UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20 549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[ ] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-13
ND HOLDINGS, INC.
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(Name of Registrant as Specified In Its Articles)
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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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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2
____________________
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
ANNUAL MEETING TO BE HELD
MAY 31, 2002
____________________
APRIL 15, 2002
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to
be held at the Holiday Inn, 2200 Burdick Expy. E., Minot, North Dakota,
commencing at 10:00 a.m. local time on Friday, May 31, 2002.
The Secretary's Notice of Annual Meeting and the Proxy Statement which
follow describe the matters to come before the Meeting. During the Meeting,
we will also review the activities of the past year and items of general
interest about the Company.
We hope that you will be able to attend the Meeting in person, and we look
forward to seeing you. Please mark, date and sign the enclosed Proxy and
return it in the accompanying envelope as quickly as possible, even if you plan
to attend the Meeting. You may revoke the Proxy and vote in person at
that time if you so desire.
Sincerely,
Robert E. Walstad
Chairman, CEO
1
TABLE OF CONTENTS
Page
Notice of Annual Meeting................................................. 3
General Information...................................................... 4
Question and Answer Summary: About the Meeting.......................... 5
Proposal No. 1 - Election of Directors................................... 7
Executive Compensation................................................... 10
Proposal No. 2 - Ratification of Selection of Independent Auditors....... 12
Proposal No. 3 - Change of Name of the Corporation....................... 12
Proposal No. 4 - Increase Authorized Common Shares and
Authorize Preferred Shares............................................... 13
Proposal No. 5 - 2 for 1 Forward Split................................... 16
Proposal No. 6 - Other Matters as May Come Before the Meeting............ 17
Security Ownership of Certain Beneficial Owners and Management........... 17
Other Matters............................................................ 18
Shareholder Proposals for Next Annual Meeting............................ 18
Notice to Banks, Broker-Dealers and Voting Trustees and Their Nominees... 19
Appendix A - Resolution of the Board of Directors of ND Holdings, Inc.,
Regarding Proposed Amendments to the
Articles of Incorporation................................... 20
Appendix I - Audit Committee Chart. ..................................... 23
Proxy/Voting Instruction Card............................................ 25
2
NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 31, 2002
_____________________________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the
"Meeting") of ND Holdings, Inc., a North Dakota corporation (the "Company"),
will be held on May 31, 2002, at 10:00 a.m. local time at the Holiday Inn,
2200 Burdick Expy. E., Minot, North Dakota, for the following purposes:
1. To elect the Board of Directors of the Company.
2. To ratify the selection of Brady, Martz & Associates, P.C. as the
Company's independent auditors for the fiscal year ending December 31,
2002.
3. To consider and vote upon a proposal to change the name of the Company
from ND Holdings, Inc., to Integrity Mutual Funds, Inc.
4. To consider and vote upon a proposal to change the capitalization of
the Company by increasing the number of authorized common shares from
the currently authorized 20,000,000 shares of no par value to
1,000,000,000 common shares of $0.0001 par value and authorizing
100,000,000 preferred shares of $0.0001 par value of which the
Board of Directors may establish a class or series, setting forth the
designation of the class or series and fixing the relative rights and
preferences of the class or series of the preferred shares.
5. To consider and vote upon a proposal to effect a 2 for 1 forward split
of the Company's common shares.
6. To transact such other business as may properly come before the
Meeting and at any postponements or adjournments thereof.
Only shareholders of record at the close of business on April 12, 2002, are
entitled to notice of and to vote at the Meeting or at any postponements or
adjournments thereof.
You are cordially invited and urged to attend the Meeting. All
shareholders, whether or not they expect to attend the Meeting in person, are
requested to complete, date and sign the enclosed form of Proxy and return it
promptly in the postage-paid, return-addressed envelope provided for that
purpose. Shareholders who attend the Meeting may revoke a prior Proxy and
vote in person as set forth in the Proxy Statement.
The enclosed Proxy is being solicited by the Board of Directors of the
Company. The Board of Directors recommends that you vote in favor of the
proposed items. Your vote is important.
By Order of the Board of Directors
/S/ JACQUELINE L. CASE
___________________
Jacqueline L. Case
Secretary
Minot, North Dakota
Dated: April 15, 2002
3
ND HOLDINGS, INC.
1 NORTH MAIN STREET
MINOT, ND 58703
(701) 852 - 5292
__________________________________________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 31, 2002
__________________________________________________
GENERAL INFORMATION
The enclosed Proxy is being solicited by the Board of Directors of ND
Holdings, Inc., a North Dakota corporation (the "Company"), for use in
connection with the annual meeting of shareholders on May 31, 2002, at 10:00
a.m. local time (the "Meeting") at the Holiday Inn, 2200 Burdick Expy. E.,
Minot, North Dakota, and at any postponement or adjournment thereof. Only
shareholders of record as of the close of business on April 12, 2002 (the
"Record Date"), will be entitled to vote at the Meeting or any postponement
or adjournment. When the accompanying Proxy is properly executed and returned,
the shares it represents will be voted at the Meeting in the manner specified.
ANY PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY WRITTEN NOTICE
MAILED OR DELIVERED TO THE SECRETARY, BY A RECEIPT OF A PROXY PROPERLY SIGNED
AND DATED SUBSEQUENT TO AN EARLIER PROXY AND BY REVOCATION OF A WRITTEN PROXY
BY REQUEST IN PERSON AT THE ANNUAL MEETING OF SHAREHOLDERS. IF NOT SO REVOKED,
THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS ON THE PROXY FORM.
The address of the principal executive office of the Company is 1 North
Main, Minot, North Dakota 58703. This Proxy Statement and the Board of
Directors' form of Proxy are being mailed to shareholders on or about April 15,
2002. Concurrently with the mailing of this Statement, the Company is
furnishing to shareholders its Annual Report for its fiscal year ended
December 31, 2001.
The Company is bearing all costs of soliciting proxies and expressly
reserves the right to solicit proxies otherwise than by mail. Telephone,
telegraph, facsimile or other personal solicitations of certain shareholders
and brokers may follow the solicitation of proxies by mail by one or more of
the directors, by officers or by employees of the Company. The Company may
make requests to trusts, banks and brokers or other similar agents or
fiduciaries for the voting instructions of beneficial owners and reimburse the
expenses incurred by such agents or fiduciaries in obtaining such
instructions. As of the date of this mailing, however, the Company has not
made any contracts or arrangements for such solicitations; hence, it cannot
identify any parties or estimate the cost of such solicitation.
As of April 12, 2002, the Company had outstanding [6,699,740] shares, with
each share being entitled to one vote, except for the election of directors
when shareholders are entitled to cumulate their votes. Representation of a
majority of the Company's shares outstanding on such date, either in person or
by proxy, constitutes a quorum for the Meeting. When a quorum is present, the
vote by the holders of a majority of the shares present and entitled to vote at
the Meeting shall decide the proposals to be voted upon at the Meeting. A
shareholder voting through a proxy who abstains with respect to a certain
proposal is considered to be present and entitled to vote on such proposal at
the Meeting and is, in effect, casting a negative vote, but a shareholder
(including a broker) who does not give authority to a proxy to vote or
withholds authority to vote on a certain proposal shall not be considered
present and entitled to vote on such proposal.
4
Because many of the Company's shareholders may be unable to attend the
Meeting in person, our Board of Directors solicits proxies by mail to give each
shareholder an opportunity to vote on all matters presented at the Meeting.
Shareholders are urged to:
(1) read this Proxy Statement carefully;
(2) specify their choice in each matter by marking the appropriate box on
the enclosed Proxy; and
(3) sign, date and return the Proxy by mail in the postage-paid, return-
addressed envelope provided for that purpose.
QUESTION AND ANSWER SUMMARY: ABOUT THE MEETING
What is being voted on at the Meeting?
Our Board of Directors is asking shareholders to consider five items at
this Meeting:
* To elect directors to our Board of Directors;
* To ratify the selection of Brady, Martz & Associates, P.C. as our
independent auditors for the fiscal year ending December 31, 2002;
* To consider and vote upon a proposal to change the name of the Company
from ND Holdings, Inc., to Integrity Mutual Funds, Inc.
* To consider and vote upon a proposal to change the capitalization of
the Company by increasing the number of authorized common shares from
the currently authorized 20,000,000 shares of no par value to
1,000,000,000 common shares of $0.0001 par value and authorizing
100,000,000 preferred shares of $0.0001 par value of which the Board of
Directors may establish a class or series, setting forth the
designation of the class or series and fixing the relative rights and
preferences of the class or series of the preferred shares.
* To consider and vote upon a proposal to effect a 2 for 1 forward split
of the Company's common shares.
* To transact such other business as may properly come before the Meeting
and at any postponements or adjournments thereof.
Who can vote at the Meeting?
Our Board of Directors has set April 12, 2002, as the Record Date for the
Meeting. Only persons holding shares of record at the close of business on
the Record Date will be entitled to receive notice of and to vote at the
Meeting. Each share will be entitled to one vote on each matter properly
submitted for vote to our shareholders at the Meeting. On the Record Date,
there were approximately 6,700,000 shares outstanding held by a total of
1,070 shareholders of record. Therefore, there are a total of approximately
6,700,000 votes that will be entitled to be cast at the Meeting.
5
What constitutes a quorum for the Meeting?
A quorum for the Meeting is based on the number of votes that can be cast
rather than the number of actual shares that are represented, because each
share has one vote per share. To have a quorum, we need more than fifty
percent (50+%) of the votes entitled to be cast to be present, in person or
by proxy, including votes as to which authority to vote on any proposal is
withheld, shares abstaining as to any proposal and broker non-votes (where a
broker submits a proxy but does not have authority to vote a customer's shares
on one or more matters) on any proposal, all of which will be considered
present at the Meeting for purposes of establishing a quorum for the
transaction of business at the Meeting. Each will be tabulated separately.
How do I vote?
If you complete and properly sign the accompanying Proxy card and return it
to us, it will be voted as you direct, unless you later revoke the Proxy.
Unless instructions to the contrary are marked or if no instructions are
specified, shares represented by a proxy will be voted for the proposals set
forth on the Proxy, and in the discretion of the persons named as proxies, on
such other matters as may properly come before the Meeting. If you are a
registered shareholder, that is, if you hold your shares in certificate form,
and you attend the Meeting, you may deliver your completed Proxy card in
person. If you hold your shares in "street name," that is, if you hold your
shares through a broker or other nominee, and you wish to vote in person at
the Meeting, you will need to obtain a Proxy form from the institution that
holds your shares.
Can I change my vote after I return my Proxy card?
Yes. Even after you have submitted your Proxy, you may change your vote at
any time before the Proxy is exercised by filing with our Secretary, at the
address indicated above, either a written notice of revocation, a duly executed
Proxy bearing a later date or if you vote in person at the Meeting. The
powers of the Proxy holders will be suspended if you attend the Meeting in
person and so request. However, attendance at the Meeting will not by itself
revoke a previously granted Proxy.
Any written notice of revocation sent to us must include the shareholder's
name and must be received prior to the Meeting to be effective.
What vote is required to approve each item?
Election of Directors. The election of each director nominee (Item 1)
requires the affirmative vote of a plurality of the votes cast in the election
of directors at the Meeting. Our shareholders are entitled to cumulate votes
with respect to the election of directors only in accordance with the
procedure described under Proposal No. 1 herein.
Other Proposals. An affirmative vote of a majority of the votes cast at the
Meeting is required for ratification of the selection of Brady, Martz &
Associates, P.C. as our independent auditors (Item 2), the proposal to change
the name of the Company from ND Holdings, Inc., to Integrity Mutual Funds, Inc.
(Item 3), the proposal to change the capitalization of the Company by
increasing the number of authorized shares from the currently authorized
20,000,000 shares of no par value to 1,000,000,000 common shares of $0.0001 par
value and authorizing 100,000,000 preferred shares of $0.0001 par value
(Item 4), and the proposal to effect a 2 for 1 forward split of the Company's
common shares (Item 5).
6
While affirmative abstentions are counted in tabulations of the votes cast
on proposals presented to shareholders with respect to Proposals No. 2, 3, 4
and 5, broker non-votes are not counted for purposes of determining whether a
proposal has been approved. Therefore, for all matters presented at the
Meeting, affirmative abstentions will have the same effect as a vote against
the proposal.
Votes cast by Proxy will be tabulated by an automated system administered by
ND Resources, Inc., our transfer agent. Votes cast by Proxy or in person at
the Meeting will be counted by the independent persons appointed by the Company
to act as election inspectors for the Meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Meeting to be held on May 31, 2002, and at any and all postponements
or adjournments thereof, it is intended that the Company's shares represented
by properly executed proxies that are enclosed herewith (each, a "Proxy") will
be voted to elect the director nominees, unless authority so to vote is
withheld. Each nominee is currently a member of the Board of Directors of ND
Holdings, Inc. (the "Board"), and all of the nominees have indicated a
willingness to serve as a director if elected. If elected, each nominee will
serve until the next annual meeting of shareholders or until his earlier
removal or resignation. The Board has no reason to believe that any of the
director nominees will be unable to serve as directors or become unavailable
for any reason. If, at the time of the Meeting, any of the director nominees
shall become unavailable for any reason, the persons entitled to vote the Proxy
will vote, as such persons shall determine in his or her discretion, for such
substituted nominee or nominees, if any, nominated by the Board. The
affirmative vote of a plurality of the votes present or represented to vote at
the Meeting is necessary to elect each director nominee. Shareholders of the
Company will have an opportunity on their Proxy to vote in favor of one or
more director nominees while withholding authority to vote for one or more
director nominees.
The directors have voted to nominate six directors for election to hold office
for a one-year term until the next Annual Meeting of shareholders or until
their successors are elected and qualified. Proxies solicited by the Board of
Directors will, unless otherwise directed, be voted to elect the six nominees
named below.
Following is certain information regarding the nominees for the office of
director:
Term of Office Positions and
with the Offices with
Name Age Company the Company
Vance A. Castleman 57 3-25-94 to Present Director
Richard D. Olson 50 10-01-01 to Present President and Director
Peter A. Quist 68 5-04-88 to Present Vice President and Director
Myron D. Thompson 57 3-20-98 to Present Director
Robert E. Walstad 57 9-22-87 to Present Director and Chief Executive Officer
Richard H. Walstad 63 5-04-88 to Present Director
7
Cumulative voting is permitting in the election of directors in accordance
with the following procedure:
Each shareholder entitled to vote for directors has the right to cumulate
those votes in the election of directors by giving written notice of such
intent to any officer of the Company before the Meeting or the presiding
officer at the Meeting at any time before the election of directors, in which
case:
1. The presiding officer at the Meeting shall announce, before the
election of directors, that shareholders may cumulate their votes; and
2. Each shareholder shall cumulate those votes either by casting for one
candidate the number of votes equal to the number of directors to be
elected multiplied by the number of votes represented by the shares
entitled to vote, or by distributing all of those votes on the same
principle among any number of candidates.
Therefore, unless the above-described procedure is implemented, the holders
of a majority of the Company's shares could elect all of the directors. It is
expected that the Proxies received by the directors' nominees will be voted,
except to the extent that authority is withheld on any Proxy as to all of one
or more individuals, to elect as directors the following nominees, whose
principal occupations during the past five years, directorships and certain
other affiliations and information are set forth below:
Vance C. Castleman - Member, Souris Basin Revolving Loan Fund Committee (1972-
1999); Real Estate Developer (1979-Present); President and CEO of Inn-
Vestments, Inc.(1989-Present); VP-Marketing, Labor Ready, LRW (1999-July,
2000); President, Minot Lodging Expo, LLC (2000 - Present); Director of ARM
Securities Corporation, (2000 - Present); Director of Capital Financial
Services, Inc. (2002 - Present).
Richard D. Olson - President and Director of ND Holdings, Inc. (2001 -
Present), Vice President/Operations of ND Holdings, Inc. (1999 - 2000);
Marketing Manager of Integrity Mutual Funds (1989 - Present); President and
Director of ARM Securities Corporation (2001 - Present); President and Director
of Capital Financial Services, Inc. (2002 - Present); Director of Magic
Internet Services, Inc. (1999 - Present).
Peter A. Quist - Vice President and Director of ND Holdings, Inc. (1988 -
Present); Vice President, Secretary and Director of ND Money Management, Inc.
(1988 - Present), ND Capital, Inc. (1988 - Present), and ND Resources, Inc.
(1989 - Present); Director, Vice President and Secretary of ND Tax-Free Fund,
Inc. (1988 - Present), ND Insured Income Fund, Inc. (1990 - 1999), Montana
Tax-Free Fund, Inc. (1993 - Present), Integrity Fund of Funds, Inc. (1994 -
Present) and Integrity Small-Cap Fund of Funds, Inc.(1998 - Present); Vice
President and Secretary of South Dakota Tax-Free Fund, Inc. (1993 - Present);
Director of South Dakota Tax-Free Fund, Inc. (1995 - Present); Vice President,
Secretary and Director of Ranson Capital Corporation (1996 - Present); Vice
President and Secretary of Ranson Managed Portfolios (1996 - Present); Vice
President, Secretary, and Director of The Ranson Company, Inc. (1996 -1997).
Currently a licensed North Dakota attorney; Director of ARM Securities
Corporation (2000 - Present).
Myron D. Thompson - President, CEO and Director, Food Management Investors,
Inc., a.k.a. FMI, Inc., (1990 - Present); President and Director, Apple Core
Enterprises, Inc. (1990 - Present); President and Director, Labor Force of MN,
Inc. (1989 to Present); General Partner, Dakota Apple Partnership (1994-
Present); Director, Officer and Member, Village Ventures, LLC (1995-Present).
8
Robert E. Walstad - Chief Executive Officer of ND Holdings, Inc. (2001 -
Present), Director of ND Holdings, Inc. (1987 - Present); President of ND
Holdings, Inc. (1987 - 2001); President, Treasurer and Director of ND Money
Management, Inc. (1988 - Present), ND Capital, Inc. (1988 - Present), ND
Resources, Inc. (1989 - Present); President, Treasurer and Director of ND Tax-
Free Fund, Inc. (1988 - Present), ND Insured Income Fund, Inc. (1990 -1999),
Montana Tax-Free Fund, Inc. (1993 - Present), South Dakota Tax-Free Fund, Inc.
(1994 - Present), Integrity Fund of Funds, Inc. (1994 - Present), and Integrity
Small-Cap Fund of Funds, Inc. (1998 - Present); President, CEO, Treasurer and
Trustee of The Ranson Company, Inc. (1996 - 1997); President, Treasurer and
Director of Ranson Managed Portfolios (1996 - Present); President, Treasurer
and Director of Ranson Capital Corporation (1996 - Present); associated with
securities industry as an NASD licensed registered representative (1972 -
Present); CEO and Director of Capital Financial Services, Inc. (2002 -
Present); Director of Magic Internet Services, Inc. (1999-Present), President
of Magic Internet Services, Inc. (1999 - 2001); CEO and Director of ARM
Securities Corporation (2000 - 2001).
Richard H. Walstad - Consultant of Cook Sign Company of Fargo, (2001 -
Present), Chairman of the Board/CEO, Cook Sign Co. of Fargo (1978 - 2001);
Director, Community First Bank, Fargo (1983 - 2001); Vice Chairman, Dakota
Certified Development Corp. (1992 - 2001); Vice Chairman, Fargo Cass County
Economic Development Corp., Fargo (1998 - 2001); Vice Chairman, Fargo Municipal
Airport Authority (1999 - 2001).
FAMILY RELATIONSHIPS
Richard H. Walstad, a director of the Company, is the brother of Robert E.
Walstad, the CEO and a director of the Company. None of the other directors
is related to any other director or to any executive officer of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
During the fiscal year ended December 31, 2001, four regular meetings and
four special meetings of the Board of Directors were held. All directors
attended at least 75% of the Board meetings, including committee meetings on
which the Board member served during this period.
During the fiscal year ended December 31, 2001, the Company did not have a
standing nominating committee of the Board of Directors. However, the Company
does have a standing Audit Committee. The Company's Audit Committee consisted
of independent directors Lyle McLain and Daniel Feist, together with Robert
Walstad, a member of Company management. Directors who were members of the
Audit Committee (other than employees who were also directors) received cash
compensation of $100 per meeting attended until October 2001, after which
members of committees were no longer paid any compensation. The Audit Committee
is responsible for providing assurance that financial disclosures made by
management reasonably portray the Company's financial condition, results of
operations, plan and long-term commitments. To accomplish this, the Audit
Committee oversees the external audit coverage, including the annual nomination
of the independent public accountants, reviews accounting policies and policy
decisions, reviews the financial statements, including interim financial
statements and annual financial statements, together with auditor's opinions,
inquires about the existence and substance of any significant accounting
accruals, reserves or estimates made by management, meets privately with the
independent public accountants to discuss all pertinent matters and reports to
the Board of Directors regarding its activities. The Audit Committee met twice
in 2001.
9
Recently, the Audit Committee met to review the audited financials for the
fiscal year ended December 31, 2001. Members of management and the independent
auditors took part in the discussion regarding the financials and the overall
results of operations. Included in the discussion were issues such as
relevance, reliability, comparability and consistency in relation to the
quality and acceptability of the Company's accounting policies and practices.
Additionally, the independent auditors discussed with the Audit Committee new
accounting policies, management's judgments and use of accounting estimates in
the preparation of the financial statements and significant audit adjustments.
Based upon a thorough discussion of the aforementioned, the Audit Committee has
recommended to the full Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10KSB for the
fiscal year 2001. Furthermore, as required, the Audit Committee has received a
statement from the independent auditors assuring their independence. The Audit
Committee has adopted a Charter outlining its duties and responsibilities, a
copy of which is attached as an appendix to this Proxy Statement.
FEES BILLED FOR SERVICES RENDERED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
During the fiscal year ended December 31, 2001, Brady, Martz & Associates,
P.C., the Company's independent auditors and principal accountant, billed the
Company the fees set forth below. The Audit Committee has considered whether
and determined that the provision of the non-audit services rendered to the
Company by Brady, Martz & Associates, P.C. during the Company's fiscal year
2001 was compatible with maintaining the independence of Brady, Martz &
Associates, P.C.
FINANCIAL INFORMATION SYSTEMS
AUDIT FEES DESIGN AND IMPLEMENTATION FEES ALL OTHER FEES
---------- ------------------------------ --------------
$ 34,495 $ 0 $ 12,885
DIRECTOR COMPENSATION
Each director (other than those directors who are also employees of the
Company) received cash compensation of $3,900 for the year 2001, except for
one director who received compensation of $450 prior to his death and one
director who received compensation of $1,000 prior to his resignation. In
addition, Board members were reimbursed for their expenses associated with
attendance at meetings or otherwise incurred in connection with the discharge
of their duties as directors of the Company.
EXECUTIVE OFFICERS
The executive officer of the Company is Robert E. Walstad, whose biography
appears on page 9 of the director nominees as set forth above.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to all annual and
long-term compensation provided to the Company's Chief Executive Officer
("CEO"). None of the Company's other executive officers received remuneration
in excess of $100,000.
10
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
Name and Commission
Principal Position Year Salary & Override
($) ($)
Robert E. Walstad, 1999 60,000 33,920*
Chairman and CEO 2000 60,000 67,572*
2001 60,000 52,722*
*Reflects compensation paid under an incentive compensation arrangement
between Mr. Walstad and the Company, pursuant to which Mr. Walstad
receives, in addition to his base salary and other regular employment
benefits, additional compensation equal to two basis points on the first
$100 million of assets under management annualized and one basis point on
assets in excess of $100 million and standard commissions based on sales
of securities.
Employment Agreements
The Company has written Employment Agreements with its President, Richard D.
Olson, and its CEO, Robert E. Walstad. The Employment Agreements are effective
as of October 1, 2001.
AGGREGATE OPTION/WARRANT
EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/WARRANT VALUES
The purpose of the following table is to report exercises of share options
by the named executive officers during 2001 and the value of their unexercised
stock options as of December 31, 2001.
Number of Unexercised Value of Unexercised
Shares Options/warrants at In-The-Money
Acquired Value Fiscal Year-End Options/warrants
--------------- at Fiscal Year-End *
--------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Robert E. Walstad -- -- 875,200 -- 8,000 --
Richard D. Olson -- -- 217,698 -- 8,708 --
-------------------
* Value is based on a share price of $.89 which was the closing bid price for
shares on the OTC Bulletin Board on December 31, 2001, minus the warrant
exercise price of $1.65 and option conversion price of $.85.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's directors and executive officer file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission. Directors and executive officers are required to furnish the
11
Company with copies of all Section 16(a) forms they file. Based solely upon a
review of the copies of such forms furnished to the Company and written
representations from the Company's directors and executive officers, all
Section 16(a) filing requirements were met for the fiscal year ended December
31, 2001. Robert E. Walstad, CEO and director of the Company, and Richard D.
Olson, President and director of the Company, failed to file a Form 4, which
was due on or before November 10, 2001. This failure has been remedied by a
subsequent filing of a Form 4 disclosing the information required to be filed.
THE BOARD RECOMMENDS THAT SHAREHOLDERS GRANT AUTHORITY FOR THE ELECTION OF THE
NOMINEES TO THE BOARD OF DIRECTORS.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board has selected Brady, Martz & Associates, P.C. to serve as
independent auditors of the Company for the fiscal year ending December 31,
2002. The shareholders of the Company are being asked to ratify this selection
at the Meeting. A majority of the votes cast at the Meeting, if a quorum is
present, will be sufficient to ratify the selection of Brady, Martz &
Associates, P.C. as the Company's independent auditors for the fiscal year
ending December 31, 2002.
The firm of Brady, Martz & Associates, P.C. has been the auditor for the
Company since the Company's inception in September 1987. The Board of
Directors again has selected Brady, Martz & Associates, P.C. to serve as the
Company's independent auditor for the year ending December 31, 2002, subject
to ratification by the shareholders. While it is not required to do so, the
Board of Directors is submitting the selection of that firm for ratification
to ascertain the view of the shareholders. If the selection is not ratified,
the Board of Directors will reconsider its selection. Proxies solicited by
the Board of Directors will, unless otherwise directed, be voted to ratify the
appointment of Brady, Martz & Associates, P.C as independent auditor for the
Company for the year ending December 31, 2002.
A representative of Brady, Martz & Associates, P.C will be present at the
Meeting and will be afforded an opportunity to make a statement if such
representative so desires and will be available to respond to appropriate
questions during the Meeting.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2
PROPOSAL NO. 3
AMENDMENT OF ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME FROM
ND HOLDINGS, INC., TO INTEGRITY MUTUAL FUNDS, INC.
Our Board of Directors has approved, subject to shareholder approval, an
amendment to our Articles of Incorporation to change the name of the Company
from ND Holdings, Inc., to Integrity Mutual Funds, Inc. The text of the
proposed amendment to the Articles of Incorporation is set forth in Appendix A
to this Proxy Statement.
12
Purpose of the Name Change
Over the past seven years, the Company has utilized the name Integrity
Mutual Funds and Integrity Funds with respect to the marketing of its
sponsored mutual fund family. Focus has been directed to establishing name
recognition of "Integrity" for the Company's sponsored mutual funds, and the
Company has registered the serves mark "Integrity Mutual Funds" with the U.S.
Patent and Trademark Office. The Company is hopeful that the "Integrity" name
and reputation in the market will contribute to providing the Company itself
with name recognition and credibility in the public stock sector as well as
more appropriately indicate the business of the Company, which may be vital as
the Company seeks to build shareholder value. The name change proposal, if
approved by our shareholders, would have the effect of changing the legal name
of the Company. If the name change is not approved, the Company's legal name
will continue to be "ND Holdings, Inc."
Effects of the Name Change
The change in the Company's name will not affect the status of the Company
or the rights of any shareholder in any respect or the transferability of share
certificates presently outstanding. The currently outstanding share
certificates evidencing shares of the Company's securities bearing the name
"ND Holdings, Inc." will continue to be valid and represent shares of Integrity
Mutual Funds, Inc., following the name change. In the future, new share
certificates will be issued bearing the new name, but this in no way will
affect the validity of your current share certificates.
In connection with the name change if approved, the Company intends to apply
for a new trading symbol for its common shares with the OTC Bulletin Board from
"NDHI" to a symbol more readily associated with the new name of Integrity
Mutual Funds, Inc.
If the proposal is approved by the shareholders, the name change will become
effective upon the filing of the amended Articles of Incorporation with the
Secretary of State of the State of North Dakota. The Company intends to file
the amended Articles of Incorporation promptly after the shareholders approve
the name change. The Company would seek a change in the trading symbol of the
Company's common shares as soon as practicable following shareholder approval
of the proposal.
Required Vote; Recommendation of the Board of Directors
Approval of the amendment to the Articles of Incorporation to change the
Company's name requires the affirmative vote of a majority of the shares cast
at the Meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND OUR ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME, WHICH IS
DESIGNATED AS PROPOSAL NO. 3 ON THE ENCLOSED PROXY CARD.
PROPOSAL NO. 4
AMEND THE ARTICLES OF INCORPORATION TO CHANGE
THE CAPITALIZATION OF THE COMPANY
Under North Dakota law, we may issue shares only to the extent such shares
have been authorized under our Articles of Incorporation. Our Certificate of
Incorporation currently authorizes the issuance of up to 20,000,000 shares, no
par value per share. As of April 12, 2002, approximately 6,700,000 shares were
issued and outstanding and an aggregate of approximately 1,700,000 shares were
reserved for issuance as follows:
13
An aggregate of approximately 1,050,000 shares are issuable in connection
with the exercise of outstanding warrants issued by the Company between the
years 1987 and 1990.
An aggregate of approximately 400,000 shares are issuable in connection
with the exercise of outstanding options issued by the Company in connection
with certain employment contracts;
An aggregate of approximately 250,000 shares are issuable in connection with
the exercise of outstanding options issued by the Company in connection with
certain asset purchase contracts;
Additionally, Proposal Number 5 herein proposes a forward share split of
2 for 1 for all common shares of the Company which would double the amount of
outstanding common shares in the hands of shareholders.
Therefore, assuming the acceptance of Proposal 5 and the exercise of all
options and warrants of the Company the Company, as of April 12, 2002, would
have had only approximately 3,400,000 authorized and unissued shares available
to it for issuance.
Our Board of Directors has approved, subject to shareholder approval, an
amendment to our Articles of Incorporation which would change the
capitalization of the Company by increasing the number authorized common
shares from the currently authorized 20,000,000 shares of no par value to
1,000,000,000 common shares of a single class of $0.0001 par value and
100,000,000 preferred shares of $0.0001 par value of which the Board of
Directors may establish a class or series, setting forth the designation of
the class or series and fixing the relative rights and preferences of the
class or series of the preferred shares.
The text of the proposed amendment to our Articles of Incorporation is set
forth in Appendix A to this Proxy Statement.
Purpose of the Proposal
The Board of Directors is seeking to ensure that shares will be available
for future issuance in the event that our Board of Directors determines
that it is necessary or advisable:
to raise additional capital through the sale of equity securities to fund
business operations;
to acquire other companies or their assets;
to attract strategic partners and/or candidates for a business combination
who can assist the Company in generating revenue streams or are capable of
increasing our revenues;
to provide equity incentives to employees and officers;
to declare share dividends or effect share splits; or
for other corporate purposes.
With respect to the proposed authority to issue 100,000,000 preferred shares
of $0.0001 par value of which the Board of Directors may establish a class or
series, setting forth the designation of the class or series and fixing the
relative rights and preferences of the class or series of the preferred shares,
the Company is seeking the approval of its shareholders to allow the Board of
Directors the flexibility to create, by Board of Director resolution, specific
classes of preferred shares with distinct rights and dividends in the future.
14
The Board of Directors is seeking authority from the Company's shareholders
to allow preferred shares, the specific dividends, terms and conditions of
which will be determined by future Board of Director resolution to fit the
economic times and situation, to be available for future issuance in the event
that our Board of Directors determines that it is necessary or advisable in
the future:
to raise additional capital through the sale of equity securities to fund
business operations;
to acquire other companies or their assets;
to attract strategic partners and/or candidates for a business combination
who can assist the Company in generating revenue streams or are capable of
increasing our revenues;
to make an exchange offer to existing common shareholders for dividend
paying preferred shares; or
for other corporate purposes.
Our Board of Directors recognizes that in future situations opportunities
for acquisitions may arise wherein financially compatible companies or assets
may be acquired by means of issuance of the Company's common shares or a
special class of preferred shares. In this regard, we anticipate that a
certain portion of the additional authorized common or preferred shares as
contemplated by this proposal will be utilized to meet such funding
requirements. Management has in its historical course of business sought and
successfully completed a number of acquisition opportunities. Presently
management is conducting preliminary discussions with certain parties
concerning potential acquisition possibilities in the future, but as of the
date of this Proxy Statement there are no such arrangements or firm intentions
which have been made.
Other than as described above, our Board of Directors has no present
agreement, arrangement or commitment to issue any of the shares for which
approval is sought. However, the Board of Directors believes that if an
increase in the number of authorized common shares and the authorization to
establish classes of preferred shares were to be postponed until a specific
need or purpose arose, the delay and expense in obtaining the approval of our
shareholders at that time could impair significantly our ability to acquire
strategic assets, meet financing requirements or meet other objectives.
EFFECTS OF THE PROPOSAL
The increase in the authorized common shares and the authorization for
preferred shares will not have any immediate effect on the rights of existing
shareholders; however, our Board of Directors will have the authority to issue
authorized common shares and create classes of preferred shares within the
authorized limits of preferred shares without requiring future shareholder
approval of such issuances, except as may be required by applicable law or
regulations, the Company's governing documents or the rules of any stock
exchange, NASDAQ or any automated inter-dealer quotation system on which the
Company's common shares may then be traded. The Company's shareholders could,
therefore, experience a reduction in their ownership interest in the Company
with respect to earnings per share (if any), voting, liquidation value, and
book and market value if the additional authorized shares are issued. The
holders of our common shares have no preemptive rights, which means that
current shareholders do not have a prior right to purchase any new issue of
common shares in order to maintain their proportionate ownership in the
Company. Our Board of Directors has no plans to grant preemptive rights with
respect to any of the newly-authorized shares.
15
Preferred shares have a preference over common shares. The issuance of
preferred shares could create a preference over the common shares with respect
to future dividends, voting rights, and liquidation in the event of
dissolution.
Although the Board of Directors will authorize the issuance of additional
common shares or designate a class or classes and issue preferred shares only
when it considers doing so to be in the best interests of shareholders, the
availability for issuance of additional common shares and the availability of
preferred shares could also enable the Board of Directors to render more
difficult or discourage an attempt to obtain control of the Company through,
for example, a proposed merger, tender offer or proxy contest. Neither
management nor the Board is aware of any planned effort on the part of any
party to accumulate material amounts of common shares or to acquire control of
the Company by means of a merger, tender offer, proxy contest or otherwise,
or to change the Company's management.
RIGHTS OF HOLDERS OF COMMON SHARES
Holders of our common shares will be entitled to one vote per share on all
matters submitted to a vote of our shareholders and to receive ratably
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor, subject to the payment of
any outstanding preferential dividends declared with respect to any preferred
shares that from time to time may be outstanding. Upon our liquidation,
dissolution or winding up, holders of common shares will be entitled to share
ratably in any assets available for distribution to shareholders after payment
of all of our obligations, subject to the rights to receive preferential
distributions of the holders of any preferred shares then outstanding.
Required Vote; Recommendation of the Board of Directors
Approval of the amendment to the Articles of Incorporation to increase the
number of the Company's authorized common shares from 20,000,000 to
1,000,000,000 and to authorize 100,000,000 shares of preferred shares requires
the affirmative vote of a majority of the shares of cast at the Meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND OUR ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED COMMON
SHARES AND TO AUTHORIZE A NEW CLASS OF PREFERRED SHARES, WHICH IS DESIGNATED
AS PROPOSAL NO. 4 ON THE ENCLOSED PROXY CARD.
PROPOSAL 5
APPROVAL OF 2 FOR 1 FORWARD SHARES SPLIT OF
THE CORPORATION'S COMMON SHARES
The Board of Directors recommends for shareholder approval the
proposal to effect a two for one (2:1) forward share split of the issued
and outstanding common shares of the Company. The proposed forward share
split will increase the number of issued and outstanding shares as of the
Record Date from approximately 6,700,000 to approximately 13,400,000. Except
for changes in the number of shares issued and outstanding, the rights and
privileges of holders of shares wil remain the same, both before and after
the proposed forward share split. The proposed share split would become
effective July 1, 2002, thirty days from the date of shareholder approval (the
"Effective Date"). Commencing on the Effective Date, each currently outstanding
certificate will be deemed for all corporate purposes to evidence ownership of
the increased number of shares resulting from the proposed forward share split.
New share certificates reflecting the number of shares resulting from the share
split will be issued only as currently outstanding certificates are transferred
or upon request.
16
The Company believes that the proposed forward share split may benefit the
shareholders by increasing the trading volume of the shares as well as
potentially placing the shares at a lower price which may encourage increased
trading activity in the market for the shares.
Approval of the proposal to effect a two for one (2:1) forward share split
of the issued and outstanding shares of the Company requires the affirmative
vote of a majority of the shares cast at the meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
EFFECT A TWO FOR ONE (2:1) FORWARD SHARE SPLIT OF THE ISSUED AND OUTSTANDING
COMMON SHARES OF THE COMPANY, WHICH IS DESIGNATED AS PROPOSAL NO. 5 ON THE
ENCLOSED PROXY CARD.
PROPOSAL NO. 6
TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND AT
ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 8, 2002, the ownership of shares
of the Company by each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding shares of the Company, each
director, each executive officer named in the Summary Compensation Table on
page 5, and all executive officers and directors as a group. As of March 8,
2002, there were 6,700,000 shares, no par value, issued and outstanding.
NAME OF BENEFICIAL AMOUNT AND NATURE OF PERCENTAGE OF
OWNER BENEFICIAL OWNERSHIP (1) OUTSTANDING
OR IDENTITY OF GROUP AS OF JANUARY 4, 2002 SHARES
Robert E. Walstad 1,031,982 (2) 13.6%
Vance A. Castleman 144,090 (3) 2.2%
Richard D. Olson 248,412 (4) 3.6%
Peter A. Quist 136,626 (5) 2.0%
Myron D. Thompson 130,500 1.9%
Richard H. Walstad 52,197 (6) *
Richard Barone 557,500 (7) 8.3%
Executive officers and 1,743,807 (8) 22.2%
directors as a group (6 persons)
* Less than 1% owned.
(1) Unless otherwise indicated in the footnotes to this table, the listed
beneficial owner has sole voting power and investment power with respect
to such shares.
(2) Of these shares, 8,527 are held in Mr. Walstad's 401(k) account, and
33,335 shares held in Mr. Walstad's ESOP. Includes 675,200 shares covered by
warrants and 200,000 options which are currently exercisable or exercisable
within 60 days of January 4, 2001, held by Mr. Walstad
17
(3) Of these shares, 140,375 are held as tenants in common with Mr.
Castleman's wife, and 3,715 are held in Mr. Castleman's IRA account.
(4) Of these shares, 5,381 are held in Mr. Olson's 401(k) account, and 25,333
shares are held in Mr. Olson's ESOP. Includes 17,698 covered by warrants and
200,000 options which are currently exercisable or exercisable within 60 days
of January 4, 2001, held by Mr. Olson.
(5) Of these shares, 17,284 are held in Mr. Quist's ESOP. Includes 56,000
shares covered by warrants which are currently exercisable or exercisable
within 60 days of January 4, 2001, held by Mr. Quist.
(6) Of these shares, Mr. Walstad's wife holds 6,667. Includes 11,300 shares
covered by warrants which are currently exercisable or exercisable within 60
days of January 4, 2001.
(7) Of these shares, Mr. Barone holds 250,000 shares individually, and 307,500
shares are owned by various clients of Ancora Securities, Inc. Mr. Barone
disclaims beneficial interest or discretionary authority over these shares;
however, Mr. Barone owns control of Ancora Securities, Inc.
(8) Includes 753,500 shares covered by warrants which are currently
exercisable or exercisable within 60 days of January 4, 2001.
OTHER MATTERS
The Company's management is not aware of the other matters which may come
before the Meeting. The proxies named in the accompanying form of Proxy will
vote said Proxy in accordance with their judgment if any other matter does
properly come before the Meeting.
A copy of the Annual Report to shareholders is enclosed with this Proxy
Statement. Copies of the Company's 10-KSB Annual Report are available upon
request by contacting Jacqueline L. Case at the Company at 1 North Main,
Minot, ND 58703.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2003 Meeting must
be received by the Secretary of the Company, 1 North Main, Minot, North Dakota
58703, no later than December 15, 2002, for inclusion in the Proxy Statement
and form of Proxy for such Meeting. If notice of any other shareholder
proposal intended to be presented at the 2003 Annual Meeting of shareholders
but not intended to be included in the Company's Proxy Statement and form of
Proxy for such Meeting is not received by the Company on or before March 1,
2003, the Proxy solicited by the Board of Directors of the Company for use in
connection with the Meeting may confer authority on the proxies named therein
to vote in their discretion on such proposal without any discussion in the
Company's Proxy Statement for that Meeting of either the proposal or how such
proxies intend to exercise their voting discretion.
18
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial owners of
the Company's shares for which proxies are being solicited from you, and, if
so, the number of copies of this Proxy Statement and other soliciting materials
you wish to receive in order to supply copies to the beneficial owners of the
Company's shares.
This solicitation is being made by mail on behalf of the Board, but may also
be made without additional remuneration by officers or employees of the Company
by telephone, telegraph, facsimile transmission or personal interview. The
expense of the preparation, printing and mailing of this Proxy Statement and
the enclosed form of Proxy and Notice of Annual Meeting and any additional
material relating to the Meeting which may be furnished to shareholders by the
Board subsequent to the furnishing of this Proxy Statement has been or will be
borne by the Company. The Company will reimburse banks and brokers who hold
the Company's shares in their name or custody, or in the name of nominees for
others, for their out-of-pocket expenses incurred in forwarding copies of the
proxy materials to those persons for whom they hold those Company's shares.
To obtain the necessary representation of shareholders at the Meeting,
supplementary solicitations may be made by mail, telephone or interview by
officers of the Company or selected securities dealers. It is anticipated
that the cost of any other supplementary solicitations, if any, will not be
material.
It is important that Proxies be returned promptly. Shareholders, whether or
not they expect to attend the meeting in person, are urged to complete, date
and sign the enclosed Proxy card and return it promptly in the envelope
provided for that purpose. By returning your Proxy card promptly, you can
help the Company avoid the expense of follow-up mailings to ensure a quorum so
that the Meeting can be held. Shareholders who attend the Meeting may revoke
a prior Proxy and vote their Proxy in person as set forth in this Proxy
Statement.
By Order of the Board of Directors
/S/ JACQUELINE L. CASE
___________________
Jacqueline L. Case
Secretary
Dated: April 15, 2002
19
APPENDIX A
RESOLUTION OF THE BOARD OF DIRECTORS OF ND HOLDINGS, INC.,
REGARDING PROPOSED AMENDMENTS TO THE ARTICLES OF INCORPORATION
WHEREAS, the Board of Directors of ND Holdings, Inc. (the "Company"), has
unanimously voted in favor of proposed amendments to the Company's Articles of
Incorporation; and
WHEREAS, the proposed amendments provide for a change in the Company's name
from ND Holdings, Inc., to Integrity Mutual Funds, Inc., and for an increase
in the number of authorized shares from 20,000,000 shares, all of a single
class with no par value, to l,000,000,000 common shares with a par value of
$0.000l per share and l00,000,000 preferred shares with a par value of $0.000l
per share; and
WHEREAS, the Board of Directors has determined that the proposed amendments
are in the best interests of the Company and its shareholders;
NOW, THEREFORE, IT IS HEREBY RESOLVED, that Articles l and 4 of the
Company's Articles of Incorporation be amended to read as follows:
ARTICLE l. The name of said corporation shall be: Integrity Mutual
Funds, Inc.
ARTICLE 4.1 Authorized Shares
The total number of shares of all classes which the Corporation has
authority to issue is one billion one hundred million (l,l00,000,000),
one billion (l,000,000,000) shares of which shall be a single class of
common shares, par value $0.000l per share, and one hundred million
(l00,000,000) shares of which shall be preferred shares, par value
$0.000l per share.
ARTICLE 4.2 Preferred Shares
(a) The preferred shares may be issued at any time and from time to time,
in one or more classes or series. The Board of Directors is hereby
authorized to provide for the issuance of preferred shares in series
or classes and, by filing a certificate of designation pursuant to
applicable provisions of the North Dakota Century Code (hereinafter
referred to as a "Preferred Share Certificate of Designation"), to
establish from time to time the number of shares to be included in
each such series or class, and to fix the designation, powers,
preferences and relative, participating, optional or other rights of
shares of each such series or class and the qualifications,
limitations and restrictions thereof, if any.
(b) The authority of the Board of Directors with respect to each series
of preferred shares shall include, but not be limited to,
determination of the following:
(i) the designation of the series or class, which may be by
distinguishing number, letter or title;
(ii) the number of shares of the series or class, which number the
Board of Directors may thereafter (except where otherwise
provided in the applicable Preferred Share Certificate of
Designation) increase or decrease (but not below the number of
shares thereof then outstanding);
20
(iii) whether dividends, if any, shall be cumulative or noncumulative
and the dividend rate of the series or class;
(iv) whether dividends, if any, shall be payable in cash, in kind or
otherwise;
(V) the dates on which dividends, if any, shall be payable;
(vi) the redemption rights and price or prices, if any, for shares of
the series or class;
(vii) the terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series or class;
(viii) the amounts payable on shares of the series or class in the
event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation;
(ix) whether the shares of the series or class shall be convertible
or exchangeable into shares of any other class or series, or any
other security of the Corporation or any other corporation, and,
if so, the specification of such other class or series or such
other security, the conversion or exchange price or prices or
rate or rates, any adjustments thereof, the date or dates as of
which such shares shall be convertible or exchangeable and all
other terms and conditions upon which such conversion or
exchange may be made;
(x) restrictions on the issuance of shares of the same series or
class or of any other class or series; and
(xi) whether or not the holders of the shares of such series or class
shall have voting rights, in addition to the voting rights
provided by law, and, if so, the terms of such voting rights,
which may provide, among other things and subject to the other
provisions of these Articles of Incorporation, that each share
of such series or class shall carry one vote or more or less
than one vote per share, that the holders of such series or
class shall be entitled to vote on certain matters as a separate
class (which for such purpose may be composed solely of such
series or class or of such series or class and one or more other
series or classes of shares of the Corporation) and that all the
shares of such series or class entitled to vote on a particular
matter shall be deemed to be voted on such matter in the manner
that a specified portion of the voting power of the shares of
such series or class or separate class is voted on such matter.
(c) The common shares shall be subject to the express terms of the
preferred shares and any series or class thereof.
21
BE IT FURTHER RESOLVED, that this resolution be submitted to a vote of the
shareholders of the Corporation at the annual meeting on May 31, 2002.
Dated this 22nd day of March, 2002.
The Board of Directors
ND Holdings, Inc.
IN TESTIMONY WHEREOF, WITNESS the hand of the Secretary of ND Holdings, Inc.
/S/ JACQUELINE L. CASE
___________________
Jacqueline L. Case
22
APPENDIX I
ND HOLDINGS, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee is a committee of the Board of Directors of ND Holdings,
Inc. The primary function of the Audit Committee will be to assist the board
in fulfilling its oversight responsibilities to the shareholders and the
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation.
To fulfill these responsibilities, the Audit Committee shall perform the
following duties with respect to the Company's financials:
1) Documenting by written report, the reviewing of and discussion
pertaining to, the audited financials with management and the
independent auditors.
2) Based upon the review and discussion of the aforementioned,
inclusion of a statement as to whether the Audit Committee will
recommend including the audited financials in the annual report on
Form 10-K to the full Board of Directors.
3) Confirming the receipt of a statement from the independent auditors
assuring their independence and, at least annually, disclosing such
notification in the proxy statement.
4) Reviewing and discussing the procedures set forth in the Statement on
Auditing Standards with the independent auditors to monitor compliance
with all necessary requirements.
5) Reviewing of all other significant accounting principles, including
changes in procedures, to be utilized during the audit of the
Company's financials.
6) Reviewing the performance of the independent auditors and making
recommendations to the Board of Directors regarding the appointment
or termination of the independent auditors.
General duties of the Audit Committee shall include, but are not limited to the
following activities:
1) Disclosing that the Audit Committee has adopted a charter and
including a copy of such as an appendix to the proxy statement,
initially in the year in which the charter is adopted, and once every
three years thereafter.
2) Maintaining minutes and supporting documentation of each Audit
Committee meeting.
3) Reviewing and considering the recommendations of the independent
auditors regarding internal controls.
4) Disclosing in the proxy statements whether the Audit Committee members
are independent and disclosing certain information, such as their
functions, regarding any director on the Audit Committee whom is not
independent.
23
5) Providing an open avenue of communication between the independent
auditors, management and the full Board of Directors.
6) Meeting twice annually or more frequently as circumstances require.
Management or others may be asked to attend meetings and provide
pertinent information as necessary.
7) Reviewing the Audit Committee charter annually and providing
recommendations to the full Board of Directors regarding revisions.
8) Providing reports regarding Audit Committee actions to the Board of
Directors.
9) Performing such other functions as required by law or assigned by the
Board of Directors.
24
ND HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 31, 2002
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Robert E. Walstad or
Peter A. Quist or either of them acting in the absence of the other, with
full power of substitution, to act as attorneys and proxies of the undersigned
to vote all shares of the Company that the undersigned is entitled to vote at
the Annual Meeting of Shareholders of ND Holdings, Inc. (the "Meeting"), to be
held May 31, 2002, at 10:00 a.m. at the Holiday Inn, 2200 Burdick Expy. E.,
Minot, ND, and at any and all adjournments and postponements thereof.
ITEM 1. The election as directors of all nominees listed below (except as
marked to the contrary).
Nominees: Vance A. Castleman, Richard D. Olson, Peter A. Quist, Myron D.
Thompson, Robert E. Walstad, Richard H. Walstad
FOR __ WITHHOLD AUTHORITY __
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), write that nominee(s) name below:
-------------------------------------------------------------------
ITEM 2. The ratification of the appointment of Brady, Martz & Associates,
P.C. as the Company's independent auditors for the fiscal year
ending December 31, 2002.
FOR __ AGAINST __ ABSTAIN __
ITEM 3. Proposal to amend the Articles of Incorporation to change the name
of the Company from ND Holdings, Inc., to Integrity Mutual Funds,
Inc.
FOR __ AGAINST __ ABSTAIN __
ITEM 4. Proposal to amend the Articles of Incorporation to change the
capitalization of the Company by increasing the number authorized
common shares from the currently authorized 20,000,000 shares of no
par value to 1,000,000,000 shares of $0.0001 par value common
shares and authorizing 100,000,000 shares of $0.0001 par value
preferred shares of which the Board of Directors may establish a
class or series, setting forth the designation of the class or
series and fixing the relative rights and preferences of the class
or series of the preferred shares.
FOR __ AGAINST __ ABSTAIN __
ITEM 5. Proposal to effect a 2 for 1 forward split of the Company's common
shares.
FOR __ AGAINST __ ABSTAIN __
ITEM 6. In their discretion, the proxies are authorized to vote on any
other business that may properly come before the Meeting or any
adjournment or postponement thereof.
FOR __ AGAINST __ ABSTAIN __
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSALS AND EACH OF THE NOMINEES LISTED
ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE
VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. PLEASE DATE, SIGN
AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED STAMPED ENVELOPE.
The undersigned acknowledges receipt from the Company, before execution of this
Proxy: (1) Annual Report to Shareholders, (2) Notice of the Meeting and (3)
Proxy Statement for the Meeting.
X
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Signature
X
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Signature, if held jointly
X
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Title (if applicable)
Date: April 15, 2002
Please sign exactly as name(s) appear(s) above. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporation name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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