Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is entered into as of September 19,
2019 (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 Kevin T. Russell (the "Executive").

 

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

 

WHEREAS, the Executive desires to continue as 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 Legal and Administrative Officer 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 other 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 $275,000. 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 $100,000 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.

 

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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) a stock option for
15,000 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; (b) a stock option
for 15,000 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; (c) a
stock option for 15,000 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; and (d) a stock option for 15,000 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. 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 25 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 or
reporting relationship without the Executive's express written consent, provided
that after a Change of Control, a change in title or reporting relationship
shall not be deemed to be “Good Reason” as long as the Executive has senior
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.

 

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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.

 

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:

 

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(v)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”);

 

(vi)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;

 

(vii)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

 

(viii)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.

 

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.

 

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(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.

 

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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.

 

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.

 

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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.

 

(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:

 

Kevin T. Russell

 

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

 

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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. For the avoidance of doubt,
this Agreement supersedes and replaces the Change in Control Retention Agreement
dated as of March 26, 2015 by and between the Company and the Executive, and
such Change in Control Retention Agreement shall be of no further force or
effect.

 

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.

 

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.

 

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

 

EXECUTIVE AWARE, INC.         By:     Kevin T. Russell  

 

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Exhibit A

NONCOMPETE AGREEMENT

  

This NONCOMPETE AGREEMENT (the "AGREEMENT"), made as of the [ ] day of [ ], 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 August [ ], 2019 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:

 

10.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:

 

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(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.

 

11.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.

 

12.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.

 

13.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.

 

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14.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.

 

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

 

16.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.

 

17.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.

 

18.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.

 

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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:

 

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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 August [
], 2019 (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:

 

(g)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;

 

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

 

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(i)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;

 

(j)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;

 

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

 

(l)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): ___________________________

 

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