AWARE INC /MA/ (Form: 8-K, Received: 07/28/2010 15:19:19)

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): July 26, 2010

Aware, Inc.

(Exact name of registrant as specified in its charter)

Commission File Number: 000-21129

Massachusetts		04-2911026
(State or other jurisdiction of		(IRS Employer
incorporation)		Identification No.)

40 Middlesex Turnpike, Bedford, MA, 01730

(Address of principal executive offices, including zip code)

(781) 276-4000

(Registrant’s telephone number, including area code)

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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.	Entry into a Material Definitive Agreement.
Item 5.02.	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 26, 2010, the Compensation Committee (the “Committee”) of the Board of Directors of Aware, Inc. (“Aware”) made the following decisions concerning compensation of Aware’s executive officers and directors:

Executive Officer Cash Compensation

The Committee approved a potential bonus for 2010 of up to $230,000, $275,000 and $75,000 to Michael A. Tzannes, Executive Chairman, Edmund C. Reiter, President and CEO and Richard P. Moberg, CFO, respectively, subject to the Committee’s discretion based upon Aware reaching certain revenue and/or earnings targets as well as each executive achieving certain operational goals. For each executive, up to 50% of the eligible bonus is earned by achieving certain revenue and/or earnings targets and up to 50% for achieving certain operational goals. The salaries for Aware’s three executive officers for 2010 changed as follows: Mr. Tzannes, the Company’s Executive Chairman, was awarded a base salary decrease from $416,000 to $385,000; Mr. Reiter, the Company’s President and CEO was awarded a base salary increase from $348,000 to $385,000; and Mr. Moberg, the Company’s CFO, was awarded a base salary increase from $250,000 to $260,000. The salary changes were based upon a change in responsibilities and a review of the salaries of comparable positions in the Company’s compensation peer group.

Director Cash Compensation

The Committee approved the following cash compensation for 2010 for non-employee directors of Aware (the non-employee directors are G. David Forney, Jr., John K. Kerr, Adrian F. Kruse, Mark G. McGrath and Charles K. Stewart):

●	the lead director and chair of the audit committee (Mr. Kruse) will receive $20,000;

●	the chair of the compensation committee (Mr. McGrath) will receive $9,000; and

●	the chair of the nominating and corporate governance committee (Mr. Forney) will receive $5,000.

Unrestricted Stock Awards

The Committee approved the following grants of unrestricted stock to the executive officers and directors of Aware under Aware’s 2001 Nonqualified Stock Plan:

Name	Stock Award ($ Value)	# of Shares

Mr. Forney	$50,000	20,408

Mr. Kerr	$50,000	20,408

Mr. Kruse	$50,000	20,408

Mr. McGrath	$50,000	20,408

Mr. Stewart	$50,000	20,408

Mr. Moberg	$100,000	40,816

Mr. Reiter	$350,000	142,857

Mr. Tzannes	$350,000	142,857

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The number of unrestricted shares to be granted under the Unrestricted Stock Awards was determined by dividing the dollar value of the unrestricted stock award by the closing price as of the date of the Compensation Committee consent. The closing price of the common stock on July 20, 2010, the date of the Compensation Committee consent was $2.45. With respect to the outside directors, Mr. Forney, Mr. Kerr, Mr. Kruse, Mr. McGrath and Mr. Stewart, the unrestricted shares will be issued on August 2, 2010 provided each director is serving as a director, officer or employee of the Company or any subsidiary of the Company on such date. With respect to the officers, Mr. Tzannes, Mr. Reiter and Mr. Moberg, the unrestricted shares will be issued in four (4) equal installments on December 31, 2010, June 30, 2011, December 31, 2011 and June 30, 2012 provided each officer is serving as a director, officer or employee of the Company or any subsidiary of the Company on said dates.

A copy of the form of Unrestricted Stock Award that Aware is using for the grants of unrestricted shares to its outside directors is filed as Exhibit 10.1 to this Report and is incorporated herein by reference. The foregoing summary of the Unrestricted Stock Awards is qualified in its entirety by the actual Award document, the form of which is filed as Exhibit 10.1 to this Report. A copy of the form of Unrestricted Stock Award that Aware is using for the grants of unrestricted shares to its officers is filed as Exhibit 10.2 to this Report and is incorporated herein by reference. The foregoing summary of the Unrestricted Stock Awards is qualified in its entirety by the actual Award document, the form of which is filed as Exhibit 10.2 to this Report.

Item 9.01. Financial Statements and Exhibits.

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

10.1	Form of Unrestricted Stock Award for outside directors of Aware, Inc. under the 2001 Nonqualified Stock Plan.

10.2	Form of Unrestricted Stock Award for officers of Aware, Inc. under the 2001 Nonqualified Stock Plan.

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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/ Edmund C. Reiter
		Edmund C. Reiter
		President & Chief Executive Officer

Date: July 28, 2010

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Exhibit Index

Number	Description

10.1	Form of Unrestricted Stock Award for outside directors of Aware, Inc. under the 2001 Nonqualified Stock Plan.

10.2	Form of Unrestricted Stock Award for officers of Aware, Inc. under the 2001 Nonqualified Stock Plan.

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Exhibit 10.1

Aware, Inc.

Unrestricted Stock Award Agreement

This Agreement is entered into as of July __, 2010 by and between Aware, Inc. (the “Company”) and [_______________] (the “Grantee”).

For valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:

1. Unrestricted Stock Award . In the event that Grantee continues to serve as a director, officer or employee of the Company or any subsidiary of the Company on the date indicated below, the Company shall issue to Grantee, at no cost to Grantee, an unrestricted stock award, pursuant to Section 7 of the Company’s 2001 Nonqualified Stock Plan (the “ Plan ”), of the applicable number shares of common stock, $0.01 par value per share, of the Company (“ Unrestricted Stock ”) indicated below.

1.1 On August 2, 2010, [___________] shares of Unrestricted Stock.

The above unrestricted stock award has been granted to the Grantee in consideration of the Grantee’s service as director of the Company from June 1, 2010 to May 31, 2011. The Company may, in its sole discretion, accelerate the date on which some or all of the Unrestricted Stock described above is issued.

2. Nontransferability . Grantee may not sell, assign, transfer, pledge or otherwise encumber Grantee’s right to receive the Unrestricted Stock.

3. No Special Rights . Nothing contained in the Plan or this Agreement shall confer upon the Grantee any right with respect to the continuation of his or her services to the Company or interfere in any way with the right of the Company at any time to terminate such services or to increase or decrease the Grantee’s compensation.

4. Withholding . Grantee shall, no later than the date as of which the value of any Unrestricted Stock first becomes includable in the gross income of the Grantee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Company regarding payment of any Federal, state, local and/or payroll taxes of any kind required by law to be withheld with respect to such income. The Company and its affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Grantee. Grantee may elect to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing Merrill Lynch to withhold from the Unrestricted Stock a number of shares with an aggregate Fair Market Value (as defined in the Plan, and determined of the date the withholding is effected) that would satisfy the withholding amount due with respect to such Award, or (ii) delivering to Merrill Lynch a check that would satisfy the withholding amount due.

5. Subdivisions, Stock Splits, Mergers, etc . If the Company shall effect any subdivision or consolidation of shares of its stock or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares outstanding, in any such case without receiving compensation therefor in money, services or property, or if the Company merges with one or more corporations or other business entities, or if there is a consolidation of the Company and one or more corporations or other business entities, or if the Company is liquidated, or sells or otherwise disposes of substantially all of its assets, then the number and class of shares of Unrestricted Stock to be issued pursuant to this Agreement shall be appropriately adjusted in such a manner as to entitle the Grantee to receive upon the issuance of such Unrestricted Stock, the same total number and class of shares as he or she would have received as a result of the event requiring the adjustment had such Unrestricted Stock been issued immediately prior to such event.

Except as hereinbefore expressly provided, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or class of shares of Unrestricted Stock to be issued pursuant to this Agreement.

6. Miscellaneous.

6.1 Except as provided herein, this Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Grantee.

6.2 This Agreement shall terminate immediately in the event that Grantee, for any reason, is no longer an employee, officer or director of the Company or a subsidiary of the Company (including, without limitation, by reason of death, disability, the Grantee’s voluntary resignation or the dismissal of the Grantee for any reason, with or without cause).

6.3 All notices under this Agreement shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another.

6.4 This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts, without regard to its principles of conflicts of laws.

6.5 This Agreement is executed in two (2) counterpart originals, one (1) to be retained by the Grantee and one (1) to be retained by the Company.

* * *

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as an agreement under seal as of the date first written above.

	Aware, Inc.
	40 Middlesex Turnpike
	Bedford, MA 01730

	By:
	Title:

	GRANTEE


	Name:

	Address:

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Exhbiit 10.2

Aware, Inc.

Unrestricted Stock Award Agreement

This Agreement is entered into as of July __, 2010 by and between Aware, Inc. (the “Company”) and [_______________] (the “Grantee”).

For valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:

1.1 On December 31, 2010, [___________] shares of Unrestricted Stock.

1.2 On June 30, 2011, [___________] shares of Unrestricted Stock.

1.3 On December 31, 2011, [___________] shares of Unrestricted Stock.

1.4 On June 30, 2012, [___________] shares of Unrestricted Stock.

The Company may, in its sole discretion, accelerate the date on which some or all of the Unrestricted Stock described above is issued.

2. Nontransferability . Grantee may not sell, assign, transfer, pledge or otherwise encumber Grantee’s right to receive the Unrestricted Stock.

6. Miscellaneous.

6.1 Except as provided herein, this Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Grantee.

6.4 This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts, without regard to its principles of conflicts of laws.

6.5 This Agreement is executed in two (2) counterpart originals, one (1) to be retained by the Grantee and one (1) to be retained by the Company.

* * *

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as an agreement under seal as of the date first written above.

	Aware, Inc.
	40 Middlesex Turnpike
	Bedford, MA 01730

	By:
	Title:

	GRANTEE

	Name:

	Address:

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