Summary of ID SYSTEMS INC - Yahoo! Finance

Entry into a Material Definitive Agreement, Material Modification to Rights of Sec

Item 1.01 Entry into a Material Definitive Agreement.

I.D. Systems, Inc. (the "Company") entered into a Rights Agreement dated as of July 1, 2009 (as the same may be supplemented or amended from time to time, the "Rights Agreement"), between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (the "Rights Agent"). On June 29, 2009, the Board of Directors of the Company authorized and declared a dividend of one preferred stock purchase right (a "Right") for each share of common stock, par value $0.01 per share (the "Common Stock"), of the Company outstanding as of the close of business on July 13, 2009 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company one one-thousandth (subject to adjustment) of a share of Series A Junior Participating Preferred Stock (a "Preferred Stock Unit"), par value $1.00 per share (the "Series A Preferred Stock"), of the Company at a price of $19.47 (as the same may be adjusted, the "Purchase Price") and upon the terms and conditions set forth in the Rights Agreement. The description and terms of the Rights are set forth in more detail in the Rights Agreement.

Until the close of business on the earlier of (i) the tenth day after the first date of a public announcement that a person or group of affiliated or associated persons has become the Beneficial Owner (as defined in the Rights Agreement) of 15% or more of the shares of Common Stock then outstanding on or after July 1, 2009 (such person, an "Acquiring Person") (other than any Exempted Entity (as defined in the Rights Agreement) or Grandfathered Stockholder (as defined in the Rights Agreement)) or (ii) the tenth business day (or such later date as may be determined by action of the Board of Directors prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) after the date of the commencement by any person of, or the first public announcement of the intention of such person to commence, a tender or exchange offer the consummation of which would result in any person becoming the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding (including for purposes of both clause (i) and (ii), any such date that is after the date of the Rights Agreement and prior to the issuance of the Rights) (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced by the Common Stock certificates.

The Rights Agreement provides that, until the Distribution Date, (or earlier redemption or expiration of the Rights), the Rights will be transferable only in connection with the transfer of Common Stock. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any certificate for Common Stock outstanding on the Record Date, with or without a copy of the Summary of Rights (as defined in the Rights Agreement), will also constitute the transfer of the Rights associated with the shares of Common Stock represented by such certificate. As soon as practicable after the Distribution Date, the Company will send or caused to be sent to each record holder of Common Stock as of the close of business on the Distribution Date (other than any Acquiring Person or any person affiliated or associated with such Acquiring Person) a separate certificate substantially in the form of Exhibit B to the Rights Agreement (a "Right Certificate"), evidencing one Right for each share of Common Stock held by such record holder. As of and after the Distribution Date, the Rights will be evidenced solely by such Right Certificate.

The Rights Agreement is effective as of July 1, 2009. The Rights will be exercisable on the Distribution Date. Thereafter, a registered holder of any Right Certificate may, subject to the terms of the Rights Agreement, exercise the Rights evidenced thereby in whole or in part upon surrender of the Right Certificate to the Rights Agent, together with payment of the Purchase Price for each Preferred Stock Unit (or other securities, cash or assets, as the case may be) as to which the Rights are exercised, at any time which is both after the Distribution Date and prior to the earliest to occur of (i) the close of business on the Sunset Date (defined below); (ii) the time at which the Rights are redeemed as provided in the Rights Agreement; or (iii) the time at which such Rights are exchanged as provided in the Rights Agreement. Sunset Date is defined as July 1, 2012, unless the Board determines within 12 months prior to such date that July 1, 2012 shall not be the Sunset Date, then Sunset Date shall mean July 1, 2015, unless the Board determines within 12 months prior to such date that July 1, 2015 shall not be the Sunset Date, then Sunset Date shall mean July 1, 2018, unless the Board determines within 12 months prior to such date that July 1, 2018 shall not be the Sunset Date. In the event the Board determines that July 1, 2012, July 1, 2015 and July 1, 2018 shall not be the Sunset Date, then "Sunset Date" will mean the close of business on the tenth anniversary of the Record Date.

The Purchase Price payable, and, in certain circumstances, the number of shares of Series A Preferred Stock (or other securities, cash or assets, as the case may be) issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Series A Preferred Stock;
(ii) upon the grant to holders of the Series A Preferred Stock of certain rights, options or warrants to subscribe for or purchase Series A Preferred Stock or securities convertible into Series A Preferred Stock at a price per share of Series A Preferred Stock (or, if a security convertible into shares of Series A Preferred Stock, a conversion price per share) less than the then-current per share market price of the Series A Preferred Stock on such grant date; or (iii) upon the distribution to holders of the Series A Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Series A Preferred Stock) or subscription rights or warrants (other than those referred to in clause (ii) above). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price.

The Rights are also subject to adjustment in the event the Company (i) declares or pays any dividend on the Common Stock payable in Common Stock or (ii) effects a subdivision, combination or consolidation of the Common Stock into a greater or lesser number of shares of Common Stock at any time after the date of the Rights Agreement and prior to the Distribution Date.

No fractional shares of Series A Preferred Stock will be issued (other than fractions which are integral multiples of one one-thousandth of a share of Series A Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), and, in lieu thereof, the Company will pay to . . .