LOWRANCE ELECTRONICS INC
INCENTIVE STOCK OPTION - BOB CALLOWAY
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>12
<FILENAME>dex1042.txt
<DESCRIPTION>INCENTIVE STOCK OPTION - BOB CALLOWAY
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.42

                           LOWRANCE ELECTRONICS, INC.
                             2001 STOCK OPTION PLAN

                        INCENTIVE STOCK OPTION AGREEMENT

         This Incentive Stock Option Agreement (the "Agreement") is entered into
effective as of the 25th day of July, 2001, between Lowrance Electronics, Inc.,
an Oklahoma corporation (the "Company"), and Bob G. Callaway (the
"Participant").

         1. Stock Option Plan. This Agreement is entered into pursuant to the
terms of the Lowrance Electronics, Inc. 2001 Stock Option Plan, as it may be
amended from time to time (the "Plan"), which is incorporated herein and made a
part hereof for all purposes. To the fullest extent possible, the terms of this
Agreement shall be interpreted in a manner consistent with the terms of the
Plan; however, to the extent that any provision of this Agreement conflicts with
the express terms of the Plan, it is hereby acknowledged and agreed that the
terms of the Plan shall control and, if necessary, the applicable provisions of
this Agreement shall be deemed amended so as to carry out the purpose and intent
of the Plan; provided, however, under no circumstances shall this Agreement be
amended to allow exercise of the Option or any part thereof prior to the
occurrence of the events described in Section 4.

         2. Grant of Option. The Company hereby grants to the Participant and
the Participant hereby accepts, subject to the terms and conditions hereof and
the approval by the Shareholders of the 2001 Stock Option Plan of Lowrance
Electronics, Inc., the right and option to purchase from the Company (the
"Option") all or any part of an aggregate of 25,000 shares of the Company's
common stock, par value $0.10 per share (the "Common Stock"), at a per share
purchase price equal to Two Dollars and Sixty-Seven cents ($2.67) per share (the
"Exercise Price"), as such shares and Exercise Price may be adjusted in
accordance with the Plan and Section 12 hereof. The Option is intended to be
treated as an Incentive Stock Option under the Plan and Code ss. 422, and not as
a nonqualified stock option.

         3. Expiration and Termination of the Option. The Option will expire at
the end of business on July 24, 2011 (the "Expiration Date"). The Option may not
be exercised after its expiration.

         4. Exercise of the Option. The Option may be exercised in whole or in
part at any time or times only upon or after the first to occur of the following
events: (a) the occurrence of any transaction by which Darrell J. Lowrance sells
100% of the shares he then owns directly, in a private placement or registered
public offering or through Rule 144 sales; or (b) upon the sale by the Company
of all or substantially all of the Company's assets and operations to a third
party; or (c) on or after July 24, 2010. Exercise shall be accomplished by
providing the Company with a completed Notice of Exercise in the form of Exhibit
"A" attached hereto, which notice shall be effective upon payment in full of the
Exercise Price and any amounts required for taxes pursuant to Section 14 below,
and the satisfaction of all other conditions to exercise imposed under this
Agreement. If the either of the events described in clause (a) or clause (b)
shall occur prior to the Company's annual meeting of shareholders scheduled for
December 11, 2001, the Company agrees to call a special meeting of shareholders
to request approval of the 2001 Stock Option Plan prior to the occurrence of the
event.

<PAGE>

         5. Payment of Exercise Price. Upon any exercise of the Option, the
total Exercise Price for the number of shares for which the Option is then being
exercised and the amount of any federal, state and local withholding taxes
imposed thereon shall be payable in full to the Company (i) by bank or certified
check, or (ii) by delivery of the Participant's Promissory Note and Stock Pledge
Agreement in the forms attached hereto as Exhibits "B" and "C", respectively, or
(iii) by delivery of whole shares of Common Stock owned by the Participant free
and clear of all liens, claims and encumbrances and evidenced by negotiable
certificates, valuing such shares at their Fair Market Value on the date of
exercise, or (iv) by reducing the number of whole shares of Common Stock
otherwise issuable to Participant as a result of the exercise, valuing such
shares at their Fair Market Value on the date of exercise, or (v) using a
combination of the foregoing forms of consideration.

         6. Transferability of Option. The Option shall not be transferable
otherwise than by will or the laws of descent and distribution, and is
exercisable, during the lifetime of the Participant, only by the Participant,
or, after Participant's death, by his legal representative or the holder of the
Option by will, the laws of descent and distribution, or beneficiary designation
pursuant to Section 8 of this Agreement. Any attempted transfer, assignment,
pledge or other disposition or levy, attachment or similar process with respect
to the Option not specifically permitted herein shall be null and void without
effect.

         7. Effect of Termination of Employment. In the event the Participant's
employment with the Company terminates for any reason, other than the
Participant's death, the Option shall automatically terminate. In the event of
termination of the Participant's employment as a result of the Participant's
death, the Option shall be exercisable as if the Participant remained employed
by the Company.

         8. Beneficiary Designations. The Participant shall file with the
Corporate Secretary of the Company a designation of one or more beneficiaries
(each a "Beneficiary") to whom the Option otherwise exercisable by the
Participant shall be distributed in the event of the death of the Participant
while in the employ of the Company. The Participant shall have the right to
change the Beneficiary or Beneficiaries from time to time; provided, however,
that any change shall not become effective until received in writing by the
Secretary of the Company. If any designated Beneficiary survives the Participant
but dies before receiving all of his benefits hereunder, any remaining benefits
due him shall be distributed to the deceased Beneficiary's estate. If there is
no effective Beneficiary designation on file at the time of the Participant's
death, or if the designated Beneficiary or Beneficiaries have all predeceased
such Participant, the payment of any remaining benefits shall be made to the
Participant's estate.

         9. Limitation of Rights. Nothing in this Agreement or the Plan shall be
construed to:

                  (a) give the Participant any right to be awarded any further
stock options other than in the sole discretion of the Compensation
Committee of the Company Board of Directors;

                  (b) give the Participant or any other person any interest in
any fund or in any specified asset or assets of the Company or any
Affiliate; or


                                     - 2 -

<PAGE>

                  (c) confer upon the Participant the right to continue in the
employment or service of the Company or any Affiliate, or affect the right of
the Company or any Affiliate to terminate the employment or service of the
Participant at any time or for any reason.

         10. Prerequisites to Benefits. Neither the Participant, nor any person
claiming through the Participant, shall have any right or interest in the Option
awarded hereunder, unless and until all the terms, conditions and provisions of
this Agreement and the Plan which affect the Participant or such other person
shall have been complied with as specified herein.

         11. Rights as a Shareholder. Neither the Participant nor the
Participant's legal representative or Beneficiary shall have any rights as a
shareholder of the Company with respect to the shares of Common Stock issuable
upon exercise of this Option unless and until certificates representing such
shares have been delivered pursuant to the terms hereof.

         12. Adjustments. If the shares of Common Stock of the Company as a
whole are increased, decreased or changed into, or exchanged for a different
number or kinds of shares or securities of the Company, whether through merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or the like, an appropriate and proportionate adjustment
shall be made in the number, kinds and exercise price of shares subject to this
Option. Any such adjustment, however, shall be made without a change in the
total exercise price of the shares underlying the Option. Further, no issuance
by the Company of options, warrants, or shares of stock of any class, including
securities convertible into shares of stock of any class or securities upon the
conversion of such convertible securities or the exercise of any options or
warrants, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or Exercise Price of shares underlying the Option.

         13. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by the Participant, the Company and their
respective permitted successors and assigns (including personal representatives,
heirs and legatees), except that the Participant may not assign any rights or
obligations under this Agreement except to the extent and in the manner
expressly permitted herein.

         14. Federal and State Taxes. Participant agrees to pay to the Company,
or to make arrangements satisfactory to the Committee to pay to the Company, as
provided in this Option, all federal, state, or local taxes of any kind imposed
on the Participant and required by law to be withheld by the Company in
connection with the transactions contemplated by this Agreement.

                         [Remainder of page left blank]


                                     - 3 -

<PAGE>

         15. Entire Agreement. This Agreement supersedes all prior agreements,
whether written or oral, between the parties with respect to its subject matter
and constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter.

         16. Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Oklahoma.

                  This Agreement is executed and delivered, in duplicate,
pursuant to the Plan, the provisions of which are incorporated herein by
reference.

                           "Company"

                           Lowrance Electronics, Inc.

                           By:
                              --------------------------------------------------
                                    Darrell J. Lowrance, President

                           "Participant"


                           -----------------------------------------------------
                           Bob G. Callaway

                                     - 4 -

<PAGE>


                                   EXHIBIT "A"

                            NOTICE OF EXERCISE UNDER

                        INCENTIVE STOCK OPTION AGREEMENT

To:      Lowrance Electronics, Inc. (the "Company")


From:
         --------------------------------------------


Date:
         -----------------------------------

         Pursuant to the Incentive Stock Option Agreement (the "Agreement")
(capitalized terms used without definition herein have the meanings given such
terms in the Agreement) between the Company and myself effective
______________________, I hereby exercise my Option as follows:

         Number of shares of Common Stock I wish to                    ________
         purchase under the Option

         Exercise Price per share                                     $ _______

         Total Exercise Price                                         $ _______

         Income Tax Withholding                                       $ _______

         Total obligation                                             $ _______


         I hereby represent, warrant, and covenant to the Company that:

         a. I can bear the economic risk of the investment in the Common Stock
resulting from this exercise of the Option, including a total loss of my
investment.

         b. I am experienced in business and financial matters and am capable of
(i) evaluating the merits and risks of an investment in the Common Stock; (ii)
making an informed investment decision regarding exercise of the Option; and
(iii) protecting my interests in connection therewith.

         c. Any subsequent offer for sale or distribution of any of the shares
of Common Stock shall be made only pursuant to (i) a registration statement on
an appropriate form under the Securities Act of 1933, as amended (the
"Securities Act"), which registration statement has become effective and is
current with regard to the shares being offered or sold, or (ii) a specific
exemption from the registration requirements of the Securities Act, it being
understood that to the extent any such exemption is claimed, I shall, prior to
any offer for sale or sale of such shares, obtain a prior favorable written
opinion, in form and substance satisfactory to the

<PAGE>

Committee, from counsel for or approved by the Committee, as to the
applicability of such exemption thereto.

         I acknowledge that I must pay the total Exercise Price in full and make
appropriate arrangements for the payment of all federal, state and local tax
withholdings due with respect to the Option exercised herein, before the stock
certificate evidencing the shares of Common Stock resulting from this exercise
of the Option will be issued to me.

         I elect to pay in full the total Exercise Price for the Option
exercised herein and all federal and state taxes imposed on me and required by
law to be withheld by Company in connection with the exercise of this Option,
through one or more of the following methods:

         1.       I elect to pay $_________ of my obligation by enclosing a
                  check made payable to the Company in the amount of
                  $____________.

         2.       I elect to pay $_________ of my obligation by enclosing my
                  Promissory Note to the Company in such amount, together with
                  my Stock Pledge Agreement and stock assignments executed in
                  blank, whereby I pledge _______ shares of Common Stock
                  issuable upon exercise of the Option as security (to determine
                  the number of shares, divide such amount by the Fair Market
                  Value per share on the date of exercise).

         3.       I elect to pay $_________ of my obligation by enclosing
                  certificate number(s) ___________, representing _______ shares
                  of Lowrance Corporation, Inc. Common Stock owned by me free
                  and clear of all liens claims and encumbrances, properly
                  endorsed to the Company (to determine the number shares,
                  divide such amount by the Fair Market Value per share on the
                  date of exercise).

         4.       I elect to pay $_________ of my obligation by reducing the
                  number of shares of Common Stock that would otherwise be
                  issuable to me upon this exercise, by _______ shares (to
                  determine the number of shares, divide such amount by the Fair
                  Market Value per share on the date of exercise).

                                      PARTICIPANT:





                                      RECEIVED BY THE COMPANY:


                                      By:
                                         ---------------------------------------
                                      Title:
                                            ------------------------------------

Date: _______________


                                     - 2 -

<PAGE>


                                   EXHIBIT "B"

                                 PROMISSORY NOTE

$__________                                              _______________, 20____
                                                                 Tulsa, Oklahoma

         FOR VALUE RECEIVED, _______________ ("Borrower"), promises to pay on
demand to Lowrance Electronics, Inc., a Delaware corporation ("Lender"), or
order, at Lender's office at 12000 East Skelly Drive, Tulsa, Oklahoma 74128, or
such other place as may be designated in writing by notice to Borrower from
Lender or any subsequent holder of this Note ("Holder"), the principal sum of
__________ Dollars ($__________), with interest thereon at a variable rate per
annum equal to the Prime Rate regularly published in the money rates section of
The Wall Street Journal, plus two percent (2%); provided, however, in the event
of default in any payment of principal or interest hereunder, then, at the
option of Holder, and without notice to Borrower, interest shall, commencing as
of the date of such default, be computed and payable on the then unpaid balance
of the principal and accrued interest at the lesser of (i) such Prime Rate plus
ten percent (10%) per annum, or (ii) the highest rate then allowed by Oklahoma
law, until paid in full.

         The principal sum and all accrued interest thereon shall be payable in
full on ____________, 20__ [180 days from the date of the note]. Borrower shall
have the right at any time or from time to time to pay all or a portion of the
principal and accrued interest without premium or penalty. Prepayments shall
apply first to accrued interest and then to principal.

         Should suit be brought to recover on this Note, or should this Note be
placed in the hands of an attorney for collection, Borrower promises to pay all
attorney fees and costs incurred in connection therewith. This Note shall be
governed by and construed in accordance with the laws of the State of Oklahoma,
and suit hereon may be brought in District Court of Tulsa County, Oklahoma, and
for this purpose Borrower hereby expressly consents to the jurisdiction of said
court and to service of process by certified mail, return receipt requested.

         Failure of Holder to exercise any right hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default, or in the event of continuance of any existing default.

         Borrower waives demand, diligence, presentment for payment, protest and
notice of demand, protest, nonpayment and exercise of any option hereunder.
Borrower further agrees that the granting without notice of any extension or
extensions of time for payment of any sum or sums due hereunder, or for the
performance of any covenant, condition or agreement hereof shall in no way
release or discharge the liability of Borrower.

         This Note is secured by Borrower's Stock Pledge Agreement of even date
herewith. Time is of the essence of this Note and each and every term and
provision hereof.

                                                   ----------------------------


                                     - 3 -

<PAGE>

                                   EXHIBIT "C"

                             STOCK PLEDGE AGREEMENT

         This Stock Pledge Agreement (the "Agreement") entered into this ____
day of ________, 20__, by and between ________________________________________
("Pledgor"), and Lowrance Electronics, Inc., a Delaware corporation ("Secured
Party").

         In consideration of the mutual covenants contained herein, the parties
agree as follows:

         1.       Grant of Security Interest and Delivery of Shares.

                  (a) The Pledgor hereby grants the Secured Party a security
interest in ____shares of common stock, par value $0.10 per share, of Lowrance
Electronics, Inc., a Delaware corporation, now or hereafter owned by, or held in
the name of, the Pledgor, together with all products and proceeds of thereof
(collectively the "Shares").

                  (b) Contemporaneously with the execution of this Agreement,
the Pledgor shall endorse in blank and deposit with the Secured Party, stock
certificate number _____ of Lowrance Electronics, Inc., representing _____
shares of the common stock of such corporation. The Pledgor shall, in the
future, similarly endorse and deposit with the Secured Party any certificates
constituting products or proceeds of the Shares.

     2. Obligations Secured. The obligations secured by this Agreement are:

                  (a) Payment of the principal and interest due upon the
Promissory Note dated __________, 20__ in the principal amount of $__________,
in which the Pledgor is the maker and the Secured Party is the payee (the
"Note").

                  (b) Performance or observance by the Pledgor of the other
covenants and conditions of the Note and of the covenants and
conditions of this Agreement.

                  (c) Any other indebtedness, liability, or obligation of the
Pledgor to the Secured Party, however arising, whether now existing or hereafter
arising, due or not due, absolute or contingent, liquidated or unliquidated,
including indebtedness, liabilities, and obligations on which the Pledgor is
jointly liable with other parties.

                  (d) All expenses incurred or paid by the Secured Party for
purposes of conserving and protecting the Shares, including, but not limited to,
reasonable attorney's fees and other legal expenses incurred in connection with
retaking, holding, preparing for sale, and selling the Shares.

                  (e) Reasonable attorney's fees and other expenses incurred by
the Secured Party in any legal proceeding, in the trial court or on appeal,
brought to enforce or to collect any obligation secured by this Agreement, or to
enforce any term or provision of this Agreement, including any legal proceeding
brought to foreclose or otherwise realize upon the Shares.

                                     - 4 -

<PAGE>

         3. Pledgor's Representations and Warranties. The Pledgor represents and
warrants to the Secured Party that:

                  (a) The Shares are validly issued, fully paid, and
nonassessable. The Pledgor is the sole owner of the Shares, free and clear of
any and all liens or encumbrances, and will defend the same against all claims
and demands of all persons.

                   (b) The Pledgor has a good right to transfer and pledge the
Shares as provided in this Agreement, and neither such pledge nor any transfer
of the Shares following a default is restricted by any buy-sell agreement or
other restriction on transfer of the Shares and neither such pledge nor such
transfer will give rise to any rights in the Shares on behalf of any third
party.

         4. Voting of Shares and Receipt of Dividends. Until there is a default
under the terms of this Agreement, the Pledgor shall be entitled to exercise all
voting rights represented by the Shares; to receive, and retain, all cash
dividends payable with respect to the Shares; and to receive, and retain, all
distributions in property other than shares of Lowrance Electronic, Inc., or any
successor corporation, made with respect to the Shares. If any stock dividend is
paid on the Shares, or if Pledgor shall receive any securities as a result of a
stock split, a recapitalization or other transaction as a result of Pledgor's
ownership of the Shares, the Pledgor shall immediately endorse and deposit with
the Secured Party any securities received.

         5. Default. Time is of the essence of this Agreement. Any of the
following shall constitute a default under this Agreement:

                  (a) The Pledgor shall fail to pay when due any installment of
 principal or interest on any obligation secured by this Agreement.

                  (b) The Pledgor shall fail to observe or perform any covenant,
agreement, or provision contained in this Agreement to be performed by the
Pledgor (other than payment of the obligations secured) and such default shall
continue for a period of ten (10) days after notice by the Secured Party to the
Pledgor of such default.

                  (c) Any representation or warranty made by the Pledgor in this
Agreement proves to have been untrue in any material respect as of the date when
made or furnished.

         6. Rights of Secured Party.

                  (a) The Secured Party shall have the right to assign this
Agreement and the interest of the Security Party under this Agreement, or to
grant a security interest in the same, upon terms that do not impair the rights
of the Pledgor under this Agreement.

                  (b) Upon default by the Pledgor, the Secured Party may, at the
option of Secured Party, declare the unpaid balances of all indebtedness owed by
the Pledgor to the Secured Party immediately due and payable, and the Secured
Party shall have and may exercise each and all of the remedies granted to the
Secured Party by the Oklahoma Uniform Commercial Code, together with any other
remedies which may be available to Secured Party under this

                                     - 5 -

<PAGE>

Agreement or by applicable law. The Note is with recourse; Secured Party shall
be entitled to deficiency judgment pursuant to the provisions of the Oklahoma
Uniform Commercial Code.

                  (c) Following default by the Pledgor, the Secured Party may
take possession of the Shares and may cause the Shares to be cancelled or
transferred into the name of the Secured Party. The Pledgor hereby appoints the
Secured Party as the Pledgor's attorney-in-fact for transfer of the Shares into
the name of the Secured Party. The transfer agent shall not be required to
inquire as to whether or not the Pledgor is in default and whether the Secured
Party is entitled to transfer the Shares into the name of the Secured Party. The
Pledgor agrees to indemnify, and hold the transfer agent harmless, from any
claim or liability arising out of such transfer.

                  (d) In connection with any sale of the Shares, the Pledgor
agrees that it is commercially reasonable to sell the Shares at public or
private sale as one lot or in several lots. The Secured Party may restrict the
purchasers or prospective purchasers of the Shares in a manner that will avoid
the necessity of registering the Shares under applicable state or federal
securities laws. The Secured Party shall give the Pledgor at least thirty (30)
days' notice of any proposed sale of the Shares.

                  (e) The Secured Party shall be under no obligation to sell the
Shares and is under no obligation to complete a sale of the Shares if, in the
reasonable business judgment of the Secured Party, none of the offers received
reasonably approximates the fair value of the Shares. If the Secured Party
elects not to sell the Shares, the Secured Party may elect to follow the
procedures set forth in the Oklahoma Uniform Commercial Code for retaining the
Shares in satisfaction of the obligations secured by this Agreement, subject to
the Pledgor's rights under such procedures.

                  (f) The Secured Party shall not be required to marshal
security and may proceed to foreclose or otherwise realize upon the Shares and
any other security for the obligations secured by this Agreement in such order
and in such manner as the Secured Party may determine in the Secured Party's
sole discretion.

         7. Miscellaneous Provisions.

                  (a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the heirs, personal representatives, successors, and
assigns of the parties. If more than one person is named in this Agreement as
the Pledgor, each of such persons shall be jointly and severally liable for the
obligations of the Pledgor under this Agreement.

                  (b) Any notice or other communication required or permitted to
be given under this Agreement or the Oklahoma Uniform Commercial Code shall be
in writing and shall be mailed by certified mail, return receipt requested,
postage prepaid, addressed to the parties at the following addresses:

                                     - 6 -

<PAGE>

         Pledgor                                          [Address]

                                                          12000 Skelly Drive
         Secured Party                                    Tulsa, Oklahoma 74128

All notices and other communications shall be deemed to be given at the
expiration of three days after the date of mailing. The address of a party to
which notices or other communications shall be mailed may be changed from time
to time by giving written notice to the other party.

                  (c) If any legal proceeding is commenced for the purpose of
interpreting or enforcing any provision of this Agreement, or for the purpose of
collecting any obligation secured by this Agreement, the Secured Party shall be
entitled to recover a reasonable attorney's fee in such proceeding, or any
appeal thereof, to be set by the court without the necessity of hearing
testimony or receiving evidence, in addition to the costs and disbursements
allowed by law. In addition, the Secured Party shall be entitled to recover
reasonable attorney's fees and legal expenses incurred by the Secured Party in
connection with retaking, holding, preparing for sale, and selling the Shares.

                  (d) No waiver of any provision of this Agreement or any
obligation secured by this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.

                  (e) This  Agreement  shall be governed by and shall be
construed  in  accordance  with the laws of the state of Oklahoma.

         In Witness Whereof, the parties have executed this Agreement as of the
date first written above.

                                 "Pledgor"



                                 "Secured Party"

                                 Lowrance Electronics, Inc.



                                 By:
                                    -----------------------------------------

                                 Title:
                                       --------------------------------------



                                     - 7 -

</TEXT>
</DOCUMENT>
