Exhibit 10.2

 

STOCK OPTION GRANT AGREEMENT

 

THIS STOCK OPTION GRANT AGREEMENT (the “Grant Agreement”) is made and entered
into by and between I.D. Systems, Inc., a Delaware Corporation (the “Company”)
and the following individual:

 

Name:   Norman Ellis (the “Optionee”) Address 3061 Silent Wind Way, Henderson,
NV 89052

 

The Optionee is granted an option (the “Option”) to purchase common stock, par
value $0.01 per share, of the Company (“Common Stock”), subject in all events to
the terms and conditions of this Grant Agreement, as follows:

 

A. DATE OF GRANT: July 21, 2014

 

B. TYPE OF OPTION: Nonstatutory Stock Option

 

C. TOTAL SHARES OF COMMON STOCK COVERED BY OPTION: 100,000 shares (collectively,
the “Shares”)

 

D. EXERCISE PRICE OF OPTION: Fair Market Value (as defined herein) of the Common
Stock on July 21, 2014 ($5.24 per Share) (the “Exercise Price”).

 

E. EXPIRATION DATE: July 21, 2024 (the “Expiration Date”)

 

F. VESTING SCHEDULE: The Option will vest in equal installments over three
years, with the first vesting occurring on the first anniversary of the date of
the grant. Notwithstanding the foregoing, the Option may not be exercised with
respect to any Shares on or after the earlier of (1) the date the Option
terminates and is canceled in accordance with this Grant Agreement and (2) the
Expiration Date.

 

G. EXERCISE OF OPTION FOLLOWING TERMINATION OF SERVICE: This Option may be
exercised for up to 90 days after the Optionee ceases to be a Service Provider
(as defined herein), except that if such cessation results from the death or
Disability (as defined herein) of the Optionee, this Option may be exercised for
up to 365 days after the Optionee ceases to be a Service Provider. In no event
shall this Option be exercised later than the Expiration Date as provided above
and in no event shall this Option be exercised for more Shares than the Shares
which otherwise have vested as of the date of cessation of status as a Service
Provider. Notwithstanding the foregoing, if the Optionee’s service or employment
with the Company terminates for Cause (as defined herein), the Option shall not
be exercisable following the effective date of such termination of service or
employment.

 

H. METHOD OF EXERCISE. This Option is exercisable by delivery of an exercise
notice in the form attached as Exhibit A (the “Exercise Notice”) which shall
state the election to exercise the Option, the number of Shares with respect to
which the Option is being exercised (the “Exercised Shares”), and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be completed by the Optionee and delivered to the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
for the Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of the fully executed Exercise Notice accompanied by the
aggregate Exercise Price. Notwithstanding the foregoing, no Exercised Shares
shall be issued unless such exercise and issuance complies with the requirements
relating to the administration of stock option plans and other applicable equity
plans under U.S. state corporate laws, U.S. federal and state securities laws,
the Code, any stock exchange or quotation system on which the Common Stock is
listed or quoted, and the applicable laws of any foreign country or jurisdiction
where stock grants or other applicable equity grants are made by the Company;
assuming such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Shares.

 

 

 

 

I. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof:

 

1.cash;

 

2.check; or

 

3.such other form of consideration as the Company’s Board of Directors or
Compensation Committee thereof (the “Administrator”) shall determine in its
discretion, provided that such form of consideration is permitted by applicable
law.

 

Upon exercise of the Option by the Optionee and prior to the delivery of such
Exercised Shares, the Company shall have the right to require the Optionee to
remit to the Company cash in an amount sufficient to satisfy applicable Federal
and state tax withholding requirements.

 

J. TAX CONSEQUENCES OF OPTION. Some of the federal income tax consequences
relating to the grant and exercise of this Option, as of the date of this
Option, are set forth below. THE FOLLOWING DESCRIPTION OF FEDERAL INCOME TAX
CONSEQUENCES IS NECESSARILY INCOMPLETE (AS THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE), AND ASSUMES THAT THE EXERCISE PRICE OF THIS OPTION IS NO
LESS THAN THE FAIR MARKET VALUE OF THE COMMON STOCK UNDERLYING THE OPTION AT THE
DATE OF GRANT. MOREOVER, THIS SUMMARY ONLY ADDRESSES THE FEDERAL INCOME TAX
CONSEQUENCES UNDER THE LAWS OF THE UNITED STATES, AND DOES NOT ADDRESS WHETHER
AND HOW THE TAX LAWS OF ANY OTHER JURISDICTION MAY APPLY TO THIS OPTION OR TO
THE OPTIONEE. ACCORDINGLY, THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF ANY EXERCISED SHARES.

 

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1.Grant of the Option. The grant of an Option generally will not result in the
imposition of a tax under the federal income tax laws.

 

2.Exercising the Option. The Optionee may incur regular federal income tax
liability upon exercise of a Nonstatutory Stock Option (“NSO”). The Optionee
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
to withhold from his or her compensation or collect from the Optionee and pay to
the applicable taxing authorities an amount in cash equal to a specified
percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

 

3.Disposition of Shares. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.

 

K. NON-TRANSFERABILITY OF OPTION. Unless otherwise consented to in advance in
writing by the Company, this Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be
exercised during the lifetime of the Optionee only by the Optionee. The terms of
this Grant Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.

 

L. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale. The provisions of Section 15 of the Company’s 2007 Equity Compensation
Plan (as amended, amended and restated, supplemented or otherwise modified from
time to time, the “Plan”), be and hereby are, incorporated by reference and
shall apply to the Option as if the Option were made under the Plan. By your
signature to this Grant Agreement below, you hereby acknowledge that you have
received and reviewed a copy of the Plan. In the case of any conflict between
the Plan and this Grant Agreement, this Grant Agreement shall control.

 

M. SECURITIES MATTERS. All Shares and Exercised Shares shall be subject to the
restrictions on sale, encumbrance and other disposition provided by Federal or
state law. As a condition precedent to the Optionee’s acquisition of Exercised
Shares, the Company may require that the Optionee submit a letter to the Company
stating that such Shares are being acquired for investment and not with a view
to the distribution thereof. The Company shall not be obligated to sell or issue
any Shares or Exercised Shares pursuant to this Grant Agreement unless, on the
date of sale and issuance thereof, such Shares are either registered under the
Securities Act of 1933, as amended, and all applicable state securities laws, or
are exempt from registration thereunder. Any such Shares acquired by the
Optionee may bear a restrictive legend summarizing any restrictions on
transferability applicable thereto, including those imposed by Federal and state
securities laws. Notwithstanding anything to the contrary contained herein, in
the event that the Company at any time ceases to be eligible to use Form S-8, or
any then effective Form S-8 (or successor form) ceases to be effective for any
reason, the Company shall have no obligation or liability to sell or issue any
Shares or Exercised Shares pursuant to this Grant Agreement unless and until
such eligibility or effectiveness is restored.

 

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N. DEFINED TERMS. For purposes of this Grant Agreement, the following terms
shall have the following meanings:

 

“Cause”, with respect to any Service Provider, means (unless otherwise
determined by the Administrator) such Service Provider’s (i) conviction of, or
plea of nolo contendere to, a felony or crime involving moral turpitude; (ii)
fraud on or misappropriation of any funds or property of the Company; (iii)
personal dishonesty, willful misconduct, willful violation of any law, rule or
regulation (other than minor traffic violations or similar offenses) or breach
of fiduciary duty which involves personal profit; (iv) willful misconduct in
connection with the Service Provider’s duties; (v) chronic use of alcohol, drugs
or other similar substances which affects the Service Provider’s work
performance; or (vi) material breach of any provision of any employment,
non-disclosure, non-competition, nonsolicitation or other similar agreement
executed by the Service Provider for the benefit of the Company, all as
reasonably determined by the Administrator, which determination will be
conclusive.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity, other than an Employee
or a Director.

 

“Director” means a member of the Board of Directors of the Company.

 

“Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.

 

“Employee” means any person, including officers and directors, serving as an
employee of the Company or any Parent or Subsidiary. An individual shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary or any successor. Neither service as
Director nor payment of a Director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.

 

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“Fair Market Value” means, as of any date, the value of Common Stock determined
as follows:

 

(i) if the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the The NASDAQ Global
Market, the Fair Market Value of a Share of Common Stock shall be the closing
sales price of a Share of Common Stock as quoted on such exchange or system for
such date (or the most recent trading day preceding such date if there were no
trades on such date), as reported in The Wall Street Journal or such other
source as the Committee deems reliable;

 

(ii) if the Common Stock is regularly quoted by a recognized securities dealer
but is not listed in the manner contemplated by clause (i) above, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock for such date (or the most recent
trading day preceding such date if there were no trades on such date), as
reported in The Wall Street Journal or such other source as the Committee deems
reliable; or

 

(iii) if neither clause (i) above nor clause (ii) above applies, the Fair Market
Value shall be determined in good faith by the Administrator based on the
reasonable application of a reasonable valuation method.

 

“Parent” means a “parent corporation” of the Company, whether now or hereafter
existing, as defined in Section 424(e) of the Code.

 

“Service Provider” means an Employee or Consultant.

 

“Subsidiary” means a “subsidiary corporation” of the Company, whether now or
hereafter existing, as defined in Section 424(f) of the Code.

 

O. OTHER PLANS. No amounts of income received by the Optionee pursuant to this
Grant Agreement shall be considered compensation for purposes of any pension or
retirement plan, insurance plan or any other employee benefit plan of the
Company or its subsidiaries, unless otherwise provided in such plan.

 

P. NO GUARANTEE OF CONTINUED SERVICE. THE OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING EMPLOYMENT WITH THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). THE OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS GRANT AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED EMPLOYMENT FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE THE EMPLOYMENT RELATIONSHIP AT ANY TIME, WITH OR
WITHOUT CAUSE.

 

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Q. ENTIRE AGREEMENT; GOVERNING LAW. This Grant Agreement and to the extent
incorporated herein by reference, the Plan, constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and the Optionee
with respect to the subject matter hereof, and may not be modified adversely to
the Optionee’s interest except by means of a writing signed by the Company and
Optionee. This Grant Agreement is governed by the internal substantive laws, but
not the choice of law rules, of the State of Delaware.

 

By your signature and the signature of the Company’s representative below, you
and the Company agree that this Option is granted pursuant to and governed by
the terms and conditions of this Grant Agreement. The Optionee has reviewed this
Grant Agreement and to the extent incorporated herein by reference, the Plan, in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Grant Agreement and fully understands all provisions of this
Grant Agreement. The Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any questions
relating to this Grant Agreement. The Optionee further agrees to notify the
Company upon any change in the residence address indicated herein.

 

OPTIONEE       I.D. SYSTEMS, INC.                 /s/ Norman Ellis   By:  /s/
Kenneth S. Ehrman                 Norman Ellis   Kenneth S. Ehrman, CEO Print
Name   Print Name/Title                 Date: July 21, 2014   Date: July 21,
2014

 

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EXHIBIT A

 

EXERCISE NOTICE

 

I.D. Systems, Inc.

123 Tice Boulevard, Suite 101

Woodcliff Lake, NJ 07677

Attention:

 

1. Exercise of Option. Effective as of today, ________________, 20__, the
undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
“Shares”) of the Common Stock of I.D. Systems, Inc. (the “Company”) under and
pursuant to the Stock Option Grant Agreement dated July 21, 2014 (the “Option
Agreement”). The purchase price for the Shares shall be $5.24, as required by
the Option Agreement.

 

2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price for the Shares.

 

3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Option Agreement and agrees to abide by and be
bound by their terms and conditions. Unless the Company is a public corporation
which has registered the shares issuable pursuant to the Option Agreement under
the Securities Act of 1933, the Purchaser confirms the representations set forth
below:

 

The Purchaser is acquiring the Shares for his/her own account and the Shares
were acquired by him/her for the purpose of investment and not with a view to
distribution or resale thereof in violation of the Securities Act of 1933 (the
“Securities Act”). The Purchaser agrees not to resell or otherwise dispose of
all or any part of the Shares purchased by him/her except as permitted by law,
including, without limitation, any regulations under the Securities Act and
other applicable securities laws. The Purchaser is able to bear the economic
risk of this investment including a complete loss of the investment.

 

4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Shares covered by the
Option, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section L of the
Option Agreement.

 

5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser's purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted with any tax consultants
Purchaser deems advisable in connection with the purchase or disposition of the
Shares and that Purchaser is not relying on the Company for any tax advice.

 

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6. Entire Agreement; Governing Law. The Option Agreement is incorporated herein
by reference. This Agreement and the Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and the
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser. This agreement is governed by the internal substantive
laws, but not the choice of law rules, of the State of Delaware.

 

Submitted by:   Accepted by:         PURCHASER     I.D. SYSTEMS, INC.          
          By:                            Print Name   Print Name/Title        
Date:     Date:   

 

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