Agreement  dated as of July 24, 1996 by and between The MicroCap Fund, Inc. (the
"Fund") and Raymond S. Troubh (the "Consultant").

Fund engages the  Consultant (1) to provide  management  services to the Fund in
connection  with  its  liquidation  and  dissolution  pursuant  to the  Plan  of
Liquidation  (the "Plan")  attached to the Fund's Proxy Statement dated June 26,
1996  and  (2)  upon  transfer  by the  Fund  of  its  remaining  assets  to the
Liquidating  Trust (the  "Trust")  contemplated  by the Plan,  to act as Trustee
under the Trust. Consultant's responsibilities pursuant to clause (1) above will
include  managing the  disposition  of the Fund's  remaining  assets,  assessing
maximization of the action brought by the Fund against  Commonwealth  Associates
and others and acting on such assessment,  assessing the liabilities of the Fund
and  appropriate  provision  therefor,  making  recommendations  to the Board of
Directors  regarding  distributions to shareholders,  resolution of and reserves
for   liabilities  and  other  matters   affecting   liquidation  of  the  Fund,
coordinating  with  the  Fund's  administrator,   custodian  and  other  service
providers,  serving as a director  of the Fund and such other tasks as the Board
shall assign to him. In  performing  the  foregoing  services  Consultant  shall
report  to  the   Board   and  be   subject   to  its   guidance.   Consultant's
responsibilities  pursuant to clause (2) above will be to act in accordance with
the  terms  of  the  Trust  and to  exercise  the  full  powers  of the  Trustee
thereunder.

Consultant accepts such engagement.

The Fund  (during the period prior to funding of the Trust) and the Trust (after
its  funding)  will pay  Consultant  for his  services  hereunder at the rate of
$8,500 per month  plus,  at the time of each  distribution  to  shareholders  in
respect of the Plan, an amount equal to 1.0% of the amount of such  distribution
(other than the initial  distribution  to  shareholders  out of available  cash)
plus,  at the time any  proceeds of sale or other  revenues  are received by the
Fund in excess of the Fund's  investment in a particular  asset, an amount equal
to 5% of such excess  received  in 1996 or 1997,  4% of any  incremental  excess
received in 1998, 2% of any  incremental  excess  received in 1999 and 0% of any
incremental  excess received  thereafter;  provided,  however,  that (subject to
Section  6  below)  in no event  shall  the  total  compensation  to  Consultant
hereunder be less than $250,000.

It is understood and agreed that  Consultant will devote such time and effort to
the faithful  performance of services  hereunder and under the Trust as shall be
appropriate but that it is not  anticipated  that such services will require his
full working time.

This  Agreement  shall expire on the earlier of (1) December 31, 1999 or (2) the
making  of the  final  distribution  to  shareholders  after  resolution  of all
liabilities of the Fund.

If Fund  terminates  this Agreement  without cause or breaches this Agreement in
any other  material  respect,  Consultant  will be entitled to a single lump sum
payment, in addition to any amounts earned hereunder, of $200,000. If Consultant
terminates this Agreement  without cause or breaches this Agreement in any other
material  respect,  Fund  will be  entitled  to a  single  lump sum  payment  of
$200,000.  For  purposes  of this  Agreement,  Fund  will  have  cause  only for
dereliction of duty,  gross  incompetence,  self dealing,  violation of law that
would render Consultant  unable to act as an officer of a registered  investment
company under Section 9 of the Investment  Company Act of 1940 in the absence of
an exemptive  order by the SEC or disability on the part of Consultant  for more
than six consecutive  months.  For purposes of this  Agreement,  Consultant will
have cause only if Fund  prevents  him from  carrying  out his  responsibilities
hereunder and fails to cure such prevention  within 30 days after notice of such
prevention by Consultant.

Consultant will be entitled to prompt  reimbursement from Fund of all reasonable
business expense incurred by Consultant in performing  services  hereunder other
than general  office  overhead such as rent,  utilities,  secretarial  services,
supplies and the like,  provided  such  expenses are properly  accounted  for in
accordance  with the normal  practices  of Fund.  The  foregoing  shall  include
reimbursement  of  reasonable  expenses for  valuations  and other expert advice
sought by Consultant on behalf of the Fund and not billed directly to the Fund.

The Fund  will  indemnify  Consultant  to the  maximum  extent  permitted  under
Maryland  law,  the  Investment   Company  Act  of  1940  and  the  Articles  of
Incorporation and by-laws of the Fund as in effect on the date hereof.
<PAGE>

Any  disputes  hereunder  shall  be  settled  by  arbitration  before  a  single
arbitrator  acceptable to each party under the rules of the American Arbitration
Association.

This Agreement shall be construed under and governed by the laws of the State of
New York without giving effect to the principles of conflicts of law thereunder.

                                            The MicroCap Fund, Inc.



                                            By: /s/ ROBERT W. NAISMITH
                            Name: Robert W. Naismith
                                                     Title: Chairman



                                            /s/ RAYMOND S. TROUBH
                                            Raymond S. Troubh