Exhibit 10.12

SEVERANCE AGREEMENT

This
SEVERANCE AGREEMENT (the Agreement) is made and effective this 14th
day of December, 2010, by and between I.D. Systems, Inc., a Delaware
corporation (the Company) and Darryl Miller (Executive).

BACKGROUND:

WHEREAS,
Executive is currently employed as Chief Operating Officer of the Company; and

WHEREAS,
the Board of Directors of the Company (the Board) has determined it is
in the best interests of the Company to enter into this Agreement to, among
other things, help retain and motivate Executive in his position with the
Company.

NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

1. Certain
Definitions: As used in the Agreement, the following terms shall have the
respective meanings set forth below:

(a)
Affiliate of the Company means any Person that controls, is controlled
by, or is under common control with, the Company. A Person shall be deemed to
be in control of another Person if, and for so long as, it owns or controls
more than 50% of the voting power in the election of directors (or, in the case
of an entity that is not a corporation, for the election of the corresponding
managing authority) of such other Person.

(b)
Cause means Executive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) willful
violation of any law, rule or regulation (other than minor traffic violations
or similar offenses or solely as a result of vicarious liability) or breach of
fiduciary duty which results in personal profit to Executive. Executive shall
be given notice of the termination of Executives employment for Cause and
shall have an opportunity to be heard by the Board with respect thereto and, to
the extent that the Board deems the matter curable, shall have a reasonable
period of time to cure the matter to the Boards reasonable satisfaction.

(c)
Change in Control Event means the occurrence of any of the following
events with respect to the Company:

(i)
the consummation of any consolidation or merger of the Company in which the
holders of the Companys common stock, par value $0.01 per share (Common
Stock) immediately prior to such consolidation or merger own less than
fifty percent (50%) of the outstanding common stock of the surviving
corporation immediately after the merger; or

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(ii)
the consummation of any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, other than to a subsidiary or Affiliate; or

(iii)
any action pursuant to which any person or group (as such terms are defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the Exchange
Act), shall become the beneficial owner (as such term is defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of shares of capital
stock entitled to vote generally for the election of directors of the Company
(Voting Securities) representing more than thirty (30%) percent of the
combined voting power of the Companys then outstanding Voting Securities
(calculated as provided in Rule 13d-3(d) in the case of rights to acquire any
such securities); or

(iv)
the individuals (x) who, as of the effective date of this Agreement, constitute
the Board (the Original Directors) and (y) who thereafter are elected
to the Board and whose election, or nomination for election, to the Board was
approved by a vote of a majority of the Original Directors then still in office
(such Directors being called Additional Original Directors) and (z)
who thereafter are elected to the Board and whose election or nomination for
election to the Board was approved by a vote of a majority of the Original
Directors and Additional Original Directors then still in office, cease for any
reason to constitute a majority of the members of the Board.

(d)
Disability means that Executive is incapable of performing his
principal duties due to physical or mental incapacity or impairment for 120
consecutive days, or for 180 non-consecutive days, during any 12 month period.

(e)
Good Reason means (i) a material reduction in Executives base salary
as in effect from time to time; (ii) a material reduction in Executives
authority, duties or responsibilities; (iii) Executives principal office
location being moved to a location which is more than 25 miles from the
principal office location at which Executive performs services on the date this
Agreement is executed or (iv) a material breach by the Company of the agreement
under which Executive provides services to the Company; provided, however, that
Executive must notify the Company, within 90 days of the occurrence of any of
the foregoing conditions, that he considers it to be a Good Reason condition,
and provide the Company with at least 30 days in which to cure the condition.
In addition, the resignation may not occur later than 6 months after the
occurrence of the condition giving rise to the resignation. If Executive fails
to provide such notice and cure period prior to his resignation, or his
resignation occurs later than 6 months after the initial occurrence of the
condition, his resignation shall not be deemed to be for Good Reason and
Executive shall be deemed to have waived any right to receive any of the
payments or benefits set forth in Section 2 hereof.

(f)
Person means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock corporation, a trust, a
joint venture, an unincorporated organization, or any court, administrative
agency or commission or other federal, state, county, local or foreign
governmental authority, instrumentality, agency or commission.

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(g)
Release means a general release agreement in the form annexed hereto
as Exhibit A and made a part hereof.

(h)
Trigger Event means the occurrence of either: (i) the termination of
Executives employment by the Company other than a termination for Cause; or
(ii) Executives resignation for Good Reason within 6 months following a Change
in Control Event. For purposes of clarity, a termination of Executives
employment due to his death or Disability shall not be considered a termination
of Executives employment by the Company other than for Cause, and shall not
constitute a Trigger Event.

2. Trigger
Event Payments and Benefits.

Within
45 days after the occurrence of a Trigger Event (or such shorter period as may
be required by the Release), Executive shall execute and deliver to the Company
the Release. Upon the sooner of the expiration of any applicable revocation
period required for the Release to be effective with respect to age
discrimination claims and the date on which it is otherwise permitted to be
effective and irrevocable under applicable law (such sooner date the Release
Effective Date), Executive shall be entitled to:

(a)
cash payments (collectively the Severance Payment) at the rate of
Executives annual base salary as in effect immediately prior to the Trigger
Event for a period of 12 months (the Severance Period), payable as set
forth below. The Severance Payment shall be made as a series of separate
payments in accordance with the Companys standard payroll practices (and
subject to all applicable tax withholdings and deductions), commencing with the
first regular payroll date on or immediately following the 60th day after the
date of the Trigger Event.

(b)
if Executive timely elects COBRA coverage and provided Executive continues to
make contributions for such continuation coverage equal to Executives
contribution amount in effect immediately preceding the date of Executives
termination of employment, the Company shall waive the remaining portion of
Executives healthcare continuation payments under COBRA for the Severance
Period. Notwithstanding the foregoing, in the event that Executive becomes
eligible to obtain alternate healthcare coverage from a new employer before the
end of the Severance Period, the Companys obligation to waive the remaining
portion of Executives healthcare continuation coverage under COBRA shall
cease. Executive understands and affirms that Executive is obligated to inform
the Company if Executive becomes eligible to obtain alternate healthcare
coverage from a new employer before the end of the Severance Period.

(c)
Executives previously granted Company stock options and restricted stock (Retention
Shares) shall (to the extent not already then vested), partially vest
and a portion of the stock options shall be exercisable, in each case on a
pro-rated basis, taking into account the number of months elapsed since the
date of grant as compared to the scheduled vesting date. For example, if the
total number of months from the grant date until the vesting date is 36 months,
and the Trigger Event occurs at the end of the 12th month after the grant date,
then effective on the Release Effective Date, the total number of vested
options and vested

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Retention Shares should be equal to 1/3 (i.e.,12/36)of
the total number of each granted. Notwithstanding anything to the contrary
contained herein, the terms of the I.D. Systems, Inc. 2007 Equity Compensation
Plan (the Plan) shall govern acceleration of vesting of stock options
and restricted stock in the event of a Change of Control as defined in the
Plan.

3. Covenants
Agreement. As a condition to the Companys obligations hereunder, Executive
shall execute and deliver to the Company an agreement in the form of Exhibit
B annexed hereto and made a part hereof relating to confidentiality,
assignment of inventions, non-competition and non-solicitation. The
non-competition and non-solicitation covenants shall apply for a period equal
to the Severance Period.

4. At
Will Employment. Nothing in this Agreement shall alter Executives status
as an at-will employee.

5. Headings.
Headings used in this Agreement are for convenience of reference only and do
not affect the meaning of any provision.

6. Counterparts.
This Agreement may be executed as of the same effective date in one or more
counterparts, each of which shall be deemed an original.

7. Binding
Agreement; Assignment. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.

8. Governing
Law; Jurisdiction. This Agreement and any and all matters arising directly
or indirectly herefrom shall be governed by, and construed in accordance with,
the internal laws of the State of New Jersey, without reference to the choice
of law principles thereof. Any legal action, suit or other proceeding arising
out of or in any way connected with this Agreement shall be brought in the
courts of the State of New Jersey, or in the United States courts for the
District of New Jersey. With respect to any such proceeding in any such court:
(i) each party generally and unconditionally submits itself and its property to
the exclusive jurisdiction of such court (and corresponding appellate courts
therefrom), and (ii) each party waives, to the fullest extent permitted by law,
any objection it has or hereafter may have the venue of such proceeding as well
as any claim that it has or may have that such proceeding is in an inconvenient
forum.

9. Amendments.
This Agreement may only be amended or otherwise modified, and the provisions
hereof may only be waived, by a writing executed by the parties hereto.

10. Entire
Agreement. This Agreement shall constitute the entire agreement of the
parties with respect to the matters covered hereby and shall supersede all
previous written, oral or implied understandings between them with respect to
such matters.

11. Opportunity
to Consult Counsel. Executive hereby acknowledges that he has read and
fully understands this Agreement, that he has been advised that Lowenstein
Sandler PC is counsel to the Company and not to Executive, and that Executive
has been advised to, and has

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had the opportunity to, consult with counsel and Executives personal
financial or tax advisor with respect to this Agreement.

12. No
Effect on Other Benefits. Notwithstanding anything contained herein to the
contrary, nothing contained herein shall adversely affect the rights of
Executive and his dependents and beneficiaries to any and all benefits to which
any of them may be entitled under the benefit plans and arrangements of the
Company in accordance with the terms of such benefit plans and arrangements.

13. Section
409A.

(a)
This Agreement is intended to comply with the requirements of Section 409A of
the Code and regulations promulgated thereunder (Section 409A). To the
extent that any provision in this Agreement is ambiguous as to its compliance
with Section 409A, the provision shall be read in such a manner so that no
payments due under this Agreement shall be subject to an additional tax as
defined in Section 409A(a)(1)(B) of the Code. For purposes of Section 409A,
each payment made under this Agreement shall be treated as a separate payment.
In no event may Executive, directly or indirectly, designate the calendar year
of payment.

(b)
Notwithstanding anything to the contrary contained herein, if necessary to
comply with the restriction in Section 409A(a)(2)(B) of the Code concerning
payments to specified employees, any payment on account of Executives
separation from service that would otherwise be due hereunder within six months
after such separation shall nonetheless be delayed until the first business day
of the seventh month following Executives date of termination and the first
such payment shall include the cumulative amount of any payments that would
have been paid prior to such date if not for such restriction, together with
interest on such cumulative amount during the period of such restriction at a
rate, per annum, equal to the applicable federal short-term rate (compounded
monthly) in effect under Section 1274(d) of the Code on the date of
termination. For purposes of Section 2 hereof, Executive shall be a specified
employee for the 12-month period beginning on the first day of the fourth
month following each Identification Date if he is a key employee (as
defined in Section 416(i) of the Code without regard to Section 416(i)(5)
thereof) of the Company at any time during the 12-month period ending on the
Identification Date. For purposes of the foregoing, the Identification Date
shall be December 31. Notwithstanding anything contained herein to the
contrary, Executive shall not be considered to have terminated employment with
the Company for purposes of Section 2 hereof unless he would be considered to
have incurred a termination of employment from the Company within the meaning
of Treasury Regulation §1.409A-1(h)(1)(ii).

(c)
Executive acknowledges that any tax liability incurred by Executive under
Section 409A of the Code is solely the responsibility of Executive.

14. No
Mitigation. Executive shall be under no obligation to seek other employment
after Executives termination of employment with the Company, and the
obligations of the Company to Executive which arise pursuant to Section 2 of
this Agreement shall not be subject to mitigation or offset.

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IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.

|                     |  |                      |                       
|-------------------- |  | -------------------- | ----------------------
|                     |  | I.D.
 SYSTEMS, INC. 
|                     |  |                      |                       
|                     |  | By:                  | /s/
 Ned Mavrommatis  
|                     |  |                      |                       
|                     |  |                      | Name: Ned
 Mavrommatis
|                     |  |                      | Title: CFO            
|                     |  |                      | Date:
 12/14/10       
|                     |  |                      |                       
|WITNESS:             |  | EXECUTIVE:          
|                     |  |                     
|/s/
 Jeffrey Jagid   |  | /s/
 Darryl Miller  
|                     |  |                     
|Name:
 Jeffrey Jagid |  | Name: Darryl
 Miller
|Date:
 12-14-10      |  | Date:
 12/14/10     

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EXHIBIT A

FORM OF RELEASE

SEPARATION AND GENERAL RELEASE AGREEMENT

This
Separation and General Release Agreement (the Agreement) is entered
into between Darryl Miller with an address at _____________________________
(the Employee) and I.D. Systems, Inc. (ID Systems), together
with its parent, divisions, affiliates, and subsidiaries and their respective
officers, directors, employees, shareholders, members, partners, plan
administrators, attorneys, and agents, as well as any predecessors, future
successors or assigns or estates of any of the foregoing with an address at 123
Tice Boulevard, Woodcliff Lake, New Jersey 07677 (the Released Parties).

1. Separation of Employment. Employee acknowledges and
understands that Employees last day of employment with ID Systems was
_______________ (the Separation Date). Employee acknowledges and
agrees that, except as otherwise provided in this Agreement, Employee has received
all compensation and benefits to which Employee is entitled as a result of
Employees employment. Employee understands that, except as otherwise provided
in this Agreement, Employee is entitled to nothing further from any of the
Released Parties, including reinstatement by ID Systems.

2. Employee General Release of Released Parties. In
consideration of the payments and benefits set forth in Section 4 below,
Employee hereby unconditionally and irrevocably releases, waives, discharges,
and gives up, to the full extent permitted by law, any and all Claims (as
defined below) that Employee may have against any of the Released Parties,
arising on or prior to the date of Employees execution and delivery of this
Agreement to ID Systems. Claims means any and all actions, charges,
controversies, demands, causes of action, suits, rights, and/or claims
whatsoever for debts, sums of money, wages, salary, severance pay, commissions,
bonuses, unvested stock options, vacation pay, sick pay, fees and costs, attorneys
fees, losses, penalties, damages, including damages for pain and suffering and
emotional harm, arising, directly or indirectly, out of any promise, agreement,
offer letter, contract, understanding, common law, tort, the laws, statutes,
and/or regulations of the State of New Jersey or any other state and the United
States, including, but not limited to, federal and state whistleblower laws,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Equal Pay Act, the Americans with Disabilities Act, the Family and Medical
Leave Act, the Employment Retirement Income Security Act (excluding COBRA), the
Vietnam Era Veterans Readjustment Assistance Act, the Fair Credit Reporting
Act, the Age Discrimination in Employment Act (ADEA), the Older
Workers Benefit Protection Act, the Occupational Safety and Health Act, the
Sarbanes-Oxley Act of 2002, the New Jersey Law Against Discrimination, the New
Jersey Family Leave Act, the New Jersey Civil Rights Act, the New Jersey
Conscientious Employee Protection Act, the Texas Human Rights Act, the Texas
Occupational Health and Safety Law, the Texas Juror Protection Law, the Texas
Military Discrimination Law, and the Texas Hazard Communication Act, as each
may be amended from time to time, whether arising directly or indirectly from
any act or omission, whether intentional or unintentional. This Section 2
releases all Claims including those of which Employee is not aware and those
not mentioned in this Agreement. Employee specifically releases any and all Claims
arising out of Employees

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employment with ID Systems or separation therefrom. Employee expressly
acknowledges and agrees that, by entering into this Agreement, Employee is
releasing and waiving any and all Claims, including, without limitation, Claims
that Employee may having arising under ADEA, which have arisen on or before the
date of Employees execution and delivery of this Agreement to ID Systems.

3. Representations; Covenant Not to Sue. Employee hereby
represents and warrants to the Released Parties that Employee has not: (A)
filed, caused or permitted to be filed any pending proceeding (nor has Employee
lodged a complaint with any governmental or quasi-governmental authority)
against any of the Released Parties, nor has Employee agreed to do any of the
foregoing; (B) assigned, transferred, sold, encumbered, pledged, hypothecated,
mortgaged, distributed, or otherwise disposed of or conveyed to any third party
any right or Claim against any of the Released Parties that has been released
in this Agreement; or (C) directly or indirectly assisted any third party in
filing, causing or assisting to be filed, any Claim against any of the Released
Parties. Except as set forth in Section 11 below, Employee covenants and agrees
that he shall not encourage or solicit or voluntarily assist or participate in
any way in the filing, reporting or prosecution by herself or any third party
of a proceeding or Claim against any of the Released Parties.

4. Payment. As good consideration for Employees execution, delivery,
and non-revocation of this Agreement, ID Systems shall provide Employee with
the payments and benefits set forth in Section 2 of the Severance Agreement
between Employee and ID Systems dated as of December 14, 2010 payable as set
forth therein. Employee acknowledges that Employee is not otherwise entitled to
receive the payments and benefits described in this Section 4 and acknowledges
that nothing in this Agreement shall be deemed to be an admission of liability
on the part of any of the Released Parties. Employee agrees that Employee will
not seek anything further from any of the Released Parties.

5. Who is Bound. ID Systems and Employee are bound by this
Agreement. Anyone who succeeds to Employees rights and responsibilities, such
as the executors of Employees estate, is bound, and anyone who succeeds to ID
Systems rights and responsibilities, such as its successors and assigns, is
also bound.

6. Cooperation. Employee agrees that, within five business days
of the Separation Date, he shall provide ID Systems (attention: _________) with
a written comprehensive summary of all outstanding work activities, current and
prospective customer contact information, and otherwise reasonably cooperate as
necessary to effect a transition of his responsibilities. Employee also agrees
that he will cease from communicating with any current ID Systems employees
(with the exception of __________________) regarding ID Systems personnel or
other business-related matters. Employee agrees to reasonably cooperate in any
ID Systems investigations and/or litigation regarding events that occurred
during Employees tenure with ID Systems. ID Systems will compensate Employee
for reasonable expenses Employee incurs in extending such cooperation regarding
investigations and/or litigation, so long as Employee provides advance written
notice of Employees request for compensation.

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7. Non Disparagement and Confidentiality. Employee agrees not to
make any defamatory or derogatory statements concerning any of the Released
Parties. Provided inquiries are directed to ID Systems Department of Human
Resources, ID Systems shall disclose to prospective employers information
limited to Employees dates of employment and last position held by Employee.
Employee confirms and agrees that Employee shall not, directly or indirectly,
disclose to any person or entity or use for Employees own benefit, any
confidential information concerning the business, finances or operations of ID
Systems or its customers; provided, however, that Employees obligations under
this Section 7 shall not apply to information generally known in ID Systems
industry through no fault of Employee or the disclosure of which is required by
law after reasonable notice has been provided to ID Systems sufficient to enable
ID Systems to contest the disclosure. Confidential information shall include,
without limitation, trade secrets, customer lists, details of contracts,
pricing policies, operational materials, marketing plans or strategies,
security and safety plans and strategies, project development, and any other
non-public or confidential information of, or relating to, ID Systems or its
affiliates. Employee also agrees that the amounts paid to Employee and all of
the other terms of this Agreement shall be kept confidential, unless ID Systems
discloses them in a public filing. Employee acknowledges that he continues to
be bound by the Confidentiality, Assignment of Contributions and Inventions,
Non-Competition and Non-Solicitation Agreement (the Covenants Agreement).

8. Remedies. If Employee tells anyone the amount paid to
Employee or any other term of this Agreement (unless ID Systems has publicly
disclosed the terms of this Agreement in a public filing), breaches any other
term or condition of this Agreement or the Covenants Agreement, or any
representation made by Employee in this Agreement was false when made, it shall
constitute a material breach of this Agreement and, in addition to and not
instead of the Released Parties other remedies hereunder, under the Covenants
Agreement or otherwise at law or in equity, Employee shall be required to
immediately, upon written notice from ID Systems, return the payments paid by
ID Systems hereunder, less $500. Employee agrees that if Employee is required
to return the payments, this Agreement shall continue to be binding on Employee
and the Released Parties shall be entitled to enforce the provisions of this
Agreement as if the payments had not been repaid to ID Systems and ID Systems
shall have no further payment obligations to Employee hereunder. Further, in
the event of a material breach of this Agreement, Employee agrees to pay all of
the Released Parties attorneys fees and other costs associated with enforcing
this Agreement.

9. ID Systems Property. Employee represents that he has returned
all ID Systems property in Employees possession, custody or control,
including, but not limited to, all ID Systems equipment, samples, laptop
computers, personal digital assistants, cell phones, pass codes, keys, swipe
cards, documents or other materials that Employee received, prepared, or helped
prepare. Employee represents that Employee has not retained any copies,
duplicates, reproductions, computer disks, or excerpts thereof of ID Systems
documents.

10. Construction of Agreement. In the event that one or more of
the provisions contained in this Agreement shall for any reason be held
unenforceable in any respect under the law of any state of the United States or
the United States, such unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall then be construed as if such
unenforceable provision or provisions had never been contained herein or
therein. If it is ever held that any

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restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, such restriction shall be enforced to the
maximum extent permitted by applicable law. This Agreement and any and all
matters arising directly or indirectly herefrom or therefrom shall be governed
under the laws of the State of New Jersey, without reference to choice of law
rules. ID Systems and Employee consent to the sole jurisdiction of the federal
and state courts of New Jersey.ID SYSTEMS
AND EMPLOYEE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION
CONCERNING THIS AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY
HEREFROM AND REPRESENT THAT THEY HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE OR
HAVE CHOSEN VOLUNTARILY NOT TO DO SO SPECIFICALLY WITH RESPECT TO THIS WAIVER.

11. Acknowledgments. ID Systems and Employee acknowledge and
agree that:

(A) By
entering into this Agreement, Employee does not waive any rights or Claims that
may arise after the date that Employee executes and delivers this Agreement to
ID Systems;

(B) This
Agreement shall not affect the rights and responsibilities of the Equal
Employment Opportunity Commission (the EEOC) to enforce the ADEA and
other laws, and further acknowledge and agree that this Agreement shall not be
used to justify interfering with Employees protected right to file a charge or
participate in an investigation or proceeding conducted by the EEOC.
Accordingly, nothing in this Agreement shall preclude Employee from filing a
charge with, or participating in any manner in an investigation, hearing or
proceeding conducted by, the EEOC, but Employee hereby waives any and all
rights to recover under, or by virtue of, any such investigation, hearing or
proceeding;

(C)
Notwithstanding anything set forth in this Agreement to the contrary, nothing
in this Agreement shall affect or be used to interfere with Employees
protected right to test in any court, under the Older Workers Benefit
Protection Act, or like statute or regulation, the validity of the waiver of
rights under ADEA set forth in this Agreement; and

(D) Nothing
in this Agreement shall preclude Employee from: exercising Employees rights,
if any (i) under Section 601-608 of the Employee Retirement Income Security Act
of 1974, as amended, popularly known as COBRA, or (ii)ID Systems pension plan or 401(k) plan, if applicable.

12. Opportunity For Review.

(A)
Employee represents and warrants that Employee: (i) has had sufficient
opportunity to consider this Agreement; (ii) has read this Agreement; (iii)
understands all the terms and conditions hereof; (iv) is not incompetent or had
a guardian, conservator or trustee appointed for Employee; (v) has entered into
this Agreement of Employees own free will and volition; (vi) has duly executed
and delivered this Agreement; (vii) understands that Employee is responsible
for Employees own attorneys fees and costs; (viii) has had the opportunity to
review this Agreement with counsel of Employees choice or has chosen
voluntarily not to do so; (ix) understands the Employee has been given
twenty-one (21) days to review this Agreement

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before signing this Agreement and understands that he is free to use as
much or as little of the 21-day period as he wishes or considers necessary
before deciding to sign this Agreement; (x) understands that if Employee does
not sign and return this Agreement to ID Systems within 21 days of his receipt,
ID Systems shall have no obligation to enter into this Agreement, Employee
shall not be entitled to the payments and benefits set forth in Section 4 of
this Agreement, and the Separation Date shall be unaltered; and (xi) this
Agreement is valid, binding and enforceable against the parties to this
Agreement in accordance with its terms.

(B) This
Agreement shall be effective and enforceable on the eighth (8th) day
after execution and delivery to ID Systems by Employee. The parties to this
Agreement understand and agree that Employee may revoke this Agreement after
having executed and delivered it to ID Systems by so advising ID Systems in
writing no later than 11:59 p.m. on the seventh (7th) day after
Employees execution and delivery of this Agreement to ID Systems. If Employee
revokes this Agreement, it shall not be effective or enforceable, Employee
shall not be entitled to the payments and benefits set forth in Section 4 of
this Agreement, and the Separation Date shall be unaltered.

Agreed to and accepted on this ____ day of ________, 20__.

|         |  |                     
|-------- |  | --------------------
|Witness: |  | EMPLOYEE:           
|         |  |                     
|         |  |                     
|         |  | Name: Darryl
 Miller

Agreed to and accepted on this ____ day of ________, 20__.

| |  |                  
| |  | -----------------
| |  | ID SYSTEMS,
 INC.
| |  |                  
| |  |                  
| |  | Name:            
| |  | Title:           

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EXHIBIT B
FORM OF COVENANTS AGREEMENT

I.D. SYSTEMS, INC.

Confidentiality, Assignment of Contributions
and
Inventions, Non-Competition, and Non-Solicitation Agreement

Background.
I am a paid employee of I.D. Systems, Inc., a Delaware corporation (the Company).
I am executing this Agreement in consideration of my continued employment with the Company, the
Companys provision to me of additional Confidential Information (as defined
below) and the severance agreement effective as of December 14, 2010.

1. Confidentiality. While working
for the Company, I may have previously developed or acquired, or may in the
future develop or acquire, knowledge in my work or from my colleagues or
otherwise of Confidential Information relating to the Company, its business,
potential business or that of its customers or its or their respective
affiliates. Confidential Information includes information concerning
the identity of customers or their requirements or key contacts within the
customers organization, suppliers, distributors, software programs,
demonstration programs, routines, algorithms, computer systems, plans,
strategies, research, formulations, processes, production methods and sources,
products and specifications, equipment manufacturing and other techniques,
designs, know-how, show how, trade secrets, inventions, improvements,
discoveries, concepts, methodology, formulas, drawings, maps, manuals, models,
specifications, records, files, memoranda, notes, reports, files,
correspondence, financial and sales data, pricing lists or terms, trading
terms, training materials and methods, marketing, distribution, and
merchandising techniques and strategies, evaluations, opinions and
interpretations, together with all other writings or materials of any type
embodying any of the foregoing and any and all other technical, operating,
financial, and business information or materials relating to the Company, its customers
or its or their respective affiliates, whether or not reduced to writing or
other medium and whether or not marked or labeled confidential, proprietary, or
the like, regardless of whether created by me, others or both. Confidential
Information does not include information that is or becomes public domain
without fault on my part. I will have the burden of proof with respect to the
exclusion of any information from the definition of Confidential Information.

With
respect to Confidential Information of the Company, its customers and its or
their respective affiliates, I agree that:

(a)
The Confidential Information is and will continue to be the sole and exclusive
property of the Company;

(b)
Except as required under applicable law or pursuant to any judicial process or
administrative proceeding with subpoena powers, I will use the Confidential
Information only in the performance of my duties for the Company. I will not
use the Confidential Information at any time (during or after my employment
with the Company or any of its affiliates) for my

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personal benefit, for the benefit of any other Person or in any manner
adverse to the interests of the Company, its customers or its or their
respective affiliates;

(c)
Except as required under applicable law or pursuant to any judicial process or
administrative proceeding with subpoena powers, I will not disclose the
Confidential Information at any time (during or after my employment with the
Company or any of its affiliates) except to authorized Company personnel,
unless the Company consents in advance in writing or unless the Confidential
Information indisputably becomes of public knowledge or enters the public
domain (without fault on my part);

(d)
I will safeguard the Confidential Information by all reasonable steps and abide
by all policies and procedures of the Company and its customers in effect from
time to time regarding storage, copying, destroying, publication or posting, or
handling of such Confidential Information, in whatever medium or format that
Confidential Information takes;

(e)
Except as required under applicable law or pursuant to any judicial process or
administrative proceeding with subpoena powers, I will execute and abide by all
confidentiality agreements that the Company reasonably requests me to sign or
abide by, whether those agreements are for the benefit of the Company, an
affiliate or an actual or a potential customer or supplier thereof;

(f)
I will return all materials containing or relating to Confidential Information,
together with all other Company or customer property, to the Company when my
employment with the Company or any of its affiliates terminates (either
voluntary or involuntary) or upon the Companys earlier request. I shall not
retain any copies or reproductions of correspondence, memoranda, reports,
notebooks, drawings, photographs, or other documents relating in any way to the
business or affairs of the Company, its customers or its or their respective
affiliates; and

(g)
Upon any termination of my employment with the Company, I will acknowledge to
the Company, in writing and under oath, in the form attached hereto as Exhibit
A that I have complied with this Agreement.

As used
herein, the term Person means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization or a
governmental entity or department, agency or subdivision of the government
entity.

For
purposes of clauses (b), (c) and (e), in the event of any required disclosure,
I will promptly notify the Company and reasonably cooperate and assist the
Company in resisting such disclosure in the event it chooses to do so.

2. Contributions and Inventions.While
employed by the Company, I may make Contributions and Inventions deemed by the
Company to have value to it. The terms Contributions and Inventions
are understood to include all information, ideas, concepts, technology,
improvements, discoveries, formulae, inventions, creations, discoveries,
techniques, designs, methods, trade secrets, technical specifications and data,
works, modifications,

-2-

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processes, know-how, show-how, concepts, expressions, improvements,
works of authorship (including computer programs), ideas and other
developments, whether or not they are patentable or copyrightable or subject to
analogous protection and regardless of their form or state of development and
whether or not I have made them alone or with others, together with any and all
rights to U.S. or foreign applications for patents, inventors certifications
or other industrial rights that may be filed thereon, including divisions,
continuations-in-part, reissues and/or extensions thereof.

This
Agreement covers Contributions and Inventions of any kind that are conceived or
made by me, alone or with others, while I am employed by the Company,
regardless of whether they are conceived or made during regular working hours
or at my place of work (whether located at the Company, customer facilities, at
home or elsewhere) and that (i) relate to the Companys business or potential
business or that of its affiliates, (ii) result from tasks assigned to me by
the Company, or (iii) are conceived or made with the use of the Companys time,
facilities, resources, or materials. With respect to Contributions or
Inventions covered by this Agreement, I agree that:

(a) I will
disclose them promptly to the Company. I will not disclose them to anyone other
than authorized Company personnel;

(b) They
will belong solely to the Company from conception as works made for hire (as
that term is used under U.S. copyright law) or otherwise. To the extent that
title to any such Contributions and Inventions do not, by operation of law,
vest in the Company, I hereby irrevocably assign to the Company all right,
title and interest, including, without limitation, tangible and intangible
rights such as patent rights, trademarks, and copyrights, that I may have or
may acquire in and to all such Contributions and Inventions, benefits and/or
rights resulting therefrom, and agree to promptly execute any further specific
assignments related to such Contributions or Inventions, benefits and/or rights
at the request of the Company. If the Company wants more specific or formal
evidence of this, I will sign written documents of assignment at the Companys
request. I also hereby assign to the Company, or waive if not assignable, all
moral rights in and to any Contributions and Inventions and agree promptly to
execute any further specific assignments or waivers related to moral rights at
the request of the Company; and

(c) I will,
at any time, either during the time I am employed by the Company or thereafter,
assist the Company in obtaining and maintaining patent, copyright, trademark,
mask works and other protection for them, in all countries and territories, at
the Companys expense. In the event that the Company is unable to secure my
signature after reasonable effort in connection with any patent, trademark,
copyright, mask work or other similar protection relating to a Contribution or
an Invention, I hereby irrevocably designate and appoint the Company and its
duly authorized officers and agents as my agent and attorney-in-fact, to act
for and on my behalf and stead to execute and file any such application and to
do all other lawfully permitted acts to further the prosecution and issuance of
patents, trademarks, copyrights, mask works or other similar protection thereon
with the same legal force and effect as if executed by me.

-3-

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(d) Any
Contributions or Inventions relating to the business of the Company and
disclosed to the Company within 6 months following the termination of my
employment shall be deemed to fall within the provisions of this Section 2. The
business of the Company as used in this Section 2 includes the actual
business conducted by the Company or any of its affiliates at any time during
my employment with the Company, as well as any business in which the Company or
any of its affiliates, at any time during my employment with the Company,
proposes or proposes to engage.

3. Obligations to Prior Employers or Others.I
do not have any non-disclosure, non-compete, non-solicitation or other
obligations to any previous employer or other Person that would prohibit,
limit, conflict or interfere with my obligations under this Agreement or the
performance of my duties for the Company. I will not disclose to the Company or
its customers or induce the Company or its customers to use any secret or
confidential information or material belonging to others, including my former
employers, if any.

4. Excluded Information.A complete
list, by non-confidential descriptive title of all Contributions, Inventions,
ideas, reports or other creative works, if any, made or conceived by me prior
to my employment by the Company and intended to be excluded from this
Agreement, is attached as Exhibit B. I shall not assert any
rights under any Contributions, Inventions, ideas, reports or other creative
works as having been made or acquired by me prior to my being employed by the
Company, unless such Contributions, Inventions, ideas, reports or other
creative works are identified on Exhibit B. If, after the date of
this Agreement, I believe that any Contribution or Invention is excluded from
this Agreement, I agree to obtain written authorization from the Company, prior
to applying for any patent on the Contribution or Invention, and prior to
taking any steps to commercially exploit the Contribution or Invention.

5. Covenant Against Competition and Solicitation.

(a)
I acknowledge and understand that, in view of my position as an employee of the
Company, I may have previously been afforded, or in the future may be afforded,
access to the Companys Confidential Information and that of its affiliates. I
therefore agree that during the course of my employment with the Company or any
of its affiliates and for a period of twelve (12) months after termination of
my employment with the Company and all of its affiliates (for any reason or no
reason) (the Restricted Period), I will not, anywhere within the
United States of America or any other country or territory in which the Company
or its affiliates conducts business, either directly or indirectly, whether
alone or as an employee, employer, consultant, independent contractor, agent,
principal, partner, joint venturer, stockholder, member, officer, director or
otherwise of any company or other business enterprise, or in any other
individual or representative capacity, engage in, assist in, participate in, or
otherwise be connected to or benefit from any Competitive Business. As used in
this Agreement, Competitive Business shall mean any individual,
entity, or business enterprise that is engaged in or is seeking to engage in:
(i) the development, design, manufacture, marketing, sale and/or distribution
of tracking and monitoring products; or (ii) the development, design,
manufacture, marketing, sale and/or distribution of any products that are
directly competitive with products that (a) represent at least 10% of the
Companys consolidated product revenues, (b) were first sold or distributed by
the Company or any of its affiliates during the preceding 12-month period, or
(c) are being

-4-

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developed, produced, marketed and/or distributed by the Company or any
of its affiliates and are scheduled to be first sold or distributed by the
Company within a 12-month period; provided, however, that for purposes of this
definition, a business shall be a Competitive Business, as it applies during
the 12 month period after termination of my employment only if the Company is
engaged or is actively seeking to engage in that business on the date of my
termination of employment with the Company or was engaged or actively seeking
to engage in that business at any time during the preceding 12 months.

(b)
During the Restricted Period, I will not, without the express prior written
consent of the Company, directly or indirectly: (i) solicit, induce, or assist
any third person in soliciting or inducing any Person that is (or was at any
time within the 12 months prior to the solicitation or inducement) an employee,
consultant, independent contractor or agent of the Company or any of its
affiliates to leave the employment of the Company or any of its affiliates or
cease performing services as an independent contractor, consultant or agent of
the Company or any of its affiliates; (ii) hire, engage, or assist any third
party in hiring or engaging, any individual that is or was (at any time within
the 12 months prior to the attempted hiring) an employee of the Company or any
of its affiliates; or (iii) contact, communicate, solicit, or transact any
business with or assist any third party in contacting, communicating,
soliciting, or transacting any business with any Person that is or was (at any
time within 12 months prior to the contact, communication, solicitation, or
transaction) a customer, distributor or supplier of the Company or its
affiliates (or Person who, at any time during the 12 months prior to the
contact, communication, solicitation, or transaction, the Company or its
affiliates contacted, communicated with or solicited for the purposes of
becoming a customer, distributor, or supplier of the Company or its affiliates
and I was in any way involved or otherwise had knowledge of or reasonably
should have had knowledge of such contact, communication, or solicitation) for
the purposes of inducing such customer, distributor, or supplier or potential
customer, distributor, or supplier to be connected to or benefit from any
business competitive with that of the Company or its affiliates or terminate
its or their business relationship with the Company or its affiliates.

6. Non-Disparagement.I will not at
any time (during or after my employment with the Company) disparage the reputation
of the Company, its affiliates, or any of its or their respective officers and
directors.

7. Interpretation and Scope of this Agreement.

(a)
In the event that any court of competent jurisdiction shall determine that any
one or more of the provisions contained in this Agreement shall be
unenforceable in any respect, then such provision shall be deemed limited and
restricted to the extent that the court shall deem the provision to be
enforceable. It is the intention of the parties to this Agreement that the
covenants and restrictions in this Agreement be given the broadest
interpretation permitted by law. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision hereof. The covenants and restrictions contained in this
Agreement shall be deemed a series of separate covenants and restrictions. If,
in any judicial proceeding, a court of competent jurisdiction should refuse to
enforce all of the separate covenants and restrictions in this Agreement, then
such unenforceable covenants and restrictions shall be deemed eliminated from
the provisions of this Agreement for the purpose of such

-5-

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proceeding to the extent necessary to permit the remaining separate
covenants and restrictions to be enforced in such proceeding.

(b) I
acknowledge that the restrictions on the activities in which I may engage that
are set forth in this Agreement and the location and period of time for which
such restrictions apply are reasonable and necessary to protect the legitimate
business interests of the Company and shall survive the termination of my
employment. I understand that the Companys business is global and,
accordingly, the restrictions cannot be limited to any particular geographic
area. I further acknowledge that the restrictions contained in this Agreement
will not prevent me from earning a livelihood during the applicable period of
restriction.

(c) I
understand and agree that if I breach or threaten to breach any of the
provisions of this Agreement, including, without limitation, the provisions of
Sections 1, 2, 5 or 6 hereof, the Company would suffer irreparable harm and
damages would be an inadequate remedy. Accordingly, I acknowledge that, in the
event of any breach or threatened breach by me of any of the provisions of this
Agreement, the Company shall be entitled to temporary, preliminary and
permanent injunctive or other equitable relief in any court of competent
jurisdiction (without being required to post a bond or other collateral) and to
an equitable accounting of all earnings, profits and other benefits arising,
directly or indirectly, from such violation, which rights shall be cumulative
and in addition to (rather than instead of) any other rights or remedies to
which the Company may be entitled at law or in equity. In addition (and not
instead of those rights), I further covenant that I shall be responsible for
payment of the reasonable fees and expenses of the Companys attorneys and
experts, as well as the Companys court costs, pertaining to any suit,
arbitration, mediation, action or other proceeding (including the costs of any
investigation related thereto) in which the Company prevails, arising directly
or indirectly out of my violation or threatened violation of any of the
provisions of this Agreement. If the Company does not prevail in any suit,
arbitration, mediation, action or other proceeding arising directly or
indirectly out of my purported violation of any of the provisions of this
Agreement, the Company shall be responsible for payment of the reasonable fees
and expenses of attorneys and experts that I incur, as well as my court costs,
pertaining to any such suit, arbitration, mediation, action or other proceeding
(including the costs of any investigation related thereto).

(d) This
Agreement shall be binding upon me, my heirs, assigns and personal
representatives and shall inure to the benefit of the Company, its affiliates
and their respective successors and assigns (including, without limitation, the
purchaser of all or substantially all of its assets).

(e) This
Agreement shall constitute the entire agreement between Company and myself with
respect to the matters covered hereby and shall supersede all previous written,
oral or implied understandings between us with respect to such matters.

(f) I
acknowledge that my employment with the Company is at-will. I understand that
nothing contained in this Agreement shall give me a right to continue in the
employ of the Company, and the right to terminate my employment with the
Company, at any

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time, with or without cause, is specifically reserved to the Company. I
also understand that I may resign from employment with the Company at any time
in my discretion.

(g) Any and
all actions or controversies arising out of this Agreement, Employees
employment by the Company or termination therefrom, including, without
limitation, tort claims, shall be construed and enforced in accordance with the
internal laws of the State of New Jersey, without regard to the choice of law
principles thereof.

I represent
and warrant that: (a) I have read this Agreement; (b) I understand all the
terms and conditions hereof; (c) I have entered into this Agreement of my own
free will and volition; (d) I have been advised by the Company to seek and
have, to the extent I have deemed necessary, received the advice of counsel of
any own selection; and (e) the terms of this Agreement are fair, reasonable and
are being agreed to voluntarily in exchange for my continued employment with
the Company, the Companys provision to me of additional Confidential
Information and the severance agreement effective as of December ___, 2010.

|      |          |  |                     
|----- | -------- |  | --------------------
|Date: | 12/14/10 |  | /s/
 Darryl Miller  
|      |          |  |                     
|      |          |  | Name: Darryl
 Miller

Accepted:

|                    |                      | 
|------------------- | -------------------- | 
|I.D.
 SYSTEMS, INC. |                     
|                    |                      | 
|By:                 | /s/ Ned
 Mavrommatis | 
|                    |                      | 

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EXHIBIT A

STATE OF NEW
JERSEY
COUNTY OF _________________

The
undersigned, being duly sworn, does hereby certify that he/she has complied
with, and will continue to comply with, for the applicable period set forth
therein, all of the terms of the Confidentiality, Assignment of Contributions
and Inventions, Non Competition and Non-Solicitation Agreement dated _______
__, 2010 by the Undersigned in favor of I.D. Systems, Inc. (the Company). I
have returned all Company property and all materials relating to or containing
Confidential Information to the Company and I have not retained any copies or
reproductions of any correspondence, memoranda, reports, notebooks, drawings,
photographs or other documents or materials relating to the affairs of the
Company, its customers and its or their affiliates.

|                            |  |                     
|--------------------------- |  | --------------------
|                            |  |                     
|                            |  | Name: Darryl
 Miller
|Sworn and
 Subscribed to    |  |                     
|before me
 this ____ day of |  |                     
|______________,
 ______     |  |                     
|                            |  |                     
|                            |  |                     
|                            |  |                     

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EXHIBIT B

Excluded Information
(See Section 4. If None, type NONE)

None.

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