SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[AMENDMENT NO. . . . . . . ]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(C) or ss. 240.14a-12
INDUSTRIAL DATA SYSTEMS CORPORATION
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-(6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-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:.......................
2) Form Schedule or Registration Statement No.:..
3) Filing Party:.................................
4) Date Filed:...................................
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION
May 15, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders ("Annual Meeting") of Industrial Data Systems Corporation to be
held at 2:00 p.m. on Monday, June 8, 1998, at the corporate offices of the
Company, 600 Century Plaza Drive, Building 140, Houston, Texas 77073-6013.
At the Annual Meeting, the shareholders will be asked to elect five
directors. The Notice of 1998 Annual Meeting of Shareholders and the Proxy
Statement on the following pages describe the nominees for election to our Board
of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU CAST YOUR VOTE IN
FAVOR OF EACH OF THE NOMINATED DIRECTORS.
Whether or not you plan to attend the Annual Meeting, we hope that you
will have your stock represented by marking, signing, dating, and returning your
proxy card in the enclosed envelope as soon as possible. Your stock will be
voted in accordance with the instructions you have given in your proxy card. You
may, of course, attend the Annual Meeting and vote in person even if you have
previously returned your proxy card.
We look forward to your attendance at the meeting.
Sincerely,
William A. Coskey
President and Chief Executive Officer
IMPORTANT
A PROXY CARD IS ENCLOSED HEREWITH. ALL SHAREHOLDERS ARE URGED TO
COMPLETE AND MAIL THE PROXY CARD PROMPTLY. THE ENCLOSED ENVELOPE FOR RETURN OF
THE PROXY CARD REQUIRES NO POSTAGE. ANY SHAREHOLDER ATTENDING THE ANNUAL MEETING
MAY PERSONALLY VOTE ON ALL MATTERS THAT ARE CONSIDERED, IN WHICH EVENT THE
SIGNED PROXY WILL BE REVOKED.
YOUR PROXY IS PARTICULARLY IMPORTANT IN CONNECTION WITH THE REQUESTED
SHAREHOLDER APPROVAL OF THE INCENTIVE PLAN SINCE STREET NAME NOMINEES GENERALLY
CANNOT VOTE ON THIS MATTER ABSENT INSTRUCTIONS FROM THE BENEFICIAL OWNER.
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION
600 CENTURY PLAZA DRIVE
BUILDING 140
HOUSTON, TEXAS 77073-6013
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 1998
----------------------------------------------------------------
To the Shareholders of
Industrial Data Systems Corporation
Notice is hereby given that the 1998 Annual Meeting of Shareholders
("Annual Meeting") of Industrial Data Systems Corporation, a Nevada corporation,
(the "Company) will be held in the corporate offices of Company, at 600 Century
Plaza Drive, Houston, Texas 77073-6013 on June 8, 1998, at 2:00 p.m., Central
Standard Time, for the following purposes:
1. To elect five directors to the Board of Directors of the Company to
serve until the next Annual Meeting of Shareholders or until their respective
successors are elected and qualified. The nominees for director are William A.
Coskey, P.E., Hulda L. Coskey, David W. Gent, P.E., Rex S. Zerger, and Gordon R.
Wingate.
2. To approve and ratify the appointment of Hein + Associates LLP as the
Company's independent auditors.
3. To approve the Industrial Data Systems Corporation 1998 Incentive
Plan.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
A record of shareholders has been taken as of the close of business on
April 20, 1998, and only those shareholders of record on that date will be
entitled to notice of and to vote at the meeting. A shareholder's list will be
available at the offices of the Company commencing June 6, 1998 and may be
inspected during the normal business hours prior to the annual meeting.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON, BUT
EVEN IF YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE REQUESTED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION. YOUR PROXY IS
PARTICULARLY IMPORTANT IN CONNECTION WITH THE REQUESTED SHAREHOLDER APPROVAL OF
THE INCENTIVE PLAN SINCE STREET NAME NOMINEES GENERALLY CANNOT VOTE ON THIS
MATTER ABSENT INSTRUCTIONS FROM THE BENEFICIAL OWNER. YOUR PROXY MAY BE REVOKED
AT ANY TIME BEFORE IT IS VOTED BY SIGNING AND RETURNING A LATER-DATED PROXY WITH
RESPECT TO THE SAME SHARES, BY FILING WITH THE SECRETARY OF INDUSTRIAL DATA
SYSTEMS CORPORATION A WRITTEN REVOCATION BEARING A LATER DATE OR BY ATTENDING
AND VOTING IN PERSON AT THE ANNUAL MEETING. SHAREHOLDERS ATTENDING THE ANNUAL
MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE PREVIOUSLY SENT IN A PROXY CARD.
By Order of the Board of
Directors,
Hulda L. Coskey
SECRETARY
Houston, Texas
Date: May 15, 1998
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION
600 CENTURY PLAZA DRIVE, BUILDING 140
HOUSTON, TEXAS 77073-6013
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, JUNE 8, 1998
-------------------------
PROXY STATEMENT
-------------------------
This Proxy Statement and accompanying Proxy are solicited by the
Management of Industrial Data Systems Corporation ("IDDS" or the "Company") for
use at the Annual Meeting of Shareholders (the "Annual Meeting") of the Company
to be held on Monday, June 8, 1998 at 2:00 p.m. at the principal executive
offices of the Company, 600 Century Plaza Drive, Building 140, Houston, Texas
77073, and at any adjournment or postponement thereof, for the purposes set
forth in this Proxy Statement and the accompanying Notice of Annual Meeting.
This Proxy Statement and accompanying Proxy are being mailed to shareholders on
or about May 15, 1998, to shareholders of record on April 20, 1998.
SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL
MEETING, TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE. Your executed Proxy may be revoked at any time before it is
exercised by filing with the Secretary of the Company, at the Company's
principal executive offices, a written notice of revocation or a duly executed
Proxy bearing a later date. The execution of the enclosed Proxy will not affect
your right to vote in person, should you find it convenient to attend the
Meeting and desire to vote in person. Attendance at the Annual Meeting will not
in and of itself constitute the revocation of a Proxy.
The purpose of the Annual Meeting is to elect five (5) directors to
serve one-year terms until the next Annual Meeting, or until their respective
successors shall be elected and qualified; and considering and acting upon the
ratification of the Company's independent auditors; and to approve the
Industrial Data Systems Corporation 1998 Incentive Plan ("the Plan").
The Company intends to solicit proxies principally by the use of the
mails and will bear all expenses in connection with such solicitations. In
addition, some of the directors, officers and regular employees of the Company
may, without extra compensation, solicit proxies by telephone, telegraph and
personal interview. Arrangements have been made with banks, brokerage houses and
other custodians and nominees to forward copies of the Proxy Statement and the
Company's Annual Report for the fiscal year ended December 31, 1997, to persons
for whom they hold stock of the Company and to request authority for the
execution of proxies. The Company will reimburse the foregoing persons for their
reasonable expenses, upon request.
VOTING SECURITIES
On April 20, 1998, the Record Date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting, 13,023,718 shares of
the Company's Common Stock ("Common Stock") were outstanding. Shareholders are
entitled to one vote per share on all matters to be considered at the Meeting.
Shareholders are not entitled to cumulative voting.
In accordance with the Company's Articles of Incorporation, a majority
of the shares entitled to vote represented in person or by proxy shall
constitute a quorum at a meeting of shareholders. Any action to be taken by
shareholders of the corporation at the Annual Meeting requires the vote or
concurrence of the holders of a majority of the outstanding shares entitled to
vote thereon. Except as otherwise specified by law, if a quorum is present, the
affirmative vote of a majority of the shares represented in person or by proxy
at the meeting and entitled to vote on the subject matter shall be the act of
the shareholders. If a quorum is present, directors are elected by a majority of
the votes cast by the shares entitled to vote.
<PAGE>
The shareholders shall also vote to ratify the selection of Independent
Auditors and the adoption of the Plan. As to any other business which may
properly come before the Annual Meeting, the proxy holders will vote in
accordance with their best judgment. Management of the Company does not
presently know of any other such business.
The shares represented by an executed proxy will be voted for the
election of directors, or withheld if so specified, and to approve and ratify
the selection of Independent Auditors, and to approve adoption of the Plan. If
no specification is made in said proxy, the proxy will be voted "FOR" the
nominees listed herein, "FOR" the selection and ratification of Hein +
Associates, LLP, Certified Public Accountants and "FOR" the adoption of the
Plan.
ELECTION OF DIRECTORS
At the meeting, five directors are to be elected, each director to hold
office until the next Annual Meeting of Shareholders or until his successor is
elected and qualified. The persons named in the accompanying proxy have been
designated by the Board of Directors and, unless authority is withheld, they
intend to vote for the election of the nominees named below to the Board of
Directors. If any nominee should become unavailable for election, the proxy may
be voted for a substitute nominee selected by the persons named in the proxy, or
the board may be reduced accordingly; however, the Board of Directors is not
aware of any circumstances likely to render any nominee unavailable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF EACH NOMINEE
FOR DIRECTOR.
INFORMATION REGARDING DIRECTORS AND NOMINEES
The Board of Directors of the Company presently consists of 4 members.
Four directors are to be re-elected and one additional nominee is to be elected
at the Meeting, each for a term expiring at the next Annual Meeting.
The following table and the notes thereto state the names of all the
persons proposed to be nominated for election as Directors. Also disclosed are
their ages, all positions and offices with the Company now held by them, their
principal occupations or employment within at least the five preceding years and
the dates upon which they became directors of the Company.
DIRECTOR
NAME AGE SINCE POSITION HELD
- ---- --- -------- -------------
William A. Coskey, P.E. (1) 45 1985 Chairman of the Board, Chief
Executive Officer and President
Hulda L. Coskey (1) 43 1985 Chief Financial Officer,
Secretary, Treasurer, Director
David W. Gent, P.E. (2) 45 1994 Director
Rex S. Zerger 61 1996 Vice President - Sales &
Marketing, Director
Gordon R. Wingate(2) 42 - Director nominee
- ------------
(1) William A. Coskey and Hulda L. Coskey are husband and wife.
(2) Member or proposed member of Audit Committee
WILLIAM A. COSKEY is the founder of the Company and has served as Chairman
of the Board, Chief Executive Officer and President since the Company's
formation in September 1985. Mr. Coskey also serves as President and Director of
the Company's subsidiaries: Industrial Data Systems, Inc.; IDS Engineering,
Inc.; Thermaire, Inc., and Constant Power Manufacturing Corporation. Prior to
founding the Company, Mr. Coskey served as Manager of Corporate Development for
Keystone International, Inc., a public company listed on the New York Stock
Exchange, and was responsible for all acquisition and merger activities of
Keystone International, Inc. during the period 1984 to 1985. Mr. Coskey had
formerly held the position of President of Syntech Associates, Inc., an
engineering services company located in
2
<PAGE>
Houston, Texas for the period 1979 to 1984. Mr. Coskey, an Honors Graduate,
received a B.S. in Electrical Engineering from Texas A&M University in 1975. He
is a Registered Professional Engineer, and is also a member of the Instrument
Society of America. William A. Coskey is the spouse of Hulda L. Coskey.
HULDA L. COSKEY has served as Chief Financial Officer and
Secretary/Treasurer of the Company since June 1994. During her thirteen years
with the Company and its predecessors, Mrs. Coskey has served in the following
capacities within the Company's subsidiaries: Vice President,
Secretary/Treasurer, and Director of Industrial Data Systems, Inc.; Vice
President, Secretary, and Director of IDS Engineering, Inc.; Secretary/Treasurer
and Director of Thermaire, Inc., and Secretary and Director of Constant Power
Manufacturing Corporation. Her primary responsibilities include SEC reporting,
investor relations, and other corporate secretary functions. In prior years,
Mrs. Coskey has been responsible for management and supervision of the Company's
operations, including but not limited to all accounting, finance and personnel
functions. Prior to joining the Company, she served the banking industry in the
Houston area both as a Loan Review Officer, and as a Credit Officer. Mrs. Coskey
majored in Accounting at the University of Houston. Mrs. Coskey serves as a
Committee Member on several Willis ISD educational planning committees and in
various civic organizations. Hulda L. Coskey is the spouse of William A. Coskey.
DAVID W. GENT, P.E. has served as a director of the Company since June
1994 and is a member of the Audit Committee. Since September 1991, Mr. Gent has
held the position of Director of International Engineering and Chief Information
Officer of Bray International, Inc., located in Houston, Texas, with the
responsibility of overseeing several departments that include Engineering,
Information Services, and Quality Control. Mr. Gent founded SofTest Designs
Corporation, a privately held electronic test equipment company, in 1980 and has
served as a director since its inception and as its President for the period
1986 to 1991. Prior to 1986, Mr. Gent was General Manager of the USA Controls
Division of Keystone International, Inc. Mr. Gent, an Honors Graduate, received
a B.S. in Electrical Engineering from Texas A&M University in 1975 and an MBA
from Houston Baptist University. He is a Registered Professional Engineer, and a
Senior member of the Instrument Society of America. Mr. Gent serves on the Texas
A&M University Electrical Engineering Department Advisory Council, the Bray
International, Inc. 401(k) committee, and as a Bray representative on various
councils including Fieldbus Foundation and the Open DeviceNet Vendors
Association. He also holds several patents in the field of industrial flow
controls.
REX S. ZERGER has served as Vice President - Sales and Marketing for the
Industrial Products Division since June 1, 1996. Mr. Zerger was appointed as a
Director on December 15, 1996. For more than the past ten years, Mr. Zerger held
various management positions with Texas Microsystems, including Senior Vice
President - Sales and Marketing and Senior Vice President - Mobile Products
Group. His responsibilities included the establishment of domestic and
international sales channels. Most recently, Mr. Zerger was responsible for the
establishment of the Mobile Products Group of Texas Microsystems which developed
the hand held, rugged PC branded "Hardbody". He was also responsible for the
formation of Texas Micro Express, a direct marketing channel. Mr. Zerger
received a B.S. in Mechanical Engineering from the University of Southwest
Louisiana in 1960.
GORDON R. WINGATE has not previously served on the Board of Directors
and is a first time nominee to the Board. Mr. Wingate has served as President
and Chief Executive Officer of SynchroNet since 1989. SynchroNet is a Novell
Gold Authorized Reseller which provides advanced network management solutions to
businesses in the Houston and surrounding areas. Prior to this time Mr. Wingate
owned and operated Wingate Services, a computer cabling and installation
provider, which in 1986 changed its name to Synergy Computer Services and became
involved with system design and computer integration. Mr. Wingate earned his
Bachelors of Arts degree from the Univesity of Texas at Austin.. He also holds
certifications in both sales and service from Novell, Microsoft, Compaq, Hewlett
Packard and other major computer manufacturers.
3
<PAGE>
DIRECTOR'S COMPENSATION
Employee directors of the Company do not receive any additional
compensation for their services as a member of the Board of Directors of the
Company. Independent directors do not receive any compensation for each board
meeting attended, nor do they receive compensation for each committee meeting
attended. The Company does not pay out-of-pocket expenses incurred by
independent directors to attend board and committee meetings.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1997, there was one meeting of the Board of Directors and three
actions taken by unanimous consent. All incumbent directors were present at the
meeting of the Board of Directors. The Board of Directors has established a
standing Audit Committee. The Board does not have an Executive Committee, a
Nominating Committee, or a Compensation Committee. Compensation for the past
several years for the Company's executive officers and employees has been
determined by the President and Chief Executive Officer.
AUDIT COMMITTEE. The Audit Committee receives and considers financial
reports of the independent auditors and approves the consolidated financial
statements of the Company. The members of this Committee are Mr. David W.
Gent, with one vacancy which is expected to be filled by Mr. Gordon R. Wingate,
both of whom are or would be independent directors.
BENEFICIAL OWNERSHIP OF SHARES
The directors and officers of the Company are not aware of any person or
company that beneficially owns, directly or indirectly, or exercises control or
direction over, shares carrying more than five percent (5%) of the voting rights
attached to the Common shares of the Company as at the close of business on
April 20, 1998 other than:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------- ---------------- -------------------- -----
<S> <C> <C> <C> <C>
Common Alliance 2000, Ltd. (1) 9,509,400 72.9%
William A. Coskey, P.E. (1) (2)
Hulda L. Coskey (1)
600 Century Plaza Drive,
Building 140
Houston, Texas 77073-6013
Common David W. Gent, P.E. 0 0.0%
Common Rex S. Zerger 0 0.0%
Common Gordon R. Wingate 0 0.0%
All executive officers and directors as a group 9,509,400 72.9%
- --------------------------------------------------
</TABLE>
(1) Alliance 2000, Ltd. is the record holder of 9,500,000 shares, shown
above. William A. Coskey and Hulda L. Coskey serve as General Partners
of Alliance 2000, Ltd.
(2) Includes 9,400 shares of the Company's Common Stock held in the name
William A. Coskey, as Custodian for minor children.
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth information concerning
compensation for services in all capacities awarded to, earned by, or paid to,
the Company's Chief Executive Officer and the most highly compensated executive
officer of the Company whose aggregate cash compensation exceeded $100,000 (the
"Named Executive Officers") during the years ended December 31, 1995, 1996 and
1997.
4
<PAGE>
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- --------------------------- ---- ------ ----- ------------ ------------
($) ($) ($) ($)
<S> <C> <C> <C> <C>
William A. Coskey, P.E., 1997 72,000 - - 16,000 (1)
Chief Executive Officer 1996 72,000 103,305 - -
and President 1995 72,000 (2) - -
</TABLE>
(1) Fees for management of the Company's research and development of acquisition
candidates payable to BHC Management Company, Inc., of which William A.
Coskey serves as President
(2) At December 31, 1995 investments in real estate limited partnerships were
assigned to William A. and Hulda L. Coskey. The transaction was recorded on
the Company's books at a value of $103,305, and was in lieu of cash
compensation during 1995.
EMPLOYMENT AGREEMENTS
The Company has not entered into any employment agreements with any of
its executive officers.
KEY MAN INSURANCE
William A. Coskey is a key employee of the Company and the loss of Mr.
Coskey could adversely affect the Company's business. The Company maintains, and
is the beneficiary of, a life insurance policy on the life of Mr. Coskey. The
face amount of such policy is $600,000. The continuance of such policy is at the
discretion of the Board of Directors and may or may not continue in the future
401(K) PLAN
On January 1, 1993, the Company adopted a Section 401(k) Profit Sharing
Plan and Trust (the "Plan"). The Plan is intended to qualify for tax exemption
under Section 401(k) of the Code and is subject to the Employee Retirement
Income Security Act of 1974. The Plan is administered by management of the
Company and all of the Company's employees are allowed to participate, who, as
of the enrollment eligibility dates under the Plan, have completed at least 90
days of service with the Company and have elected to participate in the Plan.
Employees may contribute up to 15% of their annual compensation, which is
matched by the Company under a defined formula. In addition, the Company may
make discretionary contributions to the Plan, for the benefit of all
participants, at the election of the Board of Directors. Employee contributions
are fully vested at all times and contributions by the Company vest on a
schedule of 25% per year over a four-year period, commencing with the second
year of employment.
APPROVAL OF INDUSTRIAL DATA SYSTEMS CORPORATION
1998 INCENTIVE PLAN
STOCK OPTION PLANS AND AGREEMENTS
The Company as of the date of this proxy statement has no outstanding
stock options. The board believes that the growth of the Company depends
significantly upon the efforts of its officers, key employees and key service
providers and that such individuals are best motivated to put forth maximum
effort on behalf of the Company if they own an equity interest in the Company.
In accordance with this philosophy, the Board approved and adopted the
Industrial Data Systems Corporation 1998 Incentive Plan.
INCENTIVE PLAN. The Board of Directors plans to present the Plan for
approval by the Company's stockholders at the annual shareholders meeting to be
held June 8, 1998. A total of 1,200,000 shares of Common Stock would be reserved
for issuance pursuant to the Plan. The Plan provides for the grant to employees,
including officers of the Company, of "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), nonstatutory stock options, stock appreciation rights and restricted
stock (collectively, "Awards"). In addition, non-employee directors ("Outside
Directors") and consultants are eligible to receive nonstatutory stock options.
5
<PAGE>
The Plan provides that Awards may be granted to employees (including
officers), consultants and directors of the Company and its majority-owned
subsidiaries. To the extent that the aggregate fair market value of the shares
with respect to which options designated as "incentive stock options" are
exercisable for the first time by any optionee during any calendar year (under
all plans of the Company) exceeds $100,000, such options will be reclassified in
accordance with the Code. The Plan is not a qualified deferred compensation plan
under Section 401(a) of the Code and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended. Under the Code, the
favorable vote of a majority of all issued and outstanding shares of Common
Stock is required to satisfy the Code requirement for shareholder approval.
Either the full board of directors or its designated committee, will
administer the Plan. The Board of Directors or its designated committee will
select persons to whom Awards may be granted and the type of Award to be granted
and determine, as applicable, the number of shares to be subject to each Award,
the exercise price and terms of vesting. In making such determination, the Board
of Directors or its designated committee will take into account the grantee's
present and potential contributions to the success of the Company and other
relevant factors.
The exercise price of all incentive stock options granted under the Plan
must be at least equal to the fair market value of the shares of Common Stock on
the date of grant. With respect to any participant who owns stock representing
more than 10% of the voting rights of the Company's outstanding capital stock,
the exercise price of any incentive stock option granted under the Plan must
equal at least 110% of the fair market value of the shares of Common Stock
subject to such option on the date of grant and the term of the option must not
exceed five years.
Options granted under the Plan vest pursuant to terms determined by the
Board of Directors or its designated committee.
The terms of all incentive stock options and nonstatutory stock options
granted under the Plan may not exceed ten years. However, the terms of all
incentive stock options granted to an optionee who, at the time of grant, owns
stock representing more than 10% of the voting rights of the Company's
outstanding capital stock, may not exceed five years.
Options may be granted to Outside Directors under the Plan upon such
terms as are approved by the Board or its designated committee.
Restricted Common Stock ("Restricted Stock") may be granted to employees
pursuant to terms determined by the Board of Directors or its designated
committee. Restricted Stock may not be transferred until the restrictions are
removed or have expired. Conditions to the removal of restrictions may include,
but are not required to be limited to, continuing employment or service to the
Company or achievement of certain performance objectives.
Stock appreciation rights ("SARs") may be granted to employees, either
independent of, or in connection with, options. SARs are excerisable in the
manner, and pursuant to terms, determined by the Board of Directors or its
designated committee. Terms to be determined by the Board of Directors (or its
designated committee) include the number of shares to which the SAR applies, the
vesting schedule for the exercise of such right and the expiration date of the
right. Upon exercise of an SAR, the holder shall receive payment (in cash, stock
or a combination of both at the discretion of the Board of Directors or its
designated committee) in an amount equal to the product of (i) the fair market
value of a share of Common Stock as of the date of exercise, minus the fair
market value of a share of Common Stock as of the date the SAR was granted,
multiplied by (ii) the number of shares as to which the SAR is being exercised.
The exercise of SARs granted in connection with options requires the holder to
surrender the related option (or any portion thereof, to the extent
unexercised). No SAR granted under the Plan is transferable by the employee
other than by will or the laws of descent and distribution and each SAR is
exercisable during the lifetime of the employee only by such employee.
In the event of certain changes in the Company's capitalization,
including as a result of a stock split or stock dividend, which results in a
greater or lesser number of shares of outstanding Common Stock,
6
<PAGE>
appropriate adjustment shall be made in the number of shares available under the
Plan, the exercise price and in the number of shares subject to options,
Restricted Stock and SARs.
Award agreements may under the Plan, as determined by the Board of
Directors or its designated committee, provide that, in the event of a "change
in control" of the Company, the following will occur; the holder of a stock
option will be granted a corresponding stock appreciation right; all outstanding
stock appreciation rights and stock options will become immediately and fully
vested and exercisable in full; and the restriction period on any Restricted
Stock will be accelerated and the restrictions will expire. In general, a
"change in control" of the Company occurs in any of five situations: (1) a
person (other than (a) the Company, (b) certain named affiliates or affiliated
companies or benefit plans, or (c) a company, a majority of which is owned
directly or indirectly by the stockholders of the Company) becomes the
beneficial owner of 50% or more of the voting power of the Company's outstanding
voting securities; (2) a majority of the Board of Directors is not comprised of
the members of the Board of Directors at the effective date of the Plan and
persons whose elections as directors were approved by those original directors
or their approved successors; (3) a person described in clause (1) announces a
tender offer for 50% or more of the Company's outstanding voting securities and
the Board of Directors approves or does not oppose the tender offer; (4) the
Company merges or consolidates with another corporation or partnership, or the
Company's stockholders approve such a merger or consolidation, other than
mergers or consolidations in which the Company's voting securities are converted
into securities having the majority of voting power in the surviving company; or
(5) the Company liquidates or sells all or substantially all of its assets, or
the Company's stockholders approve such a liquidation or sale, except sales to
corporations having substantial the same ownership as the Company.
If a "restructuring" of the Company occurs that does not constitute a
change in control of the Company, the Board of Directors or the committee
administering the Plan may (but need not) cause the Company to take any one or
more of the following actions: accelerate in whole or in part the time of
vesting and exercisability of any outstanding stock options and stock
appreciation rights to permit those stock options and stock appreciation rights
to be exercisable before, upon, or after the completion of the restructure;
grant each of the restrictions on any Restricted Stock; if the restructuring
involves a transaction in which the Company is not the surviving entity, cause
the surviving entity to assume in whole or in part any one or more of the
outstanding incentive awards upon such terms and provisions as the Board of
Directors or its designated committee deems desirable; or redeem in whole or in
part any one or more of the outstanding incentive awards (whether or not then
exercisable) in consideration of a cash payment as adjusted for withholding
obligations. A restructuring generally is any merger of the Company or the
direct or indirect transfer of all or substantially all of the Company's assets
(whether by sale, merger, consolidation, liquidation, or otherwise) in one
transaction or a series of transactions.
CERTAIN TRANSACTIONS
The Board of Directors has adopted a policy requiring that all
transactions between the Company and its officers, directors, principal
shareholders and their affiliates be on terms no less favorable to the Company
than could be obtained from unrelated third parties and that any such
transactions be approved by a majority of the disinterested members of the
Company's board.
William A. Coskey and Hulda L. Coskey were indebted to the Company for
three unsecured promissory notes in an amount totaling $200,000. The notes are
due on demand and bear interest at a rate of 9% per annum. Interest on the notes
is due annually. The outstanding balance at December 31, 1997 was $200,000. in
principal and $15,965.75 in accrued but unpaid interest. The Company has no
present intention of making any further loans of this nature.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors, executive officers and 10% beneficial owners ("insiders")
to file with the United States Securities and Exchange Commission reports of
ownership and change in ownership of equity securities of the Company. Based
solely on its review of such reports, or written representations from certain
insiders that all required reports
7
<PAGE>
were filed, the Company believes that during the year ended December 31, 1997,
the Company's Directors and officers complied with all filing requirements of
Section 16.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation provide that, to the fullest
extent permitted under Nevada corporation law, the Company will indemnify any
officer or director who is, was, or is threatened to be made a party to any
proceeding because he or she (1) is or was a director or officer, or (2) while a
director or officer, at the Company's request, was serving as a director,
officer, partner, venturer, proprietor, trustee, employee or agent of another
entity.
The Company's Articles of Incorporation also provide that a director of
the Company shall not be personally liable to the Company or its shareholders
for monetary damages from breaches of fiduciary duties, except for liability (i)
for any breach of the duty of loyalty to the Company or its shareholders; (ii)
for acts or omissions not in good faith or in knowing violation of the law; or
(iii) for any transaction from which a director or officer has derived an
improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities
Exchange Act of 1934 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person, the Company will unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
APPOINTMENT OF AUDITORS
The Board of Directors recommends, and unless otherwise directed the
designated persons named in the enclosed form of proxy will vote for, the
appointment of Hein + Associates LLP, 5075 Westheimer, Suite 970, Houston, Texas
77056, as auditors of the Company to hold office until the next Annual Meeting
of Shareholders and to authorize the Directors to fix the remuneration of the
auditors so appointed. Hein + Associates LLP has been the Company's auditors
since 1994. The auditors will be invited to attend the meeting to make such
comments as they deem appropriate and to answer any appropriate questions.
OTHER MATTERS
To the best of the knowledge, information and belief of the Directors,
there are no other matters which are to be acted upon at the Annual Meeting. If
such matters arise, the form of proxy provides that discretionary authority is
conferred on the designated persons in the enclosed form of proxy to vote with
respect to such matters.
The Company has received no notice of any other items submitted for
consideration at the meeting and except for reports of operations and activities
by Management, which are for informational purposes only and require no action
of approval or disapproval, and consideration of the minutes of the preceding
annual meeting for approval, which may involve technical corrections to the text
where actions taken were incorrectly recorded, but which require no action of
approval or disapproval of the subject matter, Management neither knows of nor
contemplates any other business that will be presented for action by the
shareholders at the meeting. If any further business is properly presented at
the meeting, the persons named as proxies will act in their discretion on behalf
of the shareholders they represent.
The next annual meeting of shareholders is expected to be on or about
June 1, 1999. Any shareholder proposal intended to be presented at the next
annual meeting of shareholders must be received by the Company for inclusion in
the Company's proxy materials by March 1, 1999.
8
<PAGE>
APPROVAL OF THE BOARD OF DIRECTORS
The contents of the Proxy Statement have been approved and the mailing
thereof to the Shareholders of the Company has been authorized by the Board of
Directors of the Company.
ANNUAL REPORT
A copy of the Company's 1997 Annual Report is being mailed with this
Proxy Statement to each shareholder of record. Shareholders not receiving a copy
of the Annual Report may obtain one without charge by contacting Hulda L.
Coskey, CFO, 600 Century Plaza Drive, Building 140, Houston, Texas 77073-6013,
(281) 821-3200, or by email at [email protected].
DATED at Houston, Texas, the 15th day of May, 1998.
By Order of the Board of Directors,
Hulda L. Coskey
Secretary
9
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION (IDDS)
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 8, 1998
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Industrial Data Systems Corporation (the
"Company") hereby appoints William A. Coskey, Hulda L. Coskey and/or any of
them, attorneys and proxies of the undersigned, each with full power of
substitution to vote on behalf of the undersigned at the Annual Meeting of
Stockholders of Industrial Data Systems Corporation to be held at the corporate
offices located at 600 Century Plaza Drive, Building 140, Houston, Texas
77073-6013, Friday, June 8, 1998, at 2:00 p.m. Central Standard Time, and at any
adjournments of said meeting, all of the shares of Common stock in the mane of
the undersigned or which the undersigned may be entitled to vote.
<TABLE>
<CAPTION>
<S> <C>
1. [ ] FOR the election (except as indicated below) as directors of [ ] WITHHOLD AUTHORITY to vote
William A. Coskey, P.E., Hulda L. Coskey, David W. Gent, P.E., on all nominees for directors listed.
Rex S. Zerger, and Gordon R. Wingate
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW:
--------------------------------------------------------------
2. For the appointment of HEIN and Associates, LLP as the Company's independent
auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. For the approval of the Industrial Data Systems Corporation 1998 Incentive
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(PLEASE SIGN ON OTHER SIDE)
(CONTINUED FROM FRONT)
4. In their discretion, upon such other matters as may properly come before the
meeting; hereby revoking any proxy or proxies heretofore given by the
undersigned. The board of directors recommends a vote FOR the nominees named
above and if no specfication is made, the shares will be voted for such
nominees. The undeersigned hereby acknowledges receipt of the Notice of
Annual Stockholders Meeting and the Proxy Statement furnished herewith.
Dated: _____________________, 1998
---------------------------------
Stockholder's Signature
---------------------------------
Stockholder's Signature
SIGNATURE SHOULD AGREE WITH THE NAME
PRINTED HEREON. IF STOCK IS HELD IN
THE NAME OF MORE THAN ONE PERSON, EACH
JOINT OWNER SHOULD SIGN, EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS
AND ATTORNEYS SHOULD INDICATE THE
CAPACITY IN WHICH THEY SIGN. PERSONS
ACTING PURSUANT TO POWER OF ATTORNEY
SHOULD SUBMIT POWERS OF ATTORNEY.
PLEASE SIGN AND RETURN IN THE ENCLOSED SELF ADDRESSED, STAMPED ENVELOPE
