UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

 

Date of Report (date of earliest event reported): April 30, 2020

 

AWARE, INC.

(Exact name of registrant as specified in its charter)

 

Massachusetts   000-21129   04-2911026
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)

 

40 Middlesex Turnpike, Bedford, MA, 01730

(Address of principal executive offices, including zip code)

 

Registrant's telephone number, including area code: (781) 276-4000

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol   Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share   AWRE   The Nasdaq Global Market

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

David B. Barcelo

 

On April 30, 2020, the Board of Directors of Aware, Inc. (“Aware”) appointed David B. Barcelo to serve as Chief Financial Officer of Aware, effective May 4, 2020 (the “Effective Date”). Mr. Barcelo, age 41, served as Vice President of Strategic Marketing of IDEMIA (OT-Morpho) from November 2017 to May 2020. Mr. Barcelo previously served as Vice President of Business Operations for MorphoTrust USA LLC from 2011 to 2017, as Corporate Director of Financial Planning and Strategic Operations of L-1 Identity Solutions from 2006 to 2011, and as Director of Operations for WorkOnCall.com from 2005 to 2006. Mr. Barcelo received his MBA and MIS degrees from Boston University and his Bachelor of Science degree in Computer Science from Yale University.  

 

On May 4, 2020, Aware and Mr. Barcelo entered into an Employment Agreement (the “Barcelo Employment Agreement”). Pursuant to the Barcelo Employment Agreement, Mr. Barcelo will receive the following compensation: (a) an annual base salary of $250,000; (b) annual cash incentive compensation as determined by the Board or the Compensation Committee with an initial target annual incentive compensation up to 40% of his base salary and tied to Company performance targets as determined by the Compensation Committee; (c) an unrestricted stock award of 20,000 shares of the Company’s common stock, which such shares shall be issued to the Executive in two (2) equal installments on June 30, 2020 and December 31, 2020 provided the Executive is serving as a director, officer or employee of the Company or any subsidiary of the Company on such date; (d) a stock option for 12,500 shares of Aware’s common stock with an exercise price per share equal to the greater of (i) the fair market value of a share of Aware’s common stock on the date of grant or (ii) $4.50 (such exercise price referred to as the “Base Exercise Price”) and vesting over four years; (e) a stock option for 12,500 shares of Aware’s common stock with an exercise price per share equal to the Base Exercise Price plus $1.00 and vesting over four years; (f) a stock option for 12,500 shares of Aware’s common stock with an exercise price per share equal to the Base Exercise Price plus $2.00 and vesting over four years; and (g) a stock option for 12,500 shares of Aware’s common stock with an exercise price per share equal to the Base Exercise Price plus $3.00 and vesting over four years. All stock options must be exercised within 60 days of Mr. Barcelo ceasing to be an employee of, or paid consultant to, Aware.

 

Subject to Mr. Barcelo signing and delivering to Aware a noncompetition agreement and a release of claims, Mr. Barcelo will also be eligible to receive compensation upon termination of Mr. Barcelo’s employment by Aware without “Cause” or by Mr. Barcelo for ”Good Reason” as follows: (a) an amount equal to Mr. Barcelo’s base salary paid during the twelve (12) months immediately preceding the termination of Mr. Barcelo’s employment with Aware, divided by the number of days employed during the twelve (12) months immediately preceding the termination of Mr. Barcelo’s employment with Aware and multiplied by 365, (b) all time-based stock options and other time-based stock-based awards held by Mr. Barcelo in which such stock option or other stock-based award would have vested if Mr. Barcelo had remained employed for an additional twelve (12) months following the date of termination shall vest and become exercisable or nonforfeitable as of the date of termination, and (c) Aware paying the difference between the cost of COBRA continuation coverage, should Mr. Barcelo elect to receive it, for Mr. Barcelo and any dependent who received health insurance coverage prior to termination of Mr. Barcelo’s employment with Aware, and any premium contribution amount applicable to Mr. Barcelo as of such termination, for a period of twelve (12) months following the date of termination of Mr. Barcelo’s employment with Aware.

 

Pursuant to the change in control provisions in the Barcelo Employment Agreement, if Mr. Barcelo’s employment is terminated during the eighteen (18) month period following a “Change of Control” (a) by Aware without “Cause” or (b) by Mr. Barcelo for “Good Reason”, subject to Mr. Barcelo signing and delivering to Aware a noncompetition agreement and a release of claims, Mr. Barcelo will receive from Aware: (i) a lump-sum amount equal to (A) 1.5 times (B) Mr. Barcelo’s base annual salary paid during the twelve (12) months immediately preceding the termination of Mr. Barcelo’s employment with Aware, divided by the number of days employed during the twelve (12) months immediately preceding the termination of Mr. Barcelo’s employment with Aware and multiplied by 365, (ii) all time-based stock options and other time-based stock-based awards held by Mr. Barcelo as of the occurrence of such Change of Control shall immediately accelerate and become fully exercisable or nonforfeitable as of the date of termination and (iii) the difference between the cost of COBRA continuation coverage, should Mr. Barcelo elect to receive it, for Mr. Barcelo and any dependent who received health insurance coverage prior to termination of Mr. Barcelo’s employment with Aware, and any premium contribution amount applicable to Mr. Barcelo as of such termination, for a period of eighteen (18) months following the date of termination of Mr. Barcelo’s employment with Aware.

 

A copy of the Barcelo Employment Agreement is attached as Exhibit 10.1 to this Report. The foregoing summary of the Barcelo Employment Agreement is qualified in its entirety by reference to the Barcelo Employment Agreement.

 

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Kevin Russell and David Martin

 

In connection with Aware’s previous announcement that Kevin Russell would be leaving Aware, Mr. Russell ended his employment with Aware effective May 1, 2020. Mr. Russell also resigned as a member of the Board of Directors of Aware effective May 1, 2020.

 

In connection with Aware’s previous announcement that David Martin would be leaving Aware, Mr. Barcelo replaced Mr. Martin as Aware’s Chief Financial Officer effective May 4, 2020. It is expected that Mr. Martin will remain employed by Aware through May 15, 2020 to assist Mr. Barcelo in his transition as Aware’s new Chief Financial Officer.

 

Aware, Inc. 2020 Executive Bonus Plan

 

On April 30, 2020, the Compensation Committee of Aware, Inc. (the “Company”) approved the Aware, Inc. 2020 Executive Bonus Plan (the “Plan”) and established performance criteria and target bonuses thereunder.

 

Pursuant to the Plan, each of Robert A. Eckel, the Company’s Chief Executive Officer and President, Robert M. Mungovan, the Company’s Chief Commercial Officer, Mohamed Lazzouni, the Company’s Chief Technical Officer, and David B. Barcelo, the Company’s Chief Financial Officer (the “Participants”), will be eligible to receive a bonus, based on the Company’s achievement in 2020 of certain Company 2020 booking, revenue, operating cash flow targets (“2020 Financial Goals”) and the achievement of certain operational goals by each Participant, in each case as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”).

 

70% of the bonus will be paid for achieving certain Company financial goals and 30% of the bonus will be paid for achieving certain operational goals.

 

The amount of the potential bonus that could be earned by the Participants is as follows: Robert Eckel up to $150,000; Robert Mungovan up to $137,500; Mohamed Lazzouni up to $137,500; and David Barcelo up to $100,000.

 

The amount of the bonus earned by a Participant will depend upon the Company’s actual 2020 bookings, revenue and operating cash flow, as compared to the 2020 Financial Goals. The following tables will be used to determine the applicable bonuses for the achievement of financial goals:

 

Robert Eckel

Actual 2020 bookings, revenue and operating
cash flow as a % of 2020 Financial Goals
  Bonus Amount-2020
Bookings
  Bonus Amount-2020
Revenue
  Bonus Amount-2020
Operating Cash Flow
Less than 85% of 2020 Financial Goals   $0   $0   $0
85% of 2020 Financial Goals   $13,125.00   $26,250.00   $13,125.00
95% of 2020 Financial Goals   $22,312.50   $44,625.00   $22,312.50
100% of 2020 Financial Goals   $26,250.00   $52,500.00   $26,250.00

 

Robert Mungovan 

Actual 2020 bookings, revenue and operating
cash flow as a % of 2020 Financial Goals
  Bonus Amount-2020
Bookings
  Bonus Amount-2020
Revenue
  Bonus Amount-2020
Operating Cash Flow
Less than 85% of 2020 Financial Goals   $0   $0   $0
85% of 2020 Financial Goals   $24,062.50   $16,843.75   $7,218.75
95% of 2020 Financial Goals   $40,906.25   $28,634.38   $12,271.88
100% of 2020 Financial Goals   $48,125.00   $33,687.50   $14,437.50

 

Mohamed Lazzouni

Actual 2020 bookings, revenue and operating
cash flow as a % of 2020 Financial Goals
  Bonus Amount-2020
Bookings
  Bonus Amount-2020
Revenue
  Bonus Amount-2020
Operating Cash Flow
Less than 85% of 2020 Financial Goals   $0   $0   $0
85% of 2020 Financial Goals   $12,031.25   $24,062.50   $12,031.25
95% of 2020 Financial Goals   $20,453.13   $40,906.25   $20,453.13
100% of 2020 Financial Goals   $24,062.50   $48,125.00   $24,062.50

 

David Barcelo

Actual 2020 bookings, revenue and operating
cash flow as a % of 2020 Financial Goals
  Bonus Amount- 2020
Bookings
  Bonus Amount-2020
Revenue
  Bonus Amount-2020
Operating Cash Flow
Less than 85% of 2020 Financial Goals   $0   $0   $0
85% of 2020 Financial Goals   $8,750.00   $17,500.00   $8,750.00
95% of 2020 Financial Goals   $14,875.00   $29,750.00   $14,875.00
100% of 2020 Financial Goals   $17,500.00   $35,000.00   $17,500.00

 

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The amount of bonus payable with respect to the bonus for achievement of the financial goals will be subject to linear interpolation to reflect actual 2020 bookings, revenue and operating cash flow between the 2020 Financial Goals and 85% of 2020 Financial Goals or between 95% of 2020 Financial Goals and 100% of 2020 Financial Goals.

 

Mr. Eckel, Mr. Mungovan , Mr. Lazzouni and Mr. Barcelo may earn up to $45,000, $41,250, $41,250 and $30,000, respectively, upon full achievement, as determined by the Compensation Committee, of their respective Operational Goals under the Plan, which are specific to each Participant.

 

In the event that Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment by the Company terminates during 2020 by reason of total and permanent disability, or death, the terminated person will receive a pro-rated bonus. If Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment by the Company is terminated by the Company without cause, the Compensation Committee may, in its discretion, award the terminated person a pro-rata bonus. In the event that Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment terminates for any other reason, including resignation and discharge for cause prior to the bonus payout date, all rights to a bonus will be forfeited. All payouts from this bonus plan are subject to final approval by the Compensation Committee, which shall have the authority to change any amounts payable under the Plan.

 

A copy of the Plan is attached as Exhibit 10.2 to this Report. The foregoing summary of the Plan is qualified in its entirety by reference to the Plan.

 

Press Release

 

On May 4, 2020, Aware issued a press release, attached to this Form 8-K as Exhibit 99.1, announcing that Mr. Barcelo had become Chief Financial Officer of Aware.

  

Item 9.01. Financial Statements and Exhibits.

 

No financial statements are required to be filed as part of this Report. The following exhibit is filed as part of this Report:

 

10.1* Employment Agreement between Aware, Inc. and David B. Barcelo dated May 4, 2020

 

10.2*^ Aware, Inc. 2020 Executive Bonus Plan

 

99.1 Press Release issued by Aware, Inc. on May 4, 2020

 

*  Management contract or compensatory plan

^  Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated under the Securities Act of 1933.

 

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Signature(s)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  AWARE, INC.
   
  By:  /s/ Robert A. Eckel  
  Robert A. Eckel
  President and Chief Executive Officer

 

Date: May 4, 2020

 

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Exhibit Index

 

Number   Description
10.1   Employment Agreement between Aware, Inc. and David B. Barcelo dated May 4, 2020
10.2   Aware, Inc. 2020 Executive Bonus Plan
99.1   Press Release issued by Aware, Inc. on May 4, 2020

 

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Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is entered into as of May 4th, 2020 (the “Effective Date”), by and between Aware, Inc., a Massachusetts corporation with its principal offices located at 40 Middlesex Turnpike, Bedford, Massachusetts 01730 (together with its successors and assigns, the "Company"), and David B. Barcelo (the "Executive").

 

WHEREAS, the Company desires to employ the Executive on the terms and conditions of this Agreement; and

 

WHEREAS, the Executive desires to be an employee of the Company on the terms and conditions of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows:

 

1. Employment.

 

1.1.          Term. The term of this Agreement shall commence on the Effective Date and shall continue until terminated in accordance with the provisions hereof (the “Term”). The Executive’s employment with the Company will be “at will,” meaning that the Executive’s employment may be terminated by the Company or the Executive at any time and for any reason subject to the terms of this Agreement.

 

1.2.         Position and Duties. During the Term, the Executive shall serve as the Chief Financial Officer and Treasurer of the Company, reporting to the Chief Executive Officer of the Company. The Executive shall devote his full working time and efforts to the business and affairs of the Company. Notwithstanding the foregoing, the Executive may serve on boards of directors, with the approval of the Board of Directors of the Company (the “Board”), or engage in religious, charitable or other community activities as long as such services and activities are disclosed to the Board and do not materially interfere with the Executive’s performance of his duties to the Company as provided in this Agreement.

 

2. Compensation and Related Matters.

                                

2.1.          Base Salary. During the Term, the Executive’s annual base salary will be $250,000. The Executive’s base salary shall be reviewed annually by the Board or the Compensation Committee of the Board (the “Compensation Committee”). The base salary in effect at any given time is referred to herein as “Base Salary.” The Base Salary shall be payable in a manner that is consistent with the Company’s usual payroll practices for executive officers.

 

2.2.         Incentive Compensation. During the Term, the Executive shall be eligible to receive annual cash incentive compensation as determined by the Board or the Compensation Committee from time to time. The Executive’s initial target annual incentive compensation shall be up to 40% of his Base Salary and tied to Company performance targets as determined by the Compensation Committee. To earn incentive compensation, the Executive must be employed by the Company on the day such incentive compensation is paid.

 

2.3.          Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him during the Term in performing services hereunder, in accordance with the policies and procedures then in effect and established by the Company for its executive officers.

 

 

 

 

2.4.          Equity. At the first meeting of the Compensation Committee after the Effective Date, the Company shall grant the Executive: (a) an unrestricted stock award of 20,000 shares of the Company’s common stock, which such shares shall be issued to the Executive in two (2) equal installments on June 30, 2020 and December 31, 2020 provided the Executive is serving as a director, officer or employee of the Company or any subsidiary of the Company on such date; (b) a stock option for 12,500 shares of the Company’s Common Stock with an exercise price per share equal to the greater of (i) the fair market value of a share of the Company’s common stock on the date of grant or (ii) $4.50 (such exercise price referred to as the “Base Exercise Price”) and vesting over four years in 16 substantially equal quarterly installments; (c) a stock option for 12,500 shares of the Company’s Common Stock with an exercise price per share equal to the Base Exercise Price plus $1.00 and vesting over four years in 16 substantially equal quarterly installments; (d) a stock option for 12,500 shares of the Company’s Common Stock with an exercise price per share equal to the Base Exercise Price plus $2.00 and vesting over four years in 16 substantially equal quarterly installments; and (e) a stock option for 12,500 shares of the Company’s Common Stock with an exercise price per share equal to the Base Exercise Price plus $3.00 and vesting over four years in 16 substantially equal quarterly installments. All stock options must be exercised within 60 days of the Executive ceasing to be an employee of, or paid consultant to, the Company.

 

2.5.          Additional Equity. In addition to the equity granted pursuant to Section 2.4, the Executive shall be eligible to receive such additional equity awards of the Company from time to time as determined by the Compensation Committee or the Board.

 

2.6.          Other Benefits. During the Term, the Executive shall be eligible to participate in or receive benefits under the Company’s employee benefit plans in effect from time to time, subject to the terms of such plans. Additionally, during the Term, the Executive shall be eligible to receive such benefits and perquisites as those made available to the other employees of the Company generally and to similarly situated senior executives of the Company.

 

2.7.          Vacations. During the Term, the Executive shall be entitled to paid vacation in accordance with the Company’s policies and procedures, which at the outset shall be 20 days in addition to the Company’s paid holidays. The vacation time will increase over time if the Company’s policies so provide. The Executive shall also be entitled to all paid holidays given by the Company to its executive officers.

 

3.             Termination. During the Term, the Executive’s employment hereunder may be terminated without any breach of this Agreement under the following circumstances:

 

3.1.          Death. The Executive’s employment hereunder shall terminate upon his death.

 

3.2.          Disability. The Company may terminate the Executive’s employment if he is disabled and unable to perform the essential functions of the Executive’s then existing position or positions under this Agreement with any reasonable accommodation required by law for a period of 180 days (which need not be consecutive) in any 12-month period. If any question shall arise as to whether during any period the Executive is disabled so as to be unable to perform the essential functions of the Executive’s then existing position or positions with any reasonable accommodation required by law, the Executive may, and at the request of the Company shall, submit to the Company a certification in reasonable detail by a physician selected by the Company to whom the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive is so disabled or how long such disability is expected to continue, and such certification shall for the purposes of this Agreement be conclusive of the issue. The Executive shall cooperate with any reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail to submit such certification, the Company’s determination of such issue shall be binding on the Executive. Nothing in this Section 3.2 shall be construed to waive the Executive’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.

 

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3.3.          Termination by Company for Cause. The Company may terminate the Executive’s employment hereunder for Cause. For purposes of this Agreement, “Cause” shall mean: (a) the Executive has been charged by the United States or a state or political subdivision thereof with conduct which is a felony or which is a misdemeanor involving moral turpitude, deceit, dishonesty or fraud under the laws of the United States or any state or political subdivision thereof; (b) fraud or embezzlement by the Executive with respect to funds of the Company or dishonest, unethical or improper conduct by the Executive that has had, or is reasonably likely to have, a material adverse impact on the reputation for honesty and fair dealing of the Company; (c) the Executive’s failure to comply with lawful instructions not inconsistent with this Agreement given to the Executive by the Board, which failure is not cured or corrected within thirty (30) days after the Executive’s receipt of written notice from the Company referring to this Section and describing with specificity the instructions with which the Executive did not comply; (d) the Executive’s material failure to comply with reasonable policies, directives, standards and regulations adopted by the Company, including, without limitation, the Company’s policies regarding insider trading, except any such failure, that, if capable of cure, is remedied by the Executive within thirty (30) days after the Executive’s receipt of written notice from the Company referring to this paragraph and describing with specificity the failure of the Executive to comply; and (e) material breach by the Executive of the Employee Non-Disclosure, Non-Competition and Intellectual Property Agreement by and between the Executive and the Company (the “Employee Agreement”) or any other written agreement between the Executive and the Company.

 

3.4.          Termination Without Cause. The Company may terminate the Executive’s employment hereunder at any time without Cause. Any termination by the Company of the Executive’s employment under this Agreement which does not constitute a termination for Cause under Section 3.3 and does not result from the death or disability of the Executive under Section 3.1 or 3.2 shall be deemed a termination without Cause.

 

3.5.          Termination by the Executive. The Executive may terminate his employment hereunder at any time for any reason, including but not limited to Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following events: (a) a relocation of the Executive's principal workplace to a location more than 50 miles from Bedford, Massachusetts without the Executive's express written consent; (b) a change in title after a Change in Control without the Executive’s express written consent, provided that after a Change in Control a change in title shall not be deemed to be “Good Reason” as long as the Executive has executive-level responsibilities; or (c) a material diminution in the Executive's compensation or benefits without the express written consent of the Executive; provided, that no such event or occurrence shall constitute Good Reason unless (x) written notice thereof is given by the Executive to the Company within ninety (90) days of its occurrence, (y) the Company shall fail to remedy or cure such event or occurrence within thirty (30) days following its receipt of such notice from the Executive (the “Cure Period”), and (z) the Executive shall within sixty (60) days after the expiration of such 30-day period give written notice to the Company of his election to terminate his employment pursuant to this paragraph by reason of such event or occurrence.

 

3.6.          Notice of Termination. Except for termination as specified in Section 3.1, any termination of the Executive’s employment by the Company or any such termination by the Executive shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 

3.7.          Date of Termination. “Date of Termination” shall mean: (i) if the Executive’s employment is terminated by his death, the date of his death; (ii) if the Executive’s employment is terminated on account of disability under Section 3.2 or by the Company for Cause under Section 3.3, the date on which Notice of Termination is given; (iii) if the Executive’s employment is terminated by the Company under Section 3.4, the date on which a Notice of Termination is given; (iv) if the Executive’s employment is terminated by the Executive under Section 3.5 without Good Reason, thirty (30) days after the date on which a Notice of Termination is given, and (v) if the Executive’s employment is terminated by the Executive under Section 3.5 with Good Reason, the date on which a Notice of Termination is given after the end of the Cure Period. Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Company for purposes of this Agreement.

 

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4. Compensation Upon Termination.

 

4.1.          Termination Generally. If the Executive’s employment with the Company is terminated for any reason, the Company shall pay or provide to the Executive (or to his authorized representative or estate) (i) any Base Salary earned through the Date of Termination, unpaid expense reimbursements (subject to, and in accordance with, Section 2.3 of this Agreement) and unused vacation that accrued through the Date of Termination on or before the time required by law but in no event more than thirty (30) days after the Executive’s Date of Termination; and (ii) any vested benefits the Executive may have under any employee benefit plan of the Company through the Date of Termination, which vested benefits shall be paid and/or provided in accordance with the terms of such employee benefit plans (collectively, the “Accrued Benefit”).

 

4.2.          Termination by the Company Without Cause or by the Executive with Good Reason. During the Term, if the Executive’s employment is terminated by the Company without Cause as provided in Section 3.4, or the Executive terminates his employment for Good Reason as provided in Section 3.5, then the Company shall pay the Executive his Accrued Benefit. In addition, subject to the Executive signing and delivering to the Company a noncompetition agreement (the “Noncompete Agreement”) in substantially the form attached hereto as Exhibit A and a general release (the “Release”) substantially in the form attached hereto as Exhibit B, with the Release becoming irrevocable and fully effective and, if applicable, the Executive resigning as a member of the Board of Directors, within 60 days after the Date of Termination:

 

(i) subject to clause (iv) below, the Company shall pay the Executive an amount equal to the Executive’s Base Salary paid during the twelve (12) months immediately preceding the termination of the Executive’s employment with the Company, divided by the number of days employed during the twelve (12) months immediately preceding the termination of the Executive’s employment with the Company and multiplied by 365 (the “Severance Amount”);

 

(ii) notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, all time-based stock options and other time-based stock-based awards held by the Executive in which such stock option or other stock-based award would have vested if the Executive had remained employed for an additional twelve (12) months following the Date of Termination shall vest and become exercisable or nonforfeitable as of the Date of Termination;

 

(iii) the Company paying the difference between the cost of COBRA continuation coverage, should the Executive elect to receive it, for the Executive and any dependent who received health insurance coverage prior to termination of the Executive’s employment with the Company, and any premium contribution amount applicable to the Executive as of such termination, for a period of twelve (12) months following the date of termination of the Executive’s employment with the Company (“Continuation Benefits”). Continuation Benefits otherwise receivable by the Executive will be reduced to the extent benefits of the same type are received by or made available to him during the applicable twelve-month period (and any such benefits received by or made available to the Executive shall be reported by him to the Company); and

 

(iv) the amounts payable under Section 4.2(i) and (iii) shall be paid out in substantially equal installments in accordance with the Company’s payroll practice over twelve (12) months commencing within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the Severance Amount shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination.

 

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5. Change of Control Payment.

 

5.1.          The provisions of this Section 5 set forth certain terms of an agreement reached between the Executive and the Company regarding the Executive’s rights and obligations upon the occurrence of a Change of Control of the Company (as defined below). These provisions are intended to assure and encourage in advance the Executive’s continued attention and dedication to his assigned duties and his objectivity during the pendency and after the occurrence of any such event. These provisions shall apply in lieu of, and expressly supersede, the provisions of Section 4.2 regarding severance pay and benefits upon a termination of employment, if such termination of employment occurs within eighteen (18) months after the occurrence of the first event constituting a Change of Control. These provisions shall terminate and be of no further force or effect beginning eighteen (18) months after the occurrence of a Change of Control.

 

(a)   Change of Control. During the Term, if within eighteen (18) months after a Change of Control, the Executive’s employment is terminated by the Company without Cause as provided in Section 3.4 or the Executive terminates his employment for Good Reason as provided in Section 3.5, then, subject to the Executive signing and delivering to the Company the Noncompete Agreement and the Release, and the Release becoming irrevocable and fully effective and, if applicable, the Executive resigning as a member of the Board of Directors, all within 60 days after the Date of Termination (or such shorter time period provided in the Release):

 

(i) the Company shall pay the Executive a lump sum in cash an amount equal to (A) 1.5 times (B) the Executive’s Base Salary paid during the twelve (12) months immediately preceding the termination of the Executive’s employment with the Company, divided by the number of days employed during the twelve (12) months immediately preceding the termination of the Executive’s employment with the Company and multiplied by 365 (the “Change of Control Severance Amount”);

 

(ii) notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, all time-based stock options and other time-based stock-based awards held by the Executive as of the occurrence of such Change of Control shall immediately accelerate and become fully exercisable or nonforfeitable as of the Date of Termination;

 

(iii) the Company paying the difference between the cost of COBRA continuation coverage, should the Executive elect to receive it, for the Executive and any dependent who received health insurance coverage prior to termination of the Executive’s employment with the Company, and any premium contribution amount applicable to the Executive as of such termination, for a period of eighteen (18) months following the date of termination of the Executive’s employment with the Company (“Change of Control Continuation Benefits”). Change of Control Continuation Benefits otherwise receivable by the Executive will be reduced to the extent benefits of the same type are received by or made available to him during the applicable eighteen-month period (and any such benefits received by or made available to the Executive shall be reported by him to the Company); and

 

(iv) the amounts payable under Section 5.1(a)(i) and 5.1(a)(iii) shall be paid or commence to be paid within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the Change of Control Severance Amount shall be paid in the second calendar year by the last day of such 60-day period.

 

5.2.          Definition of Change of Control. For purposes of this Agreement, a "Change of Control" shall mean the occurrence of any of the following: (i) the acquisition by an individual, entity, group or any other person of beneficial ownership of more than fifty percent (50%) or more of either (x) the then-outstanding shares of common stock of the Company or (y) the combined voting power of the election of directors for the Company; and/or (ii) the sale of substantially all of the Company's assets or a merger or sale of stock wherein the holders of the Company's capital stock immediately prior to such sale do not hold at least a majority of the outstanding capital stock of the Company or its successor immediately following such sale; and/or (iii) the Company’s shareholders approve and complete any plan or proposal for the liquidation or dissolution of the Company.

 

-5-

 

 

6. Other Provisions.

 

6.1.          Amounts Payable Less Withholding Taxes. The amounts payable by the Company hereunder shall be less any federal, state or local withholding taxes and social security.

 

6.2.          Parachute Payments. It is the intention of the parties that no payment or benefit arising out of or in connection with a Change of Control that is made or provided, or to be made or provided, by the Company to the Executive, whether pursuant to the terms of this Agreement or any other plan, agreement, or arrangement (any such payment or benefit, a “Parachute Payment”) shall be non-deductible to the Company by reason of the operation of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) relating to parachute payments.  Accordingly, and notwithstanding any other provision of this Agreement or any such agreement or plan, if by reason of the operation of said Section 280G, any such Parachute Payments exceed the amount which can be deducted by the Company, such Parachute Payments shall be reduced to the maximum amount which can be deducted by the Company.  To the extent that Parachute Payments exceeding such maximum deductible amount have been made to the Executive or his beneficiary, he or his beneficiary shall refund such excess payments to the Company with interest thereon at the Applicable Federal Rate determined under Section 1274(d) of the Code, compounded annually, or at such other rate as may be required in order that no such payments shall be non-deductible to the Company by reason of the operation of said Section 280G.  Any reduction in Parachute Payments required to be made pursuant to this Section 6.2 shall be made first with respect to Parachute Payments payable in cash before being made in respect to any Parachute Payments to be provided in the form of benefits or equity award acceleration, and in the form of benefits before being made with respect to equity award acceleration, and in any case, shall be made with respect to such Parachute Payments in inverse order of the scheduled dates or times for the payment or provision of such Parachute Payments.

 

6.3.          Section 409A. It is intended that this Agreement comply with or be exempt from Section 409A of the Internal Revenue Code and the Treasury Regulations and IRS guidance thereunder (collectively referred to as “Section 409A”). Notwithstanding anything to the contrary in this Agreement, this Agreement shall, to the maximum extent possible, be administered, interpreted, and construed in a manner consistent with Section 409A. If and to the extent required to comply with Section 409A, no payment or benefit required to be paid under this Agreement on account of termination of the Executive’s employment shall be made unless and until the Executive has a “separation from service” within the meaning of Section 409A. In the case of any amounts payable under this Agreement that may be treated as payable in the form of “a series of installment payments,” as defined in Treasury Regulation Section 1.409A-2(b)(2)(iii), the right to receive such payments shall be treated as a right to receive a series of separate payments for purposes of such Treasury Regulation. If the Executive is a “specified employee” as determined pursuant to Section 409A as of the date of termination of employment and if any payment or benefit provided for in this Agreement or otherwise both (x) constitutes a “deferral of compensation” within the meaning of Section 409A and (y) cannot be paid or provided in the manner otherwise provided without subjecting the Executive to additional tax, interest, or penalties under Section 409A, then any such payment or benefit shall be delayed until the earlier of (i) the date which is six (6) months after the Executive’s “separation from service” within the meaning of Section 409A for any reason other than death, or (ii) the date of the Executive’s death. Any payment or benefit otherwise payable or to be provided to the Executive upon or in the six (6) month period following “separation from service” that is not so paid or provided by reason of this Section 6.3 shall be accumulated and paid or provided to the Executive in a single lump sum, as soon as practicable (and in all events within 15 days) after the date that is six (6) months after the Executive’s “separation from service” (or, if earlier, as soon as practicable, and in all events within fifteen (15) days, after the date of the Executive’s death). All subsequent payments or benefits, if any, shall be payable or provided in accordance with the payment schedule applicable to each payment or benefit.  It is the intent of this Agreement to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder shall be subject to the additional tax imposed under Section 409A, and any ambiguities herein shall be interpreted to so comply.  The Company and the Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions that are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to the Executive under Section 409A.

 

-6-

 

 

6.4.          Post-termination Determination of Cause.

 

(a)   If following termination of the Executive’s employment other than for Cause there shall occur any event that would otherwise constitute Cause for termination of such employment, the Executive will repay any Severance Amount, Change of Control Severance Amount, Continuation Benefits and Change of Control Continuation Benefits previously paid, and his right to receive any future Severance Amount, Change of Control Severance Amount, Continuation Benefits and Change of Control Continuation Benefits will terminate and any Non-Compete and any Release provided by Executive to Company as part of his termination of employment shall be null and void and treated as though never effective.

 

(b)   If the employment of the Executive is terminated by the Company for Cause pursuant to Section 3.3(a) above, and if the charges of criminal conduct are subsequently dismissed, or the Executive is acquitted of such charges, then in such event the Executive’s termination shall be deemed to have been made without Cause, and in such event the Company shall pay to the Executive the amounts he would have been entitled had the Company terminated his employment without Cause.

 

6.5.          Employee Agreement. The Executive acknowledges and agrees that the Employee Agreement, except to the extent superseded by the Noncompete Agreement, is a binding and enforceable obligation of the Executive that inures to the benefit of the Company’s successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business in a Change of Control.

 

6.6.          Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given when delivered personally (including by overnight courier) or, if sent by regular mail, three days after the date of deposit in the United States mails addressed as follows:

 

(a) if to the Company, to:

Aware, Inc.

40 Middlesex Turnpike

Bedford, Massachusetts 01730

Attention: Chair of the Compensation Committee

 

(b) if to the Executive, to:

 

David B. Barcelo

 

or to such other address as either party may from time to time provide to the other by notice as provided in this section.

 

6.7.          Entire Agreement. This Agreement and the Employee Agreement constitute the entire agreement and understanding between the Company and the Executive, and supersede all prior negotiations, agreements, arrangements, and understandings, both written or oral, between the Company and the Executive with respect to the subject matter of this Agreement.

 

6.8.          Waiver or Amendment.

 

(a)   The waiver by either party of a breach or violation of any term or provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach or violation of any provision of this Agreement or of any other right or remedy.

 

(b)   No provision in this Agreement may be amended unless such amendment is set forth in a writing that specifically refers to this Agreement and is signed by the Executive and the Company.

 

-7-

 

                      

6.9.          Governing Law. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to its conflict of laws rules.

 

6.10.        Successors; Assignment. The Company shall require any successor via a Change of Control (whether direct or indirect, by purchase, merger, consolidation or otherwise) to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of, and shall be binding upon, each of the Company and the Executive and their respective heirs, personal representatives, legal representatives, successors and assigns.

 

6.11.        Severability. The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part hereof. If any part of this Agreement shall be declared invalid by a court of competent jurisdiction, this Agreement shall be construed as if such invalid part had not been inserted.

 

6.12.        Section Headings. The section and subsection headings contained in this Agreement are for reference purposes only and shall not affect any way the meaning, construction or interpretation of any or all of the provisions of this Agreement.

 

6.13.        Counterparts. This Agreement may be executed in any number of counterparts and by the separate parties hereto in separate counterparts, each of which shall be deemed to constitute an original and all of which shall be deemed to be one and the same instrument.

 

6.14.        Authority to Execute. The undersigned representative of the Company represents and warrants that he has full power and authority to enter into this Agreement on behalf of the Company, and that the execution, delivery and performance of this Agreement have been authorized by the Board. Upon the Executive's acceptance of this Agreement by signing and returning it to the Company, this Agreement will become binding upon the Executive and the Company.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

 

EXECUTIVE   AWARE, INC.
     
                                 

By: 

                               

 

David B. Barcelo    

 

-8-

 

 

Exhibit A

NONCOMPETE AGREEMENT

 

 

This NONCOMPETE AGREEMENT (the "AGREEMENT"), made as of the [ ] day of [ ], 2020, is entered into between Aware, Inc., a Massachusetts corporation with offices at 40 Middlesex Turnpike, Bedford, Massachusetts 01730 (the "Company") and [ ], an individual residing at [ ] (the "Employee").

 

RECITALS:

 

A.            The Company is willing to grant certain severance and other benefits to the Employee, under the circumstances specified in that certain Employment Agreement dated [ ], 2020 between the Company and the Employee (the “Employment Agreement”); and

 

B.            As set forth in the Employment Agreement, the Employee's execution of this Agreement is a condition to his receipt of such benefits;

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. NON-COMPETITION COVENANTS.

 

(a)           NON-COMPETITION COVENANTS. The Employee agrees that he will not, during the Non-Competition Period (as hereinafter defined), directly or indirectly:

 

(i)            as owner, employee, officer, director, partner, sales representative, agent, stockholder, capital investor, lessor, consultant or advisor, either alone or in association with others (other than as a holder of not more than one percent of the outstanding shares of any series or class of securities of a company, which securities of such class or series are publicly traded in the securities markets), develop, design, produce, market, sell or render (or assist any other person or entity in developing, designing, producing, marketing, selling or rendering), products or services which are competitive with the Business of the Company (as hereinafter defined) anywhere in the world;

 

(ii)           solicit, divert or take away, or attempt to solicit, divert or take away, the business or patronage of any of the customers, prospective customers or referral sources of the Company with whom the Company has had a relationship during the period of the Employee's employment by the Company; or

 

(iii)          recruit, solicit or hire any employee of the Company, or induce or attempt to induce any employee of the Company to terminate his or her employment with, or otherwise cease his or her relationship with, the Company.

 

(b)           DEFINITIONS. For the purposes of this Section 1, the following terms shall have the respective meanings indicated below:

 

(i)            "NON-COMPETITION PERIOD" shall mean the period during which the Employee is employed by the Company and the one-year period commencing on the last day of the Employee's employment by the Company, regardless of whether the Employee's termination was at the election of the Company, with or without cause, or at the election of the Employee, with or without good reason.

 

"BUSINESS OF THE COMPANY" shall mean the development, manufacture, marketing and/or distribution of (A) biometric technologies or wavelet compression technologies or (B) any other products or services which the Company sells, has under development or which are subject to active planning at any time during the term of the Employee's employment with the Company.

 

-9-

 

 

2. INJUNCTIVE AND OTHER EQUITABLE RELIEF.

 

(a)           The Employee consents and agrees that if he violates any of the provisions of Section 1 hereof, the Company shall be entitled, in addition to any other remedies it may have at law, to the remedies of injunction, specific performance and other equitable relief for a breach by the Employee of Section 1 of this Agreement. This Section 2(a) shall not, however, be construed as a waiver of any of the rights which the Company may have for damages or otherwise.

 

(b)           Any waiver by the Company of a breach of any provision of Section 1 hereof shall not operate or be construed as a waiver of any subsequent breach of such provision or any other provision hereof.

 

(c)           The Employee agrees that each provision of Section 1 shall be treated as a separate and independent clause, and the unenforceability of any one clause shall in no way impair the enforceability of the other clauses herein. Moreover, if one or more of the provisions contained in Section 1 shall for any reason be held to be excessively broad as to scope, activity or subject so as to be unenforceable at law, such provision or provisions shall be construed by the appropriate judicial body by limiting and reducing it or them so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear.

 

(d)           If the Company shall prevail in any action, suit or other proceeding (whether at law, in equity or otherwise) instituted concerning or arising out of this Agreement, it shall recover, in addition to any other remedy granted to it therein, all its costs and reasonable attorneys’ fees incurred in connection with the prosecution or defense of such action, suit or other proceeding.

 

3. OTHER AGREEMENTS. The Employee represents and warrants that his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any other agreement by which he is bound.

 

4. NOT A CONTRACT OF EMPLOYMENT. The Employee understands that this Agreement does not constitute a contract of employment or give the Employee rights to employment or continued employment by the Company.

 

5. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. In particular, this Agreement supersedes Section 10 of the Employee Agreement, but the rest of the Employee Agreement remains in full force and effect.

 

6. AMENDMENT. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee.

 

7. GOVERNING LAW. This Agreement shall be construed, interpreted and enforced in accordance with the laws of The Commonwealth of Massachusetts, without regard to its choice of law principles. The Employee hereby consents to (a) service of process, and to be sued, in The Commonwealth of Massachusetts and (b) to the jurisdiction of the courts of The Commonwealth of Massachusetts and the United States District Court for the District of Massachusetts, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising out of any of Employee's obligations hereunder, and Employee expressly waives any and all objections he or she may have as to venue in any such courts.

 

8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Employee are personal and shall not be assigned by him.

 

-10-

 

 

9. MISCELLANEOUS.

 

(a)           No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

 

(b)           The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

 

(c)           This Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited or invalid under any such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of such provision or any other provisions of this Agreement. If any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provisions shall be construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by applicable law.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

 

  AWARE, INC.
   
  By:                                
    Name:
    Title:
   
   
  EMPLOYEE
   
     
  Name:

 

-11-

 

 

Exhibit B

 

GENERAL RELEASE AND WAIVER OF ALL CLAIMS
(INCLUDING OLDER WORKER BENEFITS PROTECTION ACT CLAIMS)

 

For good and valuable consideration, including without limitation the compensation and benefits set forth in the Employment Agreement dated [                   ], 2020 (the “Agreement”) between the undersigned and Aware, Inc. (the “Company”), to which this General Release and Waiver of All Claims is attached, the terms of which Agreement shall survive this General Release and Waiver of Claims, the undersigned, on behalf of and for himself or herself and his or her heirs, administrators, executors, representatives, estates, attorneys, insurers, successors and assigns (hereafter referred to separately and collectively as the “Releasor”), hereby voluntarily releases and forever discharges the Company, and its subsidiaries (direct and indirect), affiliates, related companies, divisions, predecessor and successor companies, and each of its and their present, former, and future shareholders, officers, directors, employees, agents, representatives, attorneys, insurers and assigns (collectively as “Releasees”), jointly and individually, from any and all actions, causes of action, claims, suits, charges, complaints, contracts, covenants, agreements, promises, debts, accounts, damages, losses, sums of money, obligations, demands, and judgments all of any kind whatsoever, known or unknown, at law or in equity, in tort, contract, by statute, or on any other basis, for contractual, compensatory, punitive or other damages, expenses (including attorney’s fees and cost), reimbursements, or costs of any kind, which the undersigned employee ever had, now has, or may have, from the beginning of the world to the date of this Release, known or unknown, in law or equity, whether statutory or common law, whether federal, state, local or otherwise, including but not limited to any and all claims arising out of or in any way related to the undersigned’s engagement by the Company (including the hiring or termination of that engagement), or any related matters including, but not limited to claims, if any arising under the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefits Protection Act; the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended; the Family and Medical Leave Act of 1993, as amended; the Immigration Reform and Control Act of 1986; the Americans with Disabilities Act of 1990, as amended; the Employee Retirement Income Security Act (ERISA), as amended; the Massachusetts laws against discrimination and harassment (including Mass. Gen. L. c. 151B), protecting equal rights or concerning the payment of wages (including Mass. Gen. L. c. 149, section 148 et seq. and Mass. Gen. L. c. 151, section 1A, et seq.), and federal, state or local common law, laws, statutes, ordinances or regulations. Notwithstanding the foregoing, nothing contained in this General Release and Waiver of Claims shall be construed to bar any claim by the undersigned to enforce the terms of the Agreement.

 

Releasor represents and acknowledges the following:

 

(a) that Releasor understands the various claims Releasor could have asserted under federal or state law, including but not limited to the Age Discrimination in Employment Act, Mass. Gen. L. c. 151B, the Massachusetts Wage Act and Massachusetts overtime pay law and other similar laws;

 

(b) that Releasor has read this General Release carefully and understands all of its provisions;

 

(c) that Releasor understands that Releasor has the right to and is advised to consult an attorney concerning this General Release and in particular the waiver of rights Releasor might have under the laws described herein and that to the extent, if any, that Releasor desired, Releasor availed himself or herself of this right;

 

(d) that Releasor has been provided at least twenty-one (21) days to consider whether to sign this General Release and that to the extent Releasor has signed this General Release before the expiration of such twenty-one (21) day period Releasor has done so knowingly and willingly;

 

(e) that Releasor enters into this General Release and waives any claims knowingly and willingly; and

 

(f) that this General Release shall become effective seven (7) days after it is signed. Releasor may revoke this General Release within seven (7) days after it is signed by delivering a written notice of rescission to Chair, Compensation Committee of the Board of Directors at Aware, Inc., 40 Middlesex Turnpike, Bedford, Massachusetts 01730. To be effective, the notice of rescission must be hand delivered, or postmarked within the seven (7) day period and sent by certified mail, return receipt requested, to the referenced address.

 

Signed and sealed this ____ day of _____________, 20__.

 

Signed:   

 

Name (print):  

 

 

-12-

 

 

Exhibit 10.2

 

Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to Aware, if publicly disclosed. Double asterisks denote omissions.

 

Aware, Inc. 2020 Executive Bonus Plan

 

Aware, Inc. (the “Company”) executives, Robert Eckel, President & Chief Executive Officer, Robert Mungovan, Chief Commercial Officer, Mohamed Lazzouni, Chief Technical Officer and David Barcelo, Chief Financial Officer (the “Participants”) will be eligible to receive bonuses based upon the achievement by the Company of certain financial goals and the achievement of certain operational goals by each Participant as determined by the Compensation Committee of the Company’s Board of Directors. 70% of the bonus will be paid for achieving certain Company financial goals and 30% of the bonus will be paid for achieving certain operational goals.

 

The amount of the potential bonus that could be earned by the Participants is as follows: Robert Eckel up to $150,000; Robert Mungovan up to $137,500, Mohamed Lazzouni up to $137,500 and David Barcelo up to $100,000.

 

Financial Goals (70% of Total Potential Bonus)

 

The financial goal is common for all Participants. The bonus for the financial goal is based upon the achievement of certain Company 2020 booking, revenue and operating cash flow targets (“2020 Financial Goals”) determined by the Compensation Committee of the Company’s Board of Directors.

 

The amount of the bonus earned by a Participant will depend upon the Company’s actual 2020 bookings, revenue and operating cash flow, as compared to the 2020 Financial Goals. The following tables will be used to determine the applicable bonuses for the achievement of financial goals:

 

Robert Eckel

Actual 2020 bookings, revenue and operating
cash flow as a % of 2020 Financial Goals
  Bonus Amount-2020
Bookings
  Bonus Amount-2020
Revenue
  Bonus Amount-2020
Operating Cash Flow
Less than 85% of 2020 Financial Goals   $0   $0   $0
85% of 2020 Financial Goals   $13,125.00   $26,250.00   $13,125.00
95% of 2020 Financial Goals   $22,312.50   $44,625.00   $22,312.50
100% of 2020 Financial Goals   $26,250.00   $52,500.00   $26,250.00

 

Robert Mungovan

Actual 2020 bookings, revenue and operating
cash flow as a % of 2020 Financial Goals
  Bonus Amount-2020
Bookings
  Bonus Amount-2020
Revenue
  Bonus Amount-2020
Operating Cash Flow
Less than 85% of 2020 Financial Goals   $0   $0   $0
85% of 2020 Financial Goals   $24,062.50   $16,843.75   $7,218.75
95% of 2020 Financial Goals   $40,906.25   $28,634.38   $12,271.88
100% of 2020 Financial Goals   $48,125.00   $33,687.50   $14,437.50

 

 

 

 

Mohamed Lazzouni

Actual 2020 bookings, revenue and operating
cash flow as a % of 2020 Financial Goals
  Bonus Amount-2020
Bookings
  Bonus Amount-2020
Revenue
  Bonus Amount-2020
Operating Cash Flow
Less than 85% of 2020 Financial Goals   $0   $0   $0
85% of 2020 Financial Goals   $12,031.25   $24,062.50   $12,031.25
95% of 2020 Financial Goals   $20,453.13   $40,906.25   $20,453.13
100% of 2020 Financial Goals   $24,062.50   $48,125.00   $24,062.50

 

David Barcelo

Actual 2020 bookings, revenue and operating
cash flow as a % of 2020 Financial Goals
  Bonus Amount-2020
Bookings
  Bonus Amount-2020
Revenue
  Bonus Amount-2020
Operating Cash Flow
Less than 85% of 2020 Financial Goals   $0   $0   $0
85% of 2020 Financial Goals   $8,750.00   $17,500.00   $8,750.00
95% of 2020 Financial Goals   $14,875.00   $29,750.00   $14,875.00
100% of 2020 Financial Goals   $17,500.00   $35,000.00   $17,500.00

 

The amount of bonus payable with respect to the bonus for achievement of the financial goals will be subject to linear interpolation to reflect actual 2020 bookings, revenue and operating cash flow between the 2020 Financial Goals and 85% of 2020 Financial Goals or between 95% of 2020 Financial Goals and 100% of 2020 Financial Goals.

 

Operational Goals (30% of Total Potential Bonus)

 

Operational Goals are specific to each Participant.

 

Robert Eckel (Operational goal bonus eligibility up to $45,000)

 

· Prepare 3-year & 2021 plan for long term value creation (30%)
· Develop organization structure and finances to enable Aware to provide value add solutions and SaaS offerings to capture key programs (25%)
· Penetrate emerging market verticals by identifying target(s) for partner or acquisition (25%)
· Develop working plan for investor/public relations to increase demand in Aware from the shareholder community (20%)

 

Robert Mungovan (Operational goal bonus eligibility up to $41,250)

 

· Build out worldwide sales team along with program office & proposal response team (10%)
· [**] (25%)
· [**] (25%)
· Develop reusable collateral for bids and proposals (25%)
· Develop Marketing and Go-to-Market program for current identified verticals and future identified verticals (10%)
· Establish with CEO, CTO and VP of Sales a demand generation conversion program to create a customer satisfaction baseline in 2020 along with new references (5%)

 

-2-

 

 

Mohamed Lazzouni (Operational goal bonus eligibility up to $41,250)

 

· Set up a triage and support program to create a closed loop customer satisfaction improvement program integrating sales with engineering (15%)
· Deliver demos and put into production per roadmap (25%)
· Complete bid structure & costing team for contracts (20%)
· Establish standard hardware & Aware SaaS software solutions (15%)
· Prepare 3 year and 2021 plan long term technology value creation program through internal or external means (25%)

 

David Barcelo (Operational goal bonus eligibility up to $30,000)

 

· Execute Aware’s strategy by developing Aware as a value-add solutions/SaaS provider and capture key programs directly impacting company strategic goals (25%)
· Penetrate emerging market verticals by identifying target(s) for partner or acquisition (25%)
· Develop working plan with CEO for investor/public relations to increase demand in Aware from the shareholder community (20%)
· Create and implement a process for Quarterly operational reviews that include clear metrics and KPI’s for financials, products, systems, key programs to measure progress.(20%)
· Develop standard pricing and time and materials loading for OEM and SI partners to optimize the channel.(10%)

 

Bonus payouts, to the extent earned, will be paid approximately 45 days following the end of the 2020 fiscal year. All bonus payouts are subject to statutory deductions and are taxable at the time of payment. In the event that Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment by the Company terminates during 2020 by reason of total and permanent disability, or death, the terminated person will receive a pro-rated bonus. If Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment by the Company is terminated by the Company without cause, the Compensation Committee may, in its discretion, award the terminated person a pro-rata bonus. In the event that Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment terminates for any other reason, including resignation and discharge for cause prior to the bonus payout date, all rights to a bonus will be forfeited. All payouts from this bonus plan are subject to final approval by the Compensation Committee, which shall have the authority to change any amounts payable under the Plan.

 

The adoption and maintenance of the 2020 Executive Bonus Plan shall not be deemed a contract of employment. Nothing herein contained shall be deemed to give Mr. Eckel, Mr. Mungovan, Mr. Lazzouni or Mr. Barcelo the right to be retained in the employ of the Company or to interfere with the right of the Company to discharge Mr. Eckel, Mr. Mungovan, Mr. Lazzouni or Mr. Barcelo at any time, nor shall it interfere with Mr. Eckel, Mr. Mungovan, Mr. Lazzouni or Mr. Barcelo’s right to terminate their employment at any time.

 

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Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

Contact:

Bob Eckel

Aware, Inc.
781-276-4000

 

Aware, Inc. Announces Appointment of
David Barcelo as Chief Financial Officer


BEDFORD, MASS. – May 4, 2020 – Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software and services, is pleased to announce that David Barcelo has been appointed Chief Financial Officer and Treasurer, effective May 4, 2020. Mr. Barcelo is responsible for finance, accounting, legal, and overall business operations and as a senior member of the executive team reports directly to the CEO Bob Eckel. In addition to Mr. Barcelo’s appointment, Aware has hired David Traverse to serve as Controller, effective April 27, 2020.

 

Mr. Barcelo served as Vice President of Strategic Marketing of IDEMIA (OT-Morpho) from November 2017 to May 2020. Mr. Barcelo previously served as Vice President of Business Operations for MorphoTrust USA LLC from 2011 to 2017 and as Corporate Director of Financial Planning and Strategic Operations of L-1 Identity Solutions from 2006 to 2011. Mr. Barcelo received his MBA and MIS degrees from Boston University and his Bachelor of Science degree in Computer Science from Yale University.  

 

Bob Eckel, Aware’s Chief Executive Officer and President said, “We're pleased to name Dave as the Chief Financial Officer of Aware. Dave has over 14 years of extensive financial and operational experience in the identity solutions industry. I have worked directly with Dave in the past and I am confident in his ability to lead Aware’s finance and operations organization and implement and execute on our strategic goals. I am also pleased to have David Traverse join as Controller and utilize his many years of financial reporting and operations experience to augment Aware’s finance organization.”

 

Mr. Barcelo said, “I’m excited to be taking on the role of Chief Financial Officer at Aware. I have had a lot of experience working in strategy, finance and operations in the identity solutions industry. I know that Aware has a great reputation for developing industry-leading biometric solutions with an impressive roster of customer accounts. I look forward to working together with the team to help Aware solidify its position in the industry as a leading provider of biometric software solutions.”

 

About Aware

 

Aware is a leading provider of productized biometrics software products, solutions and services to governments, system integrators, and commercial organizations and solution providers globally. Our comprehensive portfolio of biometric solutions are based on innovative, robust products designed explicitly for ease of integration including customer-managed and integration ready biometric frameworks, platforms, SDK’s and services. They fulfill a broad range of functions critical to secure biometric enrollment, authentication, identity and transactions including face, fingerprint, iris, and voice capture modalities, sample quality assurance, data compliance, capture hardware peripheral and system abstraction, centralized data processing and workflow, subsystem connectivity, and biometric matching algorithms. The products and solutions apply biometrics to enable identity-centric security and know-your-customer (“KYC”) solutions for applications including financial institutions, retail, banking and payments, healthcare, border management, credentialing and access control, intelligence and defense, and law enforcement. Aware is a publicly held company (Nasdaq: AWRE) based in Bedford, Massachusetts.

 

See Aware’s website for more information about our biometrics software products.

 

 

 

 

Safe Harbor Warning

 

Portions of this release contain forward-looking statements regarding future events and are subject to risks and uncertainties, such as estimates or projections of future revenue and earnings, and the growth of the biometrics markets. Aware wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements.

 

Risk factors related to our business include, but are not limited to: i) our operating results may fluctuate significantly and are difficult to predict; ii) we derive a significant portion of our revenue from government customers, and our business may be adversely affected by changes in the contracting or fiscal policies of those governmental entities; iii) a significant commercial market for biometrics technology may not develop, and if it does, we may not be successful in that market; iv) we derive a significant portion of our revenue from third party channel partners; v) the biometrics market may not experience significant growth or our products may not achieve broad acceptance; vi) we face intense competition from other biometrics solution providers; vii) our business is subject to rapid technological change; viii) our software products may have errors, defects or bugs which could harm our business; ix) our business may be adversely affected by our use of open source software; x) we rely on third party software to develop and provide our solutions and significant defects in third party software could harm our business; xi) part of our future business is dependent on market demand for, and acceptance of, the cloud-based model for the use of software: xii) our operational systems and networks and products may be subject to an increasing risk of continually evolving cybersecurity or other technological risks which could result in the disclosure of company or customer confidential information, damage to our reputation, additional costs, regulatory penalties and financial losses; xiii) our intellectual property is subject to limited protection; xiv) we may be sued by third parties for alleged infringement of their proprietary rights; xv) we must attract and retain key personnel; xvi) we rely on single sources of supply for certain components used in our hardware products; xvii) our business may be affected by government regulations and adverse economic conditions; xviii) we may make acquisitions that could adversely affect our results, xix) we may have additional tax liabilities and xx) we believe the effects caused by the COVID-19 pandemic will likely have an adverse impact on our revenue over the next several quarters.

 

We refer you to the documents Aware files from time to time with the Securities and Exchange Commission, specifically the section titled Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2019 and other reports and filings made with the Securities and Exchange Commission.

  

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Aware is a registered trademark of Aware, Inc.

 

Aware, Inc. • 40 Middlesex Turnpike • Bedford, MA USA 01730-1432
Tel: (781) 276-4000 • Fax: (781) 276-4001 • E-mail: IR@aware.com

 

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