-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A9IZxiLh1sG8pjEYWkku5pUbUm5dUB9rFJa+5kSHUGLBJ7fuExOK26aBm2fmaZMX yiVFR12LXlyar+8yzeRgMg== 0000949377-06-000704.txt : 20060823 0000949377-06-000704.hdr.sgml : 20060823 20060823141406 ACCESSION NUMBER: 0000949377-06-000704 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060928 FILED AS OF DATE: 20060823 DATE AS OF CHANGE: 20060823 EFFECTIVENESS DATE: 20060823 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYCE MICRO CAP TRUST INC /MD/ CENTRAL INDEX KEY: 0000912147 IRS NUMBER: 133739778 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-08030 FILM NUMBER: 061050626 BUSINESS ADDRESS: STREET 1: C/O ROYCE & ASSOCIATES, INC. STREET 2: 1414 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124084587 MAIL ADDRESS: STREET 1: ROYCE MICRO-CAP TRUST, INC. STREET 2: 1414 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: ROYCE OTC MICRO CAP FUND INC DATE OF NAME CHANGE: 19930917 DEF 14A 1 rmt_77802def14-a.txt PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 ROYCE MICRO-CAP TRUST, INC. --------------------------- (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] 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: 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 28, 2006 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 Thursday, September 28, 2006, at 11:30 a.m. (Eastern time), for the following purposes: 1. To elect four Directors to the Fund's Board: (i) two Directors to be elected by the holders of the Fund's Common Stock and its 6.00% 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 18, 2006 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. 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. IF YOU HAVE BEEN PROVIDED WITH THE OPPORTUNITY ON YOUR PROXY CARD OR VOTING INSTRUCTION FORM TO PROVIDE VOTING INSTRUCTIONS VIA TELEPHONE OR THE INTERNET, PLEASE TAKE ADVANTAGE OF THESE PROMPT AND EFFICIENT VOTING OPTIONS. 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 25, 2006 PROXY STATEMENT ROYCE MICRO-CAP TRUST, INC. 1414 AVENUE OF THE AMERICAS NEW YORK, NY 10019 ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 28, 2006 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 Thursday, September 28, 2006, at 11:30 a.m. (Eastern time) and at any adjournments thereof. The approximate mailing date of this Proxy Statement is August 25, 2006. 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 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 Royce & Associates, LLC, the Fund's investment adviser, may solicit proxies personally and by telephone, if deemed desirable. Shareholders 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 have executed an Inspectors and Judges Oath. The Board of Directors of the Fund has set the close of business on August 18, 2006 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 6.00% 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 22,456,524 shares of Common Stock and 2,400,000 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 1,246,877 shares-- 5.6% c/o Royce & Associates, LLC Beneficial* (sole 1414 Avenue of the Americas voting and New York, NY 10019 investment power) Cede & Co.** Common 21,789,876 shares-- 97.0% Depository Trust Company Record** P.O. Box #20 6.00% Preferred 2,400,000 shares-- 100% Bowling Green Station Record** New York, NY 10028 ---------------- * Includes 100,000 shares held by Royce Family Fund Inc., a charitable foundation established by Mr. Royce and members of his family. ** 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 - -------------------------------------------------------------------------------- ELECTION OF Common and Preferred Preferred DIRECTORS Stockholders, voting Stockholders, voting together as a single as a separate class, class, elect two elect two additional Directors Directors - -------------------------------------------------------------------------------- PROPOSAL 1: ELECTION OF DIRECTORS At the Meeting, four members of the Board of Directors of the Fund will be elected. The holders of both Common Stock and Preferred Stock, voting together as a single class, are entitled to elect seven directors. These seven directors are divided into three classes, each class having a term of three years. Each year the term of office of one class will expire. Charles M. Royce and G. Peter O'Brien 2 have each been nominated by the Board of Directors for a three-year term to expire at the Fund's 2009 Annual Meeting of Stockholders or until their successors are duly elected and qualified. The classes of Directors are indicated below: CLASS I DIRECTOR NOMINEES TO SERVE UNTIL 2009 ANNUAL MEETING - ------------------------------------------------------------ OF STOCKHOLDERS --------------- Charles M. Royce G. Peter O'Brien CLASS III DIRECTORS SERVING UNTIL 2008 ANNUAL MEETING OF - -------------------------------------------------------- STOCKHOLDERS ------------ Donald R. Dwight Stephen L. Isaacs CLASS II DIRECTORS SERVING UNTIL 2007 ANNUAL MEETING OF - ------------------------------------------------------- STOCKHOLDERS ------------ Mark R. Fetting Richard M. Galkin Arthur S. Mehlman The holders of Preferred Stock, voting as a separate class, are entitled to elect two directors 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 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. 3 Certain biographical and other information concerning the existing Directors and 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.
NUMBER OF PORTFOLIOS OTHER NAME, ADDRESS* AND POSITIONS LENGTH CURRENT IN FUND PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TERM ELECTED COMPLEX COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED EXPIRES BY OVERSEEN DIRECTORSHIPS - ---------------------- --- -------- ------- -------- -- -------- ------------- Charles M. Royce*** 66 Class I 1986 2006 Common 23 Director of President, Chief Director and Technology Investment Officer and and Preferred Investment Member of Board of President+ Capital Managers of Royce & Corp. Associates, LLC and its predecessor, Royce & Associates, Inc. (collectively, "R&A"), the Fund's investment adviser; Director and President 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, and President 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).
4
NUMBER OF PORTFOLIOS OTHER NAME, ADDRESS* AND POSITIONS LENGTH CURRENT IN FUND PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TERM ELECTED COMPLEX COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED EXPIRES BY OVERSEEN DIRECTORSHIPS - ---------------------- --- -------- ------- -------- -- -------- ------------- Mark R. Fetting*** 51 Class II 2001 2007 Common 43 None Senior Executive Vice Director and (Director/ President of Legg Preferred Trustee Mason, Inc. ("Legg of all Mason"); Member of Royce Board of Managers of Funds R&A; and Division consisting President and Senior of 23 Officer, Prudential portfolios; Financial Group, Inc. Director/ and related Trustee companies, including of the Fund Boards and Legg consulting services Mason to subsidiary Funds companies (from 1991 consisting to 2000). Mr. Fetting's of 20 prior business portfolios) 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 existing Directors or 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. + 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. 5 Certain biographical and other information concerning the existing Directors and nominees who are not "interested persons," as defined in the Investment Company Act, of the Fund, including their designated classes, is set forth below.
NUMBER OF PORTFOLIOS OTHER NAME, ADDRESS* AND POSITIONS LENGTH CURRENT IN FUND PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TERM ELECTED COMPLEX COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED EXPIRES BY OVERSEEN DIRECTORSHIPS - ---------------------- --- -------- ------- -------- -- -------- ------------- Donald R. Dwight 75 Class 1998 2008 Common 23 None President of Dwight III and Partners, Inc., Director Preferred corporate communications consultants; Chairman (from 1982 until March 1998) and Chairman Emeritus (since March 1998) of Newspapers of New England, Inc. Mr. Dwight's prior experience includes having served as Lieutenant Governor of the Commonwealth of Massachusetts, President and Publisher of Minneapolis Star and Tribune Company, and as Trustee of the registered investment companies constituting the Eaton Vance Funds. Richard M. Galkin 68 Class 1986 2007 Common 23 None Private investor. II and Mr. Galkin's prior Director Preferred business 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).
6
NUMBER OF PORTFOLIOS OTHER NAME, ADDRESS* AND POSITIONS LENGTH CURRENT IN FUND PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TERM ELECTED COMPLEX COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED EXPIRES BY OVERSEEN DIRECTORSHIPS - ---------------------- --- -------- ------- -------- -- -------- ------------- Stephen L. Isaacs 66 Class 1986 2008 Common 23 None President of The Center III and for Health and Social Director Preferred Policy (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. William L. Koke 71 Director 2001 2006 Preferred 23 None Private investor. only Mr. Koke's prior business experience includes having served as President of Shoreline Financial consultants, Director of Financial Relations of SONAT, Inc., Treasurer of Ward Foods, Inc. and President of CFC, Inc. Arthur S. Mehlman 64 Class 2004 2007 Common 43 Director of Director of The League II and (Director/ Municipal for People with Director Preferred Trustee Mortgage & Disabilities, Inc.; of all Equity, LLC Director of University of Royce Funds Maryland Foundation consisting (non-profits). Formerly: of 23 Director of University of portfolios; Maryland College Park Director/ Foundation (from 1998 to Trustee 2005) (non-profit); of the Partner, KPMG LLP Legg (international accounting Mason firm) (from 1972 to Funds 2002); Director of consisting Maryland Business of 20 Roundtable for Education portfolios) (from July 1984 to June 2002).
7
NUMBER OF PORTFOLIOS OTHER NAME, ADDRESS* AND POSITIONS LENGTH CURRENT IN FUND PUBLIC PRINCIPAL OCCUPATIONS WITH OF TIME TERM ELECTED COMPLEX COMPANY DURING PAST FIVE YEARS** AGE THE FUND SERVED EXPIRES BY OVERSEEN DIRECTORSHIPS - ---------------------- --- -------- ------- -------- -- -------- ------------- David L. Meister 66 Director 1986 2006 Preferred 23 None Consultant. Chairman and only Chief Executive Officer of The Tennis Channel (from June 2000 to March 2005); 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 60 Class I 2001 2006 Common 43 Director Trustee Emeritus of Director and (Director/ of Colgate University (since Preferred of all Technology 2005); Board Member of Royce Investment Hill House, Inc. (since Funds Capital 1999). Formerly: Trustee consisting Corp. of Colgate University of 23 (from 1996 to 2005); portfolios; President of Hill House, Director/ Inc. (from 2001 to 2005); Trustee and Managing of the Director/Equity Capital Legg Markets Group of Merrill Mason Lynch & Co. (from 1971 to Funds 1999). consisting of 20 portfolios) - ----------------
* Messrs. Dwight, Galkin, Isaacs, Koke, Mehlman, 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 Directors or nominees is a director/trustee of certain other investment companies for which R&A acts as an investment adviser. Messrs. Dwight, Galkin, Isaacs, Koke, Mehlman, Meister and O'Brien are each a member of the Fund's Audit Committee and its Nominating Committee. 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 within the meaning of Section 2(a)(19) of the Investment Company Act 8 and who are "independent" as defined in the listing standards of the New York Stock Exchange (the "Independent Directors"). The current members of the Audit Committee are Donald R. Dwight, Richard M. Galkin, Stephen L. Isaacs, William L. Koke, Arthur S. Mehlman, David L. Meister and G. Peter O'Brien. Mr. Galkin serves as Chairman of the Audit Committee and Mr. Mehlman has been designated as the Audit Committee Financial Expert, as defined under Securities and Exchange Commission regulations. The principal purposes of the Audit Committee are to (i) oversee the accounting and financial reporting processes of the Fund and the Fund's internal control over financial reporting; (ii) oversee the integrity of the Fund's financial statements and the independent audit thereof; (iii) oversee, or, as appropriate, assist Board oversight of, the Fund's compliance with legal and regulatory requirements that relate to the Fund's accounting and financial reporting, internal control over financial reporting, and independent audits; and (iv) be responsible for the appointment compensation, retention, and oversight of the Fund's independent accountants, including the resolution of disagreements regarding financial reporting between Fund management and such independent accountants. The Board of Directors has adopted an Audit Committee Charter for the Fund, which was previously filed as an Exhibit to the proxy statement filed with the Securities and Exchange Commission on behalf of the Fund on August 18, 2004. 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 Statement 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 8, 2006, the Audit Committee reviewed and discussed the audit of the Fund's financial statements as of December 31, 2005 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 2005 Annual Report to Stockholders, the Audit Committee would have been notified by Fund management or TW&B. The 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 2005 Annual Report to Stockholders. NOMINATING COMMITTEE The Board of Directors has a Nominating Committee composed of the seven Independent Directors, namely Messrs. Dwight, Galkin, Isaacs, Koke, Mehlman, Meister and O'Brien. The Board of Directors has adopted a Nominating 9 Committee Charter for the Fund, which was previously filed as an Exhibit to the proxy statement filed with the Securities and Exchange Commission on behalf of the Fund on August 18, 2004. The Nominating Committee is responsible for identifying and recommending to the Board of Directors individuals believed to be qualified to become Board members in the event that a position is vacated or created. The Nominating Committee will consider Director candidates recommended by stockholders. In considering potential Nominees, the Nominating Committee will take into consideration (i) the contribution which the person can make to the Board, with consideration given to the person's business and professional experience, education and such other factors as the Committee may consider relevant; (ii) the character and integrity of the person; (iii) whether or not the person is an "interested person" as defined in the Investment Company Act and whether the person is otherwise qualified under applicable laws and regulations to serve as a Director or Independent Director of the Fund; (iv) whether or not the person has any relationships that might impair his independence, such as any business, financial or family relationships with Fund management, the investment adviser of the Fund, Fund service providers or their affiliates; (v) whether or not the person is financially literate pursuant to the New York Stock Exchange's audit committee membership standards; (vi) whether or not the person serves on boards of, or is otherwise affiliated with, competing financial service organizations or their related investment company complexes; (vii) whether or not the person is willing to serve as, and willing and able to commit the time necessary for the performance of the duties of, a Director of the Fund; and (viii) whether or not the selection and nomination of the person would be consistent with the requirements of the Fund's retirement policies. To have a candidate considered by the Nominating Committee, a stockholder must submit the recommendation in writing and must include biographical information and set forth the qualifications of the proposed nominee. The stockholder recommendation and information described above must be sent to the Fund's Secretary, John E. Denneen, c/o Royce Micro-Cap Trust, Inc., 1414 Avenue of the Americas, New York, New York 10019. Although the Board of Directors does not have a standing compensation committee, the Independent Directors review compensation annually. COMMITTEE AND BOARD OF DIRECTORS MEETINGS During the year ended December 31, 2005, the Board of Directors held six meetings, the Audit Committee held three meetings and the Nominating Committee did not hold any meetings. Each Director then in office attended 75% or more of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings of the Audit Committee held during that year. 10 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, 2005 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 of the Fund for the year ended December 31, 2005. PENSION OR TOTAL RETIREMENT TOTAL COMPENSATION BENEFITS ESTIMATED COMPENSATION FROM THE ACCRUED ANNUAL FROM THE FUND AND AGGREGATE AS PART BENEFITS ROYCE FUNDS FUND COMPLEX COMPENSATION OF FUND UPON PAID TO PAID TO NAME FROM THE FUND EXPENSES RETIREMENT DIRECTORS DIRECTORS(1) - ---- ------------- -------- ---------- --------- ------------ Donald R. Dwight, Director (2) $7,500 None None $82,000 $82,000 Richard M. Galkin, Director 7,500 None None 81,250 81,250 Stephen L. Isaacs, Director 7,500 None None 82,000 82,000 William L. Koke, Director (3) 7,500 None None 81,250 81,250 Arthur S. Mehlman Director 7,500 None None 82,000 162,000 David L. Meister, Director 7,500 None None 82,000 82,000 G. Peter O'Brien, Director 7,500 None None 82,000 159,500 - ---------------- (1) Represents aggregate compensation paid to each Director during the calendar year ended December 31, 2005 from the Fund Complex. The Fund Complex includes the 23 portfolios of The Royce Funds and the 20 portfolios of the Legg Mason Funds. Messrs. Mehlman and O'Brien serve on the Boards of both The Royce Funds and the Legg Mason Funds. (2) Includes $1,500 from the Fund ($16,400 from the Fund and other Royce Funds) deferred during 2005 at the election of Mr. Dwight under The Royce Funds' Deferred Compensation Plan for trustees/directors. (3) Includes $2,765 from the Fund ($30,000 from the Fund and other Royce Funds) deferred during 2005 at the election of Mr. Koke under The Royce Funds' Deferred Compensation Plan for trustees/directors. 11 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: NAME, ADDRESS* AND PRINCIPAL OFFICER OF OCCUPATIONS DURING PAST FIVE YEARS AGE OFFICE** FUND SINCE - ----------------------------------- --- ------ ---------- Charles M. Royce 66 President 1986 President, Chief Investment Officer and Member of Board of Managers of R&A; Director/Trustee and President of The Royce Funds; Secretary and sole director of RFS; managing general partner of RMC (until October 2001). John D. Diederich 55 Vice 1997 Member of Board of Managers, President Chief Operating Officer (since and October 2001), Chief Financial Treasurer Officer (since March 2002) and Managing Director of R&A; Vice President and Treasurer of The Royce Funds; Director of Administration of The Royce Funds; President of RFS. Jack E. Fockler, Jr. 47 Vice 1995 Managing Director and Vice President President of R&A; Vice President of The Royce Funds; Vice President of RFS. W. Whitney George 48 Vice 1995 Managing Director and Vice President President of R&A; Vice President of The Royce Funds. Daniel A. O'Byrne 44 Vice 1994 Principal and Vice President of President R&A; Vice President of The Royce Funds. 12 NAME, ADDRESS* AND PRINCIPAL OFFICER OF OCCUPATIONS DURING PAST FIVE YEARS AGE OFFICE** FUND SINCE - ----------------------------------- --- ------ ---------- John E. Denneen 39 Secretary April 2002 General Counsel (Deputy General and Chief and 1996 to Counsel prior to 2003), Legal Officer 2001 Principal, Chief Legal and Compliance Officer and Secretary of R&A (since March 2002); Secretary of The Royce Funds (from 1996 to 2001 and since April 2002); Associate General Counsel, Principal and Chief Compliance Officer of R&A (from 1996 to 2001) and Principal of Credit Suisse First Boston Private Equity (from 2001 to 2002). Lisa Curcio 46 Chief 2004 Chief Compliance Officer of The Compliance Royce Funds (since October Officer 2004); Compliance Officer of R&A (since June 2004); Vice President, The Bank of New York (from February 2001 to June 2004); Director of Compliance, Lord Abbett (from August 2000 to February 2001); Senior Vice President, Lexington Asset Managers, Inc. (from April 1985 to August 2000). - ----------------- * The address of each officer 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. STOCKHOLDER COMMUNICATIONS Stockholders may send written communications to the Fund's Board of Directors or to an individual Director by mailing such correspondence to the Secretary of the Fund (addressed to 1414 Avenue of the Americas, New York, New York 10019). Such communications must be signed by the stockholder and identify the class and number of shares held by the stockholder. Properly submitted stockholder communications will, as appropriate, be forwarded to the entire Board or to the individual Director. Any stockholder proposal submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), must continue to meet all the requirements of Rule 14a-8. See "Additional Information - Stockholder Proposals" herein. DIRECTOR ATTENDANCE AT STOCKHOLDER MEETINGS The Fund has no formal policy regarding Director attendance at stockholder meetings. None of the Fund's Independent Directors attended the 2005 Annual Meeting of Stockholders. 13 COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Section 16(a) of 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 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. STOCK OWNERSHIP Information relating to each Director's ownership as of August 18, 2006 in the Fund and in all registered Royce Funds overseen or to be overseen by each Director is set forth below: - -------------------------------------------------------------------------------- AGGREGATE DOLLAR RANGE OF SECURITIES IN ALL ROYCE FUNDS AGGREGATE DOLLAR OVERSEEN BY EACH DIRECTOR RANGE OF EQUITY IN THE NAME IN THE FUND ROYCE FAMILY OF FUNDS - ---------------------------- --------------------- ----------------------------- Interested Director: - ---------------------------- --------------------- ----------------------------- Charles M. Royce over $100,000 over $100,000 - ---------------------------- --------------------- ----------------------------- Mark R. Fetting $10,001 to $50,000 over $100,000 - ---------------------------- --------------------- ----------------------------- Non-Interested Directors: - ---------------------------- --------------------- ----------------------------- Donald R. Dwight $1 to $10,000 over $100,000 - ---------------------------- --------------------- ----------------------------- Richard M. Galkin $10,001 to $50,000 over $100,000 - ---------------------------- --------------------- ----------------------------- Stephen L. Isaacs $1 to $10,000 over $100,000 - ---------------------------- --------------------- ----------------------------- William L. Koke none over $100,000 - ---------------------------- --------------------- ----------------------------- Arthur S. Mehlman $10,001 to $50,000 over $100,000 - ---------------------------- --------------------- ----------------------------- David L. Meister none over $100,000 - ---------------------------- --------------------- ----------------------------- G. Peter O'Brien $10,001 to $50,000 over $100,000 - -------------------------------------------------------------------------------- 14 Information regarding ownership of the Fund's shares by the Fund's Directors and officers as of the Record Date is set forth below: AMOUNT OF RECORD/BENEFICIAL NAME AND ADDRESS* OF OWNER OWNERSHIP OF COMMON STOCK - -------------------------- ------------------------- Interested Directors: Charles M. Royce 1,246,877 Mark R. Fetting 2,242 Non-Interested Directors: Donald R. Dwight 393 Richard M. Galkin 1,026 Stephen L. Isaacs 235 William L. Koke none Arthur S. Mehlman 1,285 David L. Meister none G. Peter O'Brien 1,370 Interested Officers: John D. Diederich 1,151 Jack E. Fockler, Jr. none W. Whitney George 1,192 Daniel A. O'Byrne 4,036 John E. Denneen 2,108 Lisa Curcio none - ------------------ * The address of each Director and officer is c/o Royce & Associates, LLC, 1414 Avenue of the Americas, New York, New York 10019. 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 (15 persons) beneficially owned 1,261,915 shares of the Fund's Common Stock, constituting 5.6% of the outstanding shares, and no shares of its Preferred Stock. As of August 18, 2006, no Independent Director or any of his immediate family members directly or indirectly owned any securities issued by Legg Mason or any of its affiliates (other than registered investment companies). 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. 15 FEES PAID TO INDEPENDENT AUDITORS AUDIT FEES The aggregate fees paid to TW&B in connection with the annual audit of the Fund's financial statements and for services normally provided by TW&B in connection with the statutory and regulatory filings of the Fund for the fiscal years ended December 31, 2004 and December 31, 2005 were $23,500 and $25,000, respectively, including out of pocket expenses. AUDIT RELATED FEES The aggregate fees paid to TW&B in connection with assurance and related services related to the annual audit of the Fund and for review of the Fund's financial statements, other than the Audit Fees described above, for the fiscal years ended December 31, 2004 and December 31, 2005 were $1,500 and $1,500, respectively. The audit-related services rendered by TW&B to the Fund consisted of the preparation of reports to a rating agency for the Preferred Stock. TAX FEES The aggregate fees paid for tax-related services, including preparation of tax returns, tax compliance and tax advice, rendered by TW&B to the Fund for the fiscal years ended December 31, 2004 and December 31, 2005 were $2,500 and $2,500, respectively. ALL OTHER FEES The aggregate fees billed for all other non-audit services rendered by TW&B to the Fund for the fiscal years ended December 31, 2004 and December 31, 2005 were $0 and $2,500, respectively. The non-audit services rendered by TW&B to the Fund during 2005 were in connection with an agreed upon procedures report relating to the calculation of the Fund's investment advisory fee. The aggregate non-audit fees billed by TW&B for services rendered to R&A and any entity controlling, controlled by, or under common control with R&A that provides ongoing services to the Fund for the fiscal years ended December 31, 2004 and December 31, 2005 were $4,000 and $9,000, respectively. The Audit Committee has determined that the provision of non-audit services is compatible with maintaining the independence of TW&B. The Audit Committee has determined that the preparation of the rating agency reports and services rendered with respect to the above-referenced agreed upon procedures report is compatible with maintaining TW&B's independence. TW&B did not provide any other professional services to the Fund or R&A for the year ended December 31, 2005. No representatives of TW&B will be present at the Meeting. AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES The Audit Committee of the Fund has adopted policies and procedures with regard to the pre-approval of audit and non-audit services. On an annual basis, at 16 the Fund's December Audit Committee meeting, TW&B will submit a schedule of proposed audit, audit-related, tax and other non-audit services to be rendered to the Fund and/or R&A for the following year that require pre-approval by the Audit Committee. Such schedule will include the maximum fees that can be paid for such services without further Audit Committee approval. Any subsequent revision to pre-approved services or fees will be considered at the next regularly scheduled Audit Committee meeting. Services not presented for pre-approval at the December Audit Committee meeting will be submitted to the Chief Financial Officer of the Fund for a determination that the proposed services fit within the independence guidelines and then considered for pre-approval at the next regularly scheduled Audit Committee meeting. A proposal to commence an engagement involving audit, audit-related or tax services prior to the next regularly scheduled Audit Committee meeting shall be made in writing by the Chief Financial Officer to all Audit Committee members and include a summary of the engagement, estimated maximum cost, the category of services and the rationale for engaging the Fund's independent auditor. Such proposed engagement can be pre-approved by any Audit Committee member who is an Independent Director. Pre-approval by the Chairman of the Audit Committee is required for a proposed engagement involving non-audit services other than audit-related or tax. 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. 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 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. The Fund understands that, under the rules of the New York Stock Exchange, such broker-dealers may, without instructions from such customers and clients, grant authority to the proxies designated by the Fund to vote on the election of Directors if no instructions have been received prior to 17 the date specified in the broker-dealer firm's request for voting instructions. Certain broker-dealer firms may exercise discretion over shares held in their name for which no instructions are received by voting such shares in the same proportion as they have voted shares for which they have received instructions. The shares as to which the Proxies so designated are granted authority by broker-dealer firms to vote on the matters to be considered at the Meeting, the shares as to which broker-dealer firms have declined to vote ("broker non-votes") and the shares as to which Proxies are returned by record stockholders but which are marked "abstain" on any matter 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. 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, 2005 WAS PREVIOUSLY MAILED TO ITS STOCKHOLDERS AND THE SEMI-ANNUAL REPORT TO STOCKHOLDERS FOR THE SIX MONTHS ENDED JUNE 30, 2006 WILL BE MAILED TO STOCKHOLDERS IN LATE AUGUST 2006. COPIES OF THE ANNUAL REPORT ARE AVAILABLE, AND COPIES OF THE SEMI-ANNUAL REPORT WILL BE AVAILABLE IN LATE AUGUST, 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. ALL PUBLICLY RELEASED MATERIAL INFORMATION IS ALWAYS DISCLOSED BY THE FUND ON ITS WEBSITE AT www.roycefunds.com. - ------------------ STOCKHOLDER PROPOSALS Proposals of stockholders intended to be presented at the Fund's 2007 Annual Meeting of Stockholders must be received by the Fund by April 27, 2007 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 intended to be presented and the Fund's 2007 Annual Meeting of Stockholders must be in writing and received at the Fund's principal executive office between April 27, 2007 and May 27, 2007. Written proposals should be sent to the Secretary of the Fund, 1414 Avenue of the Americas, New York, New York 10019. 18 PROXY DELIVERY If you and another shareholder share the same address, the Fund may only send one proxy statement unless you or the other shareholder(s) request otherwise. Call or write the Fund if you wish to receive a separate copy of the proxy statement and the Fund will promptly mail a copy to you. You may also call or write to the Fund if you wish to receive a separate proxy in the future, or if you receive multiple copies now, and wish to receive a single copy in the future. For such requests, please call 1-800-221-4268, or write the Fund at 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 25, 2006 19 P/S SKU#002CS-12091 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 18, 2006 at the Annual Meeting of Stockholders of Royce Micro-Cap Trust, Inc. to be held on September 28, 2006, 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? - ----------------------------------- ----------------------------------- - ----------------------------------- ----------------------------------- - ----------------------------------- ----------------------------------- 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 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: ----------------- ROYCE MICRO-CAP TRUST, INC. PROXY PROXY 6.00% 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 6.00% Cumulative Preferred Stock of the Fund held of record by the undersigned on August 18, 2006 at the Annual Meeting of Stockholders of Royce Micro-Cap Trust, Inc. to be held on September 28, 2006, 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? - ----------------------------------- ----------------------------------- - ----------------------------------- ----------------------------------- - ----------------------------------- ----------------------------------- 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, G. Peter O'Brien, William L. Koke and David L. Meister 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: ----------------- -----END PRIVACY-ENHANCED MESSAGE-----