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Exhibit 10.6

Performance Share Unit Agreement

This Performance Share Unit Agreement (this “Agreement”) is made and entered
into as of August 7, 2013 (the “Grant Date”) by and between AudioEye, Inc., a
Delaware corporation (the “Company”) and Nathaniel Bradley (the “Grantee”).

WHEREAS, the Company has adopted the AudioEye, Inc. 2012 Incentive Compensation
Plan (the “Plan”) pursuant to which Performance Share Units may be granted; and

WHEREAS, the Company has determined that it is in the best interests of the
Company and its stockholders to grant the award of Performance Share Units
provided for herein.

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:

1.           Definitions.  Capitalized terms that are used but not defined
herein have the meanings ascribed to them in the Plan, a copy of which has been
provided to the Grantee.

2.           Grant of Performance Share Units. Pursuant to Section 6(h) of the
Plan, the Company hereby grants to the Grantee an Award of up to an aggregate of
200,000 Performance Share Units (the “Target Award”), subject to increase of up
to a total of 400,000 Performance Share Units (the “Max Units”) as described on
Exhibit A-2 attached hereto.  Each Performance Share Unit (“PSU”) represents the
right to receive one share of Common Stock, subject to the terms and conditions
set forth in this Agreement and the Plan. The number of PSUs that the Grantee
actually earns for a Performance Period (up to a maximum of 133,333 of Max
Units) will be determined by the level of achievement of the Performance Goals
in accordance with Exhibit A-1 attached hereto.

3.           Performance Period. For purposes of this Agreement, "Performance
Period" shall be the period commencing on April 1 and ending on the following
March 31.  Subject to vesting as provided in Section 5, there shall be three
Performance Periods commencing on April 1, 2013 with the opportunity to earn a
full award of Max Units based on achievement of Performance Goals on a
cumulative basis for the three Performance Periods as described on Exhibit A-2.

4.           Performance Goals.

4.1           The number of PSUs earned by the Grantee for a Performance Period
will be determined at the end of the Performance Period based on the level of
achievement of the Performance Goals in accordance with Exhibit A hereto. All
determinations of whether Performance Goals have been achieved, the number of
PSUs earned by the Grantee, and all other matters related to this Section 4
shall be made by the Committee in its sole discretion.

 
 

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4.2           Promptly following completion of a Performance Period (and no
later than thirty (30) days following the end of such Performance Period), the
Committee will review and certify in writing (a) whether, and to what extent,
the Performance Goals for the Performance Period have been achieved, and (b) the
number of PSUs that the Grantee shall earn, if any, subject to compliance with
the requirements of Section 5. Such certification shall be final, conclusive and
binding on the Grantee, and on all other persons, to the maximum extent
permitted by law.

5.           Vesting of PSUs. The PSUs are subject to forfeiture until they
vest. Except as otherwise provided herein, the PSUs will vest and become
nonforfeitable on the last day of a Performance Period with respect to the PSUs
earned for such Performance Period in accordance with Section 4.2, subject to
(a) the achievement of the minimum threshold Performance Goals for payout set
forth in Exhibit A hereto, and (b) the Grantee's Continuous Service from the
Grant Date through the last day of the Performance Period.  The number of PSUs
that vest and become payable under this Agreement shall be determined by the
Committee based on the level of achievement of the Performance Goals set forth
in Exhibit A hereto and shall be rounded to the nearest whole PSU.

6.           Termination of Continuous Service.

6.1           Except as otherwise expressly provided in this Agreement, if the
Grantee's Continuous Service terminates for any reason at any time before all of
his PSUs have vested, the Grantee's unvested PSUs shall be automatically
forfeited upon such termination of Continuous Service and neither the Company
nor any Affiliate shall have any further obligations to the Grantee under this
Agreement.

6.2           Notwithstanding Section 6.1, if the Grantee's Continuous Service
terminates during Performance Period as a result of the Grantee's death,
Disability or termination by the Company without Cause, or termination by the
Grantee for Good Reason, all of the outstanding PSUs will vest as to such
Performance Period in accordance with Section 4 subject to achievement of the
Performance Goal(s) for such Performance Period as if the Grantee's Continuous
Service had not terminated.

7.           Payment of PSUs. Payment in respect of the PSUs earned for the
Performance Period shall be made in shares of Common Stock and shall be issued
to the Grantee as soon as practicable following the vesting date.  The Company
shall cause the issuance and delivery to the Grantee of the number of shares of
Common Stock equal to the number of vested PSUs.

8.           Transferability. Subject to any exceptions set forth in this
Agreement or the Plan, the PSUs or the rights relating thereto may not be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by the Grantee, except by will or the laws of descent and
distribution, and upon any such transfer by will or the laws of descent and
distribution, the transferee shall hold such PSUs subject to all of the terms
and conditions that were applicable to the Grantee immediately prior to such
transfer.

 
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9.           Rights as Shareholder.

9.1           The Grantee shall not have any rights of a shareholder with
respect to the shares of Common Stock underlying the PSUs, including, but not
limited to, voting rights and the right to receive or accrue dividends or
dividend equivalents.

9.2           Upon and following the vesting of the PSUs and the issuance of
shares, the Grantee shall be the record owner of the shares of Common Stock
underlying the PSUs unless and until such shares are sold or otherwise disposed
of, and as record owner, shall be entitled to all rights of a stockholder of the
Company (including voting and dividend rights).

10.           No Right to Continued Service. Neither the Plan nor this Agreement
shall confer upon the Grantee any right to be retained in any position, as an
Employee, Consultant or Director of the Company. Further, nothing in the Plan or
this Agreement shall be construed to limit the discretion of the Company to
terminate the Grantee's Continuous Service at any time, with or without Cause.

11.           Adjustments. If any change is made to the outstanding Common Stock
or the capital structure of the Company, if required, the PSUs shall be adjusted
or terminated in any manner as contemplated by Section 10(c) of the Plan.

12.           Tax Liability and Withholding.

12.1           The Grantee shall be required to pay to the Company, and the
Company shall have the right to deduct from any compensation paid to the Grantee
pursuant to the Plan, the amount of any required withholding taxes in respect of
the PSUs and to take all such other action as the Committee deems necessary to
satisfy all obligations for the payment of such withholding taxes. The Committee
may permit the Grantee to satisfy any federal, state or local tax withholding
obligation by any of the following means, or by a combination of such means:

(a)           tendering a cash payment;

(b)           authorizing the Company to withhold shares of Common Stock from
the shares of Common Stock otherwise issuable or deliverable to the Grantee as a
result of the vesting of the PSUs; provided, however, that no shares of Common
Stock shall be withheld with a value exceeding the minimum amount of tax
required to be withheld by law; or

(c)           delivering to the Company previously owned and unencumbered shares
of Common Stock.

In addition, in the Company’s sole discretion and consistent with the Company’s
rules (including, but not limited to, compliance with the Company’s Policy on
Insider Trading) and regulations, the Company  may permit the Grantee to pay the
withholding or other taxes due as a result of the vesting of the Grantee’s PSUs
by delivery (on a form acceptable to the Committee or the Company) of an
irrevocable direction to a licensed securities broker to sell shares and to
deliver all or part of the sales proceeds to the Company in payment of the
withholding or other taxes.

 
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12.2           Notwithstanding any action the Company takes with respect to any
or all income tax, social insurance, payroll tax, or other tax-related
withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related
Items is and remains the Grantee's responsibility and the Company (a) makes no
representation or undertakings regarding the treatment of any Tax-Related Items
in connection with the grant, vesting or settlement of the PSUs or the
subsequent sale of any shares, and (b) does not commit to structure the PSUs to
reduce or eliminate the Grantee's liability for Tax-Related Items.

13.           Compliance with Law. The issuance and transfer of shares of Common
Stock in connection with the PSUs shall be subject to compliance by the Company
and the Grantee with all applicable requirements of federal and state securities
laws and with all applicable requirements of any stock exchange on which the
Company's shares of Common Stock may be listed. No shares of Common Stock shall
be issued or transferred unless and until any then applicable requirements of
state and federal laws and regulatory agencies have been fully complied with to
the satisfaction of the Company and its counsel.

14.           Notices. Any notice required to be delivered to the Company under
this Agreement shall be in writing and addressed to the Secretary of the Company
at the Company's principal corporate offices. Any notice required to be
delivered to the Grantee under this Agreement shall be in writing and addressed
to the Grantee at the Grantee's address as shown in the records of the Company.
Either party may designate another address in writing (or by such other method
approved by the Company) from time to time.

15.           Governing Law. This Agreement will be construed and interpreted in
accordance with the laws of the State of Delaware without regard to conflict of
law principles.

16.           Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by the Grantee or the Company to the Committee for
review. The resolution of such dispute by the Committee shall be final and
binding on the Grantee and the Company.

17.           PSUs Subject to Plan. This Agreement is subject to the Plan as
approved by the Company's stockholders. The terms and provisions of the Plan as
it may be amended from time to time are hereby incorporated herein by reference.
In the event of a conflict between any term or provision contained herein and a
term or provision of the Plan, the applicable terms and provisions of the Plan
will govern and prevail.

18.           Successors and Assigns. The Company may assign any of its rights
under this Agreement. This Agreement will be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement will be binding upon
the Grantee and the Grantee's beneficiaries, executors, administrators and the
person(s) to whom the PSUs may be transferred by will or the laws of descent or
distribution.

 
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19.           Severability. The invalidity or unenforceability of any provision
of the Plan or this Agreement shall not affect the validity or enforceability of
any other provision of the Plan or this Agreement, and each provision of the
Plan and this Agreement shall be severable and enforceable to the extent
permitted by law.

20.           Discretionary Nature of Plan. The Plan is discretionary and may be
amended, cancelled or terminated by the Company at any time, in its discretion.
The grant of the PSUs in this Agreement does not create any contractual right or
other right to receive any PSUs or other Awards in the future. Future Awards, if
any, will be at the sole discretion of the Company. Any amendment, modification,
or termination of the Plan shall not constitute a change or impairment of the
terms and conditions of the Grantee's employment with the Company.

21.           Amendment. The Committee has the right to amend, alter, suspend,
discontinue or cancel the PSUs, prospectively or retroactively; provided, that,
no such amendment shall adversely affect the Grantee's material rights under
this Agreement without the Grantee's consent.

22.           Section 162(m). All payments under this Agreement are intended to
constitute “qualified performance-based compensation” within the meaning of
Section 162(m) of the Code. This Award shall be construed and administered in a
manner consistent with such intent.

23.           Section 409A. This Agreement is intended to comply with Section
409A of the Code or an exemption thereunder and shall be construed and
interpreted in a manner that is consistent with the requirements for avoiding
additional taxes or penalties under Section 409A of the Code. Notwithstanding
the foregoing, the Company makes no representations that the payments and
benefits provided under this Agreement comply with Section 409A of the Code and
in no event shall the Company be liable for all or any portion of any taxes,
penalties, interest or other expenses that may be incurred by the Grantee on
account of non-compliance with Section 409A of the Code.  To the extent required
in order to avoid the imposition of any interest, penalties and additional tax
under Section 409A of the Code, any shares deliverable as a result of the
Grantee’s termination of Continuous Service will be delayed for six months and
one day following such termination of Continuous Service, or if earlier, the
date of the Grantee’s death, if the Grantee is deemed to be a “specified
employee” as defined in Section 409A of the Code and as determined by the
Company.

24.           No Impact on Other Benefits. The value of the Grantee's PSUs is
not part of his or her normal or expected compensation for purposes of
calculating any severance, retirement, welfare, insurance or similar employee
benefit.

25.           Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together will constitute
one and the same instrument. Counterpart signature pages to this Agreement
transmitted by facsimile transmission, by electronic mail in portable document
format (.pdf), or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, will have the same
effect as physical delivery of the paper document bearing an original signature.

 
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26.           Acceptance. The Grantee hereby acknowledges receipt of a copy of
the Plan and this Agreement. The Grantee has read and understands the terms and
provisions thereof, and accepts the PSUs subject to all of the terms and
conditions of the Plan and this Agreement. The Grantee acknowledges that there
may be adverse tax consequences upon the vesting or settlement of the PSUs or
disposition of the underlying shares and that the Grantee has been advised to
consult a tax advisor prior to such vesting, settlement or disposition.

27.           Forfeiture and Company Right to Recover Fair Market Value of
Shares Received Pursuant to PSUs.  If, at any time, the Board or the Committee,
as the case may be, in its sole discretion determines that any action or
omission by the Grantee constituted (a) wrongdoing that contributed to any
material misstatement in or omission from any report or statement filed by the
Company with the U.S. Securities and Exchange Commission or (b) intentional or
gross misconduct, (c) a breach of a fiduciary duty to the Company or a
Subsidiary, (d) fraud or (e) non-compliance with the Company’s Code of Conduct
and Business Ethics, policies or procedures to the material detriment of the
Company, then in each such case, commencing with the first year of the Company
during which such action or omission occurred, the Grantee shall forfeit
(without any payment therefor) up to 100% of any PSUs that have not been vested
or settled and shall repay to the Company, upon notice to the Grantee by the
Company, up to 100% of the Fair Market Value of the shares at the time such
shares were delivered to the Grantee pursuant to the PSUs during and after such
year.  The Board or the Committee, as the case may be, shall determine in its
sole discretion the date of occurrence of such action or omission, the
percentage of the PSUs that shall be forfeited and the percentage of the Fair
Market Value of the shares delivered pursuant to the PSUs that must be repaid to
the Company.

[SIGNATURE PAGE FOLLOWS]
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 

   
AUDIOEYE, INC.
        By:
/s/ James Crawford
   
Name: James Crawford
   
Title: Chief Operating Officer
        By:
/s/ Nathaniel Bradley
   
Name: Nathaniel Bradley

 
 
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EXHIBIT A

Performance Period

Each Performance Period shall commence on April 1 and end on March 31 of the
following year.

Performance Measures

The number of PSUs earned shall be determined for a Performance Period by
reference to the Company's actual achievement against the following Performance
Periods:

(a)           Targeted Sales (as to 37.50%)

(b)           Targeted Cash Flow (as to 37.50%) and

(c)           Board Defined Operations Goals (as to 25.0%) for a Performance
Period.

As used herein, Targeted Sales and Targeted Cash Flow are as set forth on
Exhibit A-1. With regard to Board Defined Operations Goals, the Company’s board
of directors or Committee shall in its sole discretion establish goals as to
specific matters and amounts with respect to a Performance Period.  These goals
will focus on continued development of the Company’s intellectual property
strategy, filing of new patents and effective implementation of I.P. licensing
strategy and protection of I.P. rights.

As set forth on Exhibit A-2, there shall be Threshold Units, Target Units and
Max Units.

Determining PSUs Earned

The Grantee earns Performance Units at the rate of (a) 50% of Target Units if
75% of the Performance Goals have been achieved for a Performance Period
(“Threshold Units”), (b) 100% of the Target Units if the Performance Goals have
been achieved for a Performance Period (“Target Units”), and (c) 200% of the
Target Units if 125% of the Performance Goals have been achieved for a
Performance Period (“Max Units”).

Awards of PSUs for performance achievement between Threshold Units and Max Units
shall be calculated based on linear interpolation between Threshold to Target
and Target to Max.  As an example of linear interpolation, if 110% of the
Performance Goals have been achieved, the Performance units earned are 140% of
the Target Units and calculated as:

1 + 
(Actual Performance % - Target Goal %) * (Max Payout % - Target Payout %)
   
(Max Goal % - Target Goal %)
   
OR:
 

 
1 + 
(110% - 100%) * (200% - 100%)
 = 140%
 
(125% - 100%)

 
 
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Unearned PSUs

Unless Max Units are earned in the first two Performance Periods, any unearned
PSUs may be earned as of the end of the third Performance Period based on the
cumulative achievement of Performance Goals.
 
 
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EXHIBIT A-1
 
MANAGEMENT SALES & CASH FLOW FORECASTS
 
Management’s forecast of Sales and Cash Flows over the next three years along
with Threshold and Max performance goals:
 

   
Period 1
   
Period 2
   
Period 3
     
3yr Cumulative
 
Management Forecast:
         
Sales
  $ 1,750,000     $ 8,065,000     $ 22,120,953       $ 31,935,953  
Cash Flow
  $ (1,500,091 )   $ (440,540 )   $ 5,071,565       $ 3,130,834                
                     
Performance Goals:
                                 
Threshold
    75 %     75 %     75 %       75 %
Max
    125 %     125 %     125 %       125 %                                    
Sales:
                                 
Threshold
  $ 1,312,500     $ 6,043,750     $ 16,590,715       $ 23,951,965  
Target
  $ 1,750,000     $ 3,065,000     $ 22,120,953       $ 31,935,953  
Max
  $ 2,137,500     $ 10,031,250     $ 27,651,191       $ 39,919,941              
                       
Cash Flow:
                                 
Threshold
  $ (2,000,121 )
 
$ (587,520 )
 
$ 3,803,674       $ 2,343,126  
Target
  $ (1,500,091 )   $ (440,640 )   $ 5,071,565       $ 3,130,834  
Max
  $ (1,200,073 )   $ (352,512 )   $ 6,339,456       $ 3,913,543  

 
 
 

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EXHIBIT A-2
 
EQUITY COMPENSATION FOR MR. NATHAN BRADLEY

Breakdown of units granted by metric and year:
 
Metric
   
Metric Weight
   
Period
 
Period Weight
   
Threshold Unit;
   
Target Units
   
Max Units
             
Period 1
   
33.33
%
   
12,500
     
25,000
     
50,000
 
Sales Growth
   
37.50
%
 
Period 2
   
33.33
%
   
12,500
     
25,000
     
50,000
             
Period 3
   
33.33
%
   
12,500
     
25,000
     
50,000
                           
37,500
     
75,000
     
150,000
                                                           
Period 1
   
33 33
%
   
12,500
     
25,000
     
50,000
 
Operating Cash Flow
   
37.50
%
 
Period 2
   
33 33
%
   
12,500
     
25,000
     
50,000
             
Period 3
   
33 33
%
   
12,500
     
25,000
     
50,000
                           
37,500
     
75,000
     
150,000
                                                         
Period 1
   
33 33
%
   
8,333
     
16,667
     
33,333
 
BOD defined Ops Goals
   
25.00
%
 
Period 2
   
33 33
%
   
8,333
     
16,667
     
33,333
             
Period 3
   
33 33
%
   
8,334
     
16,666
     
33,334
                           
25,000
     
50,000
     
100,000
                                                                         
100,000
     
200,000
     
400,000
                                                           
Period 1
           
33,333
     
66,667
     
133,333
 
All Metrics
         
Period 2
           
33,333
     
66,667
     
133,333
             
Period 3
           
33,334
     
66,666
     
133,334
                           
100,000
     
200,000
     
400,000
 

 
 

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