INDUSTRIAL DATA SYSTEMS CORPORATION
STOCK OPTION AGREEMENT
1. Grant of Option. Industrial Data Systems Corporation, a Nevada
corporation (the "Company") hereby grants to
Xxxx Xxxxxxxx
(the "Option Holder")
an option to purchase from the Company a total of 234,774 shares of Common
Stock. $.001 par value, of the Company at $4.26 per share, in the amounts,
during the periods and upon the terms and conditions set forth in this
Agreement.
2. Time of Exercise. Except only as specifically provided elsewhere in this
Agreement, this option is exercisable, in whole or in part, at any time prior to
the date specified in Section 4 hereof.
3. Exercise of Option. The exercise of this option shall entitle the Option
Holder to purchase shares of Common Stock of the Company. If requested by the
Option Holder, the Option Holder may exercise this option or any portion hereof
by tendering shares of Common Stock, in lieu of cash payment for the option
shares being purchased, with the number of shares tendered to be determined by
the fair market value per share of the Common Stock on the date of exercise, as
determined by the Company.
4. Term. This option will terminate at 5 p.m. on September 19, 2006.
5. Who May Exercise. During the lifetime of the Option Holder, this option
may be exercised only by the Option Holder. If the Option Holder dies or becomes
disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code,
as amended) prior to the termination date specified in Section 4 hereof without
having exercised the option as to all of the shares covered hereby, the option
may be exercised to the extent of the total remaining shares that have not been
purchased by exercise by the Option Holder prior to the date of his death or
disability at any time prior to the date specified in Section 4 hereof by (i)
the Option Holder's estate or a person who acquired the right to exercise the
option by bequest or inheritance or by reason of the death of the Option Holder
INDUSTRIAL DATA SYSTEMS CORPORATION
STOCK OPTION AGREEMENT-Xxxx Xxxxxxxx Page 1
in the event of the Option Holder's death, or (ii) the Option Holder or his
personal representative in the event of the Option Holder's disability, subject
to the other terms of this Agreement and applicable laws, rules and regulations.
For purposes of this Agreement, the Company shall determine the date of
disability of the Option Holder.
6. Restrictions on Exercise. This option:
(a) may be exercised only with respect to full shares and no
fractional share of stock shall be issued; and
(b) may not be exercised in whole or in part and no cash or
certificates representing shares subject to such option shall be
delivered, if any requisite approval or consent of any government
authority of any kind having jurisdiction over the exercise of
options shall not have been secured.
7. Manner of Exercise. Subject to such administrative regulations as the
Board of Directors of the Company (the "Board") may from time to time adopt, the
Option Holder or beneficiary shall, in order to exercise this option.
(a) give written notice to the Company of the exercise price and the
number of shares which he will purchase and tender payment of
such exercise price in United States dollars before issuance of
such shares; or
(b) give written notice to the Company of the exercise price and the
number of shares which he will purchase and tender other shares
of Common Stock in exchange for the option shares.
Any notice shall include an undertaking to furnish or execute such
documents as the Company in its discretion shall deem necessary (i) to evidence
such exercise, in whole or in part, of the option evidenced by this Agreement,
(ii) to determine whether registration is then required under the Securities Act
of 1933, or any other law, as then in effect, and (iii) to comply with or
satisfy the requirements of the Securities Act of 1933, or any other law, as
then in effect.
If the Option Holder elects to exercise this option or portion hereof by
payment of Common Stock, the Company may, upon confirming that the Option Holder
owns the number of additional shares being tendered, authorize the issuance of a
new certificate for the number of shares being acquired pursuant to the exercise
of this option less the number of shares being tendered upon the exercise and
return to the Option Holder (or not require surrender of) the certificate for
the shares being tendered upon the exercise.
INDUSTRIAL DATA SYSTEMS CORPORATION
STOCK OPTION AGREEMENT-Xxxx Xxxxxxxx Page 2
If the Option Holder does not elect to exercise this option or portion
hereof by payment of Common Stock, the Option Holder may exercise this option by
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company to pay the option exercise price;
provided that the Option Holder and the broker shall comply with such procedures
and enter into such agreements of indemnity and other agreements as the Company
shall prescribe as a condition of such payment procedure.
8. Non-Assignability. This option is not assignable or transferable by the
Option Holder except by will or by the laws of descent and distribution.
9. Rights of Shareholder. The Option Holder will have no rights as a
shareholder with respect to any shares covered by this option until the issuance
of a certificate or certificates to the Option Holder for the shares. Except as
otherwise provided in Section 10 hereof, no adjustment shall be made for
dividends or other rights for which the record date is prior to the issuance of
such certificate or certificates.
10. Capital Adjustments; Antidilution. The number of shares of Common Stock
covered by this option, and the option price thereof, shall be subject to such
adjustment as the Board deems appropriate to reflect any stock dividend, stock
split, share combination, exchange of shares, recapitalization, merger,
consolidation, separation, reorganization, liquidation or the like, of or by the
Company.
In the event the Company shall be a party to any merger, consolidation or
corporate reorganization, as the result of which the Company shall be the
surviving corporation, the rights and duties of the Option Holder and the
Company shall not be affected in any manner. In the event the Company shall sell
all or substantially all of its assets or shall be a party to any merger,
consolidation or corporate reorganization, as the result of which the Company
shall not be the surviving corporation, or in the event any other person or
entity may make a tender or exchange offer for stock of the Company whereby such
other person or entity would own more than 50% of the outstanding Common Stock
of the Company (the surviving corporation, purchaser, or tendering corporation
being collectively referred to as the "Purchaser"), then the Company shall reach
an agreement with the Purchaser that the Purchaser will convert this option into
an option of at least equal value as to stock of the Purchaser.
INDUSTRIAL DATA SYSTEMS CORPORATION
STOCK OPTION AGREEMENT-Xxxx Xxxxxxxx Page 3
11. Law Governing. This Agreement is intended to be performed in the State
of Texas and shall be construed and enforced in accordance with and governed by
the laws of such State.
12. Date of Grant. The date of grant of this option is December 21, 2001.
13. Replacement of Prior Option. This Agreement is issued in replacement of
that certain Incentive Stock Option Agreement of Petrocon Engineering, Inc.
dated September 20, 1996 evidencing the right to purchase upon exercise up to
225,225 shares of Common Stock, $.001 par value, of Petrocon Engineering, Inc.
at $4.44 per share.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Option Holder, to evidence his consent and
approval of all the terms hereof, has duly executed this Agreement, as of the
date specified in Section 12 hereof.
INDUSTRIAL DATA SYSTEMS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx, Option Holder
INDUSTRIAL DATA SYSTEMS CORPORATION
STOCK OPTION AGREEMENT-Xxxx Xxxxxxxx Page 4
