SCHEDULE 14A
(RULE 14A-101)
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 Rule 14a-11(c) or Rule 14a-12
INVESTORS CAPITAL HOLDINGS, LTD.
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(Name of Registrant as Specified In Its Charter)
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(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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[ ] 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.
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(4) Date Filed:
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[LOGO]
NOTICE OF 2001 ANNUAL MEETING
AND
PROXY STATEMENT
June 29, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Meeting") of Investors Capital Holdings, Ltd. (the "Company") to be held on
Wednesday, August 1, 2001, at 10:00 a.m. local time, at the Sheraton Colonial
located at 1 Audubon Road, Wakefield, Massachusetts. Your Board of Directors and
management look forward to greeting those stockholders who are able to attend.
The Notice of Annual Meeting of Stockholders and Proxy Statement containing
information pertaining to the business to be transacted at the Meeting appear on
the following pages.
Whether or not you plan to attend, it is important that your shares be
represented and voted at the Meeting. Please complete, sign, date, and mail the
enclosed proxy card at your earliest convenience. Most stockholders can also
vote their shares over the Internet or by telephone. If Internet or telephone
voting is available to you, voting instructions are printed on the proxy card
sent to you.
On behalf of the Board of Directors and management I would like to thank you
for your interest and participation in the affairs of the Company.
Sincerely,
Theodore E. Charles
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
INVESTORS CAPITAL HOLDINGS, LTD.
230 Broadway
Lynnfield, Massachusetts 01940
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, AUGUST 1, 2001
June 29, 2001
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders (the
"Meeting") of Investors Capital Holdings, Ltd. (the "Company") will be held at
10:00 a.m. local time on Wednesday, August 1, 2001 at the Sheraton Colonial
located at 1 Audubon Road, Wakefield, Massachusetts for the following purposes:
* To elect seven directors, each to serve for a term of one year or until
their successors are elected and qualified;
* To approve and adopt an amendment to the Company's Articles of
Organization that will eliminate Article V thereof;
* To approve and adopt the Company's 2001 Equity Incentive Plan reserving
for issuance up to 250,000 shares of the Company's common stock;
* To ratify the appointment by the Board of Directors, of independent
auditors to audit the Company's books and records for the fiscal year
ending March 31, 2002; and
* To transact such other business as may properly come before the Meeting
or any adjournments or postponements thereof.
Only holders of common shares of record as of the close of business on July
16, 2001 will be entitled to notice of, and to vote at, the Meeting, or any
adjournments or postponements thereof.
Stockholders are cordially invited to attend the Meeting. It is important
that your shares be represented and voted at the Meeting. Because many of our
stockholders cannot personally attend the Meeting, it is necessary that a large
number be represented by proxy. Therefore, if you do not expect to attend the
Meeting, but wish your stock to be voted for the business to be transacted
thereat, please complete, sign and date the enclosed proxy card and return it by
mailing it in the accompanying postage-paid envelope. Most stockholders can also
vote their shares over the Internet or by telephone. If Internet or telephone
voting is available to you, voting instructions are printed on the proxy card
sent to you.
By Order of the Board of Directors,
C. David Weller, Esq.
ASSISTANT SECRETARY
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying Proxy Card are being furnished in
connection with the solicitation by the Board of Directors (the "Board") of
Investors Capital Corporation, Ltd., a Massachusetts corporation (the
"Company"), of proxies to be voted at the Annual Meeting of Stockholders of the
Company (the "Meeting") to be held on Wednesday, August 1, 2001 at 10:00 a.m.
local time at the Sheraton Colonial located 1 Audubon Road, Wakefield,
Massachusetts, or any adjournments or postponements thereof, for the purposes
set forth in the attached Notice of Annual Meeting of Stockholders.
Only the holders of record of the Company's Common Stock, par value $.01 per
share, as of the close of business on July 16, 2001 (the "Record Date"), are
entitled to notice of, and to vote on, all matters properly brought before the
Meeting or any adjustments or postponements thereof. As of June 14, 2001, there
were 5,708,311 common shares outstanding.
VOTING AND PROXY PROCEDURES
Each stockholder is entitled to one vote for each share of common stock held
by him or her at the close of business on the Record Date. Pursuant to the
Company's Bylaws, to constitute a quorum for the transaction of business at any
meeting of stockholders, there must be present, in person or by proxy, the
holders of a majority of the voting power of the issued and outstanding shares
of voting stock of the Company. Once a share is represented for any purpose at
the meeting, it is deemed present for quorum purposes for the remainder of the
meeting. A plurality of the votes cast by the shares of stock entitled to vote,
in person or by proxy, at the Meeting will elect directors as long as a quorum
is present. If a quorum exists, action on each other question to be voted upon
will be approved if votes, in person or by proxy, cast by stockholders favoring
the action exceed the vote cast by stockholders opposing the action. When
proxies in the enclosed form are returned properly executed, the shares
represented thereby will be voted at the Meeting and, where instructions have
been given by the stockholder, will be voted in accordance therewith. If the
stockholder does not otherwise specify, the stockholders shares will be voted
FOR each of the nominees for director and FOR the proposals to approve an
amendment to the Articles of Organization, approve the equity incentive plan,
and ratify the appointment of the independent auditors, all as set forth in this
Proxy Statement. As to any other business, which may come before the Meeting,
the proxy holders will vote in accordance with their best judgment. Votes will
be counted manually. A stockholder executing the accompanying proxy has the
power to revoke it at any time prior to the exercise thereof by appearing at the
Meeting and voting in person or by filing with the Secretary or Assistant
Secretary of the Company, (i) a duly executed proxy bearing a later date, or
(ii) a written instrument revoking the proxy.
Abstentions and broker "non-votes" are not counted for purposes of the
election of a director. On all other proposals, abstentions will be considered
as a vote against the proposal, and broker non-votes will not be counted at all.
A stockholder executing the accompanying proxy has the power to revoke it at any
time prior to the exercise thereof by appearing at the Meeting and voting in
person or by filing with the Secretary or Assistant Secretary of the Company,
(i) a properly executed, later-dated proxy (including an Internet or telephone
vote), or (ii) a written instrument revoking the proxy.
Most stockholders have a choice of voting over the Internet, by using a
toll-free telephone number or by completing a proxy card and mailing it in the
postage-paid envelope provided. Please refer to your proxy card or the
information forwarded by your bank, broker or other holder of record to see
which options are available to you. Please be aware that if you vote over the
Internet, you may incur costs such as telephone and Internet access charges for
which you will be responsible, and that there may be some risk a stockholders
vote might not be properly recorded or counted because of an unanticipated
electronic malfunction.
This Proxy Statement and the accompanying Proxy Card are first being mailed
to stockholders on or about June 29, 2001. A copy of the Company's Annual Report
for the year ended March 31, 2001, is included with this Proxy Statement.
The solicitation of proxies in the accompanying form is made by, and on
behalf of, the Board of Directors. We have engaged the services of Computershare
Trust Company., Inc., the Company's Transfer Agent, to assist us in the
distribution of proxies, for which a fee of approximately $400 will be paid.
There will be no solicitation by officers and employees of the Company. The
Company will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of proxy materials to the beneficial
owners of shares held of record by such persons, and such persons will be
reimbursed for reasonable expenses incurred by them in connection therewith.
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PROPOSAL 1 - ELECTION OF DIRECTORS
Seven directors are to be elected at the Meeting to hold office until the
next Meeting or until their successors have been duly elected and qualified. It
is the intention of the persons named in the accompanying Proxy Card to vote FOR
the election of the seven persons named in the table below as directors of the
Company, unless authority to do so is withheld. All of the nominees are
currently directors of the Company. All of the nominees have consented to being
nominated and named herein, and to serve as directors if elected at the Meeting.
In the event that any of the below listed nominees for director should become
unavailable for election for any presently unforeseen reason, the persons named
in the accompanying Proxy Card have the right to use their discretion to vote
for a substitute.
The Bylaws of the Company provide that the number of Directors shall be
determined by vote of the stockholders or the Board of Directors, but shall
consist of not less than three Directors. The Board has fixed the current number
of directors at seven. Each director presently is elected for a one-year term at
each annual meeting of the stockholders. Officers are elected by, and serve at
the pleasure of, the Board of Directors.
Directors: Theodore E. Charles
Timothy B. Murphy
James J. McCarthy
David R. Smith
L. Gregory Gloeckner
Stephen Parker
James F. Twaddell
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES AS DIRECTOR.
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For each nominee, and for each executive officer of the Company other than
such nominees, there follows a brief listing of their principal occupation for
at least the past five years, other major affiliations, and age as of June 18,
2001.
NOMINEES:
THEODORE E. CHARLES, director of the Company since July 1995. Founder of
Investors Capital Holdings in July of 1995, serves as chairman of the board,
chief executive officer and president.
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Mr. Charles also serves as the chief executive officer of our subsidiaries,
Investors Capital Corporation and Eastern Point Advisors, Inc. Since
November 1997, Mr. Charles has been a director of Revere Federal Savings Bank of
Revere, Massachusetts, a public company, whose securities are traded on the Over
the Counter Bulletin Board Market. Mr. Charles currently holds various
securities licenses, including the series 6, 63, 7 and 24. Mr. Charles is a
member of the Financial Planning Association and has been since 1985. He was
formerly Chairman of the Shareholder Advisory Board of Life USA Insurance
Company. Age--58.
TIMOTHY B. MURPHY, director of the Company since July 1995. Also a
July 1995 founder of the Company and currently serves as executive vice
president, treasurer, chief financial officer and a director. Since August of
1994, Mr. Murphy has also served as president of our subsidiary, Investors
Capital Corporation. In addition, since January of 1995 Mr. Murphy has been
president of our subsidiary, Eastern Point Advisors, Inc. He entered the
securities industry in May of 1991 as an operations manager in the Boston
regional office of Clayton Securities. From February through August of 1994, he
was a compliance officer of Baybanks Brokerage in Burlington, Massachusetts and
a vice president of G.R. Stuart & Company, a brokerage firm located in Maynard,
Massachusetts. Mr. Murphy holds various securities licenses, including the
series 4, 7, 24, 27, 53, 63 and 65. Age--36.
JAMES J. MCCARTHY, director of the Company since March 2000. Is currently
the president and chief executive officer of Revere Federal Savings Bank of
Revere, Massachusetts, a public company, whose securities are traded on the Over
the Counter Bulletin Board Market. At Revere Federal Savings, Mr. McCarthy is
responsible for instituting full-service commercial banking operations and
successfully completing a November 1998 partial public offering of the bank. He
also manages the daily operations of the institution, including strategic
planning, financial investment, marketing and personnel. He has had these
responsibilities since October 1989. Age--40.
DAVID R. SMITH, director of the Company since March 2000. Is a founding
partner and Managing Director of Charter Financial Publishing Network in
Shrewsbury, New Jersey. Founded in March 2000, CFPN publishes, markets and
distributes information for the financial services industry. He is co-founder
of, and currently oversees sales, marketing and circulation for FINANCIAL
ADVISOR magazine, along with other newsletters, books and investment charts
distributed by CFPN. He was previously Senior Vice President of Dow Jones
Financial Publishing Corporation, where he served as Publisher of DOW JONES
INVESTMENT ADVISOR and Associate Publisher of DOW JONES ASSET MANAGEMENT
magazines since October of 1987. Age--39.
L. GREGORY GLOECKNER, director of the Company since March 2000. Has served
as senior vice president of Conseco Services, LLC from June of 1999 through
April of 2001. In this position, he dealt with insurance and investment
products. During the period from November 1997 through April 2001 he also
directed the efforts of Conseco's wholly-owned broker-dealer. Mr. Gloeckner has
been in the investment industry for over twenty years. Prior to joining Conseco,
he concurrently served as vice president of both Monarch Life Insurance Company
and First Variable Life Insurance Company. Age--47.
STEPHEN PARKER, director of the Company since March 2001. Has worked for
Allmerica Financial, a Fortune 500 financial services firm located in Worcester,
Massachusetts for the past ten years. He currently serves Allmerica as vice
president and managing director of sales distribution. Mr. Parker is also
president of Allmerica Investment Management Company, the registered investment
advisory entity of Allmerica. Prior to joining Allmerica Financial, Mr. Parker
served as chairman and chief executive officer of Freedom Capital Management
Corporation, a subsidiary of John Hancock with, at that time, almost $3 billion
under management. Mr. Parker has also served as a director of the Securities
Industry Association and has served on many securities industry committees.
Age--67.
JAMES F. TWADDELL, director of the Company since April 2001. Has served as a
partner in the investment banking group of Schneider Securities, Inc. since
June of 1995. Schneider, located in
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Denver, Colorado, is a national investment banking firm specializing in public
offerings of small- and medium-sized companies. From June of 1974 through
June of 1995, Mr. Twaddell functioned as the chairman of Barclay Investments of
Providence, Rhode Island. Barclay is a regional securities brokerage firm
specializing in public investment banking and the trading of sovereign debt with
worldwide clients. Mr. Twaddell has also previously been employed by the United
States Consulate in Geneva, Switzerland where he was assigned to negotiations on
the General Agreement on Trade and Tariffs (GATT). Age--62.
OTHER EXECUTIVE OFFICERS
JANICE M. CHARLES, secretary since July 1995. Also a 1995 founder of the
Company and director through August 2000. She also serves as treasurer of our
subsidiary, Eastern Point Advisors, Inc. and, since 1987, has been vice
president of Investors Marketing Services, Inc., an insurance brokerage firm
located in Danvers, Massachusetts. Age--50.
C. DAVID WELLER, ESQ., vice president administration and assistant secretary
since February 2001. Advanced sales attorney with the St. Paul Companies of St.
Paul, Minnesota from June 1981 through March 1984. From April 1984 through
December 1990 design attorney with an SEC registered investment advisory firm
located in North Andover, Massachusetts. From September 1991 through May 1995
compliance and tax attorney for the Mutual Life Insurance Company of New York,
located in Waltham, Massachusetts. June 1995 through December 1998 compliance
attorney and counsel to Hancock Partners Insurance, LLP located in Boston,
Massachusetts and from June 1999 to the present, director of compliance and
chief legal counsel to the Company and its subsidiaries. Mr. Weller holds
various securities licenses, including the series 6, 7, 24, and 63. Age--44.
JOSEPH P. TRAINOR, JR., CPA, controller since March of 2001. From
March 1999 through joining the Company, Mr. Trainor functioned as a financial
consultant for John Hancock Financial Services of Boston, Massachusetts. From
January 1998 to March 1999 he served as a special agent with top-secret
clearance with the Federal Bureau of Investigation in Baltimore, Maryland. From
September 1994 to December 1997, Mr. Trainor was a senior accountant with
Parent, McLaughlin & Nagle, CPAs in Boston, Massachusetts. Age--33.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 2001, the Board held five meetings and all directors serving
at the time attended all of the meetings held. In addition, certain actions were
approved by unanimous written consent resolutions of the directors. During
fiscal 2001, the Board had two ongoing committees: an Audit Committee and a
Compensation Committee.
The Audit Committee, consisting of directors Gloeckner, Smith and McCarthy
consults with the independent auditors and management with respect to the
adequacy of internal controls, the Company's audited financial statements and,
where appropriate, the Company's interim financial statements before they are
made public, and to make a recommendation to the Board of Directors regarding
the appointment of independent auditors for the following year. The Audit
Committee held one meeting subsequent to fiscal 2001 to review the Company's
financial statements with the auditor.
The Compensation Committee, consisting of directors Charles, Murphy,
Gloeckner, Smith and McCarthy determines the compensation and benefits of the
chief executive officer and reviews and approves, or modifies if deemed
appropriate, the recommendations of the chief executive officer with respect to
the compensation and benefits of the other executive officers. The Compensation
Committee also approves the issuance of grants pursuant to the Company's equity
incentive plan. The Compensation Committee did not meet during fiscal 2001.
Assuming the reelection of nominees Theodore E. Charles, L. Gregory Gloeckner
and Stephen Parker as directors of the Company,
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immediately following the Meeting, the Board intends that these three directors
will be the sole members of the Compensation Committee.
COMPENSATION OF DIRECTORS
Directors who are not employees receive $500 in cash compensation for their
attendance in person at each meeting of the Board of Directors. Members of the
Audit Committee receive an additional $1,000 for their attendance in person at
each Audit Committee meeting.
EQUITY INCENTIVE PLANS - AWARDS DURING LAST FISCAL YEAR:
There were no equity incentive plan awards made to any of our directors or
executive officers during the fiscal year ending March 31, 2001.
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid by the Company during
the fiscal years ended March 31 2000 and March 31, 2001 for our chief executive
officer and one other executive officer whose annual compensation exceeded
$100,000. The aggregate amount of perquisites and other personal benefits did
not exceed the lesser of $50,000 or 10% of the total of Messrs. Charles' and
Murphy's annual salary and bonus. Other Annual Compensation is the Company's
matching 401(k) contributions. All Other Compensation is personal life insurance
premiums paid by the Company.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- -----------------------------------------
FISCAL SALARY BONUS OTHER ANNUAL RESTRICTED OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION STOCK AWARDS($) (#) COMPENSATION
- --------------------------- -------- -------- -------- ------------ --------------- -------- ------------
Theodore E. Charles 2001 $400,000 none $3,231 none none $6,635
Chairman of the Board, Chief 2000 $232,692 none $4,788 none none $6,635
Executive Officer, President and
Director
Timothy B. Murphy 2001 $200,000 none $1,615 none none $1,265
Executive Vice President, 2000 $147,116 none $3,000 none none $1,265
Treasurer, Chief Financial Officer
and Director
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PRINCIPAL SHAREHOLDERS
The following table presents information regarding beneficial ownership of
our common stock as of June 1, 2001 by: (1) each person who owns beneficially
more than five percent (5%) of our outstanding common stock, (2) each of the
named executive officers, (3) each director, and (4) all directors and executive
officers as a group. The persons named in the table below have sole voting and
dispositive power over all shares of common stock shown as beneficially owned by
them. Mr. Murphy holds options for 150,000 shares of common stock of the Company
at an exercise price of $1.00 per share. The shares underlying these options are
reflected in the numbers below. The business address of Mr. Charles,
Mr. Murphy, Mr. Weller and Mr. Trainor is c/o Investors Capital Holdings, Ltd.,
230 Broadway, Lynnfield, Massachusetts 01940. The business address of
Ms. Charles is c/o Investors Marketing Services, Inc., 168 Centre Street,
Danvers, Massachusetts 01923. The business address of Mr. Smith is 600 Broad
Street, Shrewsbury, New Jersey 07702. The address of Mr. Gloeckner is 1460
Prestwick Lane, Carmel, Indiana 46032. The business address of Mr. McCarthy is
c/o Revere Federal Savings Bank, 310 Broadway, Revere, Massachusetts 02151. The
business address of Mr. Parker is c/o Allmerica Financial, 440 Lincoln Street,
Worcester, Massachusetts 01653. The business address of Mr. Twadell is c/o
Schneider Securities, Inc., 2 Charles Street, Providence, Rhode Island 02904.
NUMBER OF SHARES PERCENT BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNED
- ------------------------------------ ------------------ --------------------
Theodore E. Charles................... 3,585,000 61.2%
Timothy B. Murphy..................... 281,250 4.8%
Janice M. Charles..................... 0 0.0%
David R. Smith........................ 30,000 0.5%
James J. McCarthy..................... 0 0.0%
L. Gregory Gloeckner.................. 0 0.0%
Stephen Parker........................ 0 0.0%
James F. Twaddell..................... 0 0.0%
C. David Weller, Esq.................. 750 0.0%
Joseph P. Trainor, Jr................. 0 0.0%
All directors and executive officers
as a group (10 Persons)............. 3,897,000 66.5%
EMPLOYMENT AGREEMENTS
On August 8, 2000 the Company entered into full-time employment agreements
with Theodore E. Charles and Timothy B. Murphy. For each, the term of employment
is three years, which, on the third anniversary of the commencement date,
automatically extends for a three-year period unless earlier terminated. Under
the employment agreements, Messrs. Charles and Murphy are entitled to receive an
annual base salary of $400,000 and $200,000, respectively. Adjustments to the
annual base salary amounts are at the discretion of the board of directors,
taking into account appropriate cost of living adjustments and general
compensation increases based on performance.
Also, Messrs. Charles and Murphy may present to the Compensation Committee
proposals as to an annual bonus or incentive program, which proposals may or may
not be accepted by the board of directors, acting in good faith, and at their
discretion.
If the Company fails to renew the employment term or terminates the
employment either with or without cause of Mr. Charles or if there is a "change
in control," he is entitled to receive sixty months' base salary at the time of
termination plus, to the extent earned and not already paid, any bonus payable
for the prior fiscal year plus an amount equal to any bonus payable with respect
to the current fiscal year. The base salary is payable in installments on such
dates on which it would be paid if
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Mr. Charles had not been terminated. The bonus payment is payable in a lump-sum
within thirty days of termination.
If the Company fails to renew the employment term or terminates the
employment either with or without cause of Mr. Murphy or if there is a "change
in control," he is entitled to receive thirty-six months' base salary at the
time of termination plus, to the extent earned and not already paid, any bonus
payable for the prior fiscal year plus an amount equal to any bonus payable with
respect to the current fiscal year. The base salary is payable in installments
on such dates on which it would be paid if Mr. Murphy had not been terminated.
The bonus payment is payable in a lump-sum within thirty days of termination.
A "change in control" shall be deemed to have taken place if a person
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 75% or more of the total number of votes that may be cast
for the election of the directors of the company or as the result of, or in
connection with, any tender or exchange offer, merger, consolidation or other
business combination, sale of assets or one or more contested elections, or any
combination of the foregoing transactions in which the persons who were
directors immediately prior to the transaction shall cease to constitute a
majority of the board of directors of the Company or of any successor.
The employment agreements also contain a provision that neither Mr. Charles
nor Mr. Murphy will compete or engage in a business competitive with our current
or anticipated business during the term of the employment agreement and for a
period of six months thereafter. A state court may determine not to enforce this
provision or to otherwise limit its enforceability.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ACQUISITIONS
On August 9, 2000, the Company acquired all of the outstanding common stock
of ICC Insurance Agency, Inc. Our chairman, chief executive officer and
president, Theodore E. Charles and his spouse, Janice M. Charles owned all of
the outstanding shares of stock of this entity. The purchase price for this
acquisition was $100,000 and was paid in cash out of operating revenues. At the
time of this acquisition, our board of directors was of the opinion that the
terms of this transaction were fair and in the best interest of the Company and
its stockholders.
INVESTORS MARKETING SERVICES, INC.
Investors Marketing Services, Inc. is jointly owned by our chairman, chief
executive officer and president, Theodore E. Charles and his spouse, Janice M.
Charles. This entity performs a fulfillment function for our subsidiaries by
preparing, collating and mailing registration kits to registered representatives
and creates graphics and other artwork for various marketing materials produced
for these subsidiaries. It also prepares the assembly, shipping and postage of
literature pertaining to Investors Capital Corporation and Eastern Point
Advisors, Inc. The rates charged for these services are comparable to rates
charged by other non-affiliated companies for performing the same or similar
services. For the fiscal year ending March 31, 2001 the cost for these services
was $221,091.
OTHER RELATED TRANSACTIONS
James J. McCarthy, one of our directors, is currently the president and
chief executive officer of Revere Federal Savings Bank of Revere, Massachusetts.
Investors Capital Corporation has rented space in this bank for the purpose of
marketing securities and investment advisory services to the bank's customers.
During the fiscal year ended March 31, 2001, the aggregate dollar amount of
these rental payments was significantly less than 5% of our consolidated
revenues for the period.
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David R. Smith, one of our directors, is the managing director of Charter
Financial Publishing Network in Shrewsbury, New Jersey which publishes FINANCIAL
ADVISOR magazine. Investors Capital Corporation places recruiting advertisements
in this magazine, among others, and incurs costs therefor. The aggregate dollar
amount of these costs for the fiscal year ended March 31, 2001 was significantly
less than 5% of our consolidated revenues for the period.
L. Gregory Gloeckner, one of our directors, was previously senior vice
president of Conseco Services, LLC. Investors Capital Corporation markets the
variable annuity products of Conseco Services. As a result, it receives
commissions from Conseco Services, the vast majority of which, are then passed
on to registered representatives as compensation. The aggregate dollar amount of
these commissions paid to our broker-dealer subsidiary during the fiscal year
ended March 31, 2001 was less than 5% of our consolidated revenues for the
period.
We rent approximately 3,200 square feet of our principal executive offices
from Arlsburg Trust and Investors Realty, LLC of which our chairman, chief
executive officer and president, Theodore E. Charles is the trustee and a
member, respectively. The current annual rent for this portion of our space is
$136,019 which is comparable to current market rates for similar space in our
geographic area.
As of June 1, 2001, we had loaned $109,327 to Theodore E. Charles, our
chairman, chief executive officer and president. There are no formal repayment
terms and the amount loaned accrues interest at the rate of 8% per year.
------------------------
PROPOSAL 2 - APPROVAL OF AMENDMENT TO THE ARTICLES OF ORGANIZATION
PURPOSE AND EFFECT OF THE ARTICLE AMENDMENT
The proposed amendment to our Articles of Organization will amend our
Articles in a way that we believe is necessary to foster our long-term growth as
an independent company and to otherwise amend and enhance the Company's Articles
of Organization to be representative of those of a publicly-traded entity.
ARTICLE V: RESTRICTIONS ON THE TRANSFER OF SHARES OF STOCK
Following is a description of the material terms of Article V of our current
Articles of Organization, the restrictions of which have been waived by our
Board of Directors for the period February 8, 2001 until such time as this
Proposal 2 is acted upon favorably by the stockholders.
Article V of the Company's Articles of Organization currently provides in
part: ANY STOCKHOLDER, INCLUDING THE HEIRS, ASSIGNS, EXECUTORS OR ADMINISTRATORS
OF A DECEASED STOCKHOLDER, DESIRING TO SELL OR TRANSFER SUCH STOCK OWNED BY HIM
OR THEM, SHALL FIRST OFFER IT TO THE CORPORATION THROUGH THE BOARD OF DIRECTORS
... NO SHARES OF STOCK SHALL BE SOLD OR TRANSFERRED ON THE BOOKS OF THE
CORPORATION UNTIL THESE PROVISIONS HAVE BEEN COMPLIED WITH, BUT THE BOARD OF
DIRECTORS MAY IN ANY PARTICULAR INSTANCE, WAIVE THE REQUIREMENT.
THE AMENDMENT
This Article V was included in the Company's original Articles of
Organization at a time when the Company was not publicly traded. At such time,
through this Article V, restrictions were placed on the transfer of the
Company's shares and a right of first refusal was created in the Company
regarding any proposed transfer of shares. This was done in an effort to
maintain control of the Company in the then-existing stockholders. The Company's
shares of stock are now publicly traded and current Article V, while not causing
any identifiable problems to date, is in direct conflict with the free exchange
of the Company's shares on the American Stock Exchange.
8
If adopted, the proposed amendment would eliminate from our Articles of
Organization this Article V in its entirety as, in the opinion of the Board of
Directors, it has no place in, and is counterproductive to, the purposes of a
publicly-traded company and the free exchange of shares in the public
marketplace. The Board of Directors believes that the removal of this Article V
in its entirety is in the best interests of the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE AMENDMENT TO THE ARTICLES OF ORGANIZATION.
------------------------
PROPOSAL 3 - APPROVAL OF THE 2001 EQUITY INCENTIVE PLAN
On May 22, 2001, the Board of Directors adopted, subject to stockholder
approval, the Company's 2001 Equity Incentive Plan (the "Plan") to be effective
as of January 1, 2001. A copy of the Plan is attached to this Proxy Statement as
Appendix A. The Plan shall have reserved for issuance up to 250,000 shares of
common stock of the Company.
PURPOSE
The purpose of the Plan is to advance the interests of the Company and its
stockholders by providing an incentive to attract, retain, reward and motivate
employees and other individuals who contribute to the growth and profitability
of the Company. The Plan achieves this purpose by allowing for the grant of
common stock, incentive stock options, options which do not constitute incentive
stock options, or any combination of the foregoing, as is best suited to the
circumstances of the particular employees and individuals or entities.
ADMINISTRATION
The Plan is administered by the Board of Directors, which has the final
power to construe and interpret the Plan and the rights granted under it. The
Board has the power, subject to the provisions of the Plan, to determine which
employees, officers, directors, individuals or entities shall receive an award
or grant, the time or times when such award or grant shall be made, whether
common stock, an incentive stock option or nonqualified option shall be granted
and the number of shares of common stock which may be issued under each option.
In making such determinations, the Board of Directors may take into account the
nature of the services rendered by these entities and individuals, their present
and potential contribution to the success of the Company and such other factors
as the Board in its discretion shall deem relevant.
OFFERINGS
There are no specific systematic or sequential awards or grants under the
Plan. The time and amount of any awards or grants under the Plan is at the
complete discretion of the Board of Directors.
EFFECTIVE DATE AND DURATION
If approved, the Plan shall be effective as of January 1, 2001. The Plan
shall be terminated and no further awards or grants are permitted under the Plan
after ten (10) years from the date the Plan is approved by the Company's
stockholders.
ELIGIBILITY
An award of an incentive stock option pursuant to the Plan may be granted
only to an individual who, at the time of grant, is an employee of the Company
or a subsidiary. An award of an option
9
which is not an incentive stock option or a grant of common stock may be made to
an individual who, at the time of award or grant, is an employee of the Company
or a subsidiary, or to an individual who has been identified by the Board to
receive an award or grant due to their contribution or service to the Company,
including members of the Board of Directors of Company or a subsidiary. An award
or grant made may be made on more than one occasion to the same person, and such
award or grant may include a common stock grant, an incentive stock option, an
option that is not an incentive stock option, or any combination thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND
ADOPTION OF 2001 EQUITY INCENTIVE PLAN.
------------------------
PROPOSAL 4 - RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee, has
appointed the firm of Cayer Prescott Clune & Chatellier, LLP of Providence,
Rhode Island to serve as our independent public accountants for the fiscal year
ending March 31, 2002. Although stockholder ratification is not required, the
Board of Directors has directed that such appointment be submitted to the
stockholders of the Company for ratification at the Annual Meeting. Cayer
Prescott Clune & Chatellier, LLP has served as our independent public
accountants for the past fiscal year and is considered to be well-qualified by
our management. If the stockholders do not ratify the appointment of Cayer
Prescott Clune & Chatellier, LLP, the Board of Directors may reconsider the
appointment.
AUDIT FEES. Cayer Prescott Clune & Chatellier, LLP billed aggregate fees of
$193,600 for professional services rendered for (i) preparation for the public
offering; (ii) progress bill for the audit of the Company's financial statements
for the year ended March 31, 2001 and (ii) the review of the financial
statements included in the Company's quarterly reports on Form 10-Q filed with
the Securities and Exchange Commission. There were no fees for anything but
audit and audit-related matters.
All audit services provided by Cayer Prescott Clune & Chatellier, LLP are
approved by the Company's Audit Committee, which considers whether the provision
of non-audit services is compatible with maintaining the independence of Cayer
Prescott Clune & Chatellier, LLP. There have been no non-audit services
provided.
Representatives of Cayer Prescott Clune & Chatellier, LLP will be present at
the Annual Meeting. They will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
stockholders.
Assuming the presence of a quorum, ratification of the appointment of Cayer
Prescott Clune & Chatellier, LLP requires the affirmative vote of a majority of
the total shares of Common Stock present in person or represented by proxy and
entitled to vote. Abstentions will have the same effect as votes against this
proposal. Broker nonvotes will not be included in the vote totals and,
therefore, will have no effect on the outcome of this proposal. Proxies will be
voted for or against such approval in accordance with specifications marked
thereon, and if no specification is made, the proxies will be voted for such
approval.
10
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
RATIFY THE APPOINTMENT OF CAYER PRESCOTT CLUNE & CHATELLIER, LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
FOR THE FISCAL YEAR ENDING MARCH 31, 2002.
------------------------
REPORT OF THE AUDIT COMMITTEE
The Board of Directors of the Company has appointed an Audit Committee
composed of three directors, all of whom are independent as defined in Section
121 B(b)(ii) of the American Stock Exchange listing standards.
The Board of Directors has adopted a written charter for the Audit
Committee. A copy of that Charter is included as Appendix B to this Proxy
Statement. The Audit Committee's job is one of oversight as set forth in its
Charter. It is not the duty of the Audit Committee to prepare the Company's
financial statements, to plan or conduct audits, or to determine that the
Company's financial statements are complete and accurate and are in accordance
with accounting principles generally accepted in the United States of America.
The Company's management is responsible for preparing the Company's financial
statements and for maintaining internal controls. The independent auditors are
responsible for auditing the financial statements and for expressing an opinion
as to whether those audited financial statements fairly present the financial
position, results of operations, and cash flows of the Company in conformity
with accounting principles generally accepted in the United States of America.
The Audit Committee has reviewed and discussed the Company's audited
consolidated financial statements with management and with Cayer Prescott Clune
& Chatellier, LLP (the "Auditors"), the Company's independent auditors for
fiscal 2001.
The Audit Committee has discussed with the Auditors the matters required to
be discussed by Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees".
The Audit Committee has received from the Auditors a formal written
statement describing all relationships between the Auditors and the Company that
might bear on the Auditors' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees,"
discussed with the Auditors any relationships that may impact their objectivity
and independence and satisfied itself as to the Auditors' independence.
Based on the review and discussions referred to above, the Audit Committee
has recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10- K
for the fiscal year ended March 31, 2001 for filing with the Securities and
Exchange Commission.
AUDIT COMMITTEE
L. Gregory Gloeckner
David R. Smith
James J. McCarthy
ANNUAL REPORT/FORM 10-K
The Company's 2001 Annual Report to its stockholders is a reproduction of
its Form 10-K filed with the SEC, excluding the Index to Exhibits and any filed
exhibits or financial statement schedules, and is being mailed to all
stockholders concurrently with this Proxy Statement. ADDITIONAL COPIES OF THE
COMPANY'S FORM 10-K (WITHOUT EXHIBITS OR FINANCIAL STATEMENT SCHEDULES) AS FILED
WITH THE SEC MAY
11
BE OBTAINED AT NO COST BY WRITING TO THE CORPORATE SECRETARY, INVESTORS CAPITAL
HOLDINGS, LTD. 230 BROADWAY, LYNNFIELD, MASSACHUSETTS 01940. THE COMPANY'S FORM
10-K MAY ALSO BE ACCESSED ON THE INTERNET AT http://www.investorscapital.com.
EXHIBITS OR FINANCIAL STATEMENT SCHEDULES LISTED IN THE COMPANY'S FORM 10-K ARE
AVAILABLE UPON REQUEST TO THE CORPORATE SECRETARY AT A NOMINAL CHARGE FOR
PRINTING AND MAILING.
STOCKHOLDER PROPOSALS
No person who intends to present a proposal for action at a forthcoming
annual stockholders' meeting of the Company may seek to have the proposal
included in the proxy statement or form of proxy for such meeting unless that
person (a) is a record or beneficial owner of at least 1% or $2,000 in market
value of shares of Common Stock, has held such shares for at least one year at
the time the proposal is submitted, and such person shall continue to own such
shares through the date and the dates upon which he acquired such shares with
documentary support for a claim of beneficial ownership, (c) notifies the
Company of his intention to appear personally at the meeting or by a qualified
representative under Massachusetts law to present his proposal for action, and
(d) submits his proposal timely. A proposal to be included in the proxy
statement and form of proxy for the Company's next annual meeting of
stockholders will be submitted timely only if the proposal has been received at
the Company's principal executive office no later than March 1, 2002. If the
date of such meeting is changed by more than 30 calendar days from August 15,
2002, or if the proposal is to be presented at any meeting other than the next
annual meeting of stockholders, the proposal must be received at the Company's
principal executive office at a reasonable time before the solicitation of
proxies for such meeting is made.
Even if the foregoing requirements are satisfied, a person may submit only
one proposal with a supporting statement of not more than 500 words, and under
certain circumstances enumerated in the Securities and Exchange Commission's
rules relating to the solicitation of proxies, the Company may be entitled to
omit the proposal and any statement in support thereof from its proxy statement
and form of proxy.
The Company will be permitted to vote proxies in its discretion for any
proposal for inclusion in the Company's proxy statement for its next annual
meeting of stockholders that is not timely submitted on or before March 1, 2002,
if the Company:
- receives notice of the proposal before the close of business on May 15,
2002 and advises stockholders in such proxy statement about the nature of
the matter and how the Company intends to vote on such matter, or
- does not receive notice of the proposal prior to the close of business on
May 15, 2002.
Notices of intention to present proposals at the Company's next annual
stockholders meeting should be addressed to the Company's secretary, Janice M.
Charles, Investors Capital Holdings, Ltd., 230 Broadway, Lynnfield, MA 01940.
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no other business
to be presented at the Meeting. However, if any other matters properly come
before the Meeting, the persons named in the enclosed form of proxy are expected
to vote the proxy in accordance with their best judgment on such matters.
By order of the Board of Directors,
THEODORE E. CHARLES
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
12
APPENDIX A
INVESTORS CAPITAL HOLDINGS, LTD.
2001 EQUITY INCENTIVE PLAN
A-1
INVESTORS CAPITAL HOLDINGS, LTD. 2001 EQUITY INCENTIVE PLAN
SECTION 1
PURPOSE
The purpose of the Investors Capital Holdings, Ltd. 2001 Equity Incentive
Plan is to provide a means whereby Investors Capital Holdings, Ltd., a
Massachusetts corporation (the "Corporation"), may attract able persons to
remain in or to enter the employ of the Corporation, a Parent Corporation, or a
Subsidiary and to provide a means whereby those employees, directors, officers,
and other individuals or entities upon whom the responsibilities of the
successful administration, management, planning, and/ or organization of the
Corporation may rest, and whose present and potential contributions to the
welfare of the Corporation, a Parent Corporation or a Subsidiary are of
importance, can acquire and maintain stock ownership, thereby strengthening
their concern for the long-term welfare of the Corporation. A further purpose of
the Plan is to provide such employees and individuals or entities with
additional incentive and reward opportunities designed to enhance the profitable
growth of the Corporation over the long term. Accordingly, the Plan provides for
granting Common Stock, Incentive Stock Options, options which do not constitute
Incentive Stock Options, or any combination of the foregoing, as is best suited
to the circumstances of the particular employees and individuals or entities as
provided herein.
SECTION 2
DEFINITIONS
The following definitions shall be applicable during the term of the Plan
unless specifically modified by any paragraph:
(a) AWARD means, individually or collectively, any Option granted pursuant to
the Plan.
(b) BOARD means the board of directors of the Corporation.
(c) CHANGE OF CONTROL VALUE means the amount determined in Clause (i), (ii) or
(iii), whichever is applicable, as follows: (i) the per share price offered
to stockholders of the Corporation in any merger, consolidation, sale or
assets or dissolution transaction, (ii) the price per share offered to
stockholders of the corporation in any tender offer or exchange offer
whereby a Corporate Change takes place or (iii) if a Corporate Change occurs
other than as described in Clause (i) or Clause (ii), the fair market value
per share determined by the Board as of the date determined by the Board to
be the date of cancellation and surrender of an Option. If the consideration
offered to stockholders of the Corporation in any transaction described in
this Paragraph or Paragraphs (d) and (e) of Section 8 consists of anything
other than cash, the Board shall determine the fair cash equivalent of the
portion of the consideration offered which is other than cash.
(d) CODE means the Internal Revenue Code of 1986, as amended. Reference in the
Plan to any Section of the Code shall be deemed to include any amendments or
successor provisions to such Section and any regulations under such Section.
(e) COMMON STOCK means the common stock of the Corporation.
(f) CORPORATION means Investors Capital Holdings, Ltd.
(g) CORPORATE CHANGE means one of the following events: (i) the merger,
consolidation or other reorganization of the Corporation in which the
outstanding Common Stock is converted into or exchanged for a different
class of securities of the Corporation, a class of securities of any other
issuer (except a Subsidiary or Parent Corporation), cash or other property
other than (a) a merger, consolidation or reorganization of the Corporation
which would result in the voting stock of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
A-2
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation, at
least sixty percent (60%) of the combined voting power of the voting stock
of the Corporation or such surviving entity outstanding immediately after
such merger, consolidation or reorganization of the Corporation, or
(b) merger, consolidation or reorganization of the Corporation effected to
implement a recapitalization of the Corporation (or similar transaction) in
which no person acquires more than forty-nine percent (49%) of the combined
voting power of the Corporation's then outstanding stock; (ii) the sale,
lease or exchange of all or substantially all of the assets of the
Corporation to any other corporation or entity (except a Subsidiary or
Parent Corporation); (iii) the adoption by the stockholders of the
Corporation of a plan of liquidation and dissolution; (iv) the acquisition
(other than acquisition pursuant to any other clause of this definition) by
any person or entity, including without limitation a "group" as contemplated
by Section 13(d)(3) of the Exchange Act, of beneficial ownership, as
contemplated by such Section, of more than twenty-five percent (25%) (based
on voting power) of the Corporation's outstanding capital stock or
acquisition by a person or entity who currently has beneficial ownership
which increases such person's or entity's beneficial ownership to fifty
percent (50%) or more (based on voting power) of the Corporation's
outstanding capital stock; or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the
Corporation before such election shall cease to constitute a majority of the
Board. Notwithstanding the provisions of clause (iv) above, a Corporate
Change shall not be considered to have occurred upon the acquisition (other
than acquisition pursuant to any other clause of the preceding sentence) by
any person or entity, including without limitation a "group" as contemplated
by Section 13(d)(3) of the Exchange Act, of beneficial ownership, as
contemplated by such Section, of more than twenty-five percent (25%) (based
on voting power) of the Corporation's outstanding capital stock or the
requisite percentage to increase their ownership to fifty percent (50%)
resulting from a public offering of securities of the Corporation under the
Securities Act of 1933, as amended.
(h) DESIGNATED OFFICER means an officer of the Corporation, such as the
President or Chief Operating Officer, who is given authority by the Board to
grant options or make stock grants under the Plan.
(i) EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
(j) FAIR MARKET VALUE means, as of any specified date, the closing price of the
Common Stock on the NASDAQ (or, if the Common Stock is not listed on such
exchange, such other national securities exchange on which the Common Stock
is then listed) on that date, or if no prices are reported on that date, on
the last preceding date on which such prices of the Common Stock are so
reported. If the Common Stock is not then listed on any national securities
exchange but is traded over the counter at the time determination of its
Fair Market Value is required to be made hereunder, its Fair Market Value
shall be deemed to be equal to the average between the reported high and low
sales prices of Common Stock on the most recent date on which Common Stock
was publicly traded. If the Common Stock is not publicly traded at the time
a determination of its value is required to be made hereunder, the
determination of its Fair Market Value shall be made by the Board in such
manner as it deems appropriate (such determination will be made in
good-faith as required by Section 422(c)(1) of the Code and may be based on
the advice of an independent investment banker or appraiser recognized to be
expert in making such valuations).
(k) GRANT means individually or collectively, any Common Stock granted pursuant
to the Plan.
(l) GRANTEE means an employee, director, officer, other individual or entity who
has been granted Common Stock pursuant to the Plan.
(m) HOLDER means an individual or entity who has been granted an Award.
A-3
(n) INCENTIVE STOCK OPTION means an Option within the meaning of Section 422 of
the Code.
(o) OPTION means an Award granted under Section 7 of the Plan and includes both
Incentive Stock Options to purchase Common Stock and Options which do not
constitute Incentive Stock Options to purchase Common Stock.
(p) OPTION AGREEMENT means a written agreement between the Corporation and an
employee with respect to an Option.
(q) OPTIONEE means an employee, director, officer, entity or individual who has
been granted an Option.
(r) PARENT CORPORATION shall have the meaning set forth in Section 424(e) of the
Code.
(s) PLAN means the Investors Capital Holdings, Ltd. 2001 Equity Incentive Plan.
(t) RULE 16B-3 means Rule 16b-3 of the General Rules and Regulations of the
Securities and Exchange Commission under the Exchange Act, as such rule is
currently in effect or as hereafter modified or amended.
(u) SUBSIDIARY means a company (whether a corporation, partnership, joint
venture or other form of entity) in which the Corporation, or a corporation
in which the Corporation owns a majority of the shares of capital stock,
directly or indirectly, owns an equity interest of fifty percent (50%) or
more, except solely with respect to the issuance of Incentive Stock Options
the term "Subsidiary" shall have the same meaning as the term "subsidiary
corporation" as defined in Section 424(f) of the Code.
SECTION 3
EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be effective as of January 1, 2001 provided that the Plan is
approved by the stockholders of the Corporation within twelve (12) months before
or thereafter and on or prior to the date of the first annual meeting of
stockholders of the Corporation held subsequent to the acquisition of an equity
security by a Holder hereunder for which exemption is claimed under Rule 16b-3.
Notwithstanding any provision of the Plan or of any Option Agreement, no Option
shall be exercisable and no Common Stock may be granted prior to such
stockholder approval. The Plan shall be terminated and no further Awards or
Common Stock may be granted under the Plan after ten (10) years from the date
the Plan is adopted by the Board or the date the Plan is approved by the
Corporation's shareholders, whichever is earlier. Subject to the provisions of
Section 9, the Plan shall remain in effect until all Options granted under the
Plan have been exercised or have expired by reason of lapse of time and all
restrictions imposed upon restricted stock awards have lapsed. Any option
exercised before shareholder approval is obtained must be rescinded if
shareholder approval is not obtained within twelve (12) months before or after
the Plan is adopted. Such shares shall not be counted in determining whether
such approval is granted.
SECTION 4
ADMINISTRATION
(a) ADMINISTRATION OF PLAN BY BOARD. The Plan shall be administered by the
Board in compliance with Rule 16b-3. Members of the Board shall abstain from
participating in and deciding matters which directly affect their individual
ownership interests under the Plan.
(b) POWERS. Subject to the terms of the Plan, the Board shall elect one or
several Designated Officers who shall have sole authority, in their
discretion, to determine which employees, officers, directors, individuals
or entities shall receive an Award or Grant, the time or times when such
Award or
A-4
Grant shall be made, whether Common Stock, an Incentive Stock Option or
nonqualified Option shall be granted and the number of shares of Common
Stock which may be issued under each Option. In making such determinations,
the Designated Officer may take into account the nature of the services
rendered by these individuals, their present and potential contribution to
the success of the Corporation, a Parent Corporation or a Subsidiary, and
such other factors as the Board in its discretion shall deem relevant.
(c) ADDITIONAL POWERS. The Board shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Board is authorized in its sole discretion,
exercised in a nondiscriminatory manner, to construe and interpret the Plan
and the respective agreements executed thereunder, to prescribe such
rules and regulations relating to the Plan as it may deem advisable to carry
out the Plan, and to determine the terms, restrictions and provisions of
each Award or Grant, including such terms, restrictions and provisions as
shall be requisite in the judgment of the Board to cause designated Options
to qualify as Incentive Stock Options, and to make all other determinations
necessary or advisable for administering the Plan. The Board may correct any
defect or supply any omission or reconcile any inconsistency in any
agreement relating to an Award or Grant in the manner and to the extent it
shall deem expedient to carry it into effect. The determination of the Board
on the matters referred to in this Section 4 shall be conclusive.
(d) COMPLIANCE WITH CODE SECTION 162(M). In the event the Corporation, a Parent
Corporation or a Subsidiary becomes a "publicly-held corporation" as defined
in Section 162(m)(2) of the Code, the Corporation may establish a committee
of outside directors meeting the requirements of Code Section 162(m) to
(i) approve the grant of Options which might reasonably be anticipated to
result in the payment of employee remuneration that would otherwise exceed
the limit on employee remuneration deductible for income tax purposes by the
Corporation pursuant to Code Section 162(m) and (ii) administer the Plan. In
such event, the powers reserved to the Board in the Plan shall be exercised
by such compensation committee. In addition, Options under the Plan shall be
granted upon satisfaction of the conditions to such grants provided pursuant
to Code Section 162(m) and any Treasury Regulations promulgated thereunder.
SECTION 5
GRANT OF OPTIONS AND STOCK SUBJECT TO THE PLAN
(a) AWARD LIMITS. A Designated Officer may from time to time grant Awards
and/or make Grants to one or more employees, directors, officers,
individuals or entities determined by him or her to be eligible for
participation in the Plan in accordance with the provisions of Section 6 of
the Plan. The aggregate number of shares of Common Stock that may be issued
under the Plan shall not exceed 250,000 shares. The aggregate number of
shares of Common Stock that may be issued to any Holder and/or granted to
any Grantee under the Plan shall not exceed 10% percent of the aggregate
number of shares referred to in the preceding sentence. The total number of
shares issuable upon exercise of all outstanding Options shall not exceed a
number of shares which is equal to fifteen percent (15%) of the then
outstanding shares of the Corporation. Any of such shares which remain
unissued and which are not subject to outstanding Options and/or Grants at
the termination of the Plan shall cease to be subject to the Plan but, until
termination of the Plan, the Corporation shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan. Shares
shall be deemed to have been issued under the Plan only to the extent
actually issued and delivered pursuant to an Award or Grant. To the extent
that an Award or Grant lapses or the rights of its Holder or Grantee
terminate, any shares of Common Stock subject to such Award or Grant shall
again be available for the grant of an Award or making of a Grant. The
aggregate number of shares which may be issued under the Plan shall be
subject to adjustment in the same manner as provided in Section 8 of the
Plan with respect to shares of Common Stock
A-5
subject to Options then outstanding. Separate stock certificates shall be
issued by the Corporation for those shares acquired pursuant to a Grant, the
exercise of an Incentive Stock Option and for those shares acquired pursuant
to the exercise of any Option which does not constitute an Incentive Stock
Option.
(b) STOCK OFFERED. The stock to be offered pursuant to an Award or Grant may be
authorized but unissued Common Stock or Common Stock previously issued and
outstanding and reacquired by the Corporation.
SECTION 6
ELIGIBILITY
An Incentive Stock Option Award made pursuant to the Plan may be granted
only to an individual who, at the time of grant, is an employee of the
Corporation, a Parent Corporation or a Subsidiary. An Award of an Option which
is not an Incentive Stock Option or a Grant of Common Stock may be made to an
individual who, at the time of Award or Grant, is an employee of the
Corporation, a Parent Corporation or a Subsidiary, or to an individual who has
been identified by the Board or Designated Officer to receive an Award or Grant
due to their contribution or service to the Corporation, including members of
the Board of Directors of the Corporation, a Parent Corporation or a Subsidiary.
An Award or Grant made pursuant to the Plan may be made on more than one
occasion to the same person, and such Award or Grant may include a Common Stock
Grant, an Incentive Stock Option, an Option which is not an Incentive Stock
Option, or any combination thereof. Each Award or Grant shall be evidenced by a
written instrument duly executed by or on behalf of the Corporation.
SECTION 7
STOCK OPTIONS/GRANTS
(a) STOCK OPTION AGREEMENT. Each Option shall be evidenced by an Option
Agreement between the Corporation and the Optionee which shall contain such
terms and conditions as may be approved by the Board and agreed upon by the
Holder. The terms and conditions of the respective Option Agreements need
not be identical. Each Option Agreement shall specify the effect of
termination of employment, total and permanent disability, retirement or
death on the exercisability of the Option. Under each Option Agreement, a
Holder shall have the right to appoint any individual or legal entity in
writing as his or her beneficiary under the Plan in the event of his death.
Such designation may be revoked in writing by the Holder at any time and a
new beneficiary may be appointed in writing on the form provided by the
Board for such purpose. In the absence of such appointment, the beneficiary
shall be the legal representative of the Holder's estate.
(b) OPTION PERIOD. The term of each Option shall be as specified by the Board
at the date of grant and shall be stated in the Option Agreement; provided,
however, that an option may not be exercised more than one hundred twenty
(120) months from the date it is granted.
(c) LIMITATIONS ON EXERCISE OF OPTION. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Board and as shall be permissible under the terms of the Plan, which shall
be specified in the Option Agreement evidencing the Option; provided,
however, that an option shall be exercised at the rate of at least twenty
percent (20%) per year over five (5) years from the date it is granted. An
Option may not be exercised for fractional shares.
(d) SPECIAL LIMITATIONS ON INCENTIVE STOCK OPTIONS. To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an individual during any
calendar year under all incentive stock option plans of the Corporation (and
any Parent Corporation or Subsidiary) exceeds One Hundred Thousand Dollars
($100,000) (within the
A-6
meaning of Section 422 of the Code), such excess Incentive Stock Options
shall be treated as Options which do not constitute Incentive Stock Options.
The Board shall determine, in accordance with applicable provisions of the
Code, Treasury Regulations and other administrative pronouncements, which of
an Optionee's Incentive Stock Options will not constitute Incentive Stock
Options because of such limitation and shall notify the Optionee of such
determination as soon as practicable after such determination. No Incentive
Stock Option shall be granted to an individual if, at the time the Option is
granted, such individual owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the
Corporation or of its Parent Corporation or a Subsidiary, within the meaning
of Section 422(b)(6) of the Code, unless (i) at the time such Option is
granted the Option price is at least one hundred ten percent (110%) of the
Fair Market Value of the Common Stock subject to the Option and (ii) such
Option by its terms is not exercisable after the expiration of five years
from the date of grant.
(e) OPTION PRICE. The purchase price of Common Stock issued under each Option
shall be determined by the Board and shall be stated in the Option
Agreement, but such purchase price shall, in the case of Incentive Stock
Options, not be less than the Fair Market Value of Common Stock subject to
the Option on the date the Option is granted, and, in the case of Options
which do not constitute Incentive Stock Options, not be less than
eighty-five percent (85%) of the fair value of the stock at the time the
option is granted, except that the price shall be one hundred ten percent
(110%) of the fair value in the case of any person or entity who owns stock
comprising more than ten percent (10%) of the total combined voting power of
all classes of stock of the Corporation or its Parent Corporation or
Subsidiary.
(f) OPTIONS AND RIGHTS IN SUBSTITUTION FOR STOCK OPTIONS MADE BY OTHER
CORPORATIONS. Options may be granted under the Plan from time to time in
substitution for stock options held by employees of corporations who become,
or who became prior to the effective date of the Plan, employees of the
Corporation, of any Parent Corporation or of any Subsidiary as a result of a
merger or consolidation of the employing corporation with the Corporation,
such Parent Corporation or such Subsidiary, or the acquisition by the
Corporation, a Parent Corporation or a Subsidiary of all or a portion of the
assets of the employing corporation, or the acquisition by the Corporation,
a Parent Corporation or a Subsidiary of stock of the employing corporation
with the result that such employing corporation becomes a Subsidiary.
SECTION 8
RECAPITALIZATION OR REORGANIZATION
(a) Except as hereinafter otherwise provided, Awards or Grants shall be subject
to adjustment by the Board at its discretion as to the number and price of
shares of Common Stock in the event of changes in the outstanding Common
Stock by reason of stock dividends, stock splits, reverse stock splits,
reclassifications, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any such Options or
Common Stock.
(b) The existence of the Plan and the Awards and/or Grants made hereunder shall
not affect in any way the right or power of the Board or the stockholders of
the Corporation to make or authorize any adjustment, recapitalization,
reorganization or other change in the capital structure of the Corporation,
a Parent Corporation or a Subsidiary or their business, any merger or
consolidation of the Corporation, a Parent Corporation or a Subsidiary, any
issue of debt or equity securities having any priority or preference with
respect to or affecting Common Stock or the rights thereof, the dissolution
or liquidation of the Corporation, a Parent Corporation or a Subsidiary, or
any sale, lease, exchange or other disposition of all or any part of their
assets or business or any other corporate act or proceeding.
A-7
(c) The shares with respect to which Options may be granted are shares of Common
Stock as presently constituted but if and whenever, prior to the expiration
of an Option theretofore granted, the Corporation shall effect a subdivision
or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the
Corporation, the number of shares of Common Stock with respect to which such
Option may thereafter be exercised (i) in the event of an increase in the
number of outstanding shares shall be proportionately increased, and the
purchase price per share shall be proportionately reduced, and (ii) in the
event of a reduction in the number of outstanding shares shall be
proportionately reduced, and the purchase price per share shall be
proportionately increased.
(d) If the Corporation recapitalizes or otherwise changes its capital structure,
thereafter upon any exercise of an Option theretofore granted, the Optionee
shall be entitled to purchase under such Option, in lieu of the number of
shares of Common Stock as to which such Option shall then be exercisable,
the number and class of shares of stock and securities, and the cash and
other property to which the Optionee would have been entitled pursuant to
the terms of the recapitalization if, immediately prior to such
recapitalization, the Optionee had been the holder of such record of the
number of shares of Common Stock then covered by such Option.
(e) In the event of a Corporate Change, unless otherwise deemed to be
impractical by the Board, then no later than (i) two business days prior to
any Corporate Change referenced in Clause (i), (ii), (iii), (v) or (vi) of
the definition thereof or (ii) ten business days after any Corporate Change
referenced in Clause (iv) of the definition thereof, the Board, acting in
its sole discretion without the consent or approval of any Optionee or
Grantee, shall act to effect the following alternatives with respect to
outstanding Options which acts may vary among individual Optionees and, with
respect to acts taken pursuant to Clause (i) above, may be contingent upon
effectuation of the Corporate Change: (A) in the event of a Corporate Change
referenced in Clauses (i), (ii) and (vi) acceleration of exercise for all
Options then outstanding so that such Options may be exercised in full for a
limited period of time on or before a specified date (before or after such
Corporate Change) fixed by the Board, after which specified date all
unexercised Options and all rights of Optionees thereunder shall terminate;
(B) in the event of a Corporate Change referenced in Clauses (iii),
(iv) and (v) require the mandatory surrender to the Corporation by selected
Optionees of some or all of the outstanding Options held by such Optionees
(irrespective of whether such Options are then exercisable under the
provisions of the Plan) as of a date (before or after such Corporate Change)
specified by the Board, in which event the Board shall thereupon cancel such
Options and pay to each Optionee an amount of cash per share equal to the
excess, if any, of the Change of Control Value of the shares subject to such
Option over the exercise price(s) under such Options for such shares;
(C) in the event of a Corporate Change referenced in Clauses (iii),
(iv) and (v), make such adjustments to Options then outstanding as the Board
deems appropriate to reflect such Corporate Change (provided, however, that
the Board may determine in its sole discretion that no adjustment is
necessary to Options then outstanding); (D) in the event of a Corporate
Change referenced in Clauses (iii), (iv) and (v), provide that thereafter
upon any exercise of an Option theretofore granted the Optionee shall be
entitled to purchase under such Option, in lieu of the number of shares of
Common Stock as to which such Option shall then be exercisable, the number
and class of shares of stock or other securities or property (including,
without limitation, cash) to which the Optionee would have been entitled
pursuant to the terms of the agreement of merger, consolidation or sale of
assets or plan of liquidation and dissolution if, immediately prior to such
merger, consolidation or sale of assets or any distribution in liquidation
and dissolution of the Corporation, the Optionee had been the holder of
record of the number of shares of Common Stock then covered by such Option;
or (E) in the event of a Corporate Change referenced in Clauses (iii),
(iv) and (v), cancel the Options granted if the Fair Market Value of the
Common Stock underlying the Options is below the Option exercise price.
A-8
(f) Except as hereinbefore expressly provided, issuance by the Corporation of
shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon
the exercise of rights or warranty to subscribe therefore, or upon
conversion of shares or obligations of the Corporation convertible into such
shares or other securities, and in any case whether or not for fair value,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock subject to Options
theretofore granted, or the purchase price per share of Common Stock subject
to Options.
SECTION 9
AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan or any Option or Grant or
alter or amend the Plan or any part thereof or any Option from time to time;
provided that no change in any Award or Grant previously made may be made which
would impair the rights of the Holder or Grantee without the consent of the
Holder or Grantee, and provided further, that the Board may not, without
approval of the stockholders, amend the Plan:
(a) to increase the aggregate number of shares which may be issued pursuant to
the provisions of the Plan on exercise or surrender of Options or upon
Grants;
(b) to change the minimum Option exercise price;
(c) to change the class of employees eligible to receive Awards and/or Grants or
increase materially the benefits accruing to employees under the Plan;
(d) to extend the maximum period during which Awards may be granted or Grants
may be made under the Plan;
(e) to modify materially the requirements as to eligibility for participation in
the Plan; or
(f) to decrease any authority granted to the Board hereunder in contravention of
Rule 16b-3.
SECTION 10
OTHER
(a) NO RIGHT TO AN AWARD OR GRANT. Neither the adoption of the Plan nor any
action of the Board or Designated Officer shall be deemed to give an
employee any right to be granted an Option to purchase Common Stock, to
receive a Grant or to any other rights hereunder except as may be evidenced
by an Option Agreement duly executed on behalf of the Corporation, and then
only to the extent of and on the terms and conditions expressly set forth
therein. The Plan shall be unfunded. The Corporation shall not be required
to establish any special or separate fund or to make any other segregation
of funds or assets to assure the payment of any Award or Grant.
(b) NO EMPLOYMENT RIGHTS CONFERRED. Nothing contained in the Plan or in any
Award or Grant made hereunder shall (i) confer upon any employee any right
with respect to continuation of employment with the Corporation or any
Parent Corporation or Subsidiary, or (ii) interfere in any way with the
right of the Corporation or any Parent Corporation or Subsidiary to
terminate his or her employment at any time.
(c) OTHER LAWS; WITHHOLDING. The Corporation shall not be obligated to issue
any Common Stock pursuant to any Award granted or any Grant made under the
Plan at any time when the offering of the shares covered by such Award has
not been registered (or exempted) under the Securities Act of 1933 and such
other state and federal laws, rules or regulations as the Corporation or the
Board deems applicable and, in the opinion of legal counsel for the
Corporation, there is no exemption from the registration requirements of
such laws, rules or regulations available for the
A-9
issuance and sale of such shares. No fractional shares of Common Stock shall
be delivered, nor shall any cash in lieu of fractional shares be paid. The
Corporation shall have the right to deduct in connection with all Awards or
Grants any taxes required by law to be withheld and to require any payments
necessary to enable it to satisfy its withholding obligations. The Board may
permit the Holder of an Award or Grant to elect to surrender, or authorize
the Corporation to withhold shares of Common Stock (valued at their Fair
Market Value on the date of surrender or withholding of such shares) in
satisfaction of the Corporation's withholding obligation, subject to such
restrictions as the Board deems necessary to satisfy the requirements of
Rule 16b-3.
(d) NO RESTRICTION OF CORPORATE ACTION. Nothing contained in the Plan shall be
construed to prevent the Corporation or any Parent Corporation or Subsidiary
from taking any corporate action which is deemed by the Corporation or such
Parent Corporation or Subsidiary to be appropriate or in its best interest,
whether or not such action would have an adverse effect on the Plan or any
Award made under the Plan. No employee, beneficiary or other person shall
have any claim against the Corporation or any Parent Corporation or
Subsidiary as a result of such action.
(e) RESTRICTIONS ON TRANSFER. An Award shall not be transferable otherwise than
by will or the laws of descent and distribution and shall be exercisable
during the lifetime of the Holder only by such Holder or the Holder's
guardian or legal representative.
(f) EFFECT OF DEATH, DISABILITY OR TERMINATION OF EMPLOYMENT. The Option
Agreement or other written instrument evidencing an Award shall specify the
effect of the death, disability or termination of employment of the Holder
on the Award; provided, however that an Optionee shall be entitled to
exercise (i) at least six (6) months from the date of termination of
employment with the Corporation if such termination is caused by death or
disability or (ii) at least thirty (30) days from the date of termination of
employment with the Corporation if such termination is caused by reasons
other than death or disability.
All outstanding Incentive Stock Options will automatically be converted to a
nonqualified stock option if the Optionee does not exercise the Incentive
Stock Option (i) within three (3) months of the date of termination caused
by reasons other than death or disability; or (ii) within twelve (12) months
of the date of termination caused by disability.
(g) INFORMATION TO EMPLOYEES. Optionees and Grantees under the Plan shall
receive financial statements annually regarding the Corporation during the
period the options are outstanding. The financial statements provided need
not comply with Section 260.613 of the California Code of Regulations.
(h) RULE 16B-3. It is intended that the Plan and any grant of an Award made to
a person subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3. If any provisions of the Plan or any such Award
would disqualify the Plan or such Award hereunder, or would otherwise not
comply with Rule 16b-3, such provision or Award shall be construed or deemed
amended to conform to Rule 16b-3.
(i) GOVERNING LAW. The Plan shall by construed in accordance with the laws of
the State of California and all applicable federal law. The securities
issued hereunder shall be governed by and in accordance with the Corporate
Securities Laws of the State of California.
ADOPTED BY INVESTORS CAPITAL HOLDINGS, LTD.'S BOARD OF DIRECTORS AS OF May 22,
2001.
APPROVED BY THE SHAREHOLDERS AS OF _______________ ____, 2001.
A-10
APPENDIX B
INVESTORS CAPITAL HOLDINGS, LTD.
AUDIT COMMITTEE CHARTER
B-1
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF
INVESTORS CAPITAL HOLDINGS, LTD.
CHARTER
ADOPTED OCTOBER 9, 2000
1. PURPOSE
The Corporation's bylaws authorize the Board of Directors to designate an
Audit Committee to exercise the power and authority of the full board within a
specified segment of the business and affairs of the Corporation. In accordance
therewith, the Board of Directors has established the Audit Committee. The
primary function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing the financial reports and
other financial information provided by the Corporation to any governmental body
or the public, the Corporation's system of internal controls regarding finance,
accounting, legal compliance and ethics that management and the Board have
established, and the Corporation's auditing, accounting and financial reporting
processes generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence to, the
Corporation's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:
A. Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control systems;
B. Review and appraise the audit efforts of the Corporation's independent
accountants, and
C. Provide an open avenue of communication among the independent accountants,
financial and senior management, and the Board of Directors.
The Board of Directors has adopted this Charter in accordance with the
Corporation's bylaws.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and to the extent possible at least one member of the
Committee shall have accounting or related financial management expertise.
Committee members shall be encouraged to enhance their familiarity with finance
and accounting by participating in educational programs conducted by the
Corporation or, at the Corporation's expense, an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet at least once annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet with the independent
accountants and management quarterly to review the Corporation's financials
consistent with IV. B., below.
B-2
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
A. Review and update this Charter as conditions dictate.
B. Review the Corporation's annual financial statements and any reports
or other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by
the independent accountants.
C. Review the regular internal reports to management prepared by the
accounting department and, to the extent applicable, management's response.
D. Review with financial management and the independent accountants, the
10-Q report prior to its filing or prior to the release of earnings. The
Chair of the Committee may represent the entire Committee for purposes of
this review.
E. Recommend to the Board of Directors, the selection of the
independent accountants, considering independence and effectiveness and
approve the fees and other compensation to be paid to the independent
accountants. On an annual basis, the Committee should review and discuss
with the accountants all significant relationships the accountants have with
the Corporation to determine the accountants' independence.
F. Review the performance of the independent accountants and approve
any proposed discharge of the independent accountants when circumstances
warrant.
G. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and accuracy
of the Corporation's financial statements.
H. In consultation with the independent accountants, review the
integrity of the Corporation's financial reporting processes, both internal
and external.
I. Consider the independent accountants' judgments about the quality
and appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
J. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as suggested
by the independent accountants or management.
K. Establish regular and separate systems of reporting to the Audit
Committee by management and the independent accountants, regarding any
significant judgments made in management's preparation of the financial
statements and the view of each as to appropriateness of such judgments.
L. Following completion of the annual audit, review separately with
management and the independent accountants, any significant difficulties
encountered during the course of the audit, including any restrictions on
the scope of work or access to required information.
M. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the financial
statements.
N. Review with the independent accountants and management, the extent to
which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented.
O. Ensure that management has the proper review system in place to
verify that the Corporation's financial statements, reports and other
financial information disseminated to governmental agencies and the public,
satisfy legal requirements.
B-3
P. Review, with the Corporation's counsel, any legal matter that could
have a significant impact on the Corporation's financial statements.
Q. Review, with the Corporation's counsel, legal compliance matters,
including corporate securities trading policies.
R. Perform any other activities consistent with this Charter, the
Corporation's bylaws and governing law, as the Committee or the Board deem
necessary or appropriate.
B-4
INVESTORS CAPITAL HOLDINGS, LTD.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- AUGUST 1, 2001
The undersigned, as a Stockholder of Investors Capital Holdings, Ltd. (the
"Company"), hereby appoints Theodore E. Charles and Timothy B. Murphy or any one
of them, the true and lawful proxies and attorneys-in-fact of the undersigned to
attend the Annual Meeting of the Stockholders of the Company (the "Meeting"), to
be held Wednesday, August 1, 2001, at 10:00 a.m. local time, at the Sheraton
Colonial located at 1 Audubon Road, Wakefield, Massachusetts and any
adjournments or postponements thereof, and any of them to vote, as specified
below, the number of shares which the undersigned would be entitled to vote, as
fully and with the same effect as the undersigned might do if personally
present, on the following matters as set forth in the Proxy Statement and Notice
dated June 29, 2001.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF THE STOCKHOLDER DOES NOT SO SPECIFY, THE
STOCKHOLDER'S SHARES WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR AND FOR
THE APPROVAL OF THE AMENDMENT TO THE ARTICLES OF ORGANIZATION AND FOR THE
APPROVAL OF THE 2001 EQUITY INCENTIVE PLAN AND FOR THE RATIFICATION OF THE
APPOINTMENT OF CAYER PRESCOTT CLUNE & CHATELLIER, LLP AS SET FORTH ON THE
REVERSE SIDE.
Please mark votes as shown in this example /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 - 4.
1. Election of Directors. Nominees:
Theodore E. Charles, Timothy B. Murphy, James J. McCarthy, David R. Smith,
L. Gregory Gloeckner, Stephen Parker, James F. Twaddell.
/ / FOR / / WITHHELD
- ----------------------------------------------------------------------------------------------
/ / FOR / / FOR ALL NOMINEES EXCEPT AS NOTED BELOW:
- ---------------------------------------------------------------------------------------------- -----------------------------------
- -----------
2. Approval of the amendment to the Articles of Organization.
/ / FOR / / WITHHELD
- ------------------------------------------------------------------------------------------
/ / FOR / / ABSTAIN
- ------------------------------------------------------------------------------------------ ---------------------------------------
- -----
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
3. Approval of the 2001 Equity Incentive Plan.
/ / FOR / / WITHHELD
- ------------------------------------------------------------------------------------------
/ / FOR / / ABSTAIN
- ------------------------------------------------------------------------------------------ ---------------------------------------
- -----
4. Ratification of the appointment of Cayer Prescott Clune & Chatellier,
LLP as independent auditors for the Company's fiscal year ending March 31, 2002.
/ / FOR / / WITHHELD
- ------------------------------------------------------------------------------------------
/ / FOR / / ABSTAIN
- ------------------------------------------------------------------------------------------ ---------------------------------------
- -----
Dated: _________________________, 2001
Signature(s):
- ---------------------------------------------------
- ---------------------------------------------------
Please sign exactly as the name(s) appear on your Stock Certificate. When
attorney, executor, administrator, trustee, or guardian, please give the full
title as such. If more than one name is shown, as in the case of joint tenancy,
each party should sign.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournments or postponements
thereof.
This Proxy is revocable and the undersigned reserves the right to attend the
Meeting and vote in person. The above-signed hereby revokes any proxy heretofore
given.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE NEW ADDRESS ABOVE / /
NEITHER INTERNET NOR TELEPHONE VOTING IS AVAILABLE TO STOCKHOLERS OF THE
COMPANY. THE BOARD OF DIRECTORS URGES THAT YOU COMPLETE, SIGN AND DATE THE PROXY
AND RETURN IT PROMPTLY BY MAIL IN THE ENCLOSED ENVELOPE.