Unassociated Document


     

    Exhibit
      4.3

    


    1999
      DIRECTOR OPTION PLAN

    OF

    I.D.
      SYSTEMS, INC.

    


    As
      Amended and Restated Effective as of June 4, 2004

    


    1.    
PURPOSES
      OF
      THE PLAN. This stock option plan (the "Plan") is designed to provide an
      incentive to non-employee directors of I.D. Systems, Inc., a Delaware
      corporation (the "Company"), and its present and future subsidiary corporations,
      as defined in Paragraph 18 ("Subsidiaries"), and to offer an additional
      inducement in obtaining the services of such individuals. The Plan provides
      for
      the grant of nonqualified stock options ("NQSOs") to non-employee directors
      of
      the Company or any of its subsidiaries.

    


    2.     STOCK
      SUBJECT
      TO THE PLAN. Subject to the provisions of Paragraph 12, the aggregate number
      of
      shares of Common Stock, $.01 par value per share, of the Company ("Common
      Stock") for which options may be granted under the Plan shall not exceed 600,000
      (taking into account a 1.25 stock split to be effected prior to or
      contemporaneous with the Company's initial public offering ("IPO")). Such shares
      of Common Stock may, in the discretion of the Committee (as defined in Paragraph
      3), consist either in whole or in part of authorized but unissued shares of
      Common Stock or shares of Common Stock held in the treasury of the Company.
      The
      Company shall at all times during the term of the Plan reserve and keep
      available such number of shares of Common Stock as will be sufficient to satisfy
      the requirements of the Plan. Subject to the provisions of Paragraph 13, any
      shares of Common Stock subject to an option which for any reason expires, is
      cancelled, is terminated unexercised or which ceases for any reason to be
      exercisable shall again become available for the granting of options under
      the
      Plan.

    


    3.     ADMINISTRATION
      OF THE
      PLAN. The Plan shall be administered by the Company's Board of Directors which,
      to the extent that it may determine, may delegate its powers with respect to
      the
      administration of the Plan to a committee of the Board of Directors of the
      Company (the "Committee") consisting of not less than two directors, each of
      whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 (or
      any
      successor rule or regulation) promulgated under the Securities Exchange Act
      of
      1934, as amended (the "Exchange Act"). References in the Plan to determinations
      or actions by the Committee shall be deemed to include determinations and
      actions by the Board of Directors. 

     

    Subject
      to the express provisions of the Plan, the Committee shall have the authority,
      in its sole discretion, with respect to Outside Director Options (as defined
      in
      Paragraph 18): to construe the respective contracts referred to in Paragraph
      11
      (the "Contract") and the Plan; to determine the terms and conditions of the
      Outside Director Options; to determine the amount, if any, necessary to satisfy
      the Company's obligation to withhold taxes; with the consent of the optionee,
      to
      cancel or modify an option, provided such option as modified would be permitted
      to be granted on such date under the terms of the Plan; to prescribe, amend
      and
      rescind rules and regulations relating to the Plan; and to make all other
      determinations necessary or advisable for administering the Plan. The
      determinations of the Committee on the matters referred to in this Paragraph
      3
      shall be conclusive. 

    


    No
      member
      or former member of the Committee shall be liable for any action or
      determination made in good faith with respect to the Plan or any option granted
      hereunder.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    4.     ELIGIBILITY;
      GRANTS. On the earlier of (i) the date the IPO is completed, and (ii) the date
      each member of the Board of Directors who is not on such date an employee of
      the
      Company or any of its Subsidiaries is first elected as a member of the Board
      of
      Directors, each such member shall be granted an Outside Director Option to
      purchase15,000 shares of Common Stock. In addition, on the first day of each
      fiscal quarter, starting April 1, 2000, each member of the Board of Directors
      who is not an employee of the Company or any of its Subsidiaries and who has
      served on the Board of Directors for at least six months shall be granted an
      additional Outside Director Option to purchase 5,000 shares of Common Stock.
      In
      the event the remaining shares available for grant under the Plan are not
      sufficient to grant the Outside Director Options to such non-employee directors
      in any year, the number of shares subject to each Outside Director Option for
      such year shall be reduced proportionately. The Committee shall have no
      discretion with respect to the selection of directors to receive Outside
      Director Options or the amount, the price or the timing with respect thereto.
      A
      director who is not an employee of the Company or any of its Subsidiaries shall
      not be entitled to receive any options other than Outside Director Options
      as
      provided herein. 

    


    5.     EXERCISE
      PRICE. The exercise price of the shares of Common Stock under each Outside
      Director Option shall be equal to the fair market value of the Common Stock
      subject to such option on the date of grant; PROVIDED, HOWEVER, that if the
      grant date is a legal holiday then the exercise price shall be equal to the
      fair
      market value of the Common Stock on the business day next preceding the legal
      holiday.

    


    The
      fair
      market value of the Common Stock on any day shall be (a) if the principal market
      for the Common Stock is a national securities exchange, the average of the
      highest and lowest sales prices of the Common Stock on such day as reported
      by
      such exchange or on a composite tape reflecting transactions on such exchange,
      (b) if the principal market for the Common Stock is not a national securities
      exchange and the Common Stock is quoted on the National Association of
      Securities Dealers Automated Quotations System ("NASDAQ"), and (i) if actual
      sales price information is available with respect to the Common Stock, the
      average of the highest and lowest sales prices of the Common Stock on such
      day
      on NASDAQ, or (ii) if such information is not available, the average of the
      highest bid and lowest asked prices for the Common Stock on such day on NASDAQ,
      or (c) if the principal market for the Common Stock is not a national securities
      exchange and the Common Stock is not quoted on NASDAQ, the average of the
      highest bid and lowest asked prices for the Common Stock on such day as reported
      on the NASDAQ OTC Bulletin Board Service or by National Quotation Bureau,
      Incorporated or a comparable service; PROVIDED, HOWEVER, that if clauses (a),
      (b) and (c) of this Paragraph are all inapplicable, or if no trades have been
      made or no quotes are available for such day, the fair market value of the
      Common Stock shall be determined by the Committee by any method consistent
      with
      applicable regulations adopted by the Treasury Department relating to stock
      options. The determination of the Committee shall be conclusive in determining
      the fair market value of the stock.

    


    6.     TERM.
      Each
      Outside Director Option shall have a term of 10 years commencing on the date
      of
      grant. Options shall be subject to earlier termination as hereinafter
      provided.

    


    7.     EXERCISE.
      An
      option (or any part or installment thereof), to the extent then exercisable,
      shall be exercised by giving written notice to the Company at its principal
      office (at present 90 William Street, Suite 402, New York, New York 10038,
      Attn:
      Jeffrey M. Jagid, Chief Operating Officer, specifying the number of shares
      of
      Common Stock as to which such option is being exercised and accompanied by
      payment in full of the aggregate exercise price therefor (or the amount due
      on
      exercise if the Contract permits installment payments) (a) in cash or by
      certified check, or (b) with the consent of the Committee (in the Contract
      or
      otherwise), with shares of Common Stock having been held for at least six months
      and having an aggregate fair market value, on the date of exercise, equal to
      the
      aggregate exercise price of all options being exercised, or with any combination
      of cash, certified check or shares of Common Stock.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    A
      person
      entitled to receive Common Stock upon the exercise of an option shall not have
      the rights of a stockholder with respect to such shares of Common Stock until
      the date of issuance of a stock certificate to him for such shares; PROVIDED,
      HOWEVER, that until such stock certificate is issued, any option holder using
      previously acquired shares of Common Stock in payment of an option exercise
      price shall continue to have the rights of a stockholder with respect to such
      previously acquired shares.

    


    In
      no
      case may a fraction of a share of Common Stock be purchased or issued under
      the
      Plan.

    


    8.    
TERMINATION
      OF RELATIONSHIP WITH COMPANY. Any holder of an Outside Director Option whose
      status as a director of the Company, has terminated for any reason other than
      his or her death or Disability (as defined in Paragraph 18) may exercise such
      option, to the extent exercisable on the date of such termination, at any time
      within three months after the date of termination, but not thereafter and in
      no
      event after the date the option would otherwise have expired; provided, however,
      that if his or her status as a director shall be terminated either (a) for
      cause, or (b) without the consent of the Company, said option shall terminate
      immediately.

    


    Nothing
      in the Plan or in any option granted under the Plan shall confer on any
      individual any right to continue as a director of the Company, or interfere
      in
      any way with the right of the Stockholders to terminate the director's
      relationship at any time for any reason whatsoever without liability to the
      Stockholders, the Company, its Parent or any of its Subsidiaries.

    


    9.     DEATH
      OR
      DISABILITY OF AN OPTIONEE. Any optionee whose status as a director has
      terminated by reason of Disability may exercise his or her Outside Director
      Options, to the extent they are exercisable upon the effective date of such
      termination, at any time within one year after such date, but not thereafter
      and
      in no event after the date the option would otherwise have expired.

    


    If
      an
      optionee dies (a) while he or she is a director of the Company, (b) within
      three
      months after the termination of such relationship (unless such termination
      was
      for cause or without the consent of the Company) or (c) within one year
      following the termination of such relationship by reason of Disability, the
      Outside Director Options, may be exercised, to the extent exercisable on the
      date of his or her death, by his or her executor, administrator or other person
      at the time entitled by law to the rights under such option, at any time within
      one year after death, but not thereafter and in no event after the date the
      option would otherwise have expired.

    


    10.     COMPLIANCE
      WITH SECURITIES LAWS. The Committee may require, in its discretion, among other
      things, as a condition to the exercise of any option that either (a) a
      Registration Statement under the Securities Act of 1933, as amended (the
      "Securities Act"), with respect to the shares of Common Stock to be issued
      upon
      such exercise shall be effective and current at the time of exercise, or (b)
      there is an exemption from registration under the Securities Act for the
      issuance of shares of Common Stock upon such exercise. Nothing herein shall
      be
      construed as requiring the Company to register shares subject to any option
      under the Securities Act. 

    


    The
      Committee may require the optionee to execute and deliver to the Company his
      or
      her representation and warranty, in form and substance satisfactory to it,
      that
      the shares of Common Stock to be issued upon the exercise of the option are
      being acquired by the optionee for his or her own account, for investment only
      and not with a view to the resale or distribution thereof. In addition,
      the Committee may require the optionee to represent and warrant in writing
      that
      any subsequent resale or distribution of shares of Common Stock by such optionee
      will be made only pursuant to (i) a Registration Statement under the Securities
      Act which is effective and current with respect to the shares of Common Stock
      being sold, or (ii) a specific exemption from the registration requirements
      of
      the Securities Act, but in claiming such exemption, the optionee shall, at
      the
      request of the Committee and prior to any offer of sale or sale of such shares
      of Common Stock, provide the Company with a favorable written opinion of
      counsel, in form and substance satisfactory to the Company, as to the
      applicability of such exemption to the proposed sale or
      distribution.


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    11.    
STOCK
      OPTION
      CONTRACTS. Each option shall be evidenced by an appropriate Contract which
      shall
      be duly executed by the Company and the optionee, and shall contain such terms
      and conditions not inconsistent herewith as may be determined by the
      Committee.

    


    12.     ADJUSTMENTS
      UPON CHANGES IN COMMON STOCK. Notwithstanding any other provisions of the
      Plan:

    


    (a)     a
      stock
      dividend, recapitalization, merger or consolidation in which the Company is
      the
      surviving corporation, or a spin-off, split-up, combination or exchange of
      shares or the like which results in a change in the number or kind of shares
      of
      Common Stock which is outstanding immediately prior to such event, the Committee
      shall appropriately adjust the aggregate number and kind of shares subject
      to
      the Plan, the aggregate number and kind of shares subject to each outstanding
      option and the exercise price thereof. Such adjustments shall be conclusive
      and
      binding on all parties and may provide for the elimination of fractional shares
      which might otherwise be subject to options without payment
      therefor.

    


    (b)     liquidation
      or dissolution of the Company, or a merger to which the Company is a party
      whether or not it is the surviving corporation or a consolidation or a sale
      by
      the Company of all or substantially all of its assets, then, except as set
      forth
      below, the options granted hereunder which are outstanding or unvested as of
      the
      date of such event, shall continue to be outstanding and the optionee shall
      be
      entitled to receive an option in the surviving corporation for the same number
      of shares as he would have been entitled to receive if he had exercised the
      options granted hereunder immediately prior to the transaction and actually
      owned the shares of common stock subject to such option. The exercise price
      of
      the option in the surviving corporation shall be such that the aggregate
      consideration for the shares of stock subject to the option in the surviving
      corporation shall be equal to the aggregate consideration payable with respect
      to the option granted under the Plan.

    


    Notwithstanding
      the foregoing, the Company shall have the right, by written notice, provided
      to
      an optionee sent no later than 15 days prior to the proposed liquidation,
      dissolution, merger or other transaction, to advise the optionee that upon
      consummation of the transaction all options granted to any optionee under the
      Plan shall terminate and be void, in which event, the optionee shall have right
      to exercise all options then currently exercisable in accordance with the terms
      of the applicable option Contract within 10 days after the date of the notice
      from the Company.

    


    Upon
      a
      Change of Control of the Company (as defined below), each option shall become
      immediately exercisable with respect to all shares of Common Stock subject
      thereto, unless the provisions of paragraphs 12(a) or (b) are operative. For
      purposes hereof, a "Change in Control" shall be deemed to have occurred if:
      (i)
      any "person" or "group" (as such terms are used in Sections 3(a)(9) and 13(d)(3)
      of the Securities Exchange Act of 1934, as amended (the

    "Act")),
      except for an employee stock ownership trust (or any of the trustees thereof)
      or
      any of the executive officers as of the date of Stockholder approval of the
      Plan
      becomes a "beneficial owner"
      (as such term is used in Rule 13d-3 promulgated under the Act), after the date
      hereof, directly or indirectly, of securities of the Company representing 20%
      or
      more of the combined voting power of the Company's then outstanding securities;
      (ii) a change in "control" of the Company (as the term "control" is defined
      in
      Rule 12b-2 or any successor rule promulgated under the Act) shall have occurred;
      (iii) the majority of the Board of Directors, as such entire Board of Directors
      is composed at the date of this Agreement, no longer serve as directors of
      the
      Company, except that there shall not be counted toward such majority who no
      longer serve as directors any director who ceased to serve either prior to
      the
      date of a Change in Control, for any reason, or at any other time due to his
      death, disability or termination for cause; (iv) the stockholders of the Company
      approve a plan of complete liquidation of the Company or an agreement for the
      sale or disposition by the Company of all or substantially all of the Company's
      assets; or (v) the stockholders of the Company approve a merger or consolidation
      of the Company with any other company, other than a merger or consolidation
      which would result in the combined voting power of the Company's voting
      securities outstanding immediately prior thereto continuing to represent (either
      by remaining outstanding or by being converted into voting securities of the
      surviving entity)
      more than 70% of the combined voting power of the voting securities of the
      Company or such surviving entity outstanding immediately after such merger
      or
      consolidation.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    13.     AMENDMENTS
      AND TERMINATION OF THE PLAN. The Plan was adopted by the Board of Directors
      of
      the Company on May 14, 1999. No option may be granted under the Plan after
      May
      13, 2009. The Board of Directors, without further approval of the Company's
      stockholders, may at any time and from time to time suspend or terminate the
      Plan, in whole or in part, or amend it from time to time in such respects as
      it
      may deem advisable, including without limitation, to comply with applicable
      requirements of the Securities Act and the Exchange Act, or to conform to any
      change in applicable law or to regulations or rulings of administrative
      agencies; provided, however, that no amendment shall be effective without the
      requisite prior or subsequent stockholder approval which would (a) except as
      contemplated in Paragraph 12, increase the maximum number of shares of Common
      Stock for which options may be granted under the Plan, (b) materially increase
      the benefits to participants under the Plan or (c) change the eligibility
      requirements for individuals entitled to receive options hereunder. No
      termination, suspension or amendment of the Plan shall, without the consent
      of
      the holder of an existing option affected thereby, adversely affect his rights
      under such option. The power of the Committee to construe and administer any
      options granted under the Plan prior to the termination or suspension of the
      Plan nevertheless shall continue after such termination or during such
      suspension.

    


    14.     NON-TRANSFERABILITY
      OF OPTIONS. No option granted under the Plan shall be transferable otherwise
      than by will or the laws of descent and distribution, and options may be
      exercised, during the lifetime of the holder thereof, only by the holder or
      his
      or her legal representatives. Except to the extent provided above, options
      may
      not be assigned, transferred, pledged, hypothecated or disposed of in any way
      (whether by operation of law or otherwise) and shall not be subject to
      execution, attachment or similar process. 

    


    15.
      WITHHOLDING TAXES. The Company may withhold cash and/or shares of Common Stock
      to be issued to the optionee having an aggregate fair market value equal to
      the
      amount which it determines is necessary to satisfy its obligation to withhold
      Federal, state and local income taxes or other taxes incurred by reason of
      the
      grant or exercise of an option, its disposition, or the disposition of the
      underlying shares of Common Stock. Alternatively, the Company may require the
      holder to pay to the Company such amount, in cash, promptly upon demand. The
      Company shall not be required to issue any shares of Common Stock pursuant
      to
      any such option until all required payments have been made. Fair market value
      of
      the shares of Common Stock shall be determined in accordance with Paragraph
      5.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    16.     LEGENDS;
      PAYMENT OF EXPENSES. The Company may endorse such legend or legends upon the
      certificates for shares of Common Stock issued upon exercise of an option under
      the Plan and may issue such "stop transfer" instructions to its transfer agent
      in respect of such shares as it determines, in its discretion, to be necessary
      or appropriate to (a) prevent a violation of, or to perfect an exemption from,
      the registration requirements of the Securities Act or (b) implement the
      provisions of the Plan or any agreement between the Company and the optionee
      with respect to such shares of Common Stock.

    


    17.     SUBSTITUTIONS
      AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT CORPORATIONS. Anything in
      this
      Plan to the contrary notwithstanding, the Committee may, without further
      approval by the stockholders, substitute new options for prior options of a
      Constituent Corporation (as defined in Paragraph 18) or assume the prior options
      of such Constituent Corporation.

    


    18.     DEFINITIONS.

    


    a.     Code.
      The
      term "Code" shall mean the Internal Revenue Code of 1986, as
      amended.

    


    b.     Subsidiary.
      The term "Subsidiary" shall have the same definition as "subsidiary corporation"
      in Section 424(f) of the Code. 

    


    c.     Parent.
      The
      term "Parent" shall have the same definition as "parent corporation" in Section
      424(e) of the Code.

    


    d.     Constituent
      Corporation. The term "Constituent Corporation" shall mean any corporation
      which
      engages with the Company, its Parent or any Subsidiary in a transaction to
      which
      Section 424(a) of the Code applies (or would apply if the option assumed or
      substituted were an "incentive stock option" (within the meaning of Section
      422
      of the Code)), or any Parent or any Subsidiary of such corporation.

    


    e.     Disability.
      The term "Disability" shall mean a permanent and total disability within the
      meaning of Section 22(e)(3) of the Code.

    


    f.     Outside
      Director Option. The term "Outside Director Option" shall mean a NQSO granted
      pursuant to the Plan to a person who, at the time of grant, is a director of
      the
      Company but is not an employee of the Company or any of its
      Subsidiaries.

    


    19.    
STOCKHOLDER
      APPROVAL. The Plan shall be subject to approval by the written consent of the
      majority of the stockholders. No options granted hereunder may be exercised
      prior to such approval, provided that the date of grant of any options granted
      hereunder shall be determined as if the Plan had not been subject to such
      approval. Notwithstanding the foregoing, if the Plan is not approved by a vote
      of the stockholders of the Company on or before 2000, the Plan and any options
      granted hereunder shall terminate.