EXHIBIT 2(d)(2)
Form of Subscription Agreement among Registrant
and holders of securities being registered
RAND CAPITAL CORPORATION
SUBSCRIPTION AGREEMENT
AGREEMENT made as of the __ day of January, 1997 by and
between the person identified on the signature page of this
Agreement, the persons listed on Exhibit 1 who are signatories to
this Agreement (individually, a "Subscriber," and collectively,
the "Subscribers") and Rand Capital Corporation, a New York
corporation having its principal office at 0000 Xxxx Xxxxxxxx,
Xxxxxxx, Xxx Xxxx (the "Corporation").
WHEREAS, the Corporation desires to offer up to 2,840,000
shares (the "Shares") of its common stock, par value $.10 per
share (the "Common Stock") pursuant to the terms and conditions
hereinafter provided; and
WHEREAS, the Subscribers individually desire to purchase
Shares from the Corporation under the terms of this Agreement;
NOW, THEREFORE, for and in consideration of the premises and
covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Purchase and Sale.
(a) Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement, the undersigned Subscriber hereby
subscribes to purchase the largest number of whole Shares that
may be purchased at the per share Net Asset Value of the
Company's Common Stock, as determined in accordance with Section
6(a) below, for an aggregate purchase price of $_________ at the
Closing described in Section 1(c), and delivers herewith a
certified or official bank check in that amount as payment for
the aggregate purchase price of the Subscriber's Shares.
(b) Maintenance of Purchase Price in a Separate Bank
Account. Immediately after receipt of this Subscription
Agreement and the subscription payment indicated in Section 1(a),
the Corporation shall cause the payment to be deposited with all
other subscription payments received in connection with the
Offering in a separate bank account. The full amount of all such
subscription payments shall be maintained in such account for the
benefit of the respective Subscribers until the earlier of: (i) a
Closing hereunder, in which case it will be disbursed to the
Corporation, or (ii) thirty (30) days after the date first above
written, in which case it shall be returned to by the Corporation
to the Subscriber, without interest or deduction.
(c) Closing. The purchase and sale of the Shares shall
take place at a closing (the "Closing") at the offices of the
Corporation as soon as practicable after the receipt by the
Corporation of Subscription Agreements and subscription payments
for Shares from all of the Subscribers and the fulfillment of the
conditions contained Section 6 of this Agreement. At the Closing
the Corporation shall deliver to each Subscriber a certificate or
certificates representing the number of Shares the Subscriber is
purchasing together with a check for the difference (if any)
between the price of the number of whole Shares purchased by the
Subscriber and the amount tendered pursuant to Section 1(a),
above.
2. Representations and Warranties of the Corporation. The
Corporation hereby represents and warrants to the each of the
Subscribers that:
(a) Incorporation. The Corporation is a corporation duly
organized and validly existing and in good standing under the
laws of New York and has all requisite corporate power and
authority to carry on its business as a closed-end, investment
company registered under the Investment Company Act of 1940.
(b) Authorization. All corporate action on the part of the
Corporation, its officers and directors necessary for the
authorization, execution, delivery and performance of all
obligations of the Corporation under this Agreement and for the
authorization, issuance and delivery of the Shares being sold
hereunder has been or shall be taken prior to the Closing, and
this Agreement, when executed and delivered shall constitute a
binding and enforceable obligation of the Corporation. When the
Acceptance of Subscription provided for herein has been executed
and delivered by the Corporation, it shall constitute a binding
obligation of the Corporation in accordance with its terms.
(c) Validity of Securities. The Shares to be purchased and
sold pursuant to this Agreement, when issued, sold and delivered
in accordance with its terms for the consideration expressed
herein, shall be duly and validly issued, fully paid and non-
assessable.
3. Representations by Subscribers. Each of the undersigned
Subscribers represents and warrants as to such Subscriber,
severally and not jointly, to the Corporation as follows:
(a) The Subscriber is acquiring the Shares for its own
account as principal, for investment and not with a view to
resale or distribution of all or any part of the Shares except in
accordance with and as provided for in this Agreement.
(b) Immediately prior to the purchase:
(i) the Subscriber has such knowledge and experience
in financial and business matters that it is capable of
evaluating the risks and merits of the prospective investment;
and
(ii) the Subscriber is able to bear the economic risk
of the investment (i.e., at the time of investment it could
afford a complete loss without hardship).
(c) The Subscriber has been informed as to, and is familiar
with, the business activities of the Corporation. The respective
Subscriber has been provided with copies of the Corporation's
1995 Annual Report to Shareholders, the Corporation's proxy
statement used in connection with the solicitation of proxies for
its 1996 Annual Meeting of Shareholders, the Corporation's June
30, 1996 Form N-SAR and semi-annual report to shareholders.
(d) The Subscriber has been advised that the Corporation
was made a defendant in an law suit brought by Sealy Corporation
for contribution pursuant to the federal Comprehensive
Environmental Response, Cleanup and Liability Act ("CERCLA") and
the New Jersey Spill Compensation and Control Act (the "N.J.
Spill Act") for remediation costs in excess of $1,000,000 that
will be incurred by Sealy in connection with the clean-up of a
property allegedly owned by Stop-Fire, Inc. during the period
from 1976 to 1979 on which Stop-Fire is alleged to have dumped
paints, solvents and fire extinguisher materials while allegedly
under the control of the Corporation. The Subscriber understands
that while the Corporation's motion to dismiss the causes of
action against it were dismissed on _____________, 1996 pursuant
to a motion made by the Corporation based on the absence of
evidence indicating ownership or control by the Corporation of
Stop-Fire, Inc. sufficient for the imposition of liability under
CERCLA or the N.J. Spill Act, no assurance can be given that the
dismissal will not be appealed, that any such appeal might not be
successful, and, consequently, that the Corporation will have no
liability resulting from this claim or that it will not incur
substantial expenses in defending or settling the action brought
in connection with this claim.
(e) The Subscriber has had an opportunity to ask questions
of, and receive answers from, appropriate representatives of the
Corporation, including the President, concerning the Corporation,
its business, and the terms and conditions of the Offering, and
to obtain such additional information as the Subscriber deems
necessary to verify the accuracy and adequacy of the information
it has obtained. The Subscriber fully understands that this
Offering has not been registered under the Securities Act of 1933
(the "Securities Act") in reliance upon exemptions therefrom,
and, accordingly, to the extent that it is not supplied with
information which would have been contained in a registration
statement filed under the Securities Act it must rely on its own
access to such information.
(f) The Subscriber affirms that the Subscriber is an
"accredited investor" as that term is defined and construed
pursuant to Rule 501 under the Securities Act of 1933 because at
least one of the following statements is true with respect to it
(indicate the appropriate manner of qualification):
(i)___ a natural person whose individual net worth, or
joint net worth with that person's spouse, at the
Closing will exceed $1,000,000;
(ii)___ a natural person who had an individual income
in excess of $200,000 in each of the two most recent
years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income
level in the current year;
(iii)___ a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring Shares, whose purchase is directed by a
"sophisticated person" as described in Rule
506(b)(2)(ii) under the Act;
(iv)___ an organization described in Section 501(c) of
the Internal Revenue Code, or a corporation,
Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of
acquiring Shares, with total assets in excess of
$5,000,000;
(v)___ an entity in which all of the equity owners are
accredited investors; or
(vi)___ an entity which otherwise qualifies as an
accredited investor (explain circumstances on a
separate exhibit).
(g) The Subscriber affirms that all information that it has
provided to the Corporation either directly or indirectly,
concerning the Subscriber, the Subscriber's financial position
and the Subscriber's knowledge of financial and business matters
is accurate and complete as of the date of this Agreement.
(h) The Subscriber fully understands and agrees that the
Subscriber must bear the economic risk of its investment in the
Shares for an indefinite period of time because, among other
reasons, the Shares have not been registered under the Securities
Act, and, therefore, cannot be sold, pledged, assigned or
otherwise disposed of unless they are subsequently registered
under the Securities Act or, in the opinion of counsel acceptable
to the Corporation, an exemption from such registration is
available.
(i) The Subscriber understands that no federal or state
agency has passed upon the offering of the Shares or made any
finding or determination as to the fairness of the offering the
Shares.
(j) The Subscriber understands that the Corporation is a
closed-end investment company that is registered under the
Investment Company of 1940 (the "ICA"), and the Subscriber
affirms that its purchase of the Shares hereunder will not cause
it or the Corporation to be in violation of the restrictions on
ownership of the Corporations common shares imposed by the ICA,
including, without limitation, the restrictions contained in
Section 12 of the ICA upon ownership of the Corporation's common
shares by unregistered investment companies.
4. Brokers' Fees. The Corporation and each of the
Subscribers represents and agree that the transactions
contemplated by this Agreement have been carried on by the
parties directly and without the intervention of any other person
in such manner as to give rise to any valid claim against either
party for a finder's fee, brokerage commission or other similar
payment.
5. Restriction on Transferability of Shares, Compliance
with Securities Act of 1933.
(a) Restrictions on Transferability. The Shares shall not
be transferable except upon the conditions specified in this
Section 5, which conditions are intended to insure compliance
with the provisions of the Securities Act of 1933 in respect of
the transfer of the Shares.
(b) Certain Definitions. As used in this Section 5, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act and the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Registration Stock" shall mean the all of those Shares
designated by any Subscriber pursuant Section 5(d) as includable
in the registration to be made by the Corporation hereunder.
"Registration Expenses" shall mean all expenses
incurred by the Corporation in complying with Subsection 5(d),
including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel to the
Corporation, the fees and expenses in connection with all
registrations or exemption from registration under state
securities law affecting the transfer of the Registration Stock
("Blue Sky Expenses") in New York, Texas and Arizona and the
expenses of any regular or special audits incident to or required
by any such registrations (and including the compensation of
regular employees of the Corporation involved in such
registration).
"Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sales, and
any state or federal transfer taxes payable with respect to the
sales, of the Registration Stock, all Blue Sky Expenses for any
states other than New York, Texas and Arizona, any state or
federal transfer taxes payable with respect to the sales of
Registration Stock, and all fees and disbursements of counsel for
the Subscribers.
(c) Shares to be Legended. A restrictive legend in
substantially the following form will be imprinted on the
certificates evidencing the Shares and stop transfer orders or
other appropriate instructions to such effect will be maintained
against the transfer of the Shares on the transfer records of the
Corporation or its transfer agent:
"The Shares represented by this Certificate have not
been registered under the Securities Act of 1933 (the
"Act"). The Shares have been acquired for investment
and may not be sold, transferred, pledged or otherwise
disposed of in the absence of an effective Registration
Statement for the Shares under the Act or an opinion of
counsel satisfactory to the issuer that the proposed
disposition of the Shares will not violate Section 5 of
the Act."
The transfer the Shares on the books and records of the
Corporation will only be effected in accordance with such legend.
(d) Required Registration. Each Subscriber has indicated in
the space provided on the signature page to this Agreement the
number of Shares of Registration Stock that the Subscriber
desires to sell from time to time into the market immediately
after the closing of the Offering and that the Subscriber desires
to have included in a registration to be made by the Corporation.
The Corporation shall, as expeditiously as possible after the
closing of the Offering:
(i) prepare and file with the Commission a registration
statement with respect to the Registration Stock, use its best
efforts to cause it to become and remain effective until the
earliest of (i) two years after the Closing, (ii) the expiration
of the holding period for restricted stock under Rule 144(d) (or
any successor rule) of the Commission, or (iii) until all of the
Registration Stock shall have been sold in accordance with such
registration, and pay all Registration Expenses in connection
therewith;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to delivery of
prospectuses for the period during which the information
contained in the prospectus would not have to be updated pursuant
to Section 10(a)(3) of the Securities Act; provided, however,
that if at any time during such period of effectiveness the
Company shall request that sellers of Registration Stock
registered pursuant to such registration statement withhold their
Shares of Registration Stock from sale because of the
Corporation's temporary inability to furnish such sellers with a
prospectus meeting the requirements of the Securities Act (other
than as a result of the application of Section 10(a)(3) of the
Securities Act), such sellers shall refrain from selling such
Registration Stock on the condition that the Corporation shall
file such amendments and supplements to such registration
statement and prospectus issued in connection therewith as may be
necessary in order to permit the sale of the Registration Stock
to the public in compliance with the Securities Act as
expeditiously as reasonably possible;
(iii) furnish to each seller such number of copies of a
prospectus in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably
request in order to facilitate the public sale or other
disposition of the Registration Stock owned by the seller; and
(iv) use its best efforts to register or qualify the
Registration Stock covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as
each such seller shall reasonably request (not exceeding five in
number unless otherwise agreed by the Corporation) as shall be
reasonably appropriate for the distribution of the Registration
Stock covered by such registration statement, provided that the
Corporation shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdiction,
and do any and all other acts and things which may be necessary
or desirable to enable such seller to consummate the public sale
or other disposition of the Registration Stock in such
jurisdictions;
(e) Indemnification by the Corporation. In the event of
any registration of any Registration Stock under the Securities
Act, the Corporation shall, and hereby does, indemnify and hold
harmless in the case of any registration statement filed pursuant
to Section 5, each Subscriber, its directors and officers, each
other person who participates as an underwriter in the offering
or sale of Registration Shares and each other person, if any, who
controls such seller or any such underwriter within the meaning
of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which the Subscriber
or any such director or officer or underwriter or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any registration statement under which the
Registration Stock was registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not
misleading, and the Corporation shall reimburse the Subscriber,
and each such director, officer, underwriter and controlling
person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided that the
Corporation shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Corporation
by or on behalf of the Subscriber or such underwriter, as the
case may be, specifically stating that it is for use in the
preparation thereof; and provided further that the Corporation
shall not be liable to any Person who participates as an
underwriter in the offering or sale of Registration Stock or any
other Person, if any, who controls such underwriter within the
meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such
Persons' failure to send or give a copy of the final prospectus,
as the same may be then supplemented or amended, to the person
asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written
confirmation of the sale of Registration Stock to such person if
such statement or omission was corrected in such final
prospectus.
(f) Indemnification by the Subscriber. In the event of any
registration of Registration Stock under Section 5(d), each
Subscriber shall, and hereby does indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section
5(e)) the Corporation, each director of the Corporation, each
officer of the Corporation and each other person, if any, who
controls the Corporation within the meaning of Section 15 of the
Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information about the
Subscriber furnished to the Corporation by the Subscriber for use
in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement.
(g) Cooperation, Furnishing of Information. It shall be a
condition precedent to the obligation of the Corporation to take
any action pursuant to Section 5(d) that each of the Subscribers
shall furnish to the Corporation promptly in writing such
information regarding of the Subscriber, the Shares held by the
Subscriber, and the intended method of disposition of the
Registration Stock as the Corporation shall reasonably request
and as shall be required in connection with the registrations to
be undertaken by the Corporation.
6. Conditions to Acceptance of Subscription and
Closing. The Acceptance of the Subscription provided for herein
is subject to the following conditions:
(a) Net Asset Value. Pursuant to the requirements of the
ICA, the Board of Directors of the Corporation (the "Board") must
determine that the sale price of the Shares is not less than the
current net asset value of the Corporation's common shares as of
a date within 48 hours (excluding Sundays and holidays) of the
determination. Accordingly, unless the Board, in its discretion,
determines that the sale price per share (which shall be Net
Asset Value as determined by the Board) is equal to the current
net asset value of the Corporation's common shares within 48
hours of the Closing, the subscriptions of the Subscribers will
not be accepted, and the payments made by the Subscribers will be
returned to them without interest or deduction as promptly as
possible.
(b) Commitment to Registration. The Subscribers are
concerned that the Corporation be strongly committed to the
registration of the Registration Stock pursuant to Section 5(d)
as promptly as possible after the Closing. Accordingly, the
Board shall adopt the following resolution prior to their
acceptance of the subscriptions of the Subscribers:
"RESOLVED, that the corporation shall use its best
efforts to cause the Registration Stock (as that term
is defined in a Subscription Agreement, dated ________
__, 1996, between the corporation and the subscribers
named therein for 2,840,000 common shares of the
corporation (the "Agreement")) to be registered in
accordance with the Agreement, that the officers of the
corporation are directed pursue such registration as
promptly and diligently as possible on behalf of the
corporation, and that this resolution may not be
altered, amended or repealed by the Directors of this
corporation without their affirmative vote or written
consent based on their good faith determination that to
do so would be in the best interest of the corporation
and its shareholders.
If the Board determines that it will not adopt the foregoing
resolution prior to the Closing, the Board will not accept the
subscriptions of the Subscribers, and the subscription payments
of the Subscribers shall be returned to the Subscribers without
interest or deduction as promptly as possible.
7. Miscellaneous.
(a) Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New
York.
(b) State in which Offered. The Shares are offered to and
will be purchased by the Subscriber in the State of New York,
unless a different State for such offering and sale is indicated
in the following space: __________ .
(c) Binding Effect. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of
the parties and their successors, legal representatives and
assigns.
(d) No Assignments. The Subscriber agrees that except as
provided herein neither it nor its legal representatives will
sell, assign, encumber or transfer, in any manner whatsoever,
this Agreement or its rights under this Agreement.
(e) Entire Agreement. This Agreement constitutes the
entire agreement between the parties pertaining to the subject
matter hereof and supersedes any prior understandings, oral or
written.
(f) Notices. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given
upon personal delivery or three (3) days after deposit in the
United States Post Office, by registered or certified mail,
addressed to a party at its address hereinafter shown below or at
such other address as such party may designate by ten (10) days
advance written notice to the other party.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
The Corporation:
RAND CAPITAL CORPORATION
By:_________________________
Xxxxx X. Xxxx, President
The Subscriber:
Name of Subscriber (print):___________________
Aggregate purchase price:$__________________
Number of Shares designated by Subscriber
as Registration Stock:____________________
Address of Subscriber:________________________
_________________________
Signature of Subscriber:________________________
To be completed by the Corporation:
Number of whole Shares to be to be purchased by
Subscriber:_______________
Amount of refund to Subscriber based upon
difference amount tendered and aggregate cost of
whole Shares to be purchased: _____________
ACCEPTANCE OF SUBSCRIPTION
Dated: ___________, 1997
The foregoing Subscription is hereby accepted by Rand
Capital Corporation as of the ____ day of ____________, 1997
RAND CAPITAL CORPORATION
By:______________________
Xxxxx X. Xxxx, President
Exhibit 1.
LIST OF SUBSCRIBERS
Name Address No. of Shares
