DEF 14A 1 royce57059-def14a.txt DEFINITIVE PROXY As filed with the Securities and Exchange Commission on September 5, 2002 PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X] Check the appropriate box: Filed by a Party other than the Registrant [ ] [ ] Preliminary Proxy Statement [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ROYCE MICRO-CAP TRUST, INC. -------------------------------------------------------- (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) SAME AS ABOVE -------------------------------------------------------- (NAME OF PERSON FILING PROXY STATEMENT) Payment of filing fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:1 (Set forth the amount on which the filing fee is calculated and state how it was determined.) ------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------- [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------- NY1 5238966v8 ROYCE MICRO-CAP TRUST, INC. 1414 AVENUE OF THE AMERICAS NEW YORK, NY 10019 ------------------ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ------------------ TO BE HELD ON SEPTEMBER 30, 2002 To the Stockholders of: ROYCE MICRO-CAP TRUST, INC. NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting") 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 10019 on Monday, September 30, 2002, at 2:00 p.m. (Eastern time), for the following purposes: 1. To elect a Board of eight Directors of the Fund, to hold office until the next Annual Meeting of Stockholders and until their successors have been duly elected and qualified or until their earlier resignation or removal: (i) six Directors to be elected by the holders of the Fund's Common Stock and its 7.75% Cumulative Preferred Stock (the "Preferred Stock") voting together as a single class, and (ii) two Directors to be elected only by the holders of the Fund's Preferred Stock voting as a separate class; and 2. To transact such other business as may properly come before the Meeting or any adjournment thereof. The Board of Directors of the Fund has set the close of business on August 26, 2002 as the record date for determining those stockholders entitled to vote at the Meeting or any adjournment thereof, and only holders of record at the close of business on that day will be entitled to vote. A complete list of the stockholders of the Fund entitled to vote at the Meeting will be available and open to the examination of any stockholder of the Fund for any purpose relevant to the Meeting during ordinary business hours from and after September 16, 2002, at the office of the Fund, 1414 Avenue of the Americas, New York, New York. IMPORTANT TO SAVE THE FUND THE EXPENSE OF ADDITIONAL PROXY SOLICITATION, PLEASE MARK 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 accompanying 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 August 30, 2002 PROXY STATEMENT ROYCE MICRO-CAP TRUST, INC. 1414 AVENUE OF THE AMERICAS NEW YORK, NY 10019 ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 30, 2002 INTRODUCTION The enclosed Proxy is solicited on behalf of the Board of Directors for use at the Annual Meeting of Stockholders (the "Meeting") of Royce Micro-Cap Trust, Inc. (the "Fund"), to be held at the offices of the Fund, 1414 Avenue of the Americas, New York, New York 10019, on Monday, September 30, 2002, at 2:00 p.m. (Eastern time) and at any adjournments thereof. The approximate mailing date of this Proxy Statement is September 4, 2002. All properly executed Proxies received prior to the Meeting will be voted at the Meeting in accordance with the instructions marked thereon or otherwise as provided therein. Unless instructions to the contrary are marked, Proxies will be voted "FOR" the election of the Director nominees of the Fund. You may revoke your Proxy at any time before it is exercised by sending written instructions to the Secretary of the Fund at the Fund's address indicated above 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 Board of Directors of the Fund has set the close of business on August 26, 2002 as the record date (the "Record Date") for determining those stockholders entitled to vote at the Meeting or any adjournment thereof, and only holders of record at the close of business on that day will be entitled to vote. Stockholders on the Record Date will be entitled to one vote for each outstanding share of Common Stock and 7.75% Cumulative Preferred Stock (the "Preferred Stock" and, together with the Common Stock, "Stock" or "shares") held (proportional voting rights for fractional shares held), with no shares having cumulative voting rights. As of the Record Date, there were 17,199,142 shares of Common Stock and 1,600,000 shares of Preferred Stock of the Fund outstanding. 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 or Preferred Stock as of the Record Date: CLASS/SERIES AMOUNT AND PERCENT OF NAME AND ADDRESS OF OWNER OF STOCK NATURE OF OWNERSHIP CLASS/SERIES ------------------------- -------- ------------------- ------------ Charles M. Royce Common 897,693 shares-- 5.2% 1414 Avenue of the Americas Beneficial (sole voting New York, NY 10019 and investment power) Yale University Common 2,938,089 shares-- 17.1% 230 Prospect Street Beneficial (sole voting New Haven, CT 06511-2107 and investment power) Cede & Co.* Common 16,617,274 shares-- 96.6% Depository Trust Company Record* P.O. Box #20 7.75% Preferred 1,594,091 shares-- 96.6% Bowling Green Station Record* New York, NY 10028 ---------- * Shares held by brokerage firms, banks and other financial intermediaries on behalf of beneficial owners are registered in the name of Cede & Co. The Board of Directors knows of no business other than that stated in Proposal 1 of the Notice of Meeting that will be presented for consideration at the Meeting. If any other matter is properly presented at the Meeting or any adjournment thereof, it is the intention of the persons named on the enclosed proxy card to vote in accordance with their best judgment. SUMMARY OF VOTING RIGHTS ON PROXY PROPOSALS ------------------------------------------------------------------------------ PROPOSAL COMMON STOCKHOLDERS PREFERRED STOCKHOLDERS ------------------------------------------------------------------------------ Common and Preferred Preferred Stockholders, ELECTION OF DIRECTORS Stockholders, voting voting as a separate class, elect six class, elect two Directors additional Directors ------------------------------------------------------------------------------ 2 PROPOSAL 1: ELECTION OF DIRECTORS At the Meeting, the Board of Directors of the Fund will be elected to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified or until their earlier resignation or removal. The holders of both Common Stock and Preferred Stock, voting together as a single class, are entitled to elect six directors. The holders of Preferred Stock, voting as a separate class, are entitled to elect the remaining two directors. The Board of Directors has nominated the following six persons to continue as Directors of the Fund, to be elected by holders of both Common Stock and Preferred Stock: Charles M. Royce, Donald R. Dwight, Mark R. Fetting, Richard M. Galkin, Stephen L. Isaacs and G. Peter O'Brien. The Board of Directors has nominated the following two persons to continue as Directors of the Fund, to be elected by holders of the Preferred Stock: William L. Koke and David L. Meister. Each of these persons has agreed to serve if elected, and the Fund's management has no reason to believe that any of them will be unavailable for service as a Director. However, if any of them become unwilling or unable to serve, the persons named in the accompanying Proxy will vote for the election of such other persons, if any, as the Board of Directors may nominate. Certain biographical and other information concerning the nominees who are "interested persons" as defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"), of the Fund, including their designated classes, is set forth below. 3
TERM OF OFFICE NUMBER AND OF ROYCE OTHER NAME, ADDRESS* AND POSITIONS LENGTH FUNDS' PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TO BE PORTFOLIOS COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED ELECTED BY OVERSEEN DIRECTORSHIPS ---------------------- --- -------- ------ ---------- -------- ------------- Charles M. Royce*** 62 Director, 1986 Common 17 None President, manager/director President[dagger] and of Royce & Associates, LLC and Preferred and its predecessor, Royce & Treasurer[dagger] Associates, Inc. (collectively, "R&A"), the Fund's investment adviser; Director, President and Treasurer of the Fund, Royce Value Trust, Inc. ("RVT") and Royce Focus Trust, Inc. ("RFT"), closed-end diversified management investment companies of which R&A is the investment adviser; Trustee, President and Treasurer of The Royce Fund ("TRF") and Royce Capital Fund ("RCF"), open-end diversified management investment companies of which R&A is the investment adviser (the Fund, RVT, RFT, TRF and RCF collectively, "The Royce Funds"); Secretary and sole director of Royce Fund Services, Inc. ("RFS"), a wholly-owned subsidiary of R&A; and managing general partner of Royce Management Company ("RMC"), the general partner of various private investment limited partnerships (until October 2001).
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TERM OF OFFICE NUMBER AND OF ROYCE OTHER NAME, ADDRESS* AND POSITIONS LENGTH FUNDS' PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TO BE PORTFOLIOS COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED ELECTED BY OVERSEEN DIRECTORSHIPS ---------------------- --- -------- ------ ---------- -------- ------------- Mark R. Fetting*** 47 Director 2001 Common 17 Director of Executive Vice President of Legg and registered Mason, Inc. ("Legg Mason"); Preferred investment Director of R&A; and Division companies President and Senior Officer, constituting Prudential Financial Group, Inc. four Legg and related companies, including Mason Funds Fund Boards and consulting services to subsidiary companies (from 1991 to 2000). Mr. Fetting's prior business experience includes having served as Partner, Greenwich Associates, and Vice President, T. Rowe Price Group, Inc. ----------------
* Mr. Royce's address is c/o Royce & Associates, LLC, 1414 Avenue of the Americas, New York, New York 10019. Mr. Fetting's address is c/o Legg Mason, Inc., 100 Light Street, Baltimore, Maryland 21202. ** Each of the nominees is also a director/trustee of certain other investment companies for which R&A acts as an investment adviser. *** "Interested person," as defined in the Investment Company Act, of the Fund. [dagger] Elected by and serves at the pleasure of the Board of Directors. Certain biographical and other information concerning the nominees who are not "interested persons," as defined in the Investment Company Act, of the Fund, including their designated classes, is set forth below. 5
TERM OF OFFICE NUMBER AND OF ROYCE OTHER NAME, ADDRESS* AND POSITIONS LENGTH FUNDS' PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TO BE PORTFOLIOS COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED ELECTED BY OVERSEEN DIRECTORSHIPS ---------------------- --- -------- ------ ---------- -------- ------------- Donald R. Dwight 71 Director 1998 Common 17 Trustee President of Dwight and of the Partners, Inc., corporate Preferred registered communications consultants; investment and Chairman (from 1982 companies until March 1998) of constituting Newspapers of New England, the 94 Eaton Inc. Mr. Dwight's prior Vance Funds experience includes having served as Lieutenant Governor of the Commonwealth of Massachusetts and as President and Publisher of Minneapolis Star and Tribune Company. Richard M. Galkin 64 Director 1986 Common 17 None Private investor; and Mr. Galkin's prior business Preferred experience includes having served as President of Richard M. Galkin Associates, Inc., telecommunications consultants, President of Manhattan Cable Television (a subsidiary of Time Inc.), President of Haverhills Inc. (another Time Inc. subsidiary), President of Rhode Island Cable Television and Senior Vice President of Satellite Television Corp. (a subsidiary of Comsat). Stephen L. Isaacs 62 Director 1986 Common 17 None President of The Center for and Health and Social Policy Preferred (since September 1996); Attorney and President of Health Policy Associates, Inc., consultants. Mr. Isaacs' prior experience includes having served as Director of Columbia University Development Law and Policy Program and Professor at Columbia University.
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TERM OF OFFICE NUMBER AND OF ROYCE OTHER NAME, ADDRESS* AND POSITIONS LENGTH FUNDS' PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TO BE PORTFOLIOS COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED ELECTED BY OVERSEEN DIRECTORSHIPS ---------------------- --- -------- ------ ---------- -------- ------------- William L. Koke 67 Director 2001 Preferred 17 None Financial planner with only Shoreline Financial Consultants. Mr. Koke's prior business experience includes having served as Director of Financial Relations of SONAT, Inc., Treasurer of Ward Foods, Inc. and President of CFC, Inc. David L. Meister 67 Director 2001 Preferred 17 None Chairman and Chief Executive only Officer of The Tennis Channel (since June 2000); and Chief Executive Officer of Seniorlife.com (from December 1999 to May 2000). Mr. Meister's prior business experience includes having served as a consultant to the communications industry, President of Financial News Network, Senior Vice President of HBO, President of Time-Life Films and Head of Broadcasting for Major League Baseball. G. Peter O'Brien 56 Director 2001 Common 17 Director/ Trustee of Colgate and Trustee of University, Director of Preferred registered Pinnacle Holdings, Inc., investment President of Hill House, companies Inc. and Managing constituting Director/Equity Capital 18 Legg Markets Group of Merrill Mason Funds; Lynch & Co. (from 1971 Director of to 1999). Renaissance Capital Greenwich Fund.
---------------- * Messrs. Dwight, Galkin, Isaacs, Koke, Meister and O'Brien's address is c/o Royce & Associates, LLC, 1414 Avenue of the Americas, New York, New York 10019. ** Each of the above nominees is a director/trustee of certain other investment companies for which R&A acts as an investment adviser, is a member of the Fund's audit committee and will continue as a member of the Fund's Audit Committee if re-elected a Director. 7 AUDIT COMMITTEE REPORT The Board of Directors has a standing Audit Committee (the "Audit Committee"), which consists of the Directors who are not "interested persons" of the Fund (the "Independent Directors") within the meaning of Section 2(a)(19) of the Investment Company Act and who are "independent" as defined in the listing standards of the New York Stock Exchange. The current members of the Audit Committee are Donald R. Dwight, Richard M. Galkin, Stephen L. Isaacs, William L. Koke, David L. Meister and G. Peter O'Brien. Mr. Galkin serves as Chairman of the Committee. Although the Board of Directors does not have a standing compensation committee or a nominating committee, the Independent Directors review and nominate candidates to serve as Independent Directors. The Independent Directors generally will not consider nominees recommended by stockholders of the Fund. The principal purposes of the Audit Committee are to: (i) recommend to the Board of Directors the selection, retention or termination of the Fund's independent auditors; (ii) review with the independent auditors the scope, performance and anticipated cost of their audit; (iii) discuss with the independent auditors certain matters relating to the Fund's financial statements, including any adjustment to such financial statements recommended by such independent auditors, or any other results of any audit; (iv) to review on a periodic basis a formal written statement from the independent auditors with respect to their independence, discuss with the independent auditors any relationships or services disclosed in the statement that may impact their objectivity and independence and recommend that the Board of Directors take appropriate action in response to this statement to satisfy itself of the independent auditors' independence; and (v) consider the comments of the independent auditors and management's responses thereto with respect to the quality and adequacy of the Fund's accounting and financial reporting policies and practices and internal controls. The Board of Directors has adopted an Audit Committee Charter for the Fund. The Audit Committee also has (i) received written disclosures and the letter required by Independence Standards Board Standard No. 1 from Tait, Weller & Baker ("TW&B"), independent auditors for the Fund, and (ii) discussed certain matters required to be discussed by Statements on Auditing Standards No. 61 with TW&B. The Audit Committee has considered whether the provision of non-audit services by the Fund's independent auditors is compatible with maintaining their independence. At its meeting held on February 20, 2002, the Audit Committee reviewed and discussed the audit of the Fund's financial statements as of December 31, 2001 and for the fiscal year then ended with Fund management and TW&B. Had any material concerns arisen during the course of the audit and the preparation of the audited financial statements mailed to stockholders and included in the Fund's 2001 Annual Report to Stockholders, the Audit Committee would have been notified by Fund management or TW&B. The 8 Audit Committee received no such notifications. At the same meeting, the Audit Committee recommended to the Board of Directors that the Fund's audited financial statements be included in the Fund's 2001 Annual Report to Stockholders. COMMITTEE AND BOARD OF DIRECTORS MEETINGS During the year ended December 31, 2001, the Board of Directors held six meetings and the Audit Committee held three meetings. Each Director then in office attended 75% or more of the total number of meetings of the Board of Directors held during that year. Each member of the Audit Committee attended more than 75% of the total number of meetings of the Audit Committee held during the period for which he served, except for Stephen L. Isaacs who attended two of the three Audit Committee meetings held during 2001. COMPENSATION OF DIRECTORS AND AFFILIATED PERSONS Each Independent Director receives a base fee of $5,000 per year plus $500 for each meeting of the Board of Directors attended. No Director received remuneration for services as a Director for the year ended December 31, 2001 in addition to or in lieu of this standard arrangement. Set forth below is the aggregate compensation paid by the Fund and the total compensation paid by The Royce Funds to each Independent Director and affiliated person of the Fund for the year ended December 31, 2001. 9 TOTAL PENSION OR COMPENSATION RETIREMENT ESTIMATED FROM THE FUND BENEFITS ANNUAL AND OTHER AGGREGATE ACCRUED AS BENEFITS ROYCE FUNDS COMPENSATION PART OF FUND UPON PAID TO NAME FROM THE FUND EXPENSES RETIREMENT DIRECTORS ---- ------------- -------- ---------- --------- Donald R. Dwight, Director(1) $ 7,500 None None $ 63,750 Richard M. Galkin, Director(2) 7,500 None None 63,750 Stephen L. Isaacs, Director 7,500 None None 63,750 William L. Koke, Director(3) 3,796 None None 51,898 David L. Meister, Director 7,500 None None 63,750 G. Peter O'Brien, Director(4) 1,750 None None 14,975 John D. Diederich, Vice President(5) 25,381 $ 931 None Not applicable ---------------- (1) Includes $1,125 from the Fund ($9,338 from the Fund and other Royce Funds) deferred during 2001 at the election of Mr. Dwight under The Royce Funds' Deferred Compensation Plan for trustees/directors. (2) Includes $7,500 from the Fund ($62,250 from the Fund and other Royce Funds) deferred during 2001 at the election of Mr. Galkin under The Royce Funds' Deferred Compensation Plan for trustees/directors. (3) Mr. Koke was elected a Director of the Fund on July 16, 2001. (4) Mr. O'Brien was elected a Director of the Fund on September 14, 2001. (5) Mr. Diederich resigned as a Director of the Fund on July 11, 2001. The amounts shown represent compensation paid to and benefits accrued by Mr. Diederich as an employee of the Fund and not for his services as Director. OFFICERS OF THE FUND Officers of the Fund are elected each year by the Fund's Board of Directors. The following sets forth information concerning the Fund's officers: 10 NAME, ADDRESS* AND PRINCIPAL OFFICER OF OCCUPATIONS DURING PAST FIVE YEARS AGE OFFICE** FUND SINCE ---------------------------------- --- ------ ---------- Charles M. Royce 62 President 1986 President, manager/director and Chief and Investment Officer of R&A, the Fund's Treasurer investment adviser; Director, President and Treasurer of the Fund, RVT and RFT, closed-end diversified management investment companies of which R&A is the investment adviser; Trustee, President and Treasurer of TRF and RCF, open-end diversified management investment companies of which R&A is the investment adviser; Secretary and sole director of RFS, a wholly-owned subsidiary of R&A; and managing general partner of RMC, the general partner of various private investment limited partnerships (until October 2001). John D. Diederich 51 Vice 1997 Manager/director, Chief Operating Officer President (since October 2001), Chief Financial Officer (since March 2002) and Managing Director of R&A; Vice President of the Fund, RVT, RFT, TRF and RCF; Director of Administration of The Royce Funds; and President of RFS. Jack E. Fockler, Jr. 43 Vice 1995 Director of Marketing, Managing Director and President Vice President of R&A; Vice President of the Fund, RVT, RFT, TRF and RCF; and Vice President of RFS. W. Whitney George 44 Vice 1995 Senior Portfolio Manager, Managing Director President and Vice President of R&A; Vice President of the Fund, RVT, RFT, TRF and RCF. Daniel A. O'Byrne 40 Vice 1994 Director of Administration, Principal and President Vice President of R&A; Vice President of the Fund, RVT, RFT, TRF and RCF. 11 NAME, ADDRESS* AND PRINCIPAL OFFICER OF OCCUPATIONS DURING PAST FIVE YEARS AGE OFFICE** FUND SINCE ---------------------------------- --- ------ ---------- John E. Denneen 35 Secretary April 2002 Deputy General Counsel, Principal, Chief and 1996- Compliance Officer and Secretary of R&A 2001 (since March 2002); Secretary of the Fund, RVT, RFT, TRF and RCF (1996-2001 and since April 2002); Associate General Counsel, Principal and Chief Compliance Officer of R&A (1996-2001) and Principal of Credit Suisse First Boston Private Equity (2001-2002). ----------------- * The address of each officer listed above is c/o Royce & Associates, LLC, 1414 Avenue of the Americas, New York, New York 10019. ** Elected by and serves at the pleasure of the Board of Directors. INTERESTED PERSONS Messrs. Royce and Fetting are "interested persons" of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act due to the positions they hold with R&A and its affiliate Legg Mason, respectively, and their stock ownership in Legg Mason. There are no family relationships between any of the Fund's Directors and officers. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 SECTION 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the officers and Directors of the Fund and persons who own more than ten percent of a registered class of the Fund's equity securities, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission (the "SEC") and the New York Stock Exchange. Officers, Directors and greater than ten percent stockholders are required by SEC regulations to furnish the Fund with copies of all Forms 3, 4 and 5 they file. Based solely on the Fund's review of the copies of such forms and amendments thereto, furnished to it during or with respect to its most recent fiscal year, and written representations from certain reporting persons that they were not required to file Form 5 with respect to the most recent fiscal year, the Fund believes that, except as set forth below, all of its officers, Directors, greater than ten percent beneficial owners and other persons subject to Section 16 of the Exchange Act due to the requirements of Section 30(h) of the Investment Company Act (i.e., any investment adviser or affiliated person of the Fund's investment adviser), have complied with all filing requirements applicable to them with respect to transactions in the Fund's shares during the Fund's most recent fiscal year. Each of Messrs. Fetting, Koke and O'Brien inadvertently made a late Form 3 filing following his election as a Director of the Fund, and each of Messrs. Raymond A. Mason, Chairman, President and 12 Chief Executive Officer of Legg Mason and a director of R&A, and Timothy C. Scheve, Senior Executive Vice President of Legg Mason and a director of R&A, inadvertently made a late Form 3 filing following his election as a director of R&A. STOCK OWNERSHIP Information relating to each Director nominee's ownership as of August 26, 2002 in the Fund and in all registered Royce Funds overseen or to be overseen by each Director nominee is set forth below: ------------------------- ------------------------ ---------------------------- AGGREGATE DOLLAR RANGE OF SECURITIES IN ALL ROYCE FUNDS OVERSEEN BY EACH AGGREGATE DOLLAR RANGE DIRECTOR NOMINEE IN THE NAME OF EQUITY IN THE FUND ROYCE FAMILY OF FUNDS ------------------------- ------------------------ ---------------------------- Interested Director: ------------------------- ------------------------ ---------------------------- Charles M. Royce over $100,000 over $100,000 ------------------------- ------------------------ ---------------------------- Mark R. Fetting $10,000--$50,000 over $100,000 ------------------------- ------------------------ ---------------------------- Non-Interested Directors: ------------------------- ------------------------ ---------------------------- Donald R. Dwight $1--$10,000 over $100,000 ------------------------- ------------------------ ---------------------------- Richard M. Galkin $1--$10,000 over $100,000 ------------------------- ------------------------ ---------------------------- Stephen L. Isaacs $1--$10,000 $50,000--$100,000 ------------------------- ------------------------ ---------------------------- William L. Koke None over $100,000 ------------------------- ------------------------ ---------------------------- David L. Meister None over $100,000 ------------------------- ------------------------ ---------------------------- G. Peter O'Brien $10,000--$50,000 over $100,000 ------------------------- ------------------------ ---------------------------- As of August 26, 2002, no Independent Director or any of their immediate family members directly or indirectly own any securities issued by Legg Mason or any of its affiliates (other than registered investment companies). Mr. Royce has sole voting power and sole investment power as to the shares beneficially owned by him. As of the record date, all Directors and officers of the Fund as a group (13 persons) beneficially owned 928,252 shares of the Fund's Common Stock, constituting 5.4% of the outstanding shares, and no shares of its Preferred Stock. SALE OF SECURITIES OF THE INVESTMENT ADVISER On July 18, 2001, Royce & Associates, Inc. ("Royce"), the predecessor of Royce & Associates, LLC, the Fund's investment adviser (collectively, "R&A"), and Legg Mason announced that they, Royce's shareholders and Royce Management Company had entered into a Stock Purchase Agreement (the "Stock Purchase Agreement"), pursuant to which Royce would be acquired by, and become a wholly-owned subsidiary of, Legg Mason (the "Transaction"). To effect the Transaction, Legg Mason purchased all of Royce's outstanding capital stock for a total purchase price of up to $215 13 million, of which $115 million was paid to Royce's shareholders in cash upon completion of the Transaction and up to $100 million may be paid to them in the future based upon the level of the gross revenues of Royce and its subsidiaries during the six years following the Transaction. Up to 50% of such future consideration may be paid to Royce's shareholders in shares of Legg Mason's common stock. Prior to the Transaction, Royce's shareholders were Charles M. Royce and trusts primarily for the benefit of his children. The Transaction was completed on October 1, 2001, prior to which Messrs. Fetting and O'Brien were nominated and elected as Directors at the Fund's September 14, 2001 annual stockholders meeting. In connection with the Transaction, Legg Mason, Royce, Charles M. Royce and certain other Royce employees entered into a Revenue Sharing Agreement, pursuant to which Legg Mason has designated three members of R&A's Board and Mr. Royce has designated the other two. VOTE REQUIRED A quorum consists of stockholders representing a majority of the outstanding shares of the Fund's Common Stock and/or Preferred Stock, as the case may be, entitled to vote, who are present in person or by proxy, and a plurality of all of the votes cast at a meeting at which a quorum is present is sufficient to elect a Director. THE BOARD OF DIRECTORS RECOMMENDS THAT ALL STOCKHOLDERS VOTE FOR ALL DIRECTOR NOMINEES. ADDITIONAL INFORMATION ADJOURNMENT OF MEETING; OTHER MATTERS In the event that sufficient votes in favor of Proposal 1 in the Notice of Annual Meeting of Stockholders are not received by the time scheduled for the Meeting, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies for such Proposal. Any such adjournment will require the affirmative vote of a majority of the shares present in person or by proxy at the session of the Meeting to be adjourned. The persons named as proxies will vote in favor of such adjournment those proxies which they are entitled to vote in favor of the Proposal. They will vote against any such adjournment those proxies required to be voted against the Proposal. The Fund has received notice from a foreign investment company that is a common stockholder of the Fund, that it intends to nominate at the Meeting six of its own nominees for election as Directors by holders of both Common Stock and Preferred Stock. The Board of Directors has reviewed the notice and is unanimously opposed to the election of the stockholder's nominees. Should the persons named in the Proxy have discretion on such matter, they intend to vote for the nominees of the Board of Directors named in Proposal 1. 14 While the Meeting has been called to transact any business that may properly come before it, the Directors know of no business other than the matter stated in the Notice of Annual Meeting of Stockholders. However, if any additional matter properly comes before the Meeting and on all matters incidental to the conduct of the Meeting, it is the intention of the persons named in the enclosed Proxy to vote the Proxy in accordance with their judgment on such matters. The Fund may retain Georgeson Shareholder Communications, Inc., 17 State Street, New York, New York 10004, to aid in the solicitation of Proxies, at an estimated cost of approximately $2,000 (plus reimbursement of out-of-pocket expenses), to be borne by the Fund. The Fund 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, R&A and Georgeson Shareholder Communications, Inc. may solicit Proxies personally and by telephone, if deemed desirable. Stockholders vote at the 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 Voting at the Meeting and who will have executed an Inspectors and Judges Oath. The Fund expects that broker-dealer firms holding shares of the Fund in "street name" for the benefit of their customers and clients will request the instructions of such customers and clients on how to vote their shares on the Proposal before the Meeting. Shares as to which broker-dealer firms have not received instructions from beneficial owners or other persons entitled to vote and on which such broker-dealer firms have declined to vote ("broker non-votes") and shares as to which Proxies are returned by record stockholders but which are marked "abstain" will be included in the Fund's tabulation of the total number of votes present for purposes of determining whether the necessary quorum of stockholders exists. However, abstentions and broker non-votes will not be counted as votes cast. Therefore, abstentions and broker non-votes will not have an effect on the election of Directors. INDEPENDENT AUDITORS' FEES The Fund paid aggregate fees of $22,600 to TW&B for the year ended December 31, 2001, for professional services rendered involving the audit of the Fund's annual financial statements, the review of financial statements included in the Fund's annual and semi-annual reports to stockholders and the preparation of the Fund's tax returns. The Fund paid aggregate fees of $6,000 to TW&B for such year for professional services rendered involving the preparation of reports to the rating agency that provides ratings for the Preferred Stock. The Audit Committee has determined that the preparation of such rating agency reports is compatible with maintaining TW&B's independence. TW&B did not provide any other professional services to the Fund, R&A or any entities affiliated with R&A for the year ended 15 December 31, 2001. No representatives of TW&B will be present at the Meeting. ADDRESS OF INVESTMENT ADVISER R&A's principal office is located at 1414 Avenue of the Americas, New York, New York 10019. ANNUAL REPORT DELIVERY THE FUND'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2001 AND SEMI-ANNUAL REPORT TO STOCKHOLDERS FOR THE SIX MONTHS ENDED JUNE 30, 2002 WERE PREVIOUSLY MAILED TO ITS STOCKHOLDERS, AND COPIES 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. STOCKHOLDER PROPOSALS Proposals of stockholders intended to be presented at the Fund's 2003 Annual Meeting of Stockholders must be received by the Fund by June 5, 2003 for inclusion in the Fund's Proxy Statement and form of Proxy for that meeting. The Fund's By-laws generally require advance notice be given to the Fund in the event a stockholder desires to nominate a person for election to the Board of Directors or to transact any other business from the floor at an annual meeting of stockholders. Notice of any such nomination or other business must be in writing and received at the Fund's principal executive office not less than 15 calendar days before the annual meeting. Written proposals should be sent to the Secretary of the Fund, 1414 Avenue of the Americas, New York, New York 10019. PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. By order of the Board of Directors, John E. Denneen Secretary Dated: August 30, 2002 16 RYVMC-PS-02 RYVMP-PS-02 ROYCE MICRO-CAP TRUST, INC. PROXY PROXY Common Stock 1414 Avenue of the Americas New York, NY 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 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 Common Stock of the Fund held of record by the undersigned on August 26, 2002 at the Annual Meeting of Stockholders of Royce Micro-Cap Trust, Inc. to be held on September 30, 2002, and at any adjournment thereof. 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. PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. Please sign exactly as your name(s) appear(s) 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? ---------------------------- ------------------------------- ---------------------------- ------------------------------- ---------------------------- ------------------------------- NY1 5238966v8 X PLEASE MARK VOTES AS IN THIS EXAMPLE --------------------------------------------- ROYCE MICRO-CAP TRUST, INC. ---------------------------------------------
With- For All For hold Except / / / / / / 1. ELECTION OF DIRECTORS Charles M. Royce, Donald R. Dwight, Mark R. Fetting, Richard M. Galkin, Stephen L. Isaacs and G. Peter O'Brien Instruction: If you do not wish your shares voted "FOR" a particular nominee, mark the "For All Except" box and strike a line through the nominee's name. Your shares will be voted for the remaining nominees. 2. THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. Please be sure to sign and date this Proxy. Date: Mark box at the right [ ] if an address change or comment has been noted on the reverse side of this card. Stockholder sign here Co-owner sign here RECORD DATE SHARES: --------------------- ------------------ ----------------- CONTROL NUMBER: -----------------
NY1 5238966v8 ROYCE MICRO-CAP TRUST, INC. PROXY PROXY 7.75% Cumulative Preferred Stock 1414 Avenue of the Americas New York, NY 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 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 7.75% Cumulative Preferred Stock of the Fund held of record by the undersigned on August 26, 2002 at the Annual Meeting of Stockholders of Royce Micro-Cap Trust, Inc. to be held on September 30, 2002, and at any adjournment thereof. 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. PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. Please sign exactly as your name(s) appear(s) 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? --------------------------- ------------------------------- --------------------------- ------------------------------- --------------------------- ------------------------------- NY1 5238966v8 X PLEASE MARK VOTES AS IN THIS EXAMPLE --------------------------------------------- ROYCE MICRO-CAP TRUST, INC. ---------------------------------------------
With- For All For hold Except / / / / / / 1. ELECTION OF DIRECTORS Charles M. Royce, Donald R. Dwight, Mark R. Fetting, Richard M. Galkin, Stephen L. Isaacs, William L. Koke, David L. Meister and G. Peter O'Brien Instruction: If you do not wish your shares voted "FOR" a particular nominee, mark the "For All Except" box and strike a line through the nominee's name. Your shares will be voted for the remaining nominees. 2. THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. Please be sure to sign and date this Proxy. Date: Mark box at the right [ ] if an address change or comment has been noted on the reverse side of this card. Stockholder sign here Co-owner sign here RECORD DATE SHARES: --------------------- ------------------ ------------------ CONTROL NUMBER: -----------------
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