Exhibit
99.1
POWERFLEET,
INC. STOCK OPTION INDUCEMENT AWARD AGREEMENT
THIS
STOCK OPTION INDUCEMENT AWARD AGREEMENT (the “Grant Agreement”) is made and entered into by and between PowerFleet,
Inc., a Delaware Corporation (the “Company”) and the following individual:
Name: |
Xxxxx
Xxxxxx (the “Optionee”) |
The
Optionee is granted an option to purchase Common Stock of the Company (this “Option”), subject in all events to the
terms and conditions of this Grant Agreement, as follows:
A. |
DATE
OF GRANT: January 4, 2023 |
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B. |
TYPE(S)
OF OPTION: |
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Nonstatutory Stock Option. |
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Incentive Stock Option. |
To
the extent designated as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock
Option under Section 422 of the Code. However, notwithstanding such designation, if the Optionee becomes eligible in any given year to
exercise ISOs for Shares having a Fair Market Value in excess of $100,000, those Options representing the excess shall be treated as
Nonstatutory Stock Options (“NSOs”). In the previous sentence, “ISOs” include ISOs granted under any plan
of the Company or any Parent or any Subsidiary. For the purpose of deciding which Options apply to Shares that “exceed” the
$100,000 limit, ISOs shall be taken into account in the same order as granted. The Fair Market Value of the Shares shall be determined
as of the time the Option with respect to such Shares is granted. Optionee hereby acknowledges that there is no assurance that the Option
will, in fact, be treated as an Incentive Stock Option under Section 422 of the Code.
C. |
TOTAL
SHARES OF COMMON STOCK COVERED BY THIS OPTION: |
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[___________]
Shares, as follows: |
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Number
Granted as Incentive Stock Options: |
______________ |
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Number
Granted as Nonstatutory Stock Options: |
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F. VESTING SCHEDULE: This Option will vest [25% annually on each of the first, second, third and fourth anniversaries of the Date
of Grant/in full if the volume weighted average price of the Common Stock during a consecutive 60 trading day period reaches $12.00 per
share]. Except as otherwise provided in this Grant Agreement, any vested portion of this Option (to the extent not previously exercised)
may be exercised, in whole or in part, with respect to the Shares at any time on or after the Date of Grant (or such earlier date and
with respect to such number of Shares as may apply pursuant to the terms of any severance (or other) agreement between the Optionee and
the Company providing for accelerated vesting in certain events), or, if earlier, upon consummation of a Change in Control as provided
(and defined) in the Plan.
Notwithstanding
the foregoing, this Option may not be exercised with respect to any Shares on or after the earlier of (1) the date the Option terminates
and is canceled in accordance with this Grant Agreement and (2) the Expiration Date.
G. INDUCEMENT
AWARD: This Option is made and granted as a stand-alone award, separate and apart from, and outside of, the PowerFleet, Inc. 2018
Incentive Plan (the “Plan”) and shall not constitute an award granted under or pursuant to the Plan.
The grant of this Option is intended to constitute an “employment inducement grant” under Rule 5635(c)(4) of the Nasdaq Listing
Rules. However, except as otherwise expressly stated herein, this option is governed by terms and conditions identical to those of the
Plan, which are incorporated herein by reference. In the event of any conflict between the terms and conditions of this Grant Agreement
and the terms and conditions of the Plan, the terms and conditions of this Grant Agreement shall govern. Capitalized terms used herein
and not otherwise defined shall have the meaning set forth in the Plan.
H. EXERCISE
OF OPTION FOLLOWING TERMINATION OF SERVICE: This Option may be exercised for up to 90 days after the Optionee ceases to be a Service
Provider, except that if such cessation results from the death or Disability of the Optionee, this Option may be exercised for up to
365 days after the Optionee ceases to be a Service Provider. In no event shall this Option be exercised later than the Expiration Date
as provided above and in no event shall this Option be exercised for more Shares than the Shares which otherwise have vested as of the
date of cessation of status as a Service Provider. Notwithstanding the foregoing, if the Optionee’s service or employment with
the Company terminates for Cause, the Option shall not be exercisable following the effective date of such termination of service or
employment.
I. METHOD
OF EXERCISE. This Option is exercisable by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise
Notice”) which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being
exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the Optionee and delivered to the Administrator. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price for the Exercised Shares. This Option shall be deemed
to be exercised upon receipt by the Company of the fully executed Exercise Notice accompanied by the aggregate Exercise Price. Notwithstanding
the foregoing, no Exercised Shares shall be issued unless such exercise and issuance complies with the requirements relating to the administration
of stock option plans and other applicable equity plans under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted, and the applicable laws of any foreign country
or jurisdiction where stock grants or other applicable equity grants are made under the Plan; assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such
Shares.
J. METHOD
OF PAYMENT. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof:
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cash; |
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check;
or |
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such
other form of consideration as the Administrator shall determine in its discretion, provided that such form of consideration is permitted
by the Plan and by applicable law. |
Upon
exercise of the Option by the Optionee and prior to the delivery of such Exercised Shares, the Company shall have the right to require
the Optionee to remit to the Company cash in an amount sufficient to satisfy applicable Federal and state tax withholding requirements.
K. TAX CONSEQUENCES OF OPTION. Some of the federal income tax consequences relating to the grant and exercise of this Option, as
of the date of this Option, are set forth below. THE FOLLOWING DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES IS NECESSARILY INCOMPLETE
(AS THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE), AND ASSUMES THAT THE EXERCISE PRICE OF THIS OPTION IS NO LESS THAN THE FAIR
MARKET VALUE OF THE COMMON STOCK UNDERLYING THE OPTION AT THE DATE OF GRANT. MOREOVER, THIS SUMMARY ONLY ADDRESSES THE FEDERAL INCOME
TAX CONSEQUENCES UNDER THE LAWS OF THE UNITED STATES, AND DOES NOT ADDRESS WHETHER AND HOW THE TAX LAWS OF ANY OTHER JURISDICTION MAY
APPLY TO THIS OPTION OR TO THE OPTIONEE. ACCORDINGLY, THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF ANY EXERCISED SHARES.
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1. |
Grant
of the Option. The grant of an Option generally will not result in the imposition of a tax under the federal income tax laws. |
(a) Nonstatutory Stock Option (“NSO”). The Optionee may incur regular federal income tax liability upon exercise
of a NSO. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the Optionee
is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from the Optionee
and pay to the applicable taxing authorities an amount in cash equal to a specified percentage of this compensation income at the time
of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time
of exercise.
(b) Incentive
Stock Option (“ISO”). If this Option qualifies as an ISO, the Optionee will have no regular federal income
tax liability upon its exercise, although the excess, if any, of the Fair Market Value of the Exercised Shares on the date of
exercise over their aggregate Exercise Price will be treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of exercise. In the event that the Optionee ceases to
be an Employee but remains a Service Provider, any Incentive Stock Option of the Optionee that remains unexercised shall cease to
qualify as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
(a) NSO. If the Optionee holds NSO Shares for at least one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(b) ISO. If the Optionee holds ISO Shares for at least one year after exercise and two years after the grant date, any gain realized
on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. If the Optionee disposes of ISO
Shares within one year after exercise or within two years after the grant date, any gain realized on such disposition will be treated
as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the lesser of (A) the difference between
the Fair Market Value of the Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference between
the sale price of such Shares and the aggregate Exercise Price. Any additional gain will be taxed as short-term or long-term capital
gain, depending on the period that the ISO Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee sells or otherwise disposes of any of the Shares acquired pursuant
to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, the Optionee shall
promptly notify the Company in writing of such disposition. The Optionee agrees that he or she may be subject to income tax withholding
by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out of the current
earnings paid to the Optionee.
L. NON-TRANSFERABILITY OF OPTION. Unless otherwise consented to in advance in writing by the Administrator, this Option may not be
transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of
the Optionee only by the Optionee. The terms of the Plan and this Grant Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
M. SECURITIES MATTERS. All Shares and Exercised Shares shall be subject to the restrictions on sale, encumbrance and other disposition
provided by Federal or state law. As a condition precedent to the Optionee’s acquisition of Exercised Shares, the Company may require
that the Optionee submit a letter to the Company stating that such Shares are being acquired for investment and not with a view to the
distribution thereof. The Company shall not be obligated to sell or issue any Shares or Exercised Shares pursuant to this Grant Agreement
unless, on the date of sale and issuance thereof, such Shares are either registered under the Securities Act of 1933, as amended, and
all applicable state securities laws, or are exempt from registration thereunder. Any such Shares acquired by the Optionee may bear a
restrictive legend summarizing any restrictions on transferability applicable thereto, including those imposed by Federal and state securities
laws. Notwithstanding anything to the contrary contained herein, in the event that the Company at any time ceases to be eligible to use
Form S-8, or any then effective Form S-8 (or successor form) ceases to be effective for any reason, the Company shall have no obligation
or liability to sell or issue any Shares or Exercised Shares pursuant to this Grant Agreement unless and until such eligibility or effectiveness
is restored.
N. OTHER PLANS. No amounts of income received by the Optionee pursuant to this Grant Agreement shall be considered compensation for
purposes of any pension or retirement plan, insurance plan or any other employee benefit plan of the Company or its subsidiaries, unless
otherwise provided in such plan.
O. NO GUARANTEE OF CONTINUED SERVICE. THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF
IS EARNED ONLY BY CONTINUING EMPLOYMENT WITH THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING
SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS GRANT AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND
THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED EMPLOYMENT FOR THE VESTING PERIOD,
FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE EMPLOYMENT
RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.
P. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by reference. The Plan and this Grant Agreement constitute the
entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s
interest except by means of a writing signed by the Company and Optionee. This Grant Agreement is governed by the internal substantive
laws, but not the choice of law rules, of the State of Delaware.
By
your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under
and governed by the terms and conditions of the Plan and this Grant Agreement. The Optionee has reviewed the Plan and this Grant Agreement
in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Agreement and fully understands
all provisions of the Plan and this Grant Agreement. The Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan and this Grant Agreement. The Optionee further agrees
to notify the Company upon any change in the residence address indicated herein.
OPTIONEE |
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POWERFLEET, INC. |
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By: |
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Xxxxx Xxxxxx |
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Xxxxx Xxxx/Chief Executive Officer |
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Date: |
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Nothing
contained herein concerning certain federal income tax considerations is intended or written to be used, and cannot be used, for the
purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another
party any transactions or tax-related matters addressed herein.
EXHIBIT
A
POWERFLEET, INC.
EXERCISE NOTICE
PowerFleet,
Inc.
000
Xxxx Xxxxxxxxx, Xxxxx 000
Woodcliff
Lake, NJ 07677
Attention:
1. Exercise of Option. Effective as of today, _____, 20__, the undersigned (“Purchaser”) hereby elects to purchase _____
shares (the “Shares”) of the Common Stock of PowerFleet, Inc. (the “Company”) under and pursuant to the PowerFleet,
Inc. 2018 Incentive Plan (the “Plan”) and the Stock Option Inducement Award Agreement dated January 4, 2023 (the
“Option Agreement”). The purchase price for the Shares shall be $3.00, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser has received, read and understood the Plan and the Option
Agreement and agrees to abide by and be bound by their terms and conditions. Unless the Company is a public corporation which has registered
the shares issuable under the Plan under the Securities Act of 1933, the Purchaser confirms the representations set forth below:
The
Purchaser is acquiring the Shares for his/her own account and the Shares were acquired by him/her for the purpose of investment and not
with a view to distribution or resale thereof in violation of the Securities Act of 1933 (the “Securities Act”). The Purchaser
agrees not to resell or otherwise dispose of all or any part of the Shares purchased by him/her except as permitted by law, including,
without limitation, any regulations under the Securities Act and other applicable securities laws. The Purchaser is able to bear the
economic risk of this investment including a complete loss of the investment.
4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares covered by the Option, notwithstanding the exercise of the Option. The Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No adjustment will be made for a dividend or other right for which
the record date is prior to the date of issuance, except as provided in the Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase
or disposition of the Shares. Purchaser represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are incorporated herein by reference. This Agreement, the Plan
and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and the Purchaser with respect to the subject matter hereof, and may not
be modified adversely to the Purchaser’s interest except by means of a writing signed by the Company and Purchaser. This agreement
is governed by the internal substantive laws, but not the choice of law rules, of the State of Delaware.
Submitted
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Accepted
by: |
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PURCHASER |
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POWERFLEET,
INC. |
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By: |
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Print
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Name/Title |
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Date: |
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Date: |
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