1999 STOCK OPTION PLAN
                                       of
                                I.D. SYSTEMS INC.
 
             1. PURPOSES OF THE PLAN. This stock incentive plan (the "Plan") is
designed to provide an incentive to key employees (including directors and
officers who are key employees) and to consultants and directors who are not
employees of I.D. Systems Inc., a Delaware corporation (the "Company"), and to
offer an additional inducement in obtaining the services of such persons. The
Plan provides for the grant of "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and nonqualified stock options which do not qualify as ISOs ("NQSOs").
The Company makes no representation or warranty, express or implied, as to the
qualification of any option as an "incentive stock option" under the Code.
 
             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 812,500. Such shares of Common Stock may, in the
discretion of the Board of Directors of the Company (the "Board of Directors"),
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. Subject to
the provisions of Paragraph 13, any shares of Common Stock subject to an option
which for any reason expires, is canceled or is terminated unexercised or which
ceases for any reason to be exercisable, shall again become available for the
granting of options under the Plan. 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.
 
             3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Board of Directors or a committee of the Board of Directors (collectively,
the "Committee"). A majority of the members of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any meeting at
which a quorum is present, and any acts approved in writing by all members
without a meeting, shall be the acts of the Committee.
 
                  Subject to the express provisions of the Plan, the Committee
shall have the authority, in its sole discretion, to make all determinations
relating to the Plan, including, but not limited to, the right to determine: the
key employees, consultants and Non-Employee Directors (as defined in Paragraph
19) who shall be granted options; the type of option to be granted to a key
employee; the times when an option shall be granted; the number of shares of
Common Stock to be subject to each option; the term of each option; the date
each option shall become exercisable; whether an option shall be exercisable in
whole, in part or in installments and, if in installments, the number of shares
of Common Stock to be subject to each installment, whether
 
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the installments shall be cumulative, the date each installment shall become
exercisable and the term of each installment; whether to accelerate the date of
exercise of any option or installment; whether shares of Common Stock may be
issued upon the exercise of an option as partly paid and, if so, the dates when
future installments of the exercise price shall become due and the amounts of
such installments; the exercise price of each option; the form of payment of the
exercise price; whether to require the optionee to enter into a stockholder's
agreement with the Company as a condition to exercising any option; whether to
restrict the sale or other disposition of the shares of Common Stock acquired
upon the exercise of an option and, if so, whether and under what conditions to
waive any such restriction; whether and under what conditions to subject all or
a portion of the grant or exercise of an option or the shares acquired pursuant
to the exercise of an option to the fulfillment of certain restrictions or
contingencies as specified in the contract referred to in Paragraph 11 hereof
(the "Contract"), including without limitation, restrictions or contingencies
relating to entering into a covenant not to compete with the Company, to
financial objectives for the Company or a division of any of the foregoing, a
product line or other category, and/or to the period of continued employment of
the optionee with the Company, and to determine whether such restrictions or
contingencies have been met; whether an optionee is Disabled (as defined in
Paragraph 19); the amount, if any, necessary to satisfy the obligation of the
Company, to withhold taxes or other amounts; the fair market value of a share of
Common Stock; to construe the respective Contracts and the Plan; with the
consent of the optionee, to cancel or modify an option, provided, that the
modified provision is permitted to be included in an option granted under the
Plan on the date of the modification, and further, provided, that in the case of
a modification (within the meaning of Section 424(h) of the Code) of an ISO,
such option as modified would be permitted to be granted on the date of such
modification 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. Any controversy or claim
arising out of or relating to the Plan, any option granted under the Plan or any
Contract shall be determined unilaterally by the Committee in its sole
discretion. The determinations of the Committee on the matters referred to in
this Paragraph 3 shall be conclusive and binding on the parties. No member or
former member of the Committee shall be liable for any action, failure to act or
determination made in good faith with respect to the Plan, any Contract or any
option hereunder.
 
             4. ELIGIBILITY. The Committee may from time to time, in its sole
discretion, consistent with the purposes of the Plan, grant options to (a) key
employees (including officers and directors who are key employees) of the
Company or any of its Subsidiaries, (b) consultants to the Company or any of its
Subsidiaries and (c) Non-Employee Directors. Such options granted shall cover
such number of shares of Common Stock as the Committee may determine, in its
sole discretion, as set forth in the applicable Contract; provided, however,
that the aggregate market value (determined at the time the option is granted in
accordance with Paragraph 5) of the shares of Common Stock for which any
eligible employee may be granted ISOs under the Plan or any other plan of the
Company which are exercisable for the first time by such optionee during any
calendar year shall not exceed $100,000; provided further, that the maximum
number of shares with respect to which ISOs may be granted under the Plan to any
eligible employee in any fiscal
 
                                       -2-
 
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year shall be 300,000. Such ISO limitation shall be applied by taking ISOs into
account in the order in which they were granted. Any option granted in excess of
such ISO limitation amount shall be treated as a NQSO to the extent of such
excess.
 
             5. EXERCISE PRICE. The exercise price of the shares of Common Stock
under each option shall be determined by the Committee, in its sole discretion,
as set forth in the applicable Contract; provided, however, that the exercise
price of an ISO shall not be less than the fair market value of the Common Stock
subject to such option on the date of grant; and further, provided, that if, at
the time an ISO is granted, the optionee owns (or is deemed to own under Section
424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, the exercise price of such ISO
shall not be less than 110% of the fair market value of the Common Stock subject
to such ISO on the date of grant.
 
                  The fair market value of a share of 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 per
share of 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 Nasdaq Stock Market ("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 per share of 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 per share of 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 per share of Common Stock on such day as reported on the 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 Board of Directors or the Committee by any method consistent
with applicable regulations adopted by the Treasury Department relating to stock
options.
 
             6. TERM. The term of each option granted pursuant to the Plan shall
be such term as is established by the Committee, in its sole discretion, as set
forth in the applicable Contract; provided, however, that the term of each ISO
granted pursuant to the Plan shall be for a period not exceeding 10 years from
the date of grant thereof; and further, provided, that if, at the time an ISO is
granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company the term of the ISO shall be for a period not
exceeding five years from 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 stating which option is being exercised,
specifying the number of shares of Common Stock as to
 
                                       -3-
 
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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
applicable Contract permits installment payments) (a) in cash or by certified
check or (b) if the applicable Contract permits, with previously acquired shares
of Common Stock having an aggregate fair market value on the date of exercise
(determined in accordance with Paragraph 5) equal to the aggregate exercise
price of all options being exercised, or with any combination of cash, certified
check or shares of Common Stock having such value. The Company shall not be
required to issue any shares of Common Stock pursuant to any such option until
all required payments, including any required withholding, have been made.
 
                  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 for such
shares or in the case of uncertificated shares, an entry is made on the books of
the Company's transfer agent representing such shares; provided, however, that
until such stock certificate is issued or book entry is made, any optionee 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. Except as may otherwise be
expressly provided in the applicable Contract, an optionee whose relationship
with the Company, as an employee or a consultant has terminated for any reason
(other than as a result of the death or Disability of the optionee) may exercise
his options, 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 such relationship is terminated either (a) for Cause (as
defined in Paragraph 19), or (b) without the consent of the Company, such option
shall terminate immediately. Except as may otherwise be expressly provided in
the applicable Contract, options granted under the Plan to an employee or
consultant shall not be affected by any change in the status of the optionee so
long as the optionee continues to be an employee of, or a consultant to, the
Company.
 
                  For the purposes of the Plan, an employment relationship shall
be deemed to exist between an individual and the Company. If at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be considered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the individual's right to
reemployment with the Company, is guaranteed either by statute or by contract.
If the period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed by statute or by contract, the employment
relationship shall be deemed to have terminated on the 91st day of such leave.
 
                                       -4-
 
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                  Except as may otherwise be expressly provided in the
applicable Contract, an optionee whose relationship with the Company as a
Non-Employee Director ceases for any reason (other than as a result of his death
or Disability) may exercise his options, 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 such relationship is
terminated for Cause, such option shall terminate immediately. Except as may
otherwise be expressly provided in the applicable Contract, options granted to a
Non-Employee Director shall not be affected by the optionee becoming an employee
of the Company.
 
                  Nothing in the Plan or in any option granted under the Plan
shall confer on any optionee any right to continue in the employ of, or as a
consultant to, the Company or as a director of the Company, or interfere in any
way with any right of the Company to terminate the optionee's relationship at
any time for any reason whatsoever without liability to the Company.
 
             9. DEATH OR DISABILITY OF AN OPTIONEE. Except as may otherwise be
expressly provided in the applicable Contract, if an optionee dies (a) while he
is an employee of, or consultant to, 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 his Disability, the options that
were granted to him as an employee or consultant may be exercised, to the extent
exercisable on the date of his death, by his Legal Representative (as defined in
Paragraph 19) at any time within one year after death, but not thereafter and in
no event after the date the option would otherwise have expired.
 
                  Except as may otherwise be expressly provided in the
applicable Contract, any optionee whose relationship as an employee of, or
consultant to, the Company, has terminated by reason of such optionee's
Disability may exercise the options that were granted to him as an employee or
consultant, to the extent 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.
 
                  Except as may otherwise be expressly provided in the
applicable Contract, any optionee whose relationship as a Non-Employee Director
ceases as a result of his death or Disability may exercise the options that were
granted to him as a Non-Employee Director, to the extent exercisable on the date
of such termination, at any time within one year after the date of termination,
but not thereafter and in no event after the date the option would otherwise
have expired. In the case of the death of the Non-Employee Director, the option
may be exercised by his Legal Representative.
 
             10. COMPLIANCE WITH SECURITIES LAWS. The Committee may require, in
its sole discretion, 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
 
                                       -5-
 
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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 the 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 or to keep any
Registration Statement effective or current.
 
                  The Committee may require, in its sole discretion, as a
condition to the receipt of an option or the exercise of any option that the
optionee execute and deliver to the Company his representations and warranties,
in form, substance and scope satisfactory to the Committee, which the Committee
determines are necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirement, including without limitation
that (a) the shares of Common Stock to be issued upon the exercise of the option
are being acquired by the optionee for his own account, for investment only and
not with a view to the resale or distribution thereof, and (b) 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 prior to any offer of
sale or sale of such shares of Common Stock provide the Company with a favorable
written opinion of counsel satisfactory to the Company, in form, substance and
scope satisfactory to the Company, as to the applicability of such exemption to
the proposed sale or distribution.
 
                  In addition, if at any time the Committee shall determine, in
its sole discretion, that the listing or qualification of the shares of Common
Stock subject to any option on any securities exchange, Nasdaq or under any
applicable law, or the consent or approval of any governmental agency or
regulatory body, is necessary or desirable as a condition to, or in connection
with, the granting of an option or the issuing of shares of Common Stock
thereunder, such option may not be granted and such option may not be exercised
in whole or in part unless such listing, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
 
             11. 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, provisions and conditions not inconsistent herewith as may
be determined by the Committee. The terms of each option and Contract need not
be identical.
 
             12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Except as may be
specifically provided in the applicable Contract, notwithstanding any other
provision of the Plan, in the event of:
 
                  (a) a stock dividend, recapitalization, 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
 
                                       -6-
 
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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) a merger, consolidation, or sale by the Company of all or
substantially all of its assets, in which the Company is not the surviving
corporation, except as set forth below, the options granted hereunder as of the
date of such event shall continue to be outstanding and the optionee shall be
entitled to receive in exchange therefor 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 sale of assets, merger or consolidation (as determined by
the Board of Directors in its sole discretion), 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.
 
             13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by
the Board of Directors on April , 1999. No ISO may be granted under the Plan
after April , 2009. The Board of Directors, without further approval of the
Company's stockholders, may at any 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, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with any change in applicable law, regulations, rulings or interpretations of
any administrative agency; 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)
change the eligibility requirements to receive options hereunder or (c) make any
other change for which applicable law requires stockholder approval. No
termination, suspension or amendment of the Plan shall, without the consent of
the optionee, adversely affect his rights under any option granted under the
Plan. The power of the Committee to construe and administer any option granted
under the Plan prior to the termination or suspension of the Plan nevertheless
shall continue after such termination or during such suspension.
 
                                       -7-
 
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             14. NON-TRANSFERABILITY. 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 optionee, only by the
optionee or his 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, and any such attempted assignment,
transfer, pledge, hypothecation or disposition shall be null and void ab initio
and of no force or effect.
 
             15. WITHHOLDING TAXES. The Company, may withhold (a) cash, (b)
shares of Common Stock to be issued upon exercise of an option having an
aggregate fair market value on the relevant date (determined in accordance with
Paragraph 5), or (c) any combination thereof, in an amount equal to the amount
which the Committee determines is necessary to satisfy the obligation of the
Company, to withhold Federal, state and local income taxes or other amounts
incurred by reason of the grant, vesting, exercise or disposition of an option,
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.
 
             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 and any applicable state securities laws, (b) implement the provisions of
the Plan or any agreement between the Company and the optionee with respect to
such shares of Common Stock, including any stockholder's agreement, or (c)
permit the Company to determine the occurrence of a "disqualifying disposition,"
as described in Section 421(b) of the Code, of the shares of Common Stock issued
or transferred upon the exercise of an ISO granted under the Plan. Each optionee
may, in the Committee's discretion, be required to execute a stockholders'
agreement as a condition to receiving a grant of options hereunder.
 
                  The Company shall pay all issuance taxes with respect to the
issuance of shares of Common Stock upon the exercise of an option granted under
the Plan, as well as all fees and expenses incurred by the Company in connection
with such issuance.
 
             17. USE OF PROCEEDS. The cash proceeds received upon the exercise
of an option under the Plan shall be added to the general funds of the Company
and used for such corporate purposes as the Board of Directors may determine.
 
             18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as defined in Paragraph
19) or assume the prior options of such Constituent Corporation.
 
                                       -8-
 
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             19. DEFINITIONS. For purposes of the Plan, the following terms
shall be defined as set forth below:
 
                  (a) "Cause" shall mean (i) in the case of an employee or
consultant, if there is a written employment or consulting agreement between the
optionee and the Company, any of its Subsidiaries or a Parent which defines
termination of such relationship for cause, cause as defined in such agreement,
and (ii) in all other cases, cause as defined by applicable state law.
 
                  (b) "Constituent Corporation" shall mean any corporation which
engages with the Company, any of its Subsidiaries or a Parent in a transaction
to which Section 424(a) of the Code applies (or would apply if the option
assumed or substituted were an ISO), or any Parent or any Subsidiary of such
corporation.
 
                  (c) "Disability" shall mean a permanent and total disability
within the meaning of Section 22(e)(3) of the Code.
 
                  (d) "Legal Representative" shall mean the executor,
administrator or other person who at the time is entitled by law to exercise the
rights of a deceased or incapacitated optionee with respect to an option granted
under the Plan.
 
                  (e) "Non-Employee Director" shall mean a person who is a
director of the Company, but is not an employee of the Company, any of its
Subsidiaries or a Parent.
 
                  (f) "Parent" shall have the same definition as "parent
corporation" in Section 424(e) of the Code.
 
                  (g) "Subsidiary" shall have the same definition as "subsidiary
corporation" in Section 424(f) of the Code.
 
             20. GOVERNING LAW; CONSTRUCTION. The Plan, the options and
Contracts hereunder and all related matters shall be governed by, and construed
in accordance with, the laws of the State of Delaware, without regard to
conflict of law provisions.
 
                  Neither the Plan nor any Contract shall be construed or
interpreted with any presumption against the Company by reason of the Company
causing the Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular and plural, and any term stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.
 
             21. PARTIAL INVALIDITY. The invalidity, illegality or
unenforceability of any provision in the Plan, any option or Contract shall not
affect the validity, legality or enforceability of any other provision, all of
which shall be valid, legal and enforceable to the fullest extent permitted by
applicable law.
 
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             22. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by
the Company's stockholders.
 
                                      -10-