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
Rand Capital Corporation
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a- 6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
[X] 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.
<PAGE>
RAND CAPITAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1996 Annual Meeting of Shareholders of Rand Capital
Corporation (the "Company") will be held on Thursday, April 25,
1996, at 10:00 a.m. in Room 1734, Rand Building, 14 Lafayette
Square, Buffalo, New York, for the following purposes:
1. To elect seven Directors to hold office until the next
annual meeting of shareholders and until their
successors have been elected and qualified;
2. To consider and act upon a proposal to amend the
Company's Certificate of Incorporation in order to
limit the liability of directors to the Company and its
shareholders to the extent permitted by New York law;
and
3. To ratify the selection of Deloitte & Touche LLP as
independent auditors for the 1996 fiscal year for the
Company; and
4. To consider and act upon such other business as may
properly come before the meeting.
Shareholders of record at the close of business on March 27,
1996 are entitled to notice of and to vote at the meeting, and at
any adjournment thereof.
By order of the Board of Directors.
Buffalo, New York Thomas R. Beecher, Jr.
April 3, 1996 Chairman
1300 Rand Building, Buffalo, NY 14203 TEL 716-853-0802
FAX 716-854-8480
<PAGE>
RAND CAPITAL CORPORATION
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Rand Capital
Corporation (the "Company"), for the Annual Meeting of
Shareholders to be held on April 25, 1996. Only shareholders of
record at the close of business on March 27, 1996, are entitled
to notice of and to vote at the meeting, and at any adjournment
thereof. On that date the Company had outstanding 4,225,477
Common Shares, par value $.10 per share ("shares").
Each share entitles the holder to one vote. Shares cannot
be voted at the meeting unless the shareholder is present or
represented by proxy. If the enclosed form of proxy is returned
properly executed, the shares represented thereby will be voted
at the meeting in accordance with the instructions contained in
the proxy, unless the proxy is revoked prior to its exercise.
Any shareholder who executes and delivers the accompanying form
of proxy has the right to revoke it at any time before it is
voted. A shareholder may revoke a proxy by executing a
subsequently dated proxy or a notice of revocation, provided such
subsequent proxy or notice is delivered to the Company prior to
the taking of a vote, or by voting in person at the meeting.
Proxies submitted with abstentions and broker non-votes will be
counted in determining whether or not a quorum is present.
Abstentions and broker non-votes will not be counted in
tabulating the votes cast on proposals submitted to shareholders.
This Proxy Statement and accompanying form of proxy are
being mailed to shareholders on or about April 3, 1996. A copy
of the Company's 1995 Annual Report, which contains financial
statements, accompanies this Proxy Statement.
The cost of soliciting proxies in the accompanying form will
be borne by the Company. The Company does not expect to pay any
compensation for the solicitation of proxies, but may pay
brokers, nominees, fiduciaries and other custodians their
reasonable fees and expenses for sending proxy materials to
beneficial owners and obtaining their instructions. In addition
to solicitation by mail, proxies may be solicited in person or by
telephone by directors, officers and regular employees of the
Company, who will receive no additional compensation therefor.
The Company's office is located at 1300 Rand Building,
Buffalo, New York 14203; telephone number (716) 853-0802.
BENEFICIAL OWNERSHIP OF SHARES
Unless otherwise indicated, the following table sets forth
beneficial ownership of the Company's shares on March 27, 1996,
by (a) persons known to the Company to be beneficial owners of
more than 5% of the outstanding shares, (b) the nominees for
director of the Company and (c) all directors and officers of the
Company as a group. Unless otherwise stated, each person named
in the table has sole voting and investment power with respect to
the shares indicated as beneficially owned by such person.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Beneficial Owner Beneficial Ownership (1) of Class
<S> <C> <C>
(a) More than 5% Owners:
Reginald B. Newman II 371,515 8.8%
7000 Grand Island Blvd.
Tonawanda, NY
Jayne K. Rand 215,634 5.1%
c/o 1300 Rand Building,
Buffalo, NY
(b) Nominees for Director:
Thomas R. Beecher, Jr. 9,835 (2) *
Allen F. Grum 43,103 *
Willis S. McLeese 62,389 (3) 2.3
Reginald B. Newman II 375,515 8.8
Jayne J. Rand 215,634 5.1
Donald A. Ross -0- *
Frederick W. Winter -0- *
(c) All Directors and Officers
as a group:
Ten persons 730,601 (4) 17.3%
</TABLE>
* Less than 1%
(1) The beneficial ownership information presented is based upon
information furnished by each person or contained in filings
made with the Securities and Exchange Commission.
(2) Shares are owned by Beecher Securities Corporation, a
venture capital company owned by Mr. Beecher and members of
his family, of which Mr. Beecher has voting control.
(3) Such shares are owned by Colmac Holdings, Ltd., a
corporation of which Mr. McLeese is the Chairman and
principal owner.
(4) Except as indicated above, members of the group have sole
voting and investment power over these shares.
1. ELECTION OF DIRECTORS
Seven Directors are to be elected at the meeting, each to
serve until the next annual meeting of shareholders and until his
or her successor has been elected and qualified. Unless marked
to the contrary, the proxies received will be voted FOR the
election of the seven nominees named below.
Five of the nominees named below, Thomas R. Beecher, Jr.,
Willis S. McLeese, Reginald B. Newman II, Jayne K. Rand and
Donald A. Ross are presently members of the Board of Directors,
who were elected at the Company's last annual meeting of
shareholders. Robert P. Fine and Emma K. Harrod, who were also
elected at the last annual meeting of shareholders, have chosen
not to stand for re-election. Each of the nominees has consented
to serve as director, if elected. If at the time of the meeting
any nominee should be unable to serve, it is the intention of the
persons designated as proxies to vote, in their discretion, for
such other person as may be designated as a nominee by the Board
of Directors.
Information Regarding the Nominees
Thomas R. Beecher, Jr., 60, became a director in 1969 and
has been Chairman of the Board since August 1991. Mr. Beecher
has been a self-employed attorney and business consultant in
Buffalo, N.Y,, since 1976. He has been President and a director
of Beecher Securities Corporation, a family owned venture capital
company, since 1979. Mr. Beecher is also a director of Albany
International Corporation, a manufacturer of paper machine
clothing.
* Allen F. Grum, 38, has served as the President and Chief
Executive Officer of the Company since January 1996. Prior to
becoming President, Mr. Grum served as Senior Vice President of
the Company commencing in June 1995. From 1994 to June 1995, Mr.
Grum was Executive Vice President of Hamilton Financial
Corporation, mortgage brokers, and from 1991-1994 he served as
Senior Vice President of Marine Midland Mortgage Corporation;
prior thereto, he held various executive positions at Marine
Midland Mortgage Corporation from 1986-1991, and at First Federal
Savings and Loan of Rochester from 1985-1986.
Willis S. McLeese, 82, became a director in 1986. Since
1976, Mr. McLeese has been the Chairman of Colmac Holdings
Limited, Toronto, Canada, which develops, owns and operates
cogeneration and alternative energy, electric power generating
plants.
* Reginald B. Newman II, 58, became a director in 1987.
Mr. Newman has been President of NOCO Energy Corporation,
Tonawanda, N.Y., a petroleum distributor, since 1960.
* Jayne K. Rand, 35, became a director in 1989. Since 1993,
Ms. Rand has been a Vice President of M&T Bank. From 1989 to
1993, Ms. Rand was an Assistant Vice President of Marine Midland
Bank. N.A., and from 1987 to 1989 she was a Residential Loan
Officer for M&T Bank.
* Donald A. Ross, 66, was President, Chief Executive Officer
and a director of the Company from 1966 through December 31,
1995, at which time he retired as an officer and entered into a
financial consulting arrangement with the Company.
Frederick W. Winter, 51, has been Dean of the School of
Management, University of New York at Buffalo, since 1994. From
1986-1993, Mr. Winter was Head of the Department of Business
Administration at the University of Illinois, and from 1981-1994,
he was a Professor of Business Administration at the same
University. Mr. Winter has served on the Board of Directors of
Bell Sports, Inc., a bicycle and sporting goods manufacturer,
since 1991, and of Alkon Corporation, a manufacturer of pneumatic
parts and fittings, since 1992.
(*) Designates directors and nominees for director who are
"interested persons" within the meaning of Section 2(a)(19)
of the Investment Company Act of 1940, as amended (the "1940
Act"). Ms. Rand and Mr. Newman are included in this
category as a result of their percentage ownership of
shares, Mr. Ross is included because he acts as a financial
adviser to the Company, and Mr. Fine (who has chosen not to
stand for re-election), as a result of his position in the
law firm of Hurwitz & Fine, which was retained by the
Company to provide services with respect to various legal
matters within the Company's last two fiscal years.
Committees and Meeting Data
The following Committees of the Board of Directors have the
members indicated below:
Executive Committee Audit Committee
Thomas R. Beecher, Jr. Emma K. Harrod, M.D.
*Robert P. Fine Willis S. McLeese
*Reginald B. Newman II *Reginald B. Newman II
*Jayne K. Rand
*Donald A. Ross
Compensation Committee Nominating Committee
Emma K. Harrod, M.D. *Reginald B. Newman, II
*Robert P. Fine *Robert P. Fine
*Jayne K. Rand *Jayne K. Rand
*Designates "interested persons" as noted above.
The Executive Committee meets from time to time between
regular meetings of the Board of Directors and exercises the
authority of the Board, including the authority to approve
investments and sales of investments by the Company. However,
the Executive Committee does not have the authority to submit to
shareholders any action requiring shareholder approval, fill
vacancies on the Board or any Committee, fix compensation of
directors for serving on the Board or any committee, amend or
adopt bylaws, or amend or repeal any resolution of the Board
which by its terms is not amendable or repealable.
The Audit Committee considers and recommends to the Board of
Directors the selection of the Company's auditors and the range
of their services. It reviews with the auditors the plan and
results of the annual audit, the adequacy of the Company's system
of internal accounting controls and the costs of the auditor's
services.
The Compensation Committee is responsible for setting the
compensation of the senior executive officers, reviewing the
criteria that form the basis for management's recommendations for
officer and employee compensation and reviewing management's
recommendations in this regard. The Committee is composed of Dr.
Harrod, Mr. Fine and Ms. Rand.
The Nominating Committee was formed in October 1995 to
consider and recommend nominees for the Board of Directors. The
Committee will consider a nominee for election to the Board
recommended by a shareholder if the shareholder submits to the
Committee a written proposal which includes the qualifications of
the proposed nominee and the consent of the proposed nominee to
serve if elected.
In 1995 the full board met on four occasions. The Executive
Committee met three times, Audit and Compensation Committees each
met twice, and the Nominating Committee met once. In 1995 each
incumbent director attended at least 75% of the aggregate number
of meetings of the Board of Directors and of the Committees of
the Board of which he or she is a member, except Mr. Fine, who
attended 67% of such meetings.
Executive Officers
In addition to Mr. Grum, the executive officers of the
Company include:
Nora B. Sullivan, 38, has served as Executive Vice President
of the Company since September 1995. From February 1995 to July
1995, Ms. Sullivan served as a senior associate at Barakat &
Chamberlain, a financial consulting firm. From 1993 to 1994, Ms.
Sullivan attended Columbia Business School where she received an
MBA in Finance/International Business. Prior thereto, from 1991
to 1992, Ms. Sullivan served as General Counsel to Integrated
Waste Services, Inc., a hazardous waste management company; from
1990 to 1991 she was an associate attorney with the firm of
Davis, Augello & Matteliano of Buffalo, NY, and, from 1987 to
1990 she served as Senior Law Clerk for the Hon. Edgar C.
Nemoyer, New York Court of Claims, Buffalo, NY.
Robin K. Penberthy, 32, has served as Secretary and
Treasurer of the Company since February 1996. During 1995, Ms.
Penberthy served as a Scholastic Aptitude Test (SAT) Instructor
for The Princeton Review in Snyder, NY. Prior thereto, she was
employed by Marine Midland Mortgage Corporation as Administrative
Vice President - Investor Relations Manager from 1993-1994, as
Vice President - Investor Mortgage Accounting Manager from 1991-
1992, and as Assistant Vice President - Mortgage Controller from
1990 to 1991. Prior thereto, she was employed by Price
Waterhouse as an Audit Senior Accountant from 1988-1990, and as
an Audit Staff Accountant from 1983-1988.
Compensation
The following table sets forth information with respect to
the compensation paid or accrued by the Company in the 1995
fiscal year to each director, and to each executive officer of
the company with aggregate compensation from the Company in
excess of $60,000. The Company is not part of a fund complex.
<TABLE>
<CAPTION>
Pension or Retirement Estimated
Aggregate Benefit Accrued as Annual Benefits
Name, Position Compensation Part of Company Expenses On retirement
______________ ____________ ________________________ _______________
<S> <C> <C> <C>
Donald A. Ross $ 185,000 (1) $ 9,000 (2) $ 50,000 (3)
President, Director
Thomas R. Beecher, Jr. 4,000 0 0
Director
Robert P. Fine 2,500 0 0
Director
Emma K. Harrod, M.D. 3,000 0 0
Director
Willis S. McLeese 2,250 0 0
Director
Reginald B. Newman, II 3,000 0 0
Director
Jayne K. Rand 3,000 0 0
Director
</TABLE>
(1) Includes payment of $30,161 for life insurance premiums and
for an offset of the tax effects of such premiums, and
payment of $34,661 for part of the amount payable by the
Company for cost of living increases that Mr. Ross was
entitled to for the years 1988 through 1993 under his former
employment agreement. In addition, Mr. Ross received the
use of an automobile, a portion of which was used for non-
business purposes, and payment of membership dues in a
business club used primarily for business purposes.
(2) Included within the indicated compensation is payment of
Company contributions to the Company's 401(k) Profit Sharing
Plan. To date an aggregate of $43,014 has been deferred for
payment to Mr. Ross. Under such plan, participants may
elect to contribute up to 20% of their compensation on a
pretax basis by salary reduction. For eligible employees,
the Company makes a flat contribution of 1% of compensation
and matches an eligible contribution of up to a maximum of
five percent (5%). In addition. the Company may contribute
an annual discretionary amount as determined by the Board of
Directors. In 1995, the Company did not make a
discretionary contribution to the 401(k) Plan.
(3) Includes pension benefit payable pursuant to the Company's
Defined Benefit Pension Retirement Plan, described below.
Amounts indicated do not include any benefits payable
pursuant to the Company's 401(k) Profit Sharing Plan.
Amount indicated for Mr. Ross does not include $182,621, the
year-end value of segregated assets allocated to Mr. Ross as
the result of the termination of the Company's Money
Purchase Pension Plan in 1988. Upon his retirement, Mr.
Ross entered into a Consulting Agreement and a Deferred
Compensation Agreement with the Company (see "Consulting and
Deferred Compensation Agreements," below).
Consulting and Deferred Compensation Agreements
Effective December 31, 1995, the Company and Donald A. Ross
terminated his employment agreement and entered into a Consulting
Agreement and a Deferred Compensation Agreement. Under the terms
of the Consulting Agreement, Mr. Ross will be paid $10,000 per
year for providing part-time consulting services, assistance in
maintaining continuity in business relations during the
transition to new management, and such other services related to
the Company's business operations as the Company may reasonably
request. Such amounts included any amounts payable for service
as a Director and on any committee of the Board of Directors. In
addition, Mr. Ross will receive: medical insurance coverage for
the duration of his life and that of his wife for himself, his
wife and his dependents, and during the period of his employment,
the use of a car and up to $1,500 in annual maintenance fees
therefor, and $2,400 annual membership dues at a business club
and reimbursement of business entertainment expenses of up to
$2,000 per year at the club. The Consulting Agreement runs for a
period of 12 months and is subject to annual renewal by the
Company. Under the Deferred Compensation Agreement, Mr. Ross or
his heirs will receive deferred payment for services previously
rendered in the amount of $60,000 for 1996, and $31,000 for each
year there after until Mr. Ross reaches age 70.
Defined Benefit Pension Retirement Plan
Since 1988, the Company has maintained a Defined Benefit
Pension Retirement Plan (the "Defined Benefit Plan") for all
full-time employees meeting minimum age and service requirements.
At the later of age 65 or the fifth year of participation,
participants are entitled to accrued monthly pension benefits
computed under a final average pay formula equal to 75% of
average monthly compensation, up to a maximum of $50,000 per
year, reduced proportionately for each year of service less than
ten. The nonforfeitable right of an employee to pension benefits
accrues after a three year period of employment. Benefits are
not reduced by Social Security payments or by payments from other
sources. The Defined Benefit Plan is funded through Company
contributions, and benefits are payable under one of several
payment options including lifetime annuity and lump sum
settlement.
With regard to persons named in the compensation table
above, Mr. Ross' benefits are fully vested. Upon his retirement,
Mr. Ross received a lump sum retirement benefit of $480,000 in
lieu of an entitlement of $50,000 per year in retirement benefits
under the Defined Benefit Plan.
Director Compensation
During 1995, under the Company's standard compensation
arrangements with directors, each nonemployee director received
an annual fee of $1,000 plus $250 for attendance at each meeting
of the Board of Directors and each meeting of a Committee not
held on the same day as a Board meeting, and the Chairman of the
Board, Mr. Beecher, received an annual fee of $2,500 plus $250
for attendance at Board and committee meetings. For 1996, the
fee for attendance at each Board and committee meeting has been
increased to $750.
Stock Options/Stock Appreciation Rights
Restrictions imposed on registered investment companies by
the 1940 Act preclude the Company from offering stock options or
stock appreciation rights incentive packages to its employees.
The Company does not have any other forms of restricted stock or
employee share benefit plans.
Certain Reports
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's stock, to
file with the Securities and Exchange Commission initial reports
of stock ownership and reports of changes in stock ownership.
Reporting persons are required by SEC regulation to furnish the
Company with all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, all Section
16(a) filing requirements applicable to its officers, directors
and greater than ten percent beneficial owners were complied with
during the fiscal years ended December 31, 1995, except as
follows: Allen F. Grum filed late one report with respect to one
transaction; Nora B. Sullivan filed late an initial report of
beneficial ownership; Emma K. Harrod filed late one report with
respect to one transaction; Donald A. Ross filed late three
reports with respect to three transactions; and Jayne K. Rand
filed late five reports covering an aggregate of 31 transactions.
The transactions reported late by Ms. Rand were sales made by a
bank as co-trustee of trusts under the will of her late father
for the benefit of Ms. Rand and her five siblings, and Ms. Rand
has advised the Company that her ability to report these
transactions on time was impaired by the failure of the bank to
notify her of the completion of the sales in a timely manner.
Directors' and Officers' Liability Insurance
The Company has an insurance policy from Fidelity and
Casualty Company of New York that indemnifies (i) the Company for
any obligation incurred as a result of the Company's
indemnification of its directors and officers under the
provisions of the New York Business Corporation Law and the
Company's Bylaws, and (ii) the Company's directors and officers
as permitted under the New York Business Corporation Law and the
Company's Bylaws. The policy covers all directors and officers
of the Company for the 12 months ending December 1996 for a total
premium of $91,386. No sums have been paid to the Company or its
officers or directors under the insurance contract.
Allocation of Brokerage
Because the Company primarily makes venture capital
investments by negotiated transactions involving securities which
are not publicly traded, the Company does not ordinarily pay
brokerage on its purchase of portfolio securities. From time to
time the Company has sought to increase its return on its cash
awaiting venture capital investment by purchasing certificates of
deposit and government or mortgage backed debt securities from
the issuing banks or from dealers in these securities. In 1995,
the Company paid an aggregate of $2,915 in brokerage commissions.
The Company has no agreement, understanding or allocation
formula with respect to the placement of brokerage. In selecting
brokers, the Company may give consideration to a broker who has
presented prospective investments to it or has furnished research
or other information which has been useful in evaluating an
investment. However, no Company employee is authorized knowingly
to permit any broker to charge the Company a commission exceeding
the lowest commission generally available to it.
2. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION OF THE
COMPANY TO LIMIT THE PERSONAL LIABILITY OF DIRECTORS
The Board of Directors has unanimously approved and
recommends to the shareholders that they consider and approve a
proposal to amend the Company's Certificate of Incorporation to
eliminate the personal monetary liability of Directors to the
extent permitted by Section 402(b) of the New York Business
Corporation Law. If the proposed amendment is approved, the
Certificate of Incorporation would be amended by adding a new
Paragraph 7 reading in its entirety as follows:
"7. To the fullest extent now or hereafter
permitted by law, no director of the corporation shall
be personally liable to the corporation or its
shareholders for damages for any breach of duty in such
capacity."
This proposal would add to the Company's Certificate of
Incorporation a provision specifically authorized by an amendment
to Section 402(b) of the New York Business Corporation Law which
became effective in 1987. As amended, Section 402(b) of the New
York Business Corporation Law authorizes a corporation, in its
original certificate of incorporation or by an amendment, to
eliminate or limit the personal liability of members of its board
of directors for damages for breach of a director's duty of care.
If the proposed amendment is approved, a stockholder
will be able to prosecute an action against a director for
damages only if the stockholder can show a breach of the duty of
loyalty, a failure to act in good faith, intentional misconduct,
a knowing violation of law, a personal gain of a financial profit
or other advantage to which the director was not legally
entitled, an illegal dividend, distribution, loan or stock
repurchase or distribution of assets after dissolution without
providing for satisfaction of corporate liabilities, and not
"negligence" or "gross negligence" in satisfying his duty of
care. One effect of the proposed amendment would be to deprive
shareholders of a cause of action against the directors for
breach of fiduciary duty, including grossly negligent business
decisions, in the context of an attempt to acquire control of the
Company. The amendment will not limit or eliminate the right of
the Company or any stockholder to seek an injunction or any other
non-monetary relief in the event of a breach of a director's duty
of care, it will not limit the right to obtain monetary damages
where the acts of "bad faith" listed above are shown, nor will it
affect a director's liability under, or duty to comply with, the
federal securities laws. In some situations, however,
injunctions or other non-monetary relief may not be useful. The
amendment applies only to claims against a director arising out
of his or her role as a director and not, if the director is also
an officer, the director's role as an officer or in any other
capacity or to his or her responsibilities under any other law,
such as the federal securities laws.
The amendment does not eliminate the fiduciary duty of care
of the Company's Directors. The amendment does not limit in any
way the right of the Company or any shareholder to seek equitable
relief, such as an injunction or recision, in the event of a
breach of a director's duty of care. The effect of the amendment
is to eliminate personal liability of Directors for monetary
damages for breaches of their duty of care. However, although
equitable remedies may be available, under certain circumstances
they may not be sufficient as a practical matter. The amendment
applies only to personal liability of Directors and has no effect
on the potential liability of persons for their actions as
officers (whether or not they also are Directors) of the Company.
In recent years, directors' liability insurance obtained
from traditional insurance carriers has become extremely
expensive, more restricted as to coverage and, in some cases,
difficult to obtain due, among other things, to increase in
frequency of litigation brought against directors. The Company
currently maintains director and officer liability insurance,
which provides $2,000,000 of coverage with a $500,000 deductible
at an annual cost of $91,386 (see "Directors' and Officers'
Liability Insurance," above). In the view of the Board of
Directors, this level of insurance is inadequate in light of the
nature and scope of the Company's operations. However, the cost
of additional director's liability insurance coverage is viewed
as excessive, and the proposed amendment is viewed as a less
expensive means of reducing the risks to directors to an
acceptable level.
The Board of Directors believes that in many instances
capable persons may be unwilling to serve as directors of a
corporation without the protection of adequate directors'
liability insurance. Although no Director of the Company has
threatened to resign, and to the best of the Company's knowledge,
no qualified person has refused to serve on the Company's Board
of Directors because of the threat of personal liability, the
Board of Directors believes that limiting the Directors' personal
liability as permitted by the new New York statute will enhance
the ability of the Company to attract and retain highly qualified
Directors in the future. In addition, the threat of personal
liability may have an adverse effect on the decision-making
process of Directors. The proposed amendment may also encourage
Directors to make entrepreneurial decisions which they believe to
be in the best interest of the Company with less threat of
personal liability for damages for breach of their duty of care.
Over the long term, the adoption of the proposed amendment
is expected to facilitate continuation of the Company's
directors' liability insurance coverage and make such coverage
less costly, although there can be no assurance that the
amendment will have these effects. The proposed amendment to the
Company's Certificate of Incorporation is not being proposed in
response to any specific resignation, threat of resignation, or
refusal to serve by any Director or potential Director of the
Company, and the Company is not aware of any threatened
resignation if the proposed amendment is not adopted. New York
law dealing with limitations on director liability does not
permit limiting liability of a director for any act or omission
occurring prior to the effective date of the proposed amendment,
and thus the proposed amendment will have a prospective effect
only. The Company has not received notice of any pending or
threatened claim, suit or proceeding to which the proposed
amendment would apply.
Although the proposed amendment to the Certificate of
Incorporation would eliminate one source of recovery available to
the Company and its shareholders for a Director's breach of
fiduciary duty of care, and although it is acknowledged that the
members of the Board of Directors have a personal interest in the
approval of the proposed amendment by the shareholders, the Board
of Directors believes that the proposed amendment is in the best
interests of the Company and its shareholders. The Board of
Directors believes that the proposed amendment will help the
Company in its ability to attract and retain qualified Directors
and in the ability of its Directors to make the best business
decisions of which they are capable.
The proposed amendment to the Certificate of Incorporation
would be reflected in Paragraph 7 of such Certificate, as
detailed in the Certificate of Amendment attached hereto as
Appendix A.
The proposed amendment will become effective, after
stockholder approval, upon the filing of a Certificate of
Amendment to the Company's Certificate of Incorporation by the
New York Secretary of State.
Required Approval. The affirmative vote of the holders of a
majority of the outstanding common stock of the Company is
required for the approval of the amendment to the Certificate of
Incorporation to limit the liability of Directors. The Board of
Directors has unanimously voted in favor of the proposed
amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE CERTIFICATE.
3. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Deloitte &
Touche LLP, Buffalo, New York, as the independent auditors to
examine the accounts of the Company for the 1996 fiscal year,
subject to ratification by the shareholders at the annual
meeting. The directors approving such selection included a
majority of the Company's directors who are not "interested
persons" of the Company as defined in the 1940 Act. Deloitte &
Touche LLP audited the accounts of the Company for the 1995
fiscal year.
A representative of Deloitte & Touche LLP is expected to be
present at the annual meeting of shareholders and will be
available to respond to appropriate questions and will be given
an opportunity to make a statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE 1996 FISCAL YEAR.
4. OTHER BUSINESS
The Company does not know of any other matters to come
before the meeting. However, if any other matters properly come
before the meeting, it is the intention of the persons designated
as proxies to vote in accordance with their best judgment on such
matters.
Shareholder Proposals for the 1997 Annual Meeting
Shareholder proposals intended to be presented at the 1997
Annual Meeting of Shareholders must he received at the Company's
offices not later than December 5, 1996, to be included in the
Company's proxy statement and form of proxy for that meeting.
By Order of the Board of Directors,
Thomas R. Beecher, Jr.
Chairman of the Board
April 3, 1996
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS
ARE URGED TO SIGN, DATE AND RETURN THE PROXY IN THE ENCLOSED
ENVELOPE, TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE MEETING YOU MAY. IF YOU WISH.
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE>
Appendix A
CERTIFICATE OF AMENDMENT
of the
CERTIFICATE OF INCORPORATION
RAND CAPITAL CORPORATION
Under Section 805 of the
Business Corporation Law
Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned, Allen F. Grum and Robin K.
Penberthy, being respectively the President and Secretary of Rand
Capital Corporation, do hereby certify as follows:
1. The name of the corporation is RAND CAPITAL
CORPORATION.
2. The Certificate of Incorporation of the corporation was
filed by the Department of State of the State of New
York on February 24, 1969.
3. The Certificate of Incorporation of the corporation is
hereby amended to add a new Paragraph 7 with respect to
elimination of personal liability of the directors of
the corporation. To effect this amendment, Paragraph 7
is hereby added which shall read in its entirety as
follows:
"7. To the fullest extent now or hereafter permitted
by law, no director of the corporation shall be
personally liable to the corporation or its
shareholders for damages for any breach of duty in
such capacity.
4. The foregoing amendment of the Certificate of
Incorporation was authorized by the affirmative vote of
the Board of Directors of the corporation followed by
the affirmative vote of the holders of a majority of
all outstanding common shares of the corporation
entitled to vote thereon at the annual meeting of
shareholders duly called and held on the 25th day of
April 1996.
IN WITNESS THEREOF, the undersigned have signed this
Certificate and affirmed the statements made herein as true under
penalties of perjury this ___ day of _______________, 1996.
_________________________________
Allen F. Grum, President
_________________________________
Robin K. Penberthy, Secretary
<PAGE>
[Form of Proxy - Side One]
RAND CAPITAL CORPORATION
1300 Rand Building, Buffalo, New York 14203
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jayne K. Rand and Allen F. Grum
as proxies, each with the power to appoint a substitute, and
hereby authorizes them to represent and to vote as designated
below all the shares of Common Stock of Rand Capital Corporation
(the "Company") held of record by the undersigned at the annual
meeting of shareholders to be held on April 25, 1996 or any
adjournment thereof
1. ELECTION OF DIRECTORS: Election of T.R. Beecher, Jr.; A.F.
Grum; W.S. McLeese; R.B. Newman II; J.K. Rand; D.A. Ross; and F.
W. Winter
[ ] FOR all nominees (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY for all nominees
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below)
2. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION:
Proposal to limit the liability of directors to the Company and
its stockholders to the extent permitted by New York law.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPOINTMENT OF DELOITTE & TOUCHE, LLP as the independent
public accountants for the Company for 1996
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Please date and sign on the reverse side)
<PAGE>
[Form of Proxy - side Two]
4. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
DATE: _____________________________
____________________________
Signature
____________________________
Signature if held jointly
Please sign exactly as names
appear to the left.
When signing as a Trustee,
Executor or Administrator, or
Guardian, give title as such.
All joint owners should sign.
If a corporation, please sign
in full corporate name by
authorized officer, giving
title. If a partnership,
please sign in partnership
name by authorized persons.
PLEASE DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE
