Fund with investment advisory, research
and related services for the investment of its assets; furnishes, without
expense to the Fund, the services of those of its executive officers and
full-time employees who may be duly elected directors or executive officers of
the Fund and pays their compensation and expenses; and pays all expenses
incurred in performing its investment advisory duties under the Agreement.
The Fund pays all of its own administrative and other expenses (except those
set forth above), and Quest does not incur substantial fixed expenses. There are
no applicable state limitations on the Fund's operating expenses.
Present Advisory Fee
As compensation for its services under the present Investment Advisory
Agreement, Quest receives a fee comprised of a basic fee (the "Basic Fee") and
an adjustment to the Basic Fee based on the investment performance of the Fund
in relation to the investment record of the Nasdaq Composite for certain
prescribed performance periods, as described below.
The Basic Fee is a monthly fee equal to 1/12 of 1% (1% on an annualized
basis) of the average of the net assets of the Fund at the end of each month
included in the applicable performance period. The performance period is a
rolling
2
<PAGE>
period of up to 36 months, ending with the most recent month. The Basic Fee for
each month in the performance period is subject to increase or decrease,
depending on the extent, if any, by which the investment performance of the Fund
exceeds by more than two percentage points, or is exceeded by more than two
percentage points by, the percentage change in the investment record of the
Nasdaq Composite for the performance period. For each percentage point in excess
of two that the investment performance of the Fund exceeds the percentage change
in the investment record of the Nasdaq Composite, the Basic Fee is increased at
the rate of 1/12 of .05%. For each percentage point in excess of two that the
percentage change in the investment record of the Nasdaq Composite exceeds the
investment performance of the Fund, the Basic Fee is decreased at the rate of
1/12 of .05%. The maximum increase or decrease in the Basic Fee for any month
may not exceed 1/12 of .5%. Accordingly, for each month, the maximum monthly fee
rate as adjusted for performance is 1/12 of 1.5% and is payable if the
investment performance of the Fund exceeds the percentage change in the
investment record of the Nasdaq Composite by 12 or more percentage points for
the performance period, and the minimum monthly fee rate as adjusted for
performance is 1/12 of .5% and is payable if the percentage change in the
investment record of the Nasdaq Composite exceeds the investment performance of
the Fund by 12 or more percentage points for the performance period.
In calculating the investment performance of the Fund and the percentage
change in the investment record of the Nasdaq Composite, all dividends and other
distributions during the performance period are treated as having been
reinvested.
For the year ended December 31, 1995, the 1% Basic Fee of $794,814 was
subject to a downward adjustment of approximately 10% ($78,903) based on the sum
of the months' separate performance calculations, with Quest earning a fee of
$715,911 or .78% of the Fund's average net assets for the year (before giving
effect to a voluntary fee waiver of $2,878). (The fee rate is applied to the
Fund's average net assets of $83,792,627 for the rolling 24 month performance
period ended December 31, 1995.)
To the extent that Quest receives a fee in excess of .75% per annum of the
Fund's average net assets, its compensation may be higher than that paid by many
other mutual funds with a similar investment objective.
Proposed Investment Advisory Agreement
It is proposed to replace the present Investment Advisory Agreement with the
new one in order to change the securities index against which the Fund's
investment performance is measured. Except for this change, the method for
determining the compensation payable by the Fund to Quest will remain as is.
New Advisory Fee
As compensation for its services under the proposed Investment Advisory
Agreement, Quest would receive a fee comprised of a basic fee (the "Basic Fee")
and an adjustment to the Basic Fee based on the investment performance of the
Fund in relation to the investment record of the Russell 2000 for certain
prescribed performance periods, as described below.
Beginning with the month of January 1997 and for each succeeding month, the
Basic Fee would, as in the present Agreement, continue to be a monthly fee equal
to 1/12 of 1% (1% on an annualized basis) of the average of the net assets of
the Fund at the end of each month included in a period consisting of the rolling
36 months ending with such month. The performance adjustment for each such month
would be computed on the basis of a performance period commencing on January 1,
1997 to the end of such month, until the proposed Investment Advisory Agreement
had been in effect for 36 months, when the performance period would become a
rolling 36 month period ending with such month.
3
<PAGE>
The Basic Fee for each such month would be increased or decreased at the
rate of 1/12 of .05% per percentage point, depending on the extent, if any, by
which the investment performance of the Fund exceeds by more than two percentage
points, or is exceeded by more than two percentage points by, the percentage
change in the investment record of the Russell 2000 for the performance period.
The maximum increase or decrease in the Basic Fee for any month could not exceed
1/12 of .5%. Accordingly, for each month, commencing with the month of January
1997, the maximum monthly fee rate as adjusted for performance would be 1/12 of
1.5% and would be payable if the investment performance of the Fund exceeded the
percentage change in the investment record of the Russell 2000 by 12 or more
percentage points for the performance period, and the minimum monthly fee rate
as adjusted for performance would be 1/12 of .5% and would be payable if the
percentage change in the investment record of the Russell 2000 exceeded the
investment performance of the Fund by 12 or more percentage points for the
performance period.
In order to avoid the impact of short-term differences between the
investment performance of the Fund and the record of the Russell 2000, Quest
will not collect any accrued portion of the Basic Fee in excess of .5% until
January 1998.
Because the Basic Fee is and would remain a function of the Fund's net
assets and not of its total assets, Quest does not now and would not receive any
fee in respect of those assets of the Fund equal to the aggregate unpaid
principal amount of any indebtedness hereafter incurred by the Fund. However,
because preferred stock is a form of equity, Quest would receive a fee in
respect of any assets of the Fund equal to the liquidation preference of and any
potential redemption premium for any preferred stock that may hereafter be
issued and sold by the Fund, and the proposed Investment Advisory Agreement,
unlike the present one, specifically addresses this issue.
If the proposed Investment Advisory Agreement had been in effect for the
rolling 24 month performance period ended December 31, 1995, the 1% Basic Fee of
$794,814 would have been subject to an upward adjustment of $173,418, and Quest
would have earned a fee of $968,232 for the year ended December 31, 1995,
thereby increasing its compensation for the year by $252,321 or 35% (before
giving effect to Quest's voluntary fee waiver).
In order to avoid unfairness to the Fund, the proposed Investment Advisory
Agreement provides that, for the 18 month period from January 1, 1997 to June
30, 1998, the monthly fee payable to Quest will be the lower of the fee
calculated under such agreement or the fee that would have been payable to Quest
for the month involved under the present Investment Advisory Agreement.
Quest is also the investment adviser of other registered investment
companies. These funds or series have assets ranging from approximately $650,000
to $506,128,000 (as of September 30, 1996) and compensate Quest at rates of up
to 1.5% of their respective average net assets. Quest has generally voluntarily
reduced its compensation under its contracts with these funds or series to the
extent necessary to maintain expenses, other than interest expense, at or below
1.99% of average net assets.
Appendix 1 to this Proxy Statement contains cumulative total return data for
the Fund (at net asset values), the Nasdaq Composite and the Russell 2000 for
the year ended December 31, 1994, the two years ended December 31, 1995 and the
two years and nine months ended September 30, 1996.
Appendix 2 to this Proxy Statement contains certain information about
Quest's officers, directors and shareholders.
The proposed Investment Advisory Agreement between the Fund and Quest would
become effective on January 1, 1997, following its approval by the Fund's
stockholders. The text of the proposed Investment Advisory Agreement is set
forth in Exhibit A to this Proxy Statement.
4
<PAGE>
Vote Required
The proposed Investment Advisory Agreement between the Fund and Quest
requires the approval of the lesser of (i) 67% of the shares of the Fund's
Common Stock present or represented at the meeting (assuming that more than 50%
of such shares are present or represented) or (ii) more than 50% of the
outstanding shares of the Fund's Common Stock.
The Board of Directors recommends a vote FOR Proposal 1.
2. OTHER BUSINESS
Management knows of no business to be brought before the meeting other than
Proposal 1 in the Notice of Special Meeting. If other matters do come before the
meeting, it is intended that the shares represented by Proxies will be voted in
accordance with the judgment of the person or persons exercising at the meeting
the authority conferred by the Proxies.
ADDITIONAL INFORMATION
Quest Advisory Corp., the Fund's investment adviser, is located at 1414
Avenue of the Americas, New York, New York 10019.
Mitchell Hutchins Asset Management Inc., the Fund's administrator, is
located at 1285 Avenue of the Americas, New York, New York 10019.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Fund's 1997 Annual
Meeting of Stockholders must be received by the Fund by January 31, 1997, for
inclusion in the Fund's Proxy Statement and form of Proxy relating to that
meeting.
PLEASE FILL IN, DATE AND SIGN THE PROXY AND RETURN IT IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE
5
<PAGE>
Appendix 1
Cumulative Total Return
---------------------------------
Nasdaq
Period Fund Composite Russell 2000
------ ---- --------- ------------
January 1, 1994 to December 31, 1994 ......... 6.0% 3.2% 1.8%
January 1, 1994 to December 31, 1995 ......... 30.3% 35.4% 26.1%
January 1, 1994 to September 30, 1996 ........ 40.4% 57.9% 39.6%
The Fund's total returns are presented on a net asset value basis and assume
reinvestment of dividend and capital gains distributions and primary
participation in the Fund's 1994 rights offering. Nasdaq Composite and Russell
2000 total returns are computed with all dividends and other distributions
reinvested.
6
<PAGE>
<TABLE>
<CAPTION>
Appendix 2
Principal Occupations
and Other Affiliations
Name and Address Position(s) with the Fund During the
Last Five Years
- - ---------------- ------------------------- ----------------
<S> <C> <C>
Charles M. Royce (57) Director, President President,
Secretary, Treasurer and sole
1414 Avenue of the Americas and Treasurer director and sole
voting shareholder
of
New York, NY 10019 Quest; Trustee, President and
Treasurer of
The Royce Fund
("TRF"), an
open-end
diversified
management
investment company
of
which Quest is
the principal
investment
adviser, and its
predecessors;
Director,
President and
Treasurer of the
Fund since
September 1993 and
of Royce Value Trust
, Inc.
("RVT"), a closed
-end diversified
management
investment
company of which
Quest is the
investment adviser
(the Fund, TRF
and RVT
collectively,
"The Royce Funds");
Secretary
and sole director
and sole
shareholder of
Quest
Distributors, Inc.
("QDI), the
distributor ofTRF's
shares; and
managing
general partner of
Quest Management
Company
("QMC"), a
registered
investment adviser,
and
its predecessor.
Thomas R. Ebright (52) Director Vice President of Quest; Trustee
of TRF
and
50 Portland Pier one of its predecessors; Director of the
Fund
Portland, ME 04101 since September 1993 and of RVT;
Vice
President since November
1995 (President
until October 1995) of QDI;
general partner
of QMC and its predecessor
until June 1994;
President, Treasurer, director
and principal
shareholder of Royce, Ebright
& Associates,
Inc., investment adviser to a
series of TRF,
since June 1994; director of
Atlantic Pro
Sports, Inc. and of the
Strasburg Rail Road
Co. since March 1993; and
President and
principal owner of Baltimore
Professional
Hockey, Inc. until May 1993.
Jack. E. Fockler, Jr. (37) Vice President Vice President of
Quest (since August
1993)
1414 Avenue of the Americas and senior
associate of Quest, having been
New York, NY 10019 employed by Quest
since October 1989; Vice
President of The
Royce Funds since
April
1995; and general
partner of QMC since
July
1993.
W. Whitney George (38) Vice President Vice President of
Quest (since August
1993)
1414 Avenue of the Americas and senior analyst of Quest,
having been
New York, NY 10019 employed by Quest since October
1991; Vice
President of The
Royce Funds since
April
1995; and general
partner of QMC and
its predecessor
since
January 1992.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations and Other Affiliations
Name and Address Position(s) with the Fund During
the Last Five Years
- - ---------------- ------------------------- ---------------
<S> <C> <C>
Daniel A. O'Byrne (34) Vice President Vice President
of Quest since May
1994,
1414 Avenue of the Americas having been
employed by Quest since
October
New York, NY 10019 1986; and Vice
President of The Royce Funds
since July 1994.
</TABLE>
8
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
BETWEEN
ROYCE MICRO-CAP TRUST, INC.
AND
QUEST ADVISORY CORP.
Agreement dated as of December 31, 1996, by and between Royce Micro-Cap
Trust, Inc., a Maryland corporation (the "Fund"), and Quest Advisory Corp., a
New York corporation (the "Adviser").
The Fund and the Adviser hereby agree as follows:
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 Fund, the nature and timing of the changes therein and the manner of
implementing such changes and (b) provide the Fund with such investment
advisory, research and related services as the Fund may, from time to time,
reasonably require for the investment of its assets. The Adviser shall perform
such duties in accordance with the applicable provisions of the Fund's Articles
of Incorporation, By-laws and stated investment objective(s), policies and
restrictions and any directions it may receive from the Fund's Board of
Directors.
2. Expenses Payable by the Fund. Except as otherwise provided in Paragraphs
1 and 3 hereof, the Fund shall be responsible for determining the net asset
value of its shares and for all of its other operations and shall pay all
administrative and other costs and expenses attributable to its operations and
transactions, including, without limitation, registrar, transfer agent and
custodian fees; legal, administrative and clerical services; rent for its office
space and facilities; auditing; preparation, printing and distribution of its
proxy statements, stockholders' reports and notices; supplies and postage;
Federal and state registration fees; NASD listing fees and expenses; Federal,
state and local taxes; non-affiliated directors' fees; interest on its
borrowings; brokerage commissions; and the cost of issue, sale and repurchase of
its shares.
3. Expenses Payable by the Adviser. The Adviser shall furnish, without
expense to the Fund, the services of those of its executive officers and
full-time employees who may be duly elected executive officers or directors 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.
4. Compensation of the Adviser.
(a) The Fund agrees to pay to the Adviser, and the Adviser agrees to
accept, as compensation for the services provided by the Adviser hereunder,
a fee comprised of a basic fee (the "Basic Fee") and an adjustment to the
Basic Fee based on the investment performance of the Fund in relation to the
investment record of the Russell 2000 Index (as the same may be constituted
from time to time, the "Index"). Such fee shall be calculated and payable as
follows:
(1) Beginning with the month of January 1997 and for each succeeding
month, the Basic Fee shall be a monthly fee equal to 1/12 of 1% (1% on
an annualized basis) of the average of the net assets of the Fund at the
end of each month included in a period consisting of the rolling
thirty-six (36) months ending with such
A-1
<PAGE>
month. (The net assets of the Fund shall be computed by subtracting the
amount of any indebtedness and other liabilities of the Fund from the
value of the total assets of the Fund, and the liquidation preference of
and any potential redemption premium for any preferred stock of the Fund
that may hereafter be issued and outstanding shall not be treated as an
indebtedness or other liability of the Fund for this purpose.)
The performance adjustment for each such month shall be computed on
the basis of a performance period commencing on January 1, 1997 to the
end of such month, until this Agreement has been in effect for
thirty-six (36) months, when the performance period shall become a
rolling thirty-six (36) month period ending with such month. The Basic
Fee for each such month shall be increased at the rate of 1/12 of .05%
for each percentage point in excess of two (2), rounded to the nearer
point (the higher point if exactly one-half a point), that the
investment performance of the Fund for the performance period then ended
exceeds the percentage change in the investment record of the Index for
such performance period (subject to a maximum of twelve (12) percentage
points). If, however, the investment performance of the Fund for such
performance period shall be exceeded by the percentage change in the
investment record of the Index for such performance period, then such
Basic Fee shall be decreased at the rate of 1/12 of .05% for each
percentage point in excess of two (2), rounded to the nearer point (the
higher point if exactly one-half a point), that the percentage change in
the investment record of the Index exceeds the investment performance of
the Fund for such performance period (subject to a maximum of twelve
(12) percentage points).
The maximum increase or decrease in the Basic Fee for any month may
not exceed 1/12 of .5%; the maximum monthly fee, as adjusted, may not
exceed 1/12 of 1.5%; and the minimum monthly fee, as adjusted, may not
be less than 1/12 of .5% The Fund shall pay such Basic Fee, as so
adjusted, to the Adviser at the end of each performance period.
(2) The Advisor shall, for the year ending December 31, 1997, defer
collection of any portion of the Basic Fee accrued in excess of .5%
until January 1998.
(3) Notwithstanding the preceding provisions of this subparagraph
(a) to the contrary, for each of the eighteen (18) months ending June
30, 1998, the Basic Fee, as so adjusted, shall be reduced if and to the
extent necessary so that such fee does not exceed the fee that would
have been payable to the Adviser for such month under the Investment
Advisory Agreement dated as of December 14, 1993 (the "Prior Agreement")
by and between the Fund and the Adviser.
(b) The investment performance of the Fund for any period shall be
expressed as a percentage of the Fund's net asset value per share of Common
Stock at the beginning of such period and shall mean and be the sum of: (i)
the change in the Fund's net asset value per share of Common Stock during
such period; (ii) the value of the Fund's cash distributions per share of
Common Stock accumulated to the end of such period; and (iii) the value of
capital gains taxes per share of Common Stock paid or payable on
undistributed realized long-term capital gains accumulated to the end of
such period. For this purpose, the value of distributions per share of
Common Stock of realized capital gains, of dividends per share of Common
Stock paid from investment income and the capital gains taxes per share of
Common Stock paid or payable on undistributed realized long-term capital
gains shall be treated as reinvested in shares of the Fund at the net asset
value per share of Common Stock in effect at the close of business on the
record date for the payment of such distributions and dividends and the date
on which provision is made for such taxes, after giving effect to such
distribution, dividends and taxes. Notwithstanding any provisions of this
subparagraph (b) or of the other subparagraphs of Paragraph 4 hereof to the
contrary, the investment performance of the Fund for any period shall not
include, and there shall be excluded from the change in the Fund's net asset
value per share of Common Stock during such period and the value of the
Fund's cash distributions per share of Common Stock accumulated to the end
of such period shall be adjusted for, any increase or decrease in the
investment performance of the Fund for such period computed as set forth in
the preceding two
A-2
<PAGE>
sentences and resulting from the Fund's issuance, sale or repurchase of any
shares of any class of the capital stock or any other securities of the
Fund.
(c) The investment record of the Index for any period, expressed as a
percentage of the Index level at the beginning of such period, shall mean
and be the sum of (i) the change in the level of the Index during such
period; and (ii) the value, computed consistently with the Index, of cash
distributions made by companies whose securities comprise the Index
accumulated to the end of such period. For this purpose, cash distributions
on the securities which comprise the Index shall be treated as reinvested in
the Index at the end of each calendar month following the payment of the
dividend.
(d) Any calculation of the investment performance of the Fund and the
investment record of the Index shall be in accordance with any then
applicable rules of the Securities and Exchange Commission.
(e) In the event of any termination of this Agreement, the fee provided
for in this Paragraph 4 shall be calculated on the basis of a period ending
on the last day on which this Agreement is in effect, subject to a pro rata
adjustment based on the number of days elapsed in the current period as a
percentage of the total number of days in such period.
5. Excess Brokerage Commissions. The Adviser is hereby authorized, to the
fullest extent now or hereafter permitted by law, to cause the Fund 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 over-all
responsibilities with respect to the Fund and its other accounts.
6. Limitations on the Employment of the Adviser. The services of the Adviser
to the Fund 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 Fund 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 to the Fund, 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 directly
by the Board of Directors of the Fund, 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
director, 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 and/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
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, and the Fund 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 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
A-3
<PAGE>
connection with the performance of any of its duties or obligations under this
Agreement or otherwise as an investment adviser of the Fund. 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 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
directors 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. The Prior Agreement
(other than the provisions of Paragraph 8 thereof, which shall remain in full
force and effect) shall terminate at the close of business on December 31, 1996.
This Agreement shall become effective on January 1, 1997, and shall remain in
effect until April 30, 1998 and thereafter shall continue automatically for
successive annual periods from May 1 to April 30, provided that such continuance
is specifically approved at least annually by (a) the vote of the Fund's
directors, including a majority of such directors 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 Fund and the vote of the
Fund's directors, including a majority of such directors 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
sixty (60) days' written notice by the vote of a majority of the outstanding
voting securities of the Fund or by the vote of a majority of the Fund's
directors 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.
10. Name. The Fund may, so long as this Agreement remains in effect, use
"Royce" as part of its name. The Adviser 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, so
refrain from using such name.
11. Notices. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
Royce Micro-Cap Trust, Inc.
By: -----------------------------------
Quest Advisory Corp.
By: -----------------------------------
A-4
<PAGE>
PROXY ROYCE MICRO-CAP TRUST, INC. PROXY
1414 Avenue of the Americas
New York, N.Y. 10019
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Charles M. Royce and John E. Denneen, or either
of them acting in the absence of the other, as Proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse, all shares of the Fund held of record by the
undersigned on November 5, 1996, at the Special Meeting of Stockholders to be
held on December 3, 1996, or at any adjournment thereof.
- - -----------------------------------------------------------------------------
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED
ENVELOPE.
- - -----------------------------------------------------------------------------
Please sign exactly as name appears on other side. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- - -----------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- - ------------------------------------ ---------------------------------
- - ------------------------------------ ---------------------------------
- - ------------------------------------ ---------------------------------
PROXY ROYCE MICRO-CAP TRUST, INC. PROXY
1414 Avenue of the Americas
New York, N.Y. 10019
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Charles M. Royce and John E. Denneen, or either
of them acting in the absence of the other, as Proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse, all shares of the Fund held of record by the
undersigned on November 5, 1996, at the Special Meeting of Stockholders to be
held on December 3, 1996, or at any adjournment thereof.
- - -----------------------------------------------------------------------------
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED
ENVELOPE.
- - ------------------------------------------------------------------------------
Please sign exactly as name appears on other side. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- - ------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- - ------------------------------------ ----------------------------------
- - ------------------------------------ ----------------------------------
- - ------------------------------------ ----------------------------------
<PAGE>
LEFT COLUMN
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- - -----------------------------------------------------
REGISTRATION
- - -----------------------------------------------------
Please be sure to sign and date this Proxy. Date
- - -----------------------------------------------------
____Shareholder sign here_______Co-owner sign here___
RIGHT COLUMN
For Against Abstain
1. APPROVAL OF NEW INVESTMENT [ ] [ ] [ ]
ADVISORY AGREEMENT.
2. THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS
MAY COME BEFORE THE MEETING.
This Proxy when properly executed will be voted in the manner
directed by the undersigned stockholder. If no direction is
made, this Proxy will be voted for Proposal 1.
ROYCE MICRO-CAP TRUST, INC.
Mark box at right if comments or address change have [ ]
been noted on the reverse side of this card.
RECORD DATE SHARES:
LEFT COLUMN
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- - -----------------------------------------------------
REGISTRATION
- - -----------------------------------------------------
Please be sure to sign and date this Proxy. Date
- - -----------------------------------------------------
____Shareholder sign here_______Co-owner sign here___
RIGHT COLUMN
For Against Abstain
1. APPROVAL OF NEW INVESTMENT [ ] [ ] [ ]
ADVISORY AGREEMENT.
2. THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS
MAY COME BEFORE THE MEETING.
This Proxy when properly executed will be voted in the manner
directed by the undersigned stockholder. If no direction is
made, this Proxy will be voted for Proposal 1.
ROYCE MICRO-CAP TRUST, INC.
Mark box at right if comments or address change have [ ]
been noted on the reverse side of this card.
RECORD DATE SHARES:
AMENDED AND RESTATED
BYLAWS
OF
ROYCE MICRO-CAP TRUST, INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the
stockholders of Royce Micro-Cap Trust, Inc. (the "Corporation")
shall be held on a date fixed from time to time by the Board of
Directors within the thirty-one (31) day period ending on April
30 of each calendar year. An annual meeting may be held at any
place in the United States, in or out of the State of Maryland,
as may be determined by the Board of Directors, and shall be
designated in the notice of the meeting, and at the time
specified by the Board of Directors. Unless otherwise provided
by statute, the Corporation's Articles of Incorporation or these
Bylaws, any business of the Corporation may be transacted at an
annual meeting without being specifically designated in the
notice.
SECTION 2. Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise
prescribed by statute or by the Corporation's Articles of
Incorporation, may be held at any place within the United States,
and may be called at any time by the Board of Directors or by the
President, and shall be called by the President or Secretary at
the request in writing of a majority of the Board of Directors or
at the request in writing of stockholders entitled to cast at
least a majority of the votes entitled to be cast at the meeting
upon payment by such stockholders to the Corporation of the
reasonably estimated cost of preparing and mailing a notice of
the meeting (which estimated cost shall be provided to such
stockholders by the Secretary of the Corporation).
SECTION 3. Notice of Meetings. Written or printed
notice of the purpose or purposes, in the case of a special
meeting, and of the time and place of every meeting of the
stockholders shall be given by the Secretary of the Corporation
to each stockholder of record entitled to vote at the meeting, by
placing the notice in the mail at least ten (10) days, but not
more than ninety (90) days, prior to the date designated for the
meeting, addressed to each stockholder at his address appearing
on the books of the Corporation or supplied by the stockholder to
the Corporation for the purpose of notice. The notice of any
meeting of stockholders may be accompanied by a form of proxy
approved by the Board of Directors in favor of the actions or
persons as the Board of Directors may select. Notice of any
meeting of stockholders shall be deemed waived by any stockholder
who attends the meeting in person or by proxy, or who before or
after the meeting submits a signed waiver of notice that is filed
with the records of the meeting.
SECTION 4. Quorum. The presence in person or by proxy
of stockholders of the Corporation entitled to cast at least a
majority of the votes entitled to be cast shall constitute a
quorum at each meeting of the stockholders, and all questions
shall be decided by a majority of the votes cast on the question
(except with respect to the election of directors, which shall be
by plurality of the votes cast), unless otherwise required by the
laws of the State of Maryland, the Investment Company Act of
1940, as amended, or the Corporation's Articles of Incorporation.
In the absence of a quorum, the stockholders present in person or
by proxy at the meeting, by majority vote and without notice
other than by announcement at the meeting, may adjourn the
meeting from time to time as provided in Section 5 of this
Article I until a quorum shall attend. The stockholders present
at any duly organized meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. The lack of presence
at any meeting in person or by proxy of holders of the number of
shares of stock of the Corporation of the proportion that may be
required by the laws of the State of Maryland, the Investment
Company Act of 1940, as amended, or other applicable statute, the
Corporation's Articles of Incorporation or these Bylaws, for
action upon any given matter shall not prevent action at the
meeting on any other matter or matters that may properly come
before the meeting, so long as there are present, in person or by
proxy, holders of the number of shares of stock of the
Corporation required for action upon the other matter or matters.
SECTION 5. Adjournment. Any meeting of the
stockholders may be adjourned from time to time, without notice
other than by announcement at the meeting at which the
adjournment is taken. At any adjourned meeting at which a quorum
shall be present, any action may be taken that could have been
taken at the meeting originally called. A meeting of the
stockholders may not be adjourned to a date more than one hundred
twenty (120) days after the original record date, unless a new
record date is set by the Board of Directors and further notice
is provided to the stockholders.
SECTION 6. Organization. At every meeting of the
stockholders, the President, or in his absence or inability to
act, a Vice President, or in the absence or inability to act of
the President and all the Vice Presidents, a chairman chosen by
the stockholders, shall act as chairman of the meeting. The
Secretary, or in his absence or inability to act, a person
appointed by the chairman of the meeting, shall act as secretary
of the meeting and keep the minutes of the meeting.
SECTION 7. Order of Business. The order of business
at all meetings of the stockholders shall be as determined by the
chairman of the meeting.
SECTION 8. Voting. Except as otherwise provided by
statute or the Corporation's Articles of Incorporation, each
holder of record of shares of stock of the Corporation having
voting power shall be entitled at each meeting of the
stockholders to one (1) vote for every full share of stock, and
proportional voting rights for fractional shares of stock,
standing in his name on the records of the Corporation as of the
record date determined pursuant to Section 9 of this Article I.
Each stockholder entitled to vote at any meeting of
stockholders may authorize another person or persons to act for
him by a proxy signed by the stockholder or his attorney-in-fact.
A stockholder may authorize another person or persons to act as
proxy by transmitting, or authorizing the transmission of, a
telegram, cablegram, datagram or other means of electronic
transmission to the person or persons authorized to act as proxy
or to a proxy solicitation firm, proxy support service
organization or other person authorized by the person or persons
who will act as proxy to receive the transmission. No proxy
shall be valid after the expiration of eleven (11) months from
the date thereof, unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases in which the proxy states
that it is irrevocable and in which an irrevocable proxy is
permitted by law.
SECTION 9. Fixing of Record Date for Determining
Stockholders Entitled to Notice and to Vote at Meeting. The
Board of Directors may set a record date for the purpose of
determining stockholders entitled to notice of, and to vote at,
any meeting of the stockholders. The record date for a
particular meeting shall be not more than ninety (90) nor fewer
than ten (10) days before the date of the meeting. All persons
who were holders of record of shares as of the record date of a
meeting, and no others, shall be entitled to vote at such meeting
and any adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may,
in advance of any meeting of stockholders, appoint one (1) or
more inspectors to act at the meeting or at any adjournment of
the meeting. If the inspectors shall not be so appointed or if
any of them shall fail to appear or act, the chairman of the
meeting may appoint inspectors. Each inspector, before entering
upon the discharge of his duties, shall, if required by the
chairman of the meeting, take and sign an oath to execute
faithfully the duties of inspector of the meeting with strict
impartiality and according to the best of his ability. The
inspectors shall determine the number of shares outstanding and
the voting power of each share, the number of shares represented
at the meeting, the existence of a quorum and the validity and
effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result and do those acts as
are proper to conduct the election or vote with fairness to all
stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote at the meeting, the inspectors shall
make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact
found by them. No director or candidate for the office of
director shall act as inspector of an election of directors.
Inspectors need not be stockholders of the Corporation.
SECTION 11. Consent of Stockholders in Lieu of
Meeting. Except as otherwise provided by statute or the
Corporation's Articles of Incorporation, any action required to
be taken at any annual or special meeting of stockholders, or any
action that may be taken at any annual or special meeting of the
stockholders, may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the
records of stockholders' meetings: (a) a unanimous written
consent that sets forth the action and is signed by each
stockholder entitled to vote on the matter and (b) a written
waiver of any right to dissent signed by each stockholder
entitled to notice of the meeting but not entitled to vote at the
meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers. Except as otherwise
provided in the Corporation's Articles of Incorporation, the
business and affairs of the Corporation shall be managed under
the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board
of Directors except as conferred on or reserved to the
stockholders by law, by the Corporation's Articles of
Incorporation or by these Bylaws.
SECTION 2. Number, Election and Term of Directors.
The number of directors shall be fixed from time to time by
resolution of the Board of Directors adopted by a majority of the
directors then in office; provided, however, that the number of
directors shall in no event be fewer than three (3) nor, subject
to the charter of the Corporation, more than eleven (11).
Directors shall hold office for one year or until the first
annual election following their election and until their
successors are duly elected and qualify. The directors shall be
elected at the annual meeting of the stockholders, except as
provided in Section 5 of this Article, and each director elected
shall hold office until his successor shall have been elected and
shall have qualified, until his death or until he shall have
resigned or have been removed as provided in these Bylaws, or as
otherwise provided by statute or the Corporation's Articles of
Incorporation. Any vacancy created by an increase in directors
may be filled in accordance with Section 5 of this Article II.
No reduction in the number of directors shall have the effect of
removing any director from office prior to the expiration of his
term unless the director is specifically removed pursuant to
Section 4 of this Article II at the time of the decrease. A
director need not be a stockholder of the Corporation, a citizen
of the United States or a resident of the State of Maryland.
SECTION 3. Resignation. A director of the Corporation
may resign at any time by giving written notice of his
resignation to the Board of Directors or to the President or the
Secretary of the Corporation. Any resignation shall take effect
at the time specified in it or, should the time when it is to
become effective not be specified in it, immediately upon its
receipt. Unless the resignation states otherwise, acceptance of
a resignation shall not be necessary to make it effective.
SECTION 4. Removal of Directors. Any director of the
Corporation may be removed by the stockholders, with or without
cause, by a vote of a majority of the votes entitled to be cast
for the election of directors.
SECTION 5. Vacancies. Subject to the provisions of
the Investment Company Act of 1940, as amended, any vacancies in
the Board of Directors, whether arising from death, resignation,
removal or any other cause except an increase in the number of
directors, shall be filled by a vote of the majority of the
directors then in office even though that majority is less than a
quorum, provided that no vacancy or vacancies shall be filled by
action of the remaining directors if, after the filling of the
vacancy or vacancies, fewer than two-thirds of the directors then
holding office shall have been elected by the stockholders of the
Corporation. A majority of the entire Board in office at the
time of the increase may fill a vacancy that results from an
increase in the number of directors. In the event that at any
time a vacancy exists in any office of a director that may not be
filled by the remaining directors, a special meeting of the
stockholders shall be held as promptly as possible and in any
event within sixty (60) days, for the purpose of filling the
vacancy or vacancies. Any director appointed by the Board of
Directors to fill a vacancy shall hold office only until the next
annual meeting of stockholders of the Corporation and until a
successor has been elected and qualifies or until his earlier
death, resignation or removal.
SECTION 6. Place of Meetings. Meetings of the Board
of Directors may be held at any place that the Board of Directors
may from time to time determine or that is specified in the
notice of the meeting.
SECTION 7. Regular Meetings. Regular meetings of the
Board of Directors may be held without notice at the time and
place determined by the Board of Directors.
SECTION 8. Special Meetings. Special meetings of the
Board of Directors may be called by a majority of the directors
of the Corporation or by the President.
SECTION 9. Annual Meeting. The annual meeting of the
Board of Directors shall be held as soon as practicable after the
meeting of stockholders at which the directors were elected. No
notice of such annual meeting shall be necessary if held
immediately after the adjournment, and at the site, of the
meeting of stockholders. If not so held, notice shall be given
as hereinafter provided for special meetings of the Board of
Directors.
SECTION 10. Notice of Special Meetings. Notice of
each special meeting of the Board of Directors shall be given by
the Secretary or the President as hereinafter provided. Each
notice shall state the time and place of the meeting and shall be
delivered to each director, either personally or by telephone or
other standard form of telecommunication, at least twenty-four
(24) hours before the time at which the meeting is to be held, or
by first-class mail, postage prepaid, addressed to the director
at his residence or usual place of business, and mailed at least
three (3) days before the day on which the meeting is to be held.
SECTION 11. Waiver of Notice of Meetings. Notice of
any special meeting need not be given to any director who shall,
either before or after the meeting, sign a written waiver of
notice that is filed with the records of the meeting or who shall
attend the meeting.
SECTION 12. Quorum and Voting. One-third (1/3) of the
members of the entire Board of Directors shall be present in
person at any meeting of the Board so as to constitute a quorum
for the transaction of business at the meeting, and, except as
otherwise expressly required by statute, the Corporation's
Articles of Incorporation, these Bylaws, the Investment Company
Act of 1940, as amended, or any other applicable statute, the act
of a majority of the directors present at any meeting at which a
quorum is present shall be the act of the Board. In the absence
of a quorum at any meeting of the Board, a majority of the
directors present may adjourn the meeting to another time and
place, and notice of any adjourned meeting shall be given to the
directors who were not present at the time of the adjournment
and, unless the time and place were announced at the meeting at
which the adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is present, any business may
be transacted that might have been transacted at the meeting as
originally called.
SECTION 13. Organization. The President or, in his
absence or inability to act, another director chosen by a
majority of the directors present shall act as chairman of the
meeting and preside at the meeting. The Secretary (or, in his
absence or inability to act, any person appointed by the
chairman) shall act as secretary of the meeting and keep the
minutes of the meeting.
SECTION 14. Committees. The Board of Directors may
designate one (1) or more committees of the Board of Directors,
each consisting of one (1) or more directors. To the extent
provided in the resolution and permitted by law, the committee or
committees shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the
Corporation. Any committee or committees shall have the name or
names determined from time to time by resolution adopted by the
Board of Directors. Each committee shall keep regular minutes of
its meetings and provide those minutes to the Board of Directors
when required. The members of a committee present at any
meeting, whether or not they constitute a quorum, may appoint a
director to act in the place of an absent member.
SECTION 15. Written Consent of Directors in Lieu of a
Meeting. Subject to the provisions of the Investment Company Act
of 1940, as amended, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee of
the Board may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes
of the proceedings of the Board or committee.
SECTION 16. Telephone Conference. Members of the
Board of Directors or any committee of the Board may participate
in any Board or committee meeting by means of a conference
telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute
presence in person at the meeting.
SECTION 17. Compensation. Each director shall be
entitled to receive such compensation, if any, as may from time
to time be fixed by the Board of Directors, including a fee for
each meeting of the Board or any committee thereof, regular or
special, he attends. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in traveling to
and from the place of a Board or committee meeting.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of
the Corporation shall be a President, a Secretary and a
Treasurer, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect or appoint one (1)
or more Vice Presidents and may also appoint any other officers,
agents and employees it deems necessary or proper. Any two (2)
or more offices may be held by the same person, except the office
of President and Vice President, but no officer shall execute,
acknowledge or verify in more than one capacity any instrument
required by law to be executed, acknowledged or verified in more
than one capacity. Officers shall be elected by the Board of
Directors each year at its first meeting held after the annual
meeting of stockholders, each to hold office until the meeting of
the Board following the next annual meeting of the stockholders
and until his successor shall have been duly elected and shall
have qualified, until his death or until he shall have resigned
or have been removed, as provided by these Bylaws. The Board of
Directors may from time to time elect such officers (including
one or more Assistant Vice Presidents, one or more Assistant
Treasurers and one or more Assistant Secretaries) and may
appoint, or delegate to the President the power to appoint, such
agents as may be necessary or desirable for the business of the
Corporation. Such other officers and agents shall have such
duties and shall hold their offices for such terms as may be
prescribed by the Board or by the appointing authority.
SECTION 2. Resignations. Any officer of the
Corporation may resign at any time by giving written notice of
his resignation to the Board of Directors, the President or the
Secretary. Any resignation shall take effect at the time
specified therein or, if the time when it shall become effective
is not specified therein, immediately upon its receipt. Unless
otherwise stated in the resignation, the acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. Removal of Officer, Agent or Employee. Any
officer, agent or employee of the Corporation may be removed by
the Board of Directors, with or without cause, at any time if the
Board of Directors in its judgment finds that the best interests
of the Corporation will be served thereby, and the Board may
delegate the power of removal as to agents and employees not
elected or appointed by the Board of Directors. Removal shall be
without prejudice to the person's contract rights, if any, but
the appointment of any person as an officer, agent or employee of
the Corporation shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office,
whether arising from death, resignation, removal or any other
cause, may be filled for the unexpired portion of the term of the
office that shall be vacant, in the manner prescribed in these
Bylaws for the regular election or appointment to the office.
SECTION 5. Compensation. The compensation of the
officers of the Corporation shall be fixed by the Board of
Directors, but this power may be delegated to any officer with
respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by
the Board, any officer, agent or employee of the Corporation
shall give a bond or other security for the faithful performance
of his duties, in an amount and with any surety or sureties as
the Board may require.
SECTION 7. President. The President shall be the
chief executive officer of the Corporation and shall preside at
all meetings of the stockholders and of the Board of Directors.
The President shall, subject to the control of the Board of
Directors, have general charge of the business and affairs of the
Corporation and may employ and discharge employees and agents of
the Corporation, except those elected or appointed by the Board,
and he may delegate these powers.
SECTION 8. Vice President. Each Vice President shall
have the powers and perform the duties that the Board of
Directors or the President may from time to time prescribe.
SECTION 9. Treasurer. Subject to the provisions of
any contract that may be entered into with any custodian pursuant
to authority granted by the Board of Directors, the Treasurer
shall have charge of all receipts and disbursements of the
Corporation and shall have or provide for the custody of the
Corporation's funds and securities; he shall have full authority
to receive and give receipts for all money due and payable to the
Corporation, and to endorse checks, drafts and warrants, in its
name and on its behalf, and to give full discharge for the same;
he shall deposit all funds of the Corporation, except those that
may be required for current use, in such banks or other places of
deposit as the Board of Directors may from time to time
designate; and he shall, in general, perform all duties incident
to the office of Treasurer and such other duties as may from time
to time be assigned to him by the Board of Directors or the
President.
SECTION 10. Secretary. The Secretary shall:
(a) Keep or cause to be kept, in one or more
books provided for the purpose, the minutes of all meetings of
the Board of Directors, the committees of the Board and the
stockholders;
(b) See that all notices are duly given in
accordance with the provisions of these Bylaws and as required by
law;
(c) Be custodian of the records and the seal of
the Corporation and affix and attest the seal to all stock
certificates of the Corporation (unless the seal of the
Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other
documents to be executed on behalf of the Corporation under its
seal;
(d) See that the books, reports, statements,
certificates and other documents and records required by law to
be kept and filed are properly kept and filed; and
(e) In general, perform all the duties incident
to the office of Secretary and such other duties as from time to
time may be assigned to him by the Board of Directors or the
President.
SECTION 11. Delegation of Duties. In case of the
absence of any officer of the Corporation, or for any other
reason that the Board of Directors may deem sufficient, the Board
may confer for the time being the powers or duties, or any of
them, of such officer upon any other officer or upon any
director.
ARTICLE IV
STOCK
SECTION 1. Stock Certificates. To the extent provided
by the Board of Directors, each holder of stock of the
Corporation shall be entitled to have a certificate or
certificates representing shares of stock of the Corporation
owned by him. Such certificates shall be in a form approved by
the Board, signed by or in the name of the Corporation by the
President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer
and sealed with the seal of the Corporation. Any or all of the
signatures or the seal on the certificate may be facsimiles. In
case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar
before the certificate is issued, it may nevertheless be issued
by the Corporation with the same effect as if the officer,
transfer agent or registrar was still in office at the date of
issue.
SECTION 2. Stock Ledger. There shall be maintained a
stock ledger containing the name and address of each stockholder
and the number of shares of stock of each class the stockholder
holds. The stock ledger may be in written form or any other form
which can be converted within a reasonable time into written form
for visual inspection. The original or a duplicate of the stock
ledger shall be kept at the principal office of the Corporation,
at the office of the transfer agent for such shares or at any
other office or agency specified by the Board of Directors.
SECTION 3. Transfers of Shares. Transfers of shares
of stock of the Corporation shall be made on the stock records of
the Corporation only by the registered holder of the shares, or
by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or
certificates, if issued, for the shares properly endorsed or
accompanied by a duly executed stock transfer power and the
payment of all taxes thereon. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the
record of stockholders as the owner of the share or shares for
all purposes, including, without limitation, the rights to
receive dividends or other distributions and to vote as the
owner, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or
shares on the part of any other person.
SECTION 4. Regulations. The Board of Directors may
authorize the issuance of uncertificated securities if permitted
by law. If stock certificates are issued, the Board of Directors
may make any additional rules and regulations, not inconsistent
with these Bylaws, as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of stock of
the Corporation. The Board may appoint, or authorize any officer
or officers to appoint, one or more transfer agents or one or
more transfer clerks and one or more registrars and may require
all certificates for shares of stock to bear the signature or
signatures of any of them.
SECTION 5. Lost, Destroyed or Mutilated Certificates.
The holder of any certificate representing shares of stock of the
Corporation shall immediately notify the Corporation of its loss,
destruction or mutilation, and the Corporation may issue a new
certificate of stock in the place of any certificate issued by it
that has been alleged to have been lost or destroyed or that
shall have been mutilated. The Board may, in its absolute
discretion, require the owner (or his legal representative) of a
lost, destroyed or mutilated certificate to give to the
Corporation a bond in a sum, limited or unlimited, and form and
with any surety or sureties, as the Board in its absolute
discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged
loss or destruction of any such certificate or issuance of a new
certificate. Anything herein to the contrary notwithstanding,
the Board of Directors may, in its absolute discretion, refuse to
issue any such new certificate, except pursuant to legal
proceedings under the laws of the State of Maryland.
SECTION 6. Fixing of Record Date for Dividends,
Distributions, etc. The Board may fix, in advance, a date not
more than ninety (90) days preceding the date fixed for the
payment of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of the
Corporation, or for the delivery of evidences of rights or
evidences of interests arising out of any change, conversion or
exchange of common stock or other securities, as the record date
for the determination of the stockholders entitled to receive any
such dividend, distribution, allotment, rights or interests, and
in such case only the stockholders of record at the time so fixed
shall be entitled to receive such dividend, distribution,
allotment, rights or interests.
SECTION 7. Information to Stockholders and Others.
Any stockholder of the Corporation or his agent may, during the
Corporation's usual business hours, inspect and copy the
Corporation's Bylaws, minutes of the proceedings of its
stockholders, annual statements of its affairs and voting trust
agreements on file at its principal office.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers.
Any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a
current or former director or officer of the Corporation, or is
or was serving while a director or officer of the Corporation at
the request of the Corporation as a director, officer, partner,
trustee, employee, agent or fiduciary of another domestic or
foreign corporation, partnership, joint venture, trust,
enterprise or employee benefit plan shall be indemnified by the
Corporation against judgments, penalties, fines, excise taxes,
settlements and reasonable expenses (including attorneys' fees)
actually incurred by such person in connection with such action,
suit or proceeding to the fullest extent permissible under the
Maryland General Corporation Law and the Investment Company Act
of 1940, as amended, as those statutes are now or hereafter in
force, except that such indemnity shall not protect any such
person against any liability to the Corporation or any
stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct").
SECTION 2. Advances. Any current or former director
or officer of the Corporation claiming indemnification within the
scope of this Article V shall be entitled to advances from the
Corporation for payment of the reasonable expenses incurred by
him in connection with proceedings to which he is a party in the
manner and to the fullest extent permissible under the Maryland
General Corporation Law and the Investment Company Act of 1940,
as amended, as those statutes are now or hereafter in force;
provided, however, that the person seeking indemnification shall
provide to the Corporation a written affirmation of his good
faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written
undertaking to repay any such advance, if it should ultimately be
determined that the standard of conduct has not been met, and
provided further that at least one (1) of the following
additional conditions is met: (a) the person seeking
indemnification shall provide a security in form and amount
acceptable to the Corporation for his undertaking; (b) the
Corporation is insured against losses arising by reason of the
advance; or (c) a majority of a quorum of directors of the
Corporation who are neither "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as
amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion,
shall determine, based on a review of facts readily-available to
the Corporation at the time the advance is proposed to be made,
that there is reason to believe that the person seeking
indemnification will ultimately be found to be entitled to
indemnification.
SECTION 3. Procedure. At the request of any current
or former director or officer, or any employee or agent whom the
Corporation proposes to indemnify, the Board of Directors shall
determine, or cause to be determined, in a manner consistent with
the Maryland General Corporation Law and the Investment Company
Act of 1940, as amended, as those statutes are now or hereafter
in force, whether the standards required by this Article V and
Section 2-418 of the Maryland General Corporation Law have been
met; provided, however, that indemnification shall be made only
following: (a) a final decision on the merits by a court or
other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct
or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the person
to be indemnified was not liable by reason of disabling conduct,
by (i) the vote of a majority of a quorum of disinterested non-
party directors or (ii) an independent legal counsel in a written
opinion.
SECTION 4. Indemnification of Employees and Agents.
Employees and agents who are not officers or directors of the
Corporation may be indemnified, and reasonable expenses may be
advanced to such employees or agents, in accordance with the
procedures set forth in this Article V to the extent permissible
under the Maryland General Corporation Law and the Investment
Company Act of 1940, as amended, as those statutes are now or
hereafter in force, and to such further extent, consistent with
the foregoing, as may be provided by action of the Board of
Directors or by contract.
SECTION 5. Other Rights. The indemnification provided
by this Article V shall not be deemed exclusive of any other
right, with respect to indemnification or otherwise, to which
those seeking such indemnification may be entitled under any
insurance or other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action by a
director or officer of the Corporation in his capacity as such
and as to action by such person in another capacity while holding
such office or position, and shall continue as to a person who
has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a
person.
SECTION 6. Insurance. The Corporation shall have the
power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the
Corporation, or who, while a director, officer, employee or agent
of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another domestic or foreign corporation,
partnership, joint venture, trust, enterprise or employee benefit
plan, against any liability asserted against and incurred by him
in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify
him against such liability.
ARTICLE VI
SEAL
The seal of the Corporation shall be circular in form and
shall bear the name of the Corporation, the year of its
incorporation, the words "Corporate Seal" and "Maryland" and any
emblem or device approved by the Board of Directors. The seal
may be used by causing it or a facsimile to be impressed or
affixed or in any other manner reproduced, or by placing the word
"(Seal)" adjacent to the signature of the authorized officer of
the Corporation.
ARTICLE VII
FISCAL YEAR
SECTION 1. Fiscal Year. The Corporation's fiscal year
shall be fixed by the Board of Directors.
SECTION 2. Accountant.
(a) The Corporation shall employ an independent
public accountant or a nationally-recognized firm of independent
public accountants as its Accountant to examine the accounts of
the Corporation and to certify financial statements of the
Corporation. The Accountant's certificates and reports shall be
addressed both to the Board of Directors and to the stockholders.
The employment of the Accountant shall be conditioned upon the
right of the Corporation to terminate the employment forthwith
without any penalty by vote of a majority of the outstanding
voting securities at any stockholders' meeting called for that
purpose.
(b) A majority of the members of the Board of
Directors who are not "interested persons" (as such term is
defined in the Investment Company Act of 1940, as amended) of the
Corporation shall select the Accountant at any meeting held
within thirty (30) days before or after the beginning of the
fiscal year of the Corporation or before the annual stockholders'
meeting in that year. Such selection shall be submitted for
ratification or rejection at the next succeeding annual
stockholders' meeting. If such meeting shall reject such
selection, the Accountant shall be selected by majority vote of
the Corporation's outstanding voting securities, either at the
meeting at which the rejection occurred or at a subsequent
meeting of stockholders called for that purpose.
(c) Any vacancy occurring between annual
meetings, due to the resignation of the Accountant, may be filled
by the vote of a majority of the members of the Board of
Directors who are not "interested persons" of the Corporation, as
that term is defined in the Investment Company Act of 1940, at a
meeting called for the purpose of voting on such action.
ARTICLE VIII
CUSTODY OF SECURITIES
SECTION 1. Employment of a Custodian. The Corporation
shall place and at all times maintain in the Custodian (including
any sub-custodian for the Custodian) all funds, securities and
similar investments owned by the Corporation. The Custodian (and
any sub-custodian) shall be an institution conforming to the
requirements of Section 17(f) of the Investment Company Act of
1940, as amended, and the rules of the Securities and Exchange
Commission thereunder. The Custodian shall be appointed from
time to time by the Board of Directors, which shall fix its
remuneration.
Subject to such rules, regulations and orders as the
Securities and Exchange Commission may adopt, the Corporation may
direct the Custodian to deposit all or any part of the securities
owned by the Corporation in a system for the central handling of
securities established by a national securities exchange or a
national securities association registered with the Securities
and Exchange Commission, or otherwise in accordance with the
Investment Company Act of 1940, as amended, pursuant to which
system all securities of any particular class of any issuer
deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical
delivery of such securities, provided that all such deposits
shall be subject to withdrawal only upon the order of the
Corporation or the Custodian.
SECTION 2. Termination of Custodian Agreement. Upon
termination of the Custodian Agreement or inability of the
Custodian to continue to serve, the Board of Directors shall
promptly appoint a successor Custodian, but in the event that no
successor Custodian can be found who has the required
qualifications and is willing to serve, the Board of Directors
shall call as promptly as possible a special meeting of the
stockholders to determine whether the Corporation shall function
without a Custodian or shall be liquidated. If so directed by
vote of the holders of a majority of the outstanding shares of
stock entitled to vote of the Corporation, the Custodian shall
deliver and pay over all property of the Corporation held by it
as specified in such vote.
ARTICLE IX
AMENDMENTS
These Bylaws may be amended or repealed by the
affirmative vote of a majority of the Board of Directors at any
regular or special meeting of the Board of Directors, subject to
the requirements of the Investment Company Act of 1940, as
amended.
Dated: December 18, 1996
N-SAR ATTACHMENT
Item 77(C)
At a Special Meeting of Stockholders of the Registrant held on December
3, 1996, the Stockholders approved a new Investment Advisory Agreement
between the Registrant and Quest Advisory Corp. as follows:
Votes Cast For Votes Cast Against Votes Abstained
8,397,503 108,366 57,232
Board of Directors
Royce Micro-Cap Trust, Inc.
In planning and performing our audit of the financial statements of
Royce Micro-Cap Trust, Inc. for the year ended December 31, 1996,
we considered its internal control structure, including procedures for
safeguarding securities, in order to determine our auditing procedures for
the purpose of expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, not to provide assurance on the
internal control structure.
The management of Royce Micro-Cap Trust, Inc. is responsible for
establishing and maintaining an internal control structure. In fulfilling
this responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control structure
policies and procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not absolute,
assurance that assets are safeguarded against loss from unauthorized use or
disposition and that transactions are executed in accordance with management's
authorization and recorded properly to permit preparation of financial
statements in conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts
that would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However, we noted no
matters involving the internal control structure, including procedures for
safeguarding securities, that we consider to be material weaknesses as defined
above as of December 31, 1996.
This report is intended solely for the information and use of management and
the Securities and Exchange Commission.
ERNST & YOUNG LLP
February 25, 1997
