<PAGE>
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 (S) 240.14a-11(C) or (S) 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 20, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
("Annual Meeting") of Industrial Data Systems Corporation to be held at 2:00
p.m. on Tuesday, June 6, 2000, 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 the 2000 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,
/s/ William A. Coskey
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.
<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 6, 2000
To the Shareholders of
Industrial Data Systems Corporation
Notice is hereby given that the 2000 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 6, 2000, at 2:00 p.m.,
Central Daylight Saving 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., Gordon R. Wingate, and Ken
J. Hedrick.
2. To approve and ratify the appointment of Hein + Associates LLP as the
Company's independent auditors.
3. 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 17, 2000 and only those shareholders of record on that date will be
entitled to notice of and to vote at the meeting. A shareholders list will be
available at the offices of the Company commencing May 26, 2000 and may be
inspected during the normal business hours prior to the Annual Meeting and
during 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
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,
/s/ Hulda L. Coskey
Hulda L. Coskey
Secretary
Houston, Texas
Date: May 20, 2000
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION
600 CENTURY PLAZA DRIVE, BUILDING 140
HOUSTON, TEXAS 77073-6013
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, JUNE 6, 2000
PROXY STATEMENT
This Proxy Statement and accompanying Proxy are solicited by the
Management of Industrial Data Systems Corporation ("IDS" or the "Company") for
use at the Annual Meeting of Shareholders (the "Annual Meeting") of the Company
to be held on Tuesday, June 6, 2000 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 on or about May 20,
2000, to shareholders of record on April 17, 2000.
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 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.
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, 1999, 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 17, 2000, the Record Date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting, 12,964,918
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.
The shareholders shall also vote to ratify the selection of
Independent Auditors. 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.
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If you are the beneficial owner of shares held in "street name" by a
broker, the broker, as the record holder of the shares, is required to vote
those shares in accordance with your instructions. If you do not give
instructions to the broker, the broker will nevertheless be entitled to vote the
shares with respect to "discretionary" items but will not be permitted to vote
the shares with respect to "non-discretionary" items (in which case, the shares
will be treated as "broker non-votes").
If you ABSTAIN from voting on one or more proposals, your shares will
nevertheless be included in the number of shares represented for purposes of
determining whether a quorum is present. If you ABSTAIN from voting on the
approval and ratification of Hein + Associates LLP as the Company's independent
auditors, your shares will also be included in the number of shares voting on
the proposal, and consequently, your abstention will have the same practical
effect as a vote AGAINST the proposal. Because directors are elected by a
plurality of the votes, an abstention would have no effect on the outcome of the
vote on the election of directors and, thus, is not offered as a voting option
for that matter.
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. If no specification is made in said
proxy, the proxy will be voted "FOR" the nominees listed herein, and "FOR" the
selection and ratification of Hein + Associates, LLP, Certified Public
Accountants.
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 five
members. Five Directors are 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.
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE POSITION HELD
- ---- --- --------------- -------------
<S> <C> <C> <C>
William A. Coskey, P.E. (1) 47 1985 Chairman of the Board, Chief
Executive Officer and President
Hulda L. Coskey (1) 45 1985 Chief Financial Officer, Secretary,
Treasurer, Director
David W. Gent, P.E. (2) 47 1994 Director
Gordon R. Wingate (2) 44 1998 Director
Ken J. Hedrick 53 1998 Controller, Director
</TABLE>
(1) William A. Coskey and Hulda L. Coskey are husband and wife.
(2) Member of Audit and Compensation Committees.
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
2
<PAGE>
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 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 sixteen 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 as 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 has
served as a committee member for 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 and Compensation Committees. 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.
GORDON R. WINGATE has served on the Board of Directors since June 1998 and
is a member of the Audit and Compensation Committees. Mr. Wingate has served as
President and Chief Executive Officer of SynchroNet since 1989. SynchroNet is a
computer internetworking service provider based out of Houston that designs and
implements secure corporate networks for data, voice, and video, some of which
are global in scope. Prior to this time Mr. Wingate owned and operated Wingate
Services, a computer cabling and installation provider, which in 1989 changed
its name to SynchroNet and became involved with system design and computer
integration. Mr. Wingate earned his Bachelors of Arts degree from the
University of Texas at Austin. He is professionally certified as a Cisco
Certified Networking Associate, a Novel Certified NetWare Engineer 5, a
Microsoft Certified Product Specialist for Windows NT and a Citrix Certified
Administrator for Citrix Winframe and Metaframe.
KEN HEDRICK has served as Corporate Controller of Industrial Data Systems
Corporation since December 1997. Mr. Hedrick was initially appointed as an
interim Director upon the resignation of Rex S. Zerger in August 1998 and was
later elected to the Board of Directors by the shareholders in June 1999.
Beginning his career in public accounting over 20 years ago, Mr. Hedrick worked
on auditing assignments and on management consulting projects while in the
public sector. Moving into the private business sector, Mr. Hedrick has held
Chief Financial Officer, General Manager and Controller positions with public
and privately held companies primarily in the construction and the manufacturing
industries. In these various positions, Mr. Hedrick has been responsible for
start-up operations, information systems conversion and implementation, as well
as typical financial, accounting and general administrative functions. Mr.
Hedrick received a B.B.A. degree in Accounting and Management from Southwest
Texas State University in 1970 and received a C.P.A. certification in 1973.
3
<PAGE>
DIRECTOR'S COMPENSATION
Employee directors and independent directors of the Company 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. As specified in the Industrial Data Systems Corporation
1998 Incentive Plan (the "Incentive Plan"), non-employee directors are eligible
to receive non-statutory stock options. Under the Incentive Plan, awards may be
granted to directors of the Company and its majority-owned subsidiaries. In
recognition of the services provided by its Board of Directors and in compliance
with the Incentive Plan, 50,000 shares were approved and awarded as stock
options to Directors and Non-Employee Directors on December 13, 1999. The
following Directors were awarded 5,000 shares each for each year or partial year
of service provided to the Company: Mr. Gent (30,000 shares), Mr. Wingate
(10,000 shares) and Mr. Hedrick (10,000 shares). All of these stock options
were issued at an exercise price of $1.25 and vest over a five-year period with
an expiration date of December 12, 2009. The stock options awarded to directors
represent 25% of all stock options issued in 1999 to directors and key
employees. In addition to the shares awarded for director service, Mr. Hedrick
was also awarded 20,000 shares of stock options for his services as a key
employee to the Company, which is disclosed further in this Proxy Statement
under "Incentive Plan". As of April 17, 2000 no options have been exercised nor
shares issued under the Incentive Plan.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1999, there were two meetings of the Board of Directors and two
actions taken by unanimous consent. Mr. Wingate was able to attend fewer than
75% of the board and committee meetings on which he served. The Board of
Directors has established a standing Audit Committee and Compensation Committee.
The Board does not have an Executive Committee or a Nominating 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 serves as an independent and
objective party to monitor the Company's financial reporting process and
internal control system, reviews and appraises the audit efforts of the
Company's independent accountants, and provides an open avenue of communication
among the independent accountants, financial and senior management and the Board
of Directors. The members of this Committee are Messrs. David W. Gent and
Gordon R. Wingate, both of whom are independent directors. The committee met
one time during 1999. Both directors were present.
Compensation Committee. The Compensation Committee is responsible for
administering the Company's Incentive Stock Plan and granting stock options and
other awards under the Plan. The members of this Committee are Messrs. David W.
Gent and Gordon R. Wingate, both of whom are independent directors. The
committee met one time during 1999. Both directors were present.
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 Stock of the Company as at the close of business on
April 17, 2000 other than:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
-------------- ------------------- -------------------- ----------------
<S> <C> <C> <C>
Common Alliance 2000, Ltd. (1) 9,525,100 73.5%
William A. Coskey, P.E. (1) (2) (3)
Hulda L. Coskey (1)
600 Century Plaza Drive, Building 140
Houston, Texas 77073-6013
Common David W. Gent, P.E. 0 0.0%
Common Gordon R. Wingate 0 0.0%
Common Ken J. Hedrick 0 0.0%
Common John L. Ripley (4)(5) 299,500 2.4%
All executive officers and directors as a group 9,825,100 75.9%
</TABLE>
4
<PAGE>
- ---------------------
(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 100 shares owned by William A. Coskey purchased on June 16, 1998
at the time the Company became listed with the American Stock Exchange.
(3) Includes 25,000 shares of the Company's Common Stock held in the name
William A. Coskey, as Custodian for minor children. Purchases reported on
Form 4 filed with Securities and Exchange Commission on January 10, 2000.
(4) Pursuant to the Stock Acquisition Agreement in connection with the
acquisition of Constant Power Manufacturing, Inc., 60,000 shares, shown
above, are assigned as security for performance of an indemnity obligation
clause and will remain in escrow until June 24, 2002.
(5) Jack L. and Mattie L. Ripley Charitable Remainder Unitrust is the record
holder of 100,000 shares, shown above. John and Mattie Ripley serve as
members of the Trust Committee.
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 officers of
the Company whose aggregate cash compensation exceeded $100,000 (the "Named
Executive Officers") during the years ended December 31, 1997, 1998 and 1999.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------- OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- --------------------------- ---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C> <C>
($) ($) ($) ($)
William A. Coskey, P.E., Chief 1999 109,224 - - -
Executive Officer and President 1998 109,200 - - -
1997 72,000 - - - (1)
John L. Ripley, Vice President - 1999 101,443 - - -
Sales and Marketing of Constant 1998 73,370 200,000 (2) - -
Power Mfg., Inc. 1997 (3)
</TABLE>
(1) The 1997 Proxy Statement indicated $16,000 was paid as compensation to Mr.
Coskey. This amount was actually a fee paid to a company owned by Mr.
Coskey for services rendered by that company to the Company.
(2) As per Employment Agreement dated March 25, 1998, Company agreed to pay
signing bonus to Mr. Ripley. The Employment Agreement is incorporated by
reference on the Company's Form 8-K filed April 10, 1998 and Form 8-K/A
filed April 29, 1998. The Employment Agreement was for a two-year term,
expiring March 25, 2000. Mr. Ripley continues to serve as Vice President -
Sales and Marketing of the Company's subsidiary, Constant Power
Manufacturing, Inc.
(3) Salary information for 1997 not included. IDS' wholly-owned subsidiary,
Constant Power Manufacturing, Inc. was acquired by the Company in March
1998.
KEY MAN INSURANCE
William A. Coskey is a key employee of the Company and the loss of Mr.
Coskey's services 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 the policy may or may
not be maintained in the future.
INCENTIVE PLAN
Since the approval and adoption of the Industrial Data Systems Corporation
1998 Incentive Plan in June 1998, the Company has granted options for the
purchase of 200,000 shares and no shares have been issued under the Incentive
Plan. On December 13, 1999 the Company granted options for the purchase of
50,000 shares of stock to directors and granted options for the purchase of
150,000 shares of stock to key employees of the Company and its subsidiaries.
All stock options were issued at an exercise price of $1.25 with a full vesting
period of either four or five years. As of the Record Date, a total of 6,250
options were
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vested but not exercised. The expiration date of all stock options awarded to
date under the Incentive Plan is December 12, 2009. Stock options awarded to
directors are specifically disclosed elsewhere in this Proxy Statement, under
"Director Compensation".
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 who elect to do so are allowed to
participate, subject to certain eligibility requirements. Eligible 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.
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.
As of April 17, 2000, William A. Coskey, Chairman of the Board, Chief
Executive Officer, and President of the Company was indebted to the Company for
two unsecured promissory notes in an amount totaling $150,000. The notes are
due on demand and bear interest at a rate of 9% per annum. The outstanding
balance at December 31, 1999 was $150,000 in principal and $38,465 in accrued
but unpaid interest. The largest aggregate amount of indebtedness outstanding
at any time during the last twelve months owed by William and Hulda Coskey was
$188,465.
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 Forms 3 and 4 and amendments thereto furnished to the Company
under Rule 16a-3(e) during its most recent fiscal year and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, the Company believes that during the year ended December 31, 1999,
the Company's Directors and officers complied with all of the filing
requirements of Section 16. William A. Coskey, who is currently and was at the
time, Chairman of the Board, Chief Executive Officer and President of the
Company, failed to file timely one report on Form 4 in 1998. The report related
to two sales of an aggregate of 9,400 shares of Common Stock and was filed seven
days late. The Company is not aware of any other late filings on Forms 3, 4 or
5.
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.
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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
8, 2001. 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 15, 2001.
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 1999 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].
7
<PAGE>
DATED at Houston, Texas, the 20th day of May, 2000.
By Order of the Board of Directors,
/s/ Hulda L. Coskey
Hulda L. Coskey
Secretary
8
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION (IDS)
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 6, 2000
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder 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
Shareholders of Industrial Data Systems Corporation to be held at the corporate
offices located at 600 Century Plaza Drive, Building 140, Houston, Texas 77073-
6013, Tuesday, June 6, 2000, at 2:00 p.m. Central Daylight Saving Time, and at
any adjournments of said meeting, all of the shares of Common Stock in the name
of the undersigned or which the undersigned may be entitled to vote.
1. [_] FOR the election [_] WITHHOLD AUTHORITY to vote
(except as indicated below) on all nominees for directors listed.
as directors of
William A. Coskey, P.E.,
Hulda L. Coskey, David W.
Gent, P.E., Gordon R. Wingate,
and Ken J. Hedrick
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 + Associates, LLP as the Company's independent
auditors.
[_] FOR [_] AGAINST [_] ABSTAIN
(Please sign on other side)
<PAGE>
(Continued from front)
3. 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 on reverse and
if no specification is made, the shares will be voted for such nominees.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement furnished herewith.
Dated: _______________________, 2000
_____________________________________
Shareholder's Signature
_____________________________________
Shareholder'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
