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Exhibit 10.3
INVESTORS CAPITAL HOLDINGS, LTD.
1996 STOCK INCENTIVE PLAN
SECTION I
PURPOSES
The purpose of the INVESTORS CAPITAL HOLDINGS, LTD, 1996 Stock
Incentive Plan (the "Plan") is two-fold. First, the Plan will further the
interest of INVESTORS CAPITAL HOLDINGS, LTD., (the "Company" or "INVESTORS"),
any subsidiaries it may have and its stockholders by providing incentives in the
form of stock options grants and/or restricted stock grants to key employees who
contribute materially to the success and profitability of the Company. The
grants shall recognize and reward outstanding individual performances and
contributions and shall give such persons a propriety interest in the Company,
thus enhancing their personal interest in the Company's continued success and
progress, This Plan also shall assist the Company and any subsidiaries it may
have in attracting and retaining key persons. Second, the Plan will provide the
Company flexibility and the means to reward directors and other non-employees
who render valuable contributions to the Company.
SECTION 2
DEFINITIONS
The following terms when used in the Plan, shall have the meanings set
forth below:
Award: An award or grant of a Stock Option or Restricted Stock by the
Committee to a Participant under the Plan.
Beneficiary: Beneficiary shall mean the person or persons
designated concurrently, successively or contingently by a Participant in his or
her last effective writing filed with the Company prior to the Participant's
death.
Board: The Board of Directors of the Company.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The Compensation Committee of the Board, or such
other committee as may be duly appointed by the Board from time to time to
administer the Plan, in accordance with Section 3 of the Plan.
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Common Stock: The Common Stock of the Company, par value $.01,
or such other securities to which the Man may apply pursuant to Section 8 of the
Plan.
Company: INVESTORS CAPITAL HOLDINGS, LTD., a Massachusetts
corporation, referred to also as "INVESTORS".
Disability: Complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which a
Participant was employed or the services for which the Participant was retained
when such disability commenced, as determined by the Committee based on medical
evidence acceptable to it.
Eligible Person: A person who performs or has in the past performed
services for the Company or any direct or indirect partially or wholly owned
subsidiary thereof, whether as a director, officer, employee, consultant or
other independent contractor, and any person who performs services relating to
the Company in his or her capacity as an employee or independent contractor of a
corporation or other entity that provides services for the Company.
Exchange Act: The Securities Exchange Act of 1934 as amended and
in effect from time to time, or any successor statute.
Fair Market Value: As applied to the Common stock on any given day,
the closing sale price of such stock in the trading day next preceding such date
as reported on the registered national exchange providing the primary market in
such securities, or if the Common Stock was not traded on such market, the
average of the closing bid prices as reported by the NASD Automated Quotation
System for the previous ton consecutive trading days, or if such stock is not so
traded or reported, the value of a share of Common Stock as may be determined,
with or without an independent appraisal, in good faith by the Board of
Directors.
Incentive Stock Option: Any Stock Option, granted to an employee of
the Company pursuant to the provisions of Section 6 of the Plan, that qualifies
as an "incentive stock option" within the meaning of Section 422 of the Code.
Non-Qualified Stock Option: Any Stock Option granted pursuant to the
provisions of Section 6 of the Plan that does not qualify as an Incentive Stock
Option.
Participant: Any Eligible Person who is selected to participate
in the Plan by the Committee.
Plan: THE INVESTORS CAPITAL HOLDINGS, LTD. 1996 Stock
Incentive Plan, as herein set forth, and as amended from time to time.
Restricted Period: The period of time during which Restricted Awards
are subject to the vesting restrictions determined in accordance with Section
7(e) of the Plan.
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Restricted Stock: Shares of Common Stock awarded pursuant to the
provisions of Section 7 of the Plan.
Retirement: Separation from service under conditions which
would constitute normal retirement under any Company's tax-qualified plans, or
at such earlier time as may be permitted by the Committee in its sole
discretion,
Rule 16-b-3: Securities Exchange Commission Regulation
240.16b-3, or any successor regulation.
Share Reserve: The share reserve established pursuant to section
5 of the Plan.
Stock Option: An option to purchase shares of Common Stock
granted pursuant to the provisions of Section 6 of the Plan.
SECTION 3
ADMINISTRATION
The Plan shall be administered by a Committee which shall be
constituted so as to permit the Plan to comply with the disinterested
administration requirements of Rule 16b-3, as currently in effect or as
hereafter modified or amended. The members of the Committee shall be members of
the Board and shall be appointed by the Board. The Committee shall have the
power to interpret the Plan and, subject to its provisions, to prescribe, amend,
waive and rescind rules and regulations, to determine the terms of the Awards
and to make all other determinations necessary or desirable for the Plan's
administration, All action taken BY the Committee in the administration and
interpretation of the Plan shall BE final and binding on all concerned.
SECTION 4
PARTICIPATION
Subject to the provisions of the Plan, the Committee may at any time,
and from time to time, make Awards under the plan in any farm provided pursuant
to Sections 6 and 7 of the Plan. the Committee shall select the Participants to
be granted Awards, determine the amounts and type or types of Awards to be made,
set forth the terms, conditions and limitations applicable to each Award and
prescribe the form of the instruments embodying Awards made under the Plan. No
individual shall at any time have the, night to be selected as a Participant.
Any Participant, having previously been granted an Award, may be granted an
additional Award in the future.
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Any Eligible Person that the Committee in its sole and absolute
discretion designates is eligible to receive an Award under the Plan. Only
employees of the Company shall be eligible to receive grants of Incentive Stock
Options. The Committee's grant of an Award to a Participant in any year does not
require the Committee to grant an Award to the Participant in any other year.
Furthermore, the Committee may grant different Awards to different Participants
and has full discretion to choose whether to grant Awards to any Eligible
Person- The Committee may consider such factors as it deems pertinent in
selecting Participants and determining the amount of their Awards, including,
without limitation, (i) the financial condition of the Company or its
Subsidiaries; (ii) expected profits for the current or future years; (iii) the
contributions of a prospective Participant to the profitability and success of
the Company or its Subsidiaries-, and (iv) the adequacy of the prospective
Participant's other compensation. Participants may include persons to whom
stock, stock options, stock appreciation rights, or other benefits previously
were granted under this or another plan of the Company or any Subsidiary,
whether or not the previously granted benefits have been fully exercised or
vested.
SECTION 5
Share Reserve
Subject to adjustment as permitted under this Section 5 or as
permitted by Section 8 hereof, the aggregate number of shares of Common Stock
that may be distributed to Participants under the Plan may not exceed 300,000
shares (the "Share Reserve"). Such shares may be either authorized but unissued
shares, treasury shares or shams issued and thereafter acquired by the Company.
For the purpose of computing the total number of shares of Common Stock
available for Awards under the Plan, there shall be counted against the
foregoing limitations the number of shares of Common Stock subject to issuance
upon exercise or settlement of Awards determined as at the dates on which such
Awards are granted. If any Award or any portion of any Award is forfeited,
terminated, expired, unexercised or settled in cash in lieu of stock or
exchanged for other Awards, the shares of Common Stock which were thereto
subject to such Awards shall again -be available for Awards under the Plan to
the extent of such forfeiture, termination, expiration, settlement or exchange.
No fractional shares of Common Stock shall be issued under the Plan.
SECTION 6
Stock Options
(a) Awards of Stock Options. Stock Options may be granted under
the Plan on such terms and conditions not inconsistent with the provisions of
the Plan and in such form as the Committee may from time to time approve. Awards
of Stock Options made
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pursuant to the Plan may be in the form of Incentive Stock Options or
Non-Qualified Stock Options. Stock Options may be granted alone or in addition
to other Awards under the Plan However, no Participant shall be granted Stock
Options in any one year to purchase a number of shares of the Company's Common
Stock in excess of one (1%) percent of the number of shares of Common Stock
outstanding as of the effective date of the Plan in accordance with Section 13.
(b) Exercise Price. The exercise price per share of Common Stock
deliverable upon the exercise of each Stock. Option shall be determined by the
Committee at the date such Stock Option is granted. Such exercise price may be
less than the Fair Market Value of Common Stock on the date of grant but in no
event shall the exercise price be less than the par value of the Common Stock;
provided, that in no event shall the exercise price of an Incentive Stock Option
be less than one hundred percent (100%) of the Fair Market Value of the Common
Stock on the date of grant thereof. If the exercise price of the Stock Option is
less than the Fair Market Value, the Committee shall establish either the
exercise price or the method used for determining the exercise price in respect
of Stock Options to be made to individuals. The Committee may grant to
Participants holding outstanding Stock Options, in exchange for the surrender
and cancellation of such Stock Options, new Stock Options having exercise prices
higher or lower than the exercise price as provided in the surrendered Stock
Options and containing such other terms and conditions as the Committee may deem
appropriate.
(c) Exercise Period. Stock Options shall become exercisable in whole
or in part on such date or dates as shall be determined by the Committee at the
date of grant. The Committee may, in its sole discretion, accelerate the time at
which any Stock Option may be exercised whether or not such right is set forth
in the terms of any option agreement evidencing such Stock Option. Except as
otherwise permitted by the Committee, each Stock Option which is not yet
exercisable by the Participant shall terminate and be forfeited back to the
Company if and when the Participant shall terminate employment With the Company.
Notwithstanding the foregoing, any exercisable Stock Options shall remain
exercisable for such period, after termination of employment as shall be
determined by the Committee at the time the Stock Option is granted which period
may extend beyond the expiration of the original exercise period of the Stock
Option; provided, that, with respect to Incentive Stock Options, the exercisable
period beyond termination of employment shall not exceed the maximum period
permitted under the Code
(d) Stock Option Term. Subject to the provisions of subparagraph (c)
above, each Stock Option shall expire on such date or dates as the Committee
may determine at the time the Stock Option shall be granted; provided, that the
term of Incentive Stock Options shall not exceed the date ten (10) years after
the date of grant.
(e) Method of Exercise. Any Stock Option granted under the Plan may
be exercised solely by the Participant to whom granted (or by his or her
guardian or legal representative) or, in the case of such Participant's death,
by the Participant's legal
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representative. Each Stock Option shall be exercised by written notice to the
Company in the manner Set forth in the option agreement evidencing such Stock
Option. As soon as practicable after receipt by the Company of the notice of
exercise and of payment of the option price for all shares of Common Stock with
respect to which a Stock Option has been exercised, a certificate or
certificates representing such shares shall be REGISTERED IN the name or names
of the Participant or his or her successor and shall be delivered to the
Participant or his or her successor at the Participant's address as it appears
in the records of the Company or such other address as may be designated by the
Participant. Payment for shares purchased upon exercise of a Stock Option shall
be made (a) in full in cash or by check at the time of exercise, (b) with the
consent of the Committee, in whole or in part BY the surrender of shares of
Common Stock, such Common Stock to be credited against the option price in an
amount equal to its Fair Market Value on the date of exercise, or (c) with the
consent of the Committee and subject to any applicable restrictions imposed by
law, by notes or other means and upon such terms and conditions including
provision for securing the payment of the same, as the Committee, in its
discretion, shall determine are consistent with the Plan's purposes and
applicable law. In no event, however, shall, the Committee provide for the
payment OF any option price unless, at the time of exercise of the Stock Option
to which such option price relates, the holder of the Stock Options pays in cash
or by check an amount equal to not less that the aggregate par or stated value
of the shares being acquired
(f) Stock Option Agreement. No Participant shall have any rights or
privileges as a stockholder with respect to any shares of Common Stock subject
to option hereunder until said shares of Common Stock have been issued- Each
Stock Option shall be evidenced by a written stock option agreement which will
expressly identify the option as an incentive stock option or as a non-qualified
stock option and which shall contain such provisions, consistent with the
provisions of this Plan, as may be established at any time or from time to time
by the Committee. Each option agreement may provide, in the discretion of the
Committee, that the issuance of the Common Stock shall be conditioned upon the
receipt from the person exercising such Stock Option of a representation, or
other instruments in form and substance satisfactory to the Committee,
indicating that at the time of such exercise that it is his or her present
intention to acquire the Common Stock being purchased for investment and not
with a view to the resale or distributor of any part thereof- The form of option
agreement authorized by the Plan may contain such other provisions as the
Committee shall deem advisable- The Committee may vary the terms and provisions
of individual option agreements on a case-by-case basis and shall not be
required to make all option agreements uniform
(g) Special Rules for Incentive Stock Options. With respect to
Incentive Stock Options granted under the Plan, the aggregate Fair Market Value
(determined as of the date the Incentive Stock Options were granted) or the
number of shares first exercisable by a Participant during any calendar year
shall not exceed one hundred thousand dollars ($ 100,000) or such other limit
as may be required by the Code.
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A Participant who owns stock possessing more than 10 percent of the
combined voting power of all classes of stock of the Company (or its parent or
subsidiary, if any) shall not be granted any Incentive Stock Options unless, at
the time the Stock Option is granted, the exercise price is a least 110 percent
of the Fair Market Value of the Common Stock subject to the Stock Option as of
that date and such Stock Option is not exercisable after the expiration of five
years after the date the Stock Option is granted.
(h) Suspension or Termination of Option. If the Board of Directors of
the Company believes that a Participant other than, a non-employee director has
committed an act of misconduct as described in this Section, the Board may
suspend the Participant's right to exercise any Stock Option pending a more
complete determination by the Board. If the Board determines a participant other
than a non-employee director has committed an act of embezzlement, fraud,
dishonesty, nonpayment of any obligation owed to INVESTORS, breach of fiduciary
duty or deliberate disregard of INVESTORS' rules resulting in loss, damage or
injury to INVESTORS, or if a Participant makes an unauthorized disclosure of any
INVESTORS proprietary or confidential information, engages in any conduct
constituting unfair competition, induces any INVESTORS' business relationship to
breach a contract with INVESTORS or induces any principal for whom INVESTORS
acts as agent to terminate such agency relationship, neither the Participant nor
his or her estate shall be entitled to exercise an option whatsoever. In making
such determination, the Board shall act fairly and shall give the participant an
opportunity to appear and present evidence on his or her behalf at a hearing
before a committee of the Board.
SECTION 7
Restricted Awards
(a) Awards of Restricted Stock. Awards of Restricted Stock may be
granted under the Plan in such form and on such terms and conditions as the
Committee may from time to time approve including' without limitation,
restrictions on the sale, assignment transfer or other disposition or
encumbrances of such sham during the Restricted Period and the requirement that
the Participant forfeit such shams back to the Company without any
consideration paid by the Company therefore upon termination of employment
within the Restricted Period Restricted Stock may be granted alone or in
addition to other Awards under the Plan.
(b) Restricted Period. Restricted Stock that is not yet vested in
accordance with Section 7(e) may be transfer red by a Participant to a trust
for the benefit of the Participant or a member of such Participant's immediate
family, but may not otherwise be sold, assigned, transferred, made subject to
gift, or otherwise disposed of, mortgaged, pledged or encumbered. The
Committee May, in its sole discretion, at the time an Award of Restricted
Stock is made, prescribe conditions for the lapse or termination of
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restrictions upon the satisfaction of other conditions in addition to or other
than the expiration of the Restricted Period with respect to all or any portion
of the Restricted Stock. The Committee may also, in its sole discretion, shorten
or terminate the Restricted Period or waive any conditions for the lapse or
termination or restrictions with respect to all or any portion of the Restricted
Stock.
(c) Rights of Holders of Restricted Stock. Except for the
restrictions described in Section 7(b), the Participant shall be the owner of
the Restricted Stock and shall have all the rights of a shareholder, including
the right to receive dividends paid on such Restricted Stock and the right to
vote such Restricted Stock.
(d) Delivery of Restricted Stock. Restricted Stock awarded to a
Participant under the Plan may be held under the Participant's name in a book
entry account maintained by the Company or, if not so held, stock certificates
for Restricted Stock awarded pursuant to the Plan may be registered in the name
of the Participant and issue and deposited, together with a stock power endorsed
in blank, with the Company or an agent appointed by the Company and shall bear
an appropriate legend restricting the transferability thereof- A Participant
shall be entitled to delivery of stock certificates ONLY when they become vested
in accordance with the provisions of this Section and upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee.
(e) Vesting. AD Participants, unless otherwise specified by the
Committee, shall be 100% vested in their Restricted Stock after five (5) years,
measured from the effective date of an Award- Notwithstanding any other
provisions of the Plan, the Committee may, in its sole discretion, provide That
a Participant shall be vested in 100% of all or any portion of such
Participant's Awards not previously vested if his or her employment by the
Company is terminated because of death, Disability or Retirement, Except as
otherwise provided by the Committee, a Participant shall cease vesting in all or
any portion of an Award as of the date of his or her termination or
employment-for whatever reason. Any Awards that are not vested as of the date of
such termination shall be forfeited. The Committee may amend the vesting
schedules, restrictions or other conditions in any Award; provided, that no such
amendment shall reduce interests in the Plan that were vested prior to the date
of such amendment without the consent of the Participant holding such vested
interest,
(f) Forfeitures. Except to the extent that the Participant has vested
in his or her Restricted Stock and subject to the provisions of Section 7(e)
above, each Participant's right to Restricted Stock shall be forfeited if an
when such Participant's employment or affiliation with the Company ceases or
when any prescribed condition for the lapse or termination of restrictions is
not satisfied. If forfeited, all such Restricted Stock shall become the
property of the Company and shall again immediately become available for
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award under the Plan and all of the rights of such Participant to such
Restricted Stock and as a stockholder with respect to such Restricted Stock
shall terminate without further obligation an the part of the Company.
(g) Designation of Beneficiary. A Participant may designate a
Beneficiary to receive, in the event Of the Participant's death, any rights to
which the Participant may be entitled under the Plan Designation of a
Beneficiary by a Participant shall be made in writing and shall be filed with
the COMMITTEE. SUCH designation may be changed from time TO TIME at the election
of the Participant by filing of a new written designation with the Committee.
The consent of the Beneficiary to any revocation or change in designation shall
not be required. The Committee shall be entitled to rely on the last written
designation of a beneficiary received by the Committee and shall not be liable
to any person by reason of making payments pursuant to the Plan to such
Beneficiary. If a Participant shall have failed to make an effective designation
of Beneficiary, the governing law of descent and distribution shall apply.
(h) Section 83(b) Election. A Participant who files an election with
the Internal Revenue Service to include the fair market value of any Restricted
Stock in gross income while they are still subject to restrictions promptly
shall furnish the Company with a copy of such election together with the amount
of any federal, state, local or other taxes required to be withheld to enable
the Company to claim an income tax deduction with respect to such election.
SECTION 8
Adjustment Provisions
In the event that the Common Stock should, as a result of a stock
split or stock dividend or combination of shares or other changes or exchange
for other securities by reclassification or otherwise, be increased or decreased
or changed into, or exchanged for, a different number of kind of shares or other
securities of the Company or any other corporation, or in the event of a
spin-off, spin-out or other distribution of assets to shareholders or the
assumption or conversion of outstanding grants pursuant to an acquisition, the
number and kind of shares then subject to Awards granted under the Plan and the
number of shares then remaining in the Share Reserve and the exercise price per
sham of outstanding Stock Options, may be appropriately adjusted by the
Committee in its sole discretion to reflect such action.
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SECTION 9
Amendment of Discontinuance of the Plan
The Plan may be amended, suspended or terminated by the Board in whole
or part at any time, with prospective or retroactive effect, provided that no
amendment, suspension or termination of the Plan shall adversely affect, except
with the consent of the holder, any rights or obligations with respect of Awards
theretofore granted and provided further that no amendment shall be made which
would cause the Plan to no longer comply with Rule 16b-3 or other regulatory
requirement to the extent applicable to the Participants subject to Section 16
of the Exchange Act. Notwithstanding any provisions hereof to the contrary,
without shareholder approval, the Board may not (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of Shares which may be issued under the Plan (other than as provided by
Section 8 of the Plan), or (c) materially modify the requirements as to
eligibility for participation under the Plan.
SECTION 10
Listing and Qualification of Shares
The Company, in its discretion, may postpone the issuance or delivery'
of shares of Common Stock pursuant to any Award until completion of such stock
exchange listing, or other qualifications of such shares under any state of
Federal law, rule or regulation as the Company may consider appropriate, and may
require any Participant to make such representations, including, but not limited
to a written representation that the shares am to be acquired for investment and
not for resale or with a VIEW to the distribution thereof, and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of the shares in compliance with applicable laws, rules and
regulations. The Committee may cause a legend or legends to be placed on the
certificates representing shares to make appropriate reference to such
representation and to restrict transfer in the absence of compliance with
applicable Federal or state securities laws.
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SECTION 11
HOLDING PERIOD
All equity securities granted pursuant to the Plan to any participant
subject to Section 16 of the Exchange Act shall be held by such participant or
by the Plan for the benefit of that Participant for a period of not less than
six (6) months from the date of such grant to the date of disposition of the
option OR underlying Common Stock (other than upon exercise or conversion) by
the Participant.
SECTION 12
OTHER PROVISIONS
The following miscellaneous terms and conditions are also in effect
under the Plan:
(a) NO RIGHT TO EMPLOYMENT OR SERVICE. No person shall have any claim
or right to be granted an Award under the Plan, and no Participant shall have
any right under the Plan to be retained in the employ or service of the Company.
No Participant or other person shall have any right with respect to the Plan or
in any Award, contingent or otherwise, until written evidence of the Award shall
have, been delivered to the recipient and all the terms, conditions and
provisions of the Plan and the Award applicable to such recipient (and each
person claiming under or through him or her) have been met,
(b) NON-TRANSFERABILITY OF AWARDS. Except as set forth in Section 7(b)
and except by will or the laws of descent and distribution, no security, right
or interest of any Participant in the Plan shall be assignable or transferable
and no security, right or interest of any Participant shall be liable for, or
subject to, any lien, obligation or liability of such Participant
(c) EXPENSES. Any expenses of administering the Plan shall be borne by
the Company.
(d) INDEMNIFICATION. No member of the Committee or, the Board shall be
personally liable by reason of any contract or other instrument executed by
such member or on such member's behalf in his or her capacity as a member of
the Committee for any mistake of judgment made in good faith, and the Company
shall, indemnify and hold harmless each employee, officer or director of the
Company to whom any duty or power
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relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the plan unless arising out of such person's
own fraud or bad faith,
SECTION 13
APPROVAL AND EFFECTIVE DATE
This Plan shall become effective sixty (60) days following its approval
by the HOLDERS OF the Company's voting common stock, and Awards may be granted
upon the effective, date of the Plan and from time to time thereafter,
Notwithstanding any provisions of the Plan to the contrary, no Incentive Stock
Options may be granted at any time on or after the tenth anniversary of the DATE
OF the Plan's adoption
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