1
EXHIBIT 10.8
AWARE, INC.
XXX XXXXXXXX XXXXX
XXXXXXXXX, XX 00000
October 27, 1994
Xx. Xxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Re: Employment Agreement
Dear Xx. Xxxxxx:
The purpose of this letter is to set forth our agreement with respect
to your employment by Aware, Inc. (the "Company"), as follows:
1. TERM OF EMPLOYMENT. Subject to sections 5 and 6 of this agreement, the
term of your employment shall begin on October 31, 1994, and end on December
31, 1997, except that the term shall be extended for up to ten one-year
periods, the first to begin on January 1, 1998, unless the Company has given
you written notice of non-extension at least twelve months before the date on
which the one-year extension would otherwise begin.
2. SALARY AND BONUS. During the term of your employment, you shall be paid a
salary at the annual rate of $180,000.00, payable monthly. The Company, at the
discretion of its board of directors, may award you a bonus based upon the
Company's financial results and/or achievement of corporate objectives.
3. TITLE AND LINE OF AUTHORITY. The Company agrees that during the term of
your employment you shall have the title "President" and "Chief Executive
Officer" and agrees to use its best efforts to cause you to be appointed to its
board of directors as soon as possible after the date of this agreement and to
be reelected to the board at each election for directors held during the term
of your employment. You agree to resign from the board of directors upon
expiration of your term of employment or its termination in accordance with
this agreement. You shall report to the Company's board of directors.
Presently, the Board has designated Xxxxxxx Xxxxxxx to act for the Board in
this reporting arrangement.
4. EMPLOYEE BENEFITS. You shall be entitled to participate in all Company
sponsored insurance or other employee benefit programs, on the same basis as
other employees. If you elect not to participate in the Company's health
insurance program, the Company shall reimburse you for such health insurance
(medical/dental) as you elect to obtain from another source, up to
reimbursement of $500/month. The Company shall also pay or reimburse you for:
2
Xx. Xxxxx X. Xxxxxx
October 27, 1994
Page 2
annual dues for your membership in the Harvard Club (Boston); access and use
charges for one cellular telephone in each of two automobiles owned or leased
by you; monthly and use charges for a telephone line for operation of a fax
machine in your home and the cost of acquiring such machine; and other ordinary
and necessary expenses incurred by you in pursuit of the Company's business for
which you provide the Company with receipts appropriate to support deduction
thereof by the Company for federal income tax purposes to the extent permitted
by law. You shall be entitled to three (3) weeks paid vacation for each year
of your employment.
5. TERMINATION:
(a) EXPIRATION OF TERM, ETC. The term of your employment shall
end upon your death or your disability (as defined herein) or upon expiration
of your term of employment on December 31, 1997, or as extended pursuant to #1.
In the event of termination by reason of your death or disability, the Company
shall continue your compensation and benefits for a period of six (6) months
thereafter. All vested options may be exercised until the second anniversary
of your death. All vested non-statutory options may be exercised until the
third anniversary of your disability. All vested incentive options may be
exercised until the first anniversary of your disability. For the purpose of
the provision, "disability" shall mean your inability to perform any of the
material duties of your position with the Company, continuously for a period of
90 calendar days or for 120 days in any one year period, as mutually determined
by the Company and you or by a physician selected by the Company (for which
purpose you agree to submit to an examination by any such physician).
(b) TERMINATION WITH CAUSE. The Company may terminate you for
"cause" (as defined herein), provided that you have been given at least 10
days' prior written notice, specifying the cause in reasonable detail, and the
opportunity to appear with your legal counsel at a meeting of the Company's
board of directors or at a meeting of the Executive Committee of the Company's
board of directors, at which at least a quorum is continuously present, to
explain or refute the alleged actions or omissions specified in such notice.
For the purpose of the provision, "cause" shall mean solely (i) negligent acts
or omissions that have been or will be the sole or primary cause of material
harm, financial or otherwise, to the Company, or (ii) conviction of a crime
involving moral turpitude or conviction of a crime the principal victim of
which is the Company.
3
Xx. Xxxxx X. Xxxxxx
October 27, 1994
Page 3
6. TERMINATION WITHOUT CAUSE. The Company may terminate your employment at
any time without cause, but in that event you shall be entitled to a severance
payment upon such termination equal to the salary that you would have been paid
pursuant to #2 of this agreement had your employment continued to the
expiration of its term, but not less than $180,000.00 nor more than
$270,000.00. Such payment shall be made irrespective of any other employment
that you may have and any effort that you may, or may not, have made to seek or
obtain other employment. For this purpose, the Company shall be deemed to have
terminated your employment without cause if the Company materially changes any
of your job titles or if there is a Change in Control of the Company. Change
in Control means the occurrence during the Term of any of the following events:
(a) The Company is merged, consolidated or reorganized into or with
another corporation (or other legal person) and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation (or person)
immediately after such transaction are held in the aggregate by the holders of
voting stock of the Company immediately prior to such transaction;
(b) The Company sells or otherwise transfers all or substantially all
of its assets to another corporation (or other legal person) and as a result of
such sale or transfer less than a majority of the combined voting power of the
then-outstanding securities of such corporation (or person) immediately after
such sale or transfer are held in the aggregate by the holders of voting stock
of the Company immediately prior to such sale or transfer.
The dissolution of Novon, L.P. (or any other entity now holding stock in the
Company) and the resulting distribution of the Company's stock to the holders
of an interest in Novon, L.P. (or any other entity now holding stock in the
Company) shall not constitute a Change in Control during the Term hereof. If
the Company elects to terminate your employment without cause during the Term
hereof, the effective date of termination of your employment for purposes of
the exercise of your stock options shall be thirty days after written notice is
given to you that the Company has elected to terminate your employment without
cause, even though you are no longer receiving compensation during said thirty
day period other than the severance pay referred to above.
7. STOCK OPTIONS: The Company does not currently have sufficient stock
available in its stock option plan to grant you the stock options that you
desire. The Company will use its best efforts to
4
Xx. Xxxxx X. Xxxxxx
October 27, 1994
Page 4
have the stockholders agree to increase the amount of stock available in the
Company's stock option plan. If the stockholders agree to the appropriate
increase in the amount of stock available in the stock option plan, the Company
will use its best efforts to have the Board of Directors grant you the
following stock options:
(a) FIRST OPTION. an option to purchase 230,769 shares of its
common stock for $1.30/share. This option shall become exercisable
cumulatively (i.e., "vest") at the rate of 6,410.25 shares at the end of each
consecutive calendar month starting with November 1994, such that it shall be
fully-vested and exercisable upon the last day of October 1997 and thereafter
until expiration. The options to be granted pursuant to this #7(a) shall be
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986 and shall be granted pursuant to the Company's Stock Option Plan.
(b) SECOND OPTION. an option to purchase 269,231 shares of its
common stock for $1.30/share. This option shall become exercisable
cumulatively (i.e., "vest") at the rate of 7,478.64 shares at the end of each
consecutive calendar month starting with November 1994, such that it shall be
fully-vested and exercisable upon the last day of October 1997 and thereafter
until expiration.
(c) THIRD OPTION. an option to purchase 300,000 shares of its
common stock for $1.30/share. This option shall become exercisable (i.e.,
"vest") at the rate of fifty (50) shares for each $1,000 of pre-tax profit
realized by the Company during the period October 1, 1994 - December 31, 1997,
as such profit is shown on the statements of operations prepared by the Company
for each year and examined and reported upon by such independent accountants as
the Company engages for such purpose. If you are still employed by the
Company, on January 15, 1998 this option shall become exercisable as to 150,000
shares, even if the Company has not realized a pre-tax profit.
(d) The options to be granted pursuant to this #7(b) and (c) shall be
non-statutory stock options and shall be granted pursuant to the Company's
Stock Option Plan. Prior to execution of this Agreement, the Company has
provided you with a copy of the forms to be used for the options to be granted
to you pursuant to this Agreement. The options shall be granted as of November
1, 1994 and expire on the eighth anniversary of their date of grant.
The options shall become exercisable in full (i.e., "vest") upon any
Change of Control of the Company.
5
Xx. Xxxxx X. Xxxxxx
October 27, 1994
Page 5
8. NON-COMPETITION, ETC. You agree to execute and be bound by the Company's
standard "Employee Agreement" concerning inventions, confidentiality and
non-competition. A copy of this Employee Agreement is attached hereto.
9. SECURITY CLEARANCE. If requested to do so by the Company, you agree to
apply for a federal security clearance and to comply with all the regulations
regarding the same.
10. INDEMNIFICATION. The Company has provided you with a copy of the
provision(s) of its by-laws or articles of organization providing
indemnification to officers and directors of the Company in respect of their
acts and omissions as such. The Company agrees that you shall be entitled to
the indemnification provided thereby. A copy of such provision(s) is attached
hereto and incorporated herein.
11. ARBITRATION. Any dispute arising hereunder or related hereto shall be
resolved exclusively by arbitration by a single arbitrator in Boston in
accordance with the rules for commercial arbitration of the American
Arbitration Association, except that the Company shall be entitled to seek
injunctive relief from any Court of competent jurisdiction for any violation by
you of your obligation under Sections 8 and 9. Such arbitration shall be final
and binding. Judgment may be entered upon any arbitral award in any court of
competent jurisdiction. No arbitrator may award punitive, multiple, statutory,
or other non-compensatory damages.
12. MISCELLANEOUS. This Agreement is to be construed and enforced under the
laws of Massachusetts. This Agreement expresses the complete understanding of
the parties with respect to the subject matter hereto and is intended to
supersede any prior or contemporaneous written or oral agreements.
AWARE, INC.
By:/s/ Xxxxxxx Xxxxxxx
--------------------------
Xxxxxxx Xxxxxxx,
Chairman of the Board
Accepted and agreed to:
/s/ Xxxxx X. Xxxxxx
--------------------------
Xxxxx X. Xxxxxx
6
[AWARE, INC. LOGO]
A W A R E
December 20, 1996
Xx. Xxxxx X. Xxxxxx
Aware, Inc.
Xxx Xxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
RE: Amendment to Employment Agreement
---------------------------------
Dear Xx. Xxxxxx:
The purpose of this letter is to set forth our agreement to amend the
employment agreement between Aware, Inc. (the "Company") and yourself dated
October 27, 1994 (the "Original Employment Agreement"), as follows:
1. TERM OF EMPLOYMENT. Section 1 of the Original Employment Agreement is
hereby amended to read as follows in its entirety:
"1. Term of Employment. Subject to Section 6 of this agreement, the
term of your employment shall begin on January 1, 1997 and end on
December 31, 2000, except that the term shall be extended for up to
(5) one-year periods, the first to begin on January 1, 2003, unless
the company or you has given the other written notice of non-extension
at least six (6) months before the date on which the one-year extension
would otherwise begin."
2. SALARY AND BONUS: Section 2 of the Original Employment Agreement is hereby
amended by deleting the term "$180,000.00" and replacing it with the term
"$200,000.00.
3. EMPLOYEE BENEFITS. Section 4 of the Original Employment Agreement is
hereby amended to insert the following phrase in the third sentence:
"initiation fees up to a maximum of $40,000, and annual dues up to a maximum of
$6,000, at a golf or country club;"
7
4. TERMINATION. Section 5(a) of the Original Employment Agreement is hereby
amended by deleting the date December 31, 1997" from the first sentence and
replacing it with the date "December 31, 2002.
5. TERMINATION WITHOUT CAUSE. Section 6 of the Original Employment Agreement
is hereby deleted in its entirety and the following new Section 6 is
substituted therefor:
6. TERMINATION BY YOU. You may terminate your employment with the
Company by providing the Company at least three (3) months' prior
written notice. If such termination occurs on or before December 31,
1997 you shall forfeit thirty percent (30%) of the portion of each of
the stock options described in Section 7 that is vested and unexercised
on the date on which you give the Company such notice and no further
vesting of any such option shall thereafter occur. If such termination
occurs between January 1, 1998 and December 31, 1998 you shall forfeit
twenty percent (20%) of the portion of each of the stock options
described in Section 7 that is vested and unexercised on the date on
which you give the Company such notice and no further vesting of any
such option shall thereafter occur.
7. LIFE INSURANCE. A new Section 6A is hereby added to the Original
Employment Agreement, to read as follows in its entirety:
"6A. LIFE INSURANCE. During the term of your employment by the Company,
the Company shall pay or reimburse you (as you may elect) for premiums
on a term life insurance policy (renewable to age 65) on your life in
the principal amount of $1 million, subject to the Company's prior
approval of the insurance contract (including amount of premiums
payable), which shall not be unreasonably withheld or delayed."
If this letter accurately sets forth our agreement regarding amendment of
the original Employment Agreement, please sign and return to the Company the
enclosed copy of this letter.
AWARE, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Chairman of the Board
Accepted and agreed to:
/s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
President & CEO
