EXHIBIT 99.1
ANNEX A
AWARE, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
(as amended May 27, 1998, February 21, 2003 and November 29, 2005)
1. PURPOSE
The 1996 Aware, Inc. Employee Stock Purchase Plan (the "Plan") is
intended to provide a method whereby employees of Aware, Inc. (the "Company")
will have an opportunity to acquire an ownership interest (or increase an
existing ownership interest) in the Company through the purchase of shares of
the Common Stock of the Company. It is the intention of the Company that the
Plan qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the
Plan shall, accordingly, be construed so as to extend and limit participation in
a manner consistent with the requirements of that section of the Code.
2. DEFINITIONS
(a) "Board" means the Board of Directors of the Company.
(b) "Code" shall have the meaning set forth in Paragraph 1.
(c) "Committee" means the Compensation Committee of the Board.
(d) "Common Stock" means the common stock, par value $.01 per share, of
the Company.
(e) "Company" shall also include any Subsidiary (as hereinafter defined)
of Aware, Inc. designated as a participant in the Plan by the Board,
unless the context otherwise requires.
(f) "Compensation" means, for the purpose of any Offering pursuant to
this Plan, base pay in effect as of the Offering Commencement Date (as
hereinafter defined). Compensation shall not include any deferred
compensation other than contributions by an individual through a salary
reduction agreement to a cash or deferred plan pursuant to Section
401(k) of the Code or to a cafeteria plan pursuant to Section 125 of the
Code.
(g) "Employee" means any person who is customarily employed by the
Company for more than 20 hours per week and more than five months in any
calendar year.
(h) "Offering" shall have the meaning set forth in Paragraph 4.
(i) "Offering Commencement Date" shall have the meaning set forth in
Paragraph 4.
(j) "Offering Termination Date" shall have the meaning set forth in
Paragraph 4.
(k) "Plan" shall have the meaning set forth in Paragraph 1.
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(l) "Subsidiary" shall mean any present or future corporation which is
or would constitute a "subsidiary corporation" as that term is defined
in Section 425 of the Code.
3. ELIGIBILITY
(a) Participation in the Plan is completely voluntary. Participation in
any one or more of the Offerings under the Plan shall neither limit, nor
require, participation in any other Offering (as hereinafter defined).
(b) Each employee of the Company shall be eligible to participate in the
Plan on the first Offering Commencement Date, as hereinafter defined, following
the completion of six months of continuous service with the Company.
Notwithstanding the foregoing, no employee shall be granted an option under the
Plan:
(i) if, immediately after the grant, such employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company or any Subsidiary; for purposes of this Paragraph, the rules of Section
424(d) of the Code shall apply in determining the stock ownership of any
employee;
(ii) which permits his rights to purchase stock under all
Section 423 employee stock purchase plans of the Company and its Subsidiaries to
exceed $25,000 of the fair market value of the stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding; for purposes of this Paragraph, the rules of Section 423(b)(8) of
the Code shall apply; or
(iii) which permits his rights to purchase stock under all
Section 423 employee stock purchase plans of the Company and its Subsidiaries to
exceed 1,000 shares of Common Stock during any single Offering.
4. OFFERING DATES
The right to purchase stock hereunder shall be made available by a
series of six-month offerings (the "Offering" or "Offerings") to employees
eligible in accordance with Paragraph 3 hereof. The Committee will, in its
discretion, determine the applicable date of commencement ("Offering
Commencement Date") and termination date ("Offering Termination Date") for each
Offering. Participation in any one or more of the Offerings under the Plan shall
neither limit, nor require, participation in any other Offering.
5. PARTICIPATION
Any eligible employee may become a participant by completing a payroll
deduction authorization form provided by the Company and filing it with the
Company's Treasurer 20 days prior to each applicable Offering Commencement Date,
as determined by the Committee pursuant to Paragraph 4.
6. PAYROLL DEDUCTIONS
(a) At the time a participant files an authorization for a payroll
deduction, the participant shall elect to have deductions made from his or her
pay on each payday during any Offering in which he or she is a participant, at a
specified percentage of his or her Compensation as determined on the applicable
Offering Commencement Date; said percentage shall be in increments of one
percent up to a maximum percentage of six percent.
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(b) Payroll deductions for a participant shall commence on the Offering
Commencement Date when the applicable authorization for a payroll deduction
becomes effective and shall end on the Offering Termination Date of the Offering
to which such authorization is applicable, unless sooner terminated by the
participant as provided in Paragraph 9.
(c) All payroll deductions made for a participant shall be credited to
his or her account under the Plan. A participant may not make any separate cash
payment into such account.
(d) A participant may withdraw from the Plan at any time during the
applicable Offering period; provided, however, that a participant who is an
officer or director of the Company and who withdraws from the Plan during any
Offering period will not be eligible for the grant of any subsequent option
under the Plan for a period of six months.
7. GRANTING OF OPTION
(a) On the Offering Termination Date of each Offering, a participating
employee shall be deemed to have been granted an option to purchase a maximum
number of shares of the Common Stock equal to an amount determined as follows:
95% of the market value per share of the Common Stock on the applicable Offering
Termination Date shall be divided into an amount equal to the sum of (x) the
payroll deductions which have been withheld with respect to the participating
employee during the applicable Offering period plus (y) any amounts in the
employee's account on the Offering Commencement Date that have been carried
forward from prior Offerings. Such market value per share of the Common Stock
shall be determined as provided in Paragraph 7(b).
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(b) The option price of the Common Stock purchased with payroll
deductions made during each such Offering for a participant therein shall be:
95% of the average of the bid and the asked prices as reported
by the Nasdaq Stock Market in the Wall Street Journal, or, if the Common Stock
is designated as a national market security by the National Association of
Securities Dealers, Inc. ("NASD"), the last trading price of the Common Stock as
reported by the Nasdaq National Market System in the Wall Street Journal, or, if
the Common Stock is listed on an exchange, the closing price of the Common Stock
on the exchange on the Offering Termination Date applicable to such Offering (or
on the next regular business date on which shares of the Common Stock shall be
traded, in the event that no shares of the Common Stock have been traded on the
Offering Termination Date); or if the Common Stock is not quoted on Nasdaq, not
designated as a Nasdaq national market security and not listed on an exchange,
95% of the fair market value on the Offering Termination Date as determined by
the Committee.
8. EXERCISE OF OPTION
(a) Unless a participant gives written notice to the Treasurer of the
Company as hereinafter provided, his or her option for the purchase of Common
Stock with payroll deductions made during any Offering will be deemed to have
been exercised automatically on the Offering Termination Date applicable to such
Offering for the purchase of the number of full shares of Common Stock which the
accumulated payroll deductions in his or her account at that time (plus any
amounts in his or her account that have been carried forward from prior
Offerings) will purchase at the applicable option price (but not in excess of
the number of shares for which options have been granted to the employee,
pursuant to Paragraph 7(a)), and any excess in his account at that time, other
than amounts representing fractional shares, will be returned to him.
(b) Fractional shares will not be issued under the Plan and any
accumulated payroll deductions which would have been used to purchase fractional
shares shall be automatically carried forward to the next Offering unless the
participant elects, by written notice to the Treasurer of the Company, to have
the excess cash returned to the participant.
9. WITHDRAWAL AND TERMINATION
(a) Prior to the Offering Termination Date for an Offering, any
participant may withdraw the payroll deductions credited to his or her account
under the Plan for such Offering by giving written notice to the Treasurer of
the Company. All of the participant's payroll deductions credited to such
account will be paid to the participant promptly after receipt of notice of
withdrawal, without interest, and no future payroll deductions will be made from
his or her pay during such Offering. The Company will treat any attempt to
borrow by a participant on the security of accumulated payroll deductions as an
election to withdraw such deductions.
(b) Except as set forth in Paragraph 6(d) , a participant's election not
to participate in, or withdrawal from, any Offering will not have any effect
upon his or her eligibility to participate in any succeeding Offering or in any
similar plan which may hereafter be adopted by the Company.
(c) Upon termination of the participant's employment for any reason,
including retirement but excluding death, the payroll deductions credited to his
or her account will be returned to the participant, or, in the case of his or
her death, to the person or persons entitled thereto under Paragraph 13.
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(d) Upon termination of the participant's employment because of death,
his or her beneficiary (as defined in Paragraph 13) shall have the right to
elect, by written notice given to the Company's Treasurer prior to the
expiration of a period of 90 days commencing with the date of the death of the
participant, either:
(i) to withdraw all of the payroll deductions credited to the
participant's account under the Plan; or
(ii) to exercise the participant's option for the purchase of
stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares which the
accumulated payroll deductions in the participant's account at the date of the
participant's death will purchase at the applicable option price (subject to the
limitation contained in Paragraph 7(a)), and any excess in such account will be
returned to said beneficiary. In the event that no such written notice of
election shall be duly received by the office of the Company's Treasurer, the
beneficiary shall automatically be deemed to have elected to withdraw the
payroll deductions credited to the participant's account at the date of the
participant's death and the same will be paid promptly to said beneficiary.
10. INTEREST
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participating employee.
11. STOCK
(a) The maximum number of shares of Common Stock available for issuance
and purchase by employees under the Plan, subject to adjustment upon changes in
capitalization of the Company as provided in Paragraph 16, shall be 350,000
shares of Common Stock, $.01 par value per share, of the Company. If the total
number of shares for which options are exercised on any Offering Termination
Date in accordance with Paragraph 8 exceeds the number of shares that remain
available for issuance and purchase by employees under the Plan, the Company
shall make a PRO RATA allocation of the shares available for delivery and
distribution in an equitable manner, with the balances of payroll deductions
credited to the account of each participant under the Plan carried forward to
the next Offering or returned to the participant at his or her discretion, by
giving written notice to the Treasurer to this effect.
(b) The participant will have no interest in the stock covered by his or
her option until such option has been exercised.
12. ADMINISTRATION
The Plan shall be administered by the Committee. The interpretation and
construction of any provision of the Plan and adoption of rules and regulations
for administering the Plan shall be made by the Committee. Determinations made
by the Committee with respect to any matter or provision contained in the Plan
shall be final, conclusive and binding upon the Company and upon all
participants, their heirs or legal representatives. Any rule or regulation
adopted by the Committee shall remain in full force and effect unless and until
altered, amended, or repealed by the Committee.
13. DESIGNATION OF BENEFICIARY
A participant shall file with the Treasurer of the Company a written
designation of a beneficiary who is to receive any Common Stock and/or cash
under the Plan. Such
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designation of beneficiary may be changed by the participant at any time by
written notice. Upon the death of a participant and upon receipt by the Company
of proof of the identity and existence of a beneficiary validly designated by
the participant under the Plan, the Company shall deliver such Common Stock
and/or cash to such beneficiary. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such Common
Stock and/or cash to the executor or administrator of the estate of the
participant. No beneficiary shall, prior to the death of the participant by whom
he or she has been designated, acquire any interest in the Common Stock and/or
cash credited to the participant under the Plan.
14. TRANSFERABILITY
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive Common Stock under
the Plan may be assigned, transferred, pledged, or otherwise disposed of in any
way by the participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Paragraph 8(b).
15. USE OF FUNDS
All payroll deductions received or held by the Company under this Plan
may be used by the Company for any corporate purpose, and the Company shall not
be obligated to segregate such payroll deductions.
16. EFFECT OF CHANGES OF COMMON STOCK
If the Company shall subdivide or reclassify the Common Stock which has
been or may be optioned under this Plan, or shall declare thereon any dividend
payable in shares of such Common Stock, or shall take any other action of a
similar nature affecting such Common Stock, then the number and class of shares
of Common Stock which may thereafter be optioned (in the aggregate and to any
participant) shall be adjusted accordingly and in the case of each option
outstanding at the time of any such action, the number and class of shares which
may thereafter be purchased pursuant to such option and the option price per
share shall be adjusted to such extent as may be determined by the Committee,
following consultation with the Company's independent public accountants and
counsel, to be necessary to preserve the rights of the holder of such option.
17. AMENDMENT OR TERMINATION
The Board may at any time terminate or amend the Plan. No such
termination shall affect options previously granted, nor may an amendment make
any change in any option theretofore granted which would adversely affect the
rights of any participant holding options under the Plan.
18. NOTICES
All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received by the Treasurer of the Company.
19. MERGER OR CONSOLIDATION
If the Company shall at any time merge into or consolidate with another
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corporation, the holder of each option then outstanding will thereafter be
entitled to receive at the next Offering Termination Date, upon the exercise of
such option and for each share as to which such option shall be exercised, the
securities or property which a holder of one share of the Common Stock was
entitled to upon and at the time of such merger or consolidation. In accordance
with this Paragraph and Paragraph 16, the Committee shall determine the kind and
amount of such securities or property which such holder of an option shall be
entitled to receive. A sale of all or substantially all of the assets of the
Company shall be deemed a merger or consolidation for the foregoing purposes.
20. APPROVAL OF STOCKHOLDERS
The Plan is subject to the approval of the stockholders of the Company
by written consent or at their next annual meeting or at any special meeting of
the stockholders for which one of the purposes of such a special meeting shall
be to act upon the Plan.
21. GOVERNMENTAL AND OTHER REGULATIONS
The Plan, and the grant and exercise of the rights to purchase shares
hereunder, and the Company's obligation to sell and deliver shares upon the
exercise of rights to purchase shares, shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required. The Plan shall be governed by, and construed and enforced
in accordance with, the provisions of Sections 421, 423 and 424 of the Code and
the substantive laws of the Commonwealth of Massachusetts. In the event of any
inconsistency between such provisions of the Code and any such laws, said
provisions of the Code shall govern to the extent necessary to preserve the
favorable federal income tax treatment afforded employee stock purchase plans
under Section 423 of the Code.
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