Exhibit 10.11

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into
as of February 27, 2019, with an effective date of January 1, 2019 (the
“Effective Date”), by and between AudioEye, Inc., a Delaware corporation with an
address at 5210 East Williams Circle, Suite 750, Tucson, Arizona 85711 (the
“Company”), and Sean Bradley, a natural person (“Executive”).

 

WITNESSETH:

 

WHEREAS, Executive desires to be employed by the Company as its Co-Founder,
President, and Chief Strategy Officer (the “Position”) and the Company wishes to
employ Executive in such capacity;

 

NOW, THEREFORE, in consideration of the foregoing recitals and the respective
covenants and agreements of the parties contained in this document, the Company
and Executive hereby agree as follows:

 

1.         Employment and Duties. The Company agrees to employ and Executive
agrees to serve in the Position.  The duties and responsibilities of Executive
shall include the duties and responsibilities as the Board of Directors of the
Company (the “Board”), the Executive Chairman or the Chief Executive Officer may
from time to time reasonably assign to Executive.

 

Executive shall devote all of his business time, attention, and energies to the
business of the Company, provided that nothing in this Section 1 shall prohibit
Executive from (a) serving as a director or trustee of any charitable or
educational organization or (b) engaging in additional activities in connection
with personal investments and community affairs, as long as these additional
activities do not materially interfere, individually or collectively, with the
performance of the duties and responsibilities of Executive, and these
activities are not inconsistent with Executive’s duties under this Agreement and
do not violate the terms of Section 13.

 

2.         Term. The term of this Agreement shall commence on the Effective Date
and shall continue for a period of one (1) year (the “Term”) unless earlier
terminated pursuant to Section 6 or Section 11. If Executive’s employment with
the Company continues after the expiration of the Term, then any such employment
after the Term shall be on an at will basis, meaning that either Executive or
the Company may terminate the employment relationship and this Agreement at any
time, for any or no reason, subject to the notice requirements in Section 11(g)
of this Agreement.  “Employment Period” shall mean the period that Executive is
employed by the Company.

 

3.         Place of Employment. Executive’s job site shall be in Tucson, Arizona
(the “Job Site”).  The parties acknowledge, however, that Executive may be
required to travel in connection with the performance of his duties hereunder.

 

4.         Base Salary. For all services to be rendered by Executive pursuant to
this Agreement, the Company agrees to pay Executive during the Employment Period
a base salary (the “Base Salary”) at an annual rate of $210,000.  The Base
Salary shall be paid in periodic installments in accordance with the Company’s
regular payroll practices.

 

 

 

 

5          Bonuses. During the Employment Period, the Board or the Compensation
Committee of the Board (the “Compensation Committee”) in its sole discretion may
grant to Executive a bonus or bonuses.

 

6.         Severance Compensation. The Company may terminate Executive’s
employment during the Term by providing written notice of the termination date
pursuant to Section 11(g), subject to any additional notice requirements for a
termination for “Cause” set forth in Section 11(c)(2). Upon termination of
Executive’s employment prior to expiration of the Term, unless Executive’s
employment is (i) terminated for Cause, (ii) terminated as a result of Death or
Disability or (iii) Executive terminates his employment without Good Reason,
then:

 

(a)       Executive shall be entitled to receive (i) Base Salary earned through
the termination date; (ii) reimbursement of reasonable expenses paid or incurred
by Executive in connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the termination
date, (iii) any accrued but unused vacation time through the termination date in
accordance with Company policy, and (iv) an amount equal to Executive’s Base
Salary (the “Separation Payment”), during the prior twelve (12) months (the
“Separation Period”), provided that Executive executes an agreement releasing
Company and its affiliates from any liability associated with Executive’s
employment with the Company in form and terms satisfactory to the Company and
that all time periods imposed by law permitting cancellation or revocation of
such release by Executive shall have passed or expired; and subject to anything
to the contrary in Section 11(d)(3), the Separation Payment shall be paid in
substantially equal installments over the course of the twelve (12) months
following the date of termination in accordance with the customary payroll
practices of the Company.

 

7.         Equity Awards. Executive shall be eligible for such grants of awards
under the AudioEye, Inc. 2012 Incentive Compensation Plan (or any successor or
replacement plan adopted by the Board and approved by the stockholders of the
Company, the “Plan”) as the Compensation Committee may from time to time
determine (the “Share Awards”).  Share Awards shall be subject to the applicable
Plan terms and conditions; provided, however, that Share Awards shall be subject
to any additional terms and conditions as are provided herein or in any award
agreement, which shall supersede any conflicting provisions governing Share
Awards provided under the Plan.

 

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8.         Clawback Rights. All amounts paid to Executive by the Company (other
than Executive’s Base Salary and reimbursement of expenses pursuant to paragraph
9 hereof) during the Employment Period and any time thereafter and any and all
stock based compensation (such as options and equity awards) granted during the
Employment Period and any time thereafter (collectively, the “Clawback
Benefits”) shall be subject to “Clawback Rights” and to Executive’s repayment of
or surrender to the Company the Clawback Benefits during the period that
Executive is employed by the Company and upon the termination of Executive’s
employment, for a period of three (3) years thereafter, if any of the following
events occur. If a restatement (a “Restatement”) of any financial results from
which any Clawback Benefits to Executive shall have been determined (such
restatement resulting from material non-compliance of the Company with any
financial reporting requirement under the federal securities laws and shall not
include a restatement of financial results resulting from subsequent changes in
accounting pronouncements or  requirements which were not in effect on the date
the financial statements were originally prepared), then Executive agrees to
immediately repay or surrender upon demand by the Company any Clawback Benefits
which were determined by reference to any Company financial results which were
later restated, to the extent the Clawback Benefits amounts paid exceed the
Clawback Benefits amounts that would have been paid, based on the restatement of
the Company’s financial information.  All Clawback Benefits amounts resulting
from such Restatements shall be retroactively adjusted by the Compensation
Committee to take into account the restated results. If any such excess portion
of the Clawback Benefits resulting from such restated results is not so repaid
or surrendered by Executive within ninety (90) days of the revised calculation
being provided to Executive by the Company following a publicly announced
restatement, then the Company shall have the right to take any and all action to
effectuate such adjustment.

 

The amount of Clawback Benefits to be repaid or surrendered to the Company shall
be determined by the Compensation Committee and applicable law, rules and
regulations.  All determinations by the Compensation Committee with respect to
the Clawback Rights shall be final and binding on the Company and
Executive.  The parties acknowledge it is their intention that the foregoing
Clawback Rights as relates to Restatements conform in all respects to the
provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (the “Dodd Frank Act”) and requires recovery of all “incentive-based”
compensation, pursuant to the provisions of the Dodd Frank Act and any and all
rules and regulations promulgated thereunder from time to time in
effect.  Accordingly, the terms and provisions of this Agreement shall be deemed
automatically amended from time to time to assure compliance with the Dodd Frank
Act and such  rules and regulation as hereafter may be adopted and in effect.

 

9.         Expenses. Executive shall be entitled to prompt reimbursement by the
Company for all reasonable ordinary and necessary travel, entertainment, and
other expenses incurred by Executive while employed (in accordance with the
policies and procedures established by the Company for its senior executive
officers) in the performance of his duties and responsibilities under this
Agreement; provided, that Executive shall properly account for such expenses in
accordance with Company policies and procedures.

 

10.       Other Benefits; Vacation. During the Employment Period, Executive
shall be eligible to participate in incentive, stock purchase, savings,
retirement (401(k)), and welfare benefit plans, including, without limitation,
health, medical, dental, vision, life (including accidental death and
dismemberment) and disability insurance plans (collectively, “Benefit Plans”),
in substantially the same manner and at substantially the same levels as the
Company makes such opportunities available to the Company’s managerial or
salaried executive employees.  During the Employment Period, Executive shall be
entitled to accrue, on a pro rata basis, twenty (20) paid vacation days per
year, which if not taken will accrue and be carried forward. Vacation shall be
taken at such times as are mutually convenient to Executive and the Company and
no more than twenty (20) consecutive days shall be taken at any one time without
the advance written approval of the Chief Executive Officer.

 

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11.       Termination of Employment.

 

(a)       Death. If Executive dies during the Employment Period, this Agreement
and Executive’s employment with the Company shall automatically terminate and
the Company shall have no further obligations to Executive or his heirs,
administrators or executors with respect to compensation and benefits accruing
thereafter, except for the obligation to pay to Executive’s heirs,
administrators or executors any earned but unpaid Base Salary, reimbursement of
any and all reasonable expenses paid or incurred by Executive in connection with
and related to the performance of his duties and responsibilities for the
Company during the period ending on the termination date and any accrued but
unused vacation time through the termination date in accordance with Company
policy.  The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions.  

 

(b)       Disability. In the event that, during the Employment Period Executive
shall be prevented from performing his duties and responsibilities hereunder to
the full extent required by the Company by reason of Disability (as defined
below), this Agreement and Executive’s employment with the Company shall
automatically terminate and the Company shall have no further obligations or
liability to Executive or his heirs, administrators or executors with respect to
compensation and benefits accruing thereafter, except for the obligation to pay
Executive or his heirs, administrators or executors any earned but unpaid Base
Salary, reimbursement of any and all reasonable expenses paid or incurred by
Executive in connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the termination
date and any accrued but unused vacation time through the termination date in
accordance with Company policy. The Company shall deduct, from all payments made
hereunder, all applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions through the last date of Executive’s employment with the
Company. For purposes of this Agreement, “Disability” shall mean a physical or
mental disability that prevents the performance by Executive, with or without
reasonable accommodation, of his duties and responsibilities hereunder for a
total of sixty five (65) business days during any twelve (12) consecutive
months.

 

(c)       Cause.

 

(1)       At any time during the Employment Period, the Company may terminate
this Agreement and Executive’s employment hereunder for Cause. For purposes of
this Agreement, “Cause” shall consist of a termination due to the following, as
specified in the written notice of termination (and in each case following
written notice a failure by Executive to cure within thirty (30) days of such
notice except as to clauses (E) or (F) which shall not be subject to cure): (A)
Executive’s failure to substantially perform the fundamental duties and
responsibilities associated with Executive’s position for any reason other than
a physical or mental disability, including Executive’s failure or refusal to
carry out reasonable instructions; (B) Executive’s material breach of any
material written Company policy; (C) Executive’s gross misconduct in the
performance of Executive’s duties for the Company; (D) Executive’s material
breach of the terms of this Agreement; (E) being arrested or charged with any
fraudulent or felony criminal offense or any other criminal offense which
reflects adversely on the Company or reflects conduct or character that the
Board reasonably concludes is inconsistent with continued employment; or (F) any
criminal conduct that is a “statutory disqualifying event” (as defined under
federal securities laws, rules and regulations).

 

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(2)       Prior to any termination for Cause, Executive will be given five (5)
business days written notice specifying the alleged Cause event and will be
entitled to appear (with counsel) before the full Board to present information
regarding his views on the Cause event, and after such hearing, there is at
least a majority vote of the full Board to terminate him for Cause.  After
providing the notice in foregoing sentence, the Board may suspend Executive with
full pay and benefits until a final determination pursuant to this Section 11(c)
has been made.

 

(3)       Upon termination of this Agreement for Cause, the Company shall have
no further obligations or liability to Executive or his heirs, administrators or
executors with respect to compensation and benefits thereafter, except for the
obligation to pay Executive any earned but unpaid Base Salary, reimbursement of
any and all reasonable expenses paid or incurred by Executive in connection with
and related to the performance of his duties and responsibilities for the
Company during the period ending on the termination date, and any accrued but
unused vacation time through the termination date in accordance with Company
policy.  The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions.

 

(d)       Good Reason and Without Cause.

 

(1)       At any time during the term of this Agreement, subject to the
conditions set forth in Section 11(d)(2) below, Executive may terminate this
Agreement and Executive’s employment with the Company for “Good Reason.”  For
purposes of this Agreement, “Good Reason” shall mean any of the following
actions taken by the Company or a successor corporation or entity without
Executive’s consent: (A) material reduction of Executive’s base compensation;
(B) material reduction in Executive’s title, authority, duties or
responsibilities; (C) failure or refusal of a successor to the Company to
materially assume the Company’s obligations under this Agreement in the event of
a Change of Control as defined in Section 11(f)(ii); (D) relocation of
Executive’s Job Site that results in an increase in Executive’s one-way driving
distance by more than fifty (50) miles from Executive’s then-current principal
residence; or (E) any other material breach by the Company of this Agreement.

 

(2)       Executive shall not be entitled to terminate this Agreement for Good
Reason unless and until he or she shall have delivered written notice to the
Company within ninety (90) days of the date upon which the facts giving rise to
Good Reason occurred of his intention to terminate this Agreement and his
employment with the Company for Good Reason, which notice specifies in
reasonable detail the circumstances claimed to provide the basis for such
termination for Good Reason, the Company shall not have eliminated the
circumstances constituting Good Reason within thirty (30) days of its receipt
from Executive of such written notice, and Executive, in fact, terminates this
Agreement and his employment with the Company for Good Reason within 120 days
following the initial existence of the event triggering Good Reason.

 

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(3)       In the event that Executive terminates this Agreement and his
employment with the Company for Good Reason or the Company terminates this
Agreement and Executive’s employment with the Company without Cause, the Company
shall pay or provide to Executive (or, following his death, to Executive’s
heirs, administrators or executors) the Separation Payment amount.  The Company
shall deduct, from all payments made hereunder, all applicable taxes, including
income tax, FICA and FUTA, and other appropriate deductions.

 

(4)       Notwithstanding anything herein to the contrary, the benefits to
Executive under this Agreement shall be reduced by the amount of any insurance
proceeds payable to Executive, as determined by the Company, but only to the
extent that such reduction would not cause adverse tax consequences under
Section 409A of the Code (as defined below).

 

(e)       Without “Good Reason” by Executive. At any time during the term of
this Agreement, Executive shall be entitled to terminate this Agreement and
Executive’s employment with the Company without Good Reason by providing prior
written notice of at least thirty (30) days to the Company.  Upon termination by
Executive of this Agreement or Executive’s employment with the Company without
Good Reason, the Company shall have no further obligations or liability to
Executive or his heirs, administrators or executors with respect to compensation
and benefits thereafter, except for the obligation to pay Executive any earned
but unpaid Base Salary, reimbursement of any and all reasonable expenses paid or
incurred by Executive in connection with and related to the performance of his
duties and responsibilities for the Company during the period ending on the
termination date, and any accrued but unused vacation time through the
termination date in accordance with Company policy. The Company shall deduct,
from all payments made hereunder, all applicable taxes, including income tax,
FICA and FUTA, and other appropriate deductions.

 

(f)       Change of Control. For purposes of this Agreement, “Change of Control”
shall mean the occurrence of any one or more of the following: (i) the
accumulation (if over time, in any consecutive twelve (12) month period),
whether directly, indirectly, beneficially or of record, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) of 50.1% or more of the shares of
the outstanding common stock of the Company, whether by merger, consolidation,
sale or other transfer of shares of Company common stock (other than a merger or
consolidation where the stockholders of the Company prior to the merger or
consolidation are the holders of a majority of the voting securities of the
entity that survives such merger or consolidation), (ii) a sale of all or
substantially all of the assets of the Company or (iii) during any period of
twelve (12) consecutive months, the individuals who, at the beginning of such
period, constitute the Board, and any new director whose election by the Board
or nomination for election by the Company’s stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the 12-month period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board; provided, however, that the
following acquisitions shall not constitute a Change of Control for the purposes
of this Agreement: (A) any acquisitions of Company common stock or securities
convertible, exercisable or exchangeable into Company common stock directly from
the Company, or (B) any acquisition of Company common stock or securities
convertible, exercisable or exchangeable into Company common stock by any
employee benefit plan (or related trust) sponsored by or maintained by the
Company.

 

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(g)       Any termination of Executive’s employment by the Company or by
Executive (other than termination by reason of Executive’s death) shall be
communicated by written Notice of Termination to the other party of this
Agreement. For purposes of this Agreement, a “Notice of Termination” shall mean
a written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated, provided, however, failure to
provide timely notification shall not affect the employment status of Executive.

 

12.       Confidential Information.

 

(a)       Disclosure of Confidential Information. Executive recognizes,
acknowledges and agrees that he or she has had and will continue to have access
to secret and confidential information regarding the Company, its subsidiaries
and their respective businesses (“Confidential Information”), including but not
limited to, its products, methods, formulas, software code, patents, sources of
supply, customer dealings, data, know-how, trade secrets and business plans,
provided such information is not in or does not hereafter become part of the
public domain, or become known to others through no fault of
Executive.  Executive acknowledges that such information is of great value to
the Company, is the sole property of the Company, and has been and will be
acquired by him in confidence.  In consideration of the obligations undertaken
by the Company herein, Executive will not, at any time, during or after his
employment hereunder, reveal, divulge or make known to any person, any
information acquired by Executive during the course of his employment, which is
treated as confidential by the Company, and not otherwise in the public domain.
The provisions of this Section 12 shall survive the termination of Executive’s
employment hereunder for a period of three (3) years. Information will not be
deemed to be Confidential Information if: (i) the information was in Executive’s
possession or within Executive’s knowledge before the Company disclosed it to
Executive; (ii) the information was or became generally known to those who could
take economic advantage of it; (iii) Executive obtained the information from a
third party that was not known by Executive to be bound by a confidentiality
agreement or other obligation of confidentiality to the Company or any other
party with respect to such information; or (iv) Executive is required to
disclose the information pursuant to legal process (e.g. a subpoena), provided
that Executive notifies the Company promptly upon receiving or becoming aware of
such legal process.

 

(b)       Executive affirms that he or she will not rely upon the protected
trade secrets or confidential or proprietary information of any prior
employer(s) in providing services to the Company or its subsidiaries.

 

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(c)       In the event that Executive’s employment with the Company terminates
for any reason, Executive shall deliver forthwith to the Company any and all
originals and copies, including those in electronic or digital formats, of
Confidential Information; provided, however, Executive shall be entitled to
retain (i) papers and other materials of a personal nature, including, but not
limited to, photographs, correspondence, personal diaries, calendars and
rolodexes, personal files and phone books, (ii) information showing his
compensation or relating to reimbursement of expenses, (iii) information that he
or she reasonably believes may be needed for tax purposes and (iv) copies of
plans, programs and agreements relating to his employment, or termination
thereof, with the Company.

 

(d)       Notwithstanding any provision of this Agreement to the contrary, under
18 U.S.C. §1833(b), “An individual shall not be held criminally or civilly
liable under any Federal or State trade secret law for the disclosure of a trade
secret that (A) is made (i) in confidence to a Federal, State, or local
government official, either directly or indirectly, or to an attorney; and (ii)
solely for the purpose of reporting or investigating a suspected violation of
law; or (B) is made in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal.” Nothing in this Agreement or any
other Company policy is intended to conflict with this statutory protection, and
no Company director, officer, or member of management has the authority to
impose any rule to the contrary.

 

13.       Non-Competition and Non-Solicitation.

 

(a)       Executive agrees and acknowledges that the non-competition
restrictions set forth herein are reasonable and necessary to protect the
Company’s legitimate proprietary interests and do not impose undue hardship or
burdens on Executive. Executive also acknowledges that the technology, software
and related products and services developed or provided by the Company and its
affiliates relating to ADA-related and other digital accessibility compliance
requirements and enhancements (the “Business”) are or are intended to be sold,
provided, licensed and/or distributed to customers and clients primarily in and
throughout the United States (the “Territory”) (to the extent the Company comes
to operate, either directly or through the engagement of a distributor or joint
or co-venturer, or sell a significant amount of its products and services to
customers located, in areas other than the United States during the Employment
Period, the definition of Territory shall be automatically expanded to cover
such other areas in which the Company did business at any time during the last
year of Employee’s employment with the Company). If that geographical scope of
the Territory is deemed by a court of competent jurisdiction to be overly broad,
then the Territory extends to the United States, Guam and Puerto Rico; or if
that geographical scope is deemed by a court to be overly broad, then the
Territory extends to the United States; or if that geographical scope is deemed
by a court of competent jurisdiction to be overly broad, then the Territory
extends to Pima County, Arizona and Maricopa County, Arizona. Executive further
acknowledges and agrees that the Territory, scope of prohibited competition with
the Business, and time duration set forth in the non-competition restrictions
set forth below are reasonable and necessary to maintain the value of the
Confidential Information of, and to protect the goodwill and other legitimate
business interests of, the Company, its affiliates and/or its clients or
customers.  The provisions of this Section 13 shall survive the termination of
Executive’s employment hereunder.

 

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(b)       Executive hereby agrees and covenants that he or she shall not without
the prior written consent of the Company, directly or indirectly, in any
capacity whatsoever, including, without limitation, as an employee, employer,
consultant, principal, partner, shareholder, officer, director or any other
individual or representative capacity (other than (i) as a holder of less than
ten (10%) percent of the outstanding securities of a Company whose shares are
traded on any national securities exchange or (ii) as a limited partner, passive
minority interest holder in a venture capital fund, private equity fund or
similar investment entity which holds or may hold an equity or debt position in
portfolio companies that are competitive with the Company’s Business; provided
however, that Executive shall be precluded from serving as an operating partner,
general partner, manager or governing board designee with respect to such
portfolio companies), or whether on Executive’s own behalf or on behalf of any
other person or entity or otherwise howsoever, during the Employment Period and
the Separation Period and thereafter to the extent described below, within the
Territory:

 

(1)       Engage, own, manage, operate, control, be employed by, consult for,
participate in, or be connected in any manner with the ownership, management,
operation or control of any business in competition with the Business of the
Company;

 

(2)       Recruit, solicit or hire, or attempt to recruit, solicit or hire, any
current or former employee, or independent contractor of the Company who was
employed by or contracted with the Company any time during the final year of
Executive’s employment with the Company, to leave the employment (or independent
contractor relationship) thereof, whether or not any such employee or
independent contractor is party to an employment agreement, for the purpose of
competing with the Business of the Company;

 

(3)       Attempt in any manner to solicit or accept from any customer of the
Company, with whom Executive had significant contact with or knowledge of during
Executive’s employment by the Company (whether under this Agreement or
otherwise), business of the kind or competitive with the Company’s Business with
such customer or to persuade or attempt to persuade any such customer to cease
to do business or to reduce the amount of business which such customer has
customarily done or might do with the Company, or if any such customer elects to
move its business to a person other than the Company, provide any services of
the kind or competitive with the Business of the Company for such customer, or
have any discussions regarding any such service with such customer, on behalf of
such other person; or

 

(4)       Interfere with the Company’s Business or with any relationship,
contractual or otherwise, between the Company and any other party, including,
without limitation, any employee, customer, supplier, distributor, co-venturer
or joint venturer of the Company, for the purpose of soliciting such other party
to discontinue or reduce its business with the Company.

 

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With respect to the activities described in Paragraphs (1), (2), (3) and (4)
above, the restrictions of this Section 13(b) shall continue during the
Employment Period and until one (1) year following the termination of this
Agreement or of Executive’s employment with the Company (including upon
expiration of this Agreement), whichever occurs later; provided, however, that
if this Agreement or Executive’s employment is terminated by Executive for Good
Reason or by the Company without Cause, then the restrictions of this Section
13(b) shall terminate concurrently with the termination and shall be of no
further effect.  In the event that any provision of this Section 13 is
determined by a court of competent jurisdiction to be unenforceable, such
provision shall not render the entire Section unenforceable but, to the extent
possible, the court may appropriately blue pencil the Section to render such
provision enforceable.

 

14.       Inventions. All systems, inventions, discoveries, apparatus,
techniques, methods, know-how, formulae or improvements made, developed or
conceived by Executive during Executive’s employment by the Company that (i) are
directly relevant to the Company’s business as then constituted, (ii) are
developed as a part of the tasks and assignments that are the duties and
responsibilities of Executive, and (iii) were created using substantially the
Company’s resources, such as time, materials and space, shall be and continue to
remain the Company’s exclusive property, without any added compensation or any
reimbursement for expenses to Executive, and upon the conception of any and
every such invention, process, discovery or improvement and without waiting to
perfect or complete it, Executive promises and agrees that Executive will
immediately disclose it to the Company and to no one else and thenceforth will
treat it as the property and secret of the Company. Executive will also execute
any instruments requested from time to time by the Company to vest in it
complete title and ownership to such invention, discovery or improvement and
will, at the request of the Company, do such acts and execute such instruments
as the Company may require, but at the Company’s expense to obtain patents,
trademarks or copyrights in the United States and foreign countries, for such
invention, discovery or improvement and for the purpose of vesting title thereto
in the Company, all without any reimbursement for expenses (except as provided
in Section 9 or otherwise) and without any additional compensation of any kind
to Executive.

 

15.       Section 409A.

 

The provisions of this Agreement are intended to comply with or meet an
exemption from Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and any final regulations and guidance promulgated thereunder
(“Section 409A”) and shall be construed in a manner consistent with the
requirements for avoiding taxes or penalties under Section 409A.  The Company
and Executive agree to work together in good faith to consider amendments to
this Agreement and to take such reasonable actions which are necessary,
appropriate or desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to Executive under Section 409A.

 

To the extent that Executive will be reimbursed for costs and expenses or
in-kind benefits, except as otherwise permitted by Section 409A, (a) the right
to reimbursement or in-kind benefits is not subject to liquidation or exchange
for another benefit, (b) the amount of expenses eligible for reimbursement, or
in-kind benefits, provided during any taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other
taxable year; provided that the foregoing clause (b) shall not be violated with
regard to expenses reimbursed under any arrangement covered by Section 105(b) of
the Code solely because such expenses are subject to a limit related to the
period the arrangement is in effect and (c) such payments shall be made on or
before the last day of the taxable year following the taxable year in which you
incurred the expense.

 

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A termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination
constitutes a “Separation from Service” within the meaning of Section 409A and,
for purposes of any such provision of this Agreement references to a
“termination,” “termination of employment” or like terms shall mean Separation
from Service.

 

Each installment payable hereunder shall constitute a separate payment for
purposes of Treasury Regulation Section 1.409A-2(b), including Treasury
Regulation Section 1.409A-2(b)(2)(iii).  Each payment that is made within the
terms of the “short-term deferral” rule set forth in Treasury Regulation Section
1.409A-1(b)(4) is intended to meet the “short-term deferral” rule.  Each other
payment is intended to be a payment upon an involuntary termination from service
and payable pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii), et.
seq., to the maximum extent permitted by that regulation, with any amount that
is not exempt from Code Section 409A being subject to Code Section 409A.

 

Notwithstanding anything to the contrary in this Agreement, if Executive is a
“specified employee” within the meaning of Section 409A, any payment otherwise
due to Executive on or within the six (6) month period following Executive’s
termination will accrue during such six (6) month period and will become payable
in one lump sum cash payment on the date six (6) months and one (1) day
following the date of Executive’s termination of employment, to the extent
required to avoid any adverse tax consequences under Section 409A.  Any
remaining payment(s), will be payable in accordance with the payment schedule
applicable to each payment or benefit. Notwithstanding anything herein to the
contrary, if Executive dies following termination but prior to the six (6) month
anniversary of Executive’s termination date, then any payments delayed in
accordance with this paragraph will be payable in a lump sum as soon as
administratively practicable after the date of Executive’s death and all other
amounts will be payable in accordance with the payment schedule applicable to
each payment or benefit, to the extent and in a manner consistent with Section
409A.

 

16.       Miscellaneous.

 

(a)       Executive acknowledges that the services to be rendered by him under
the provisions of this Agreement are of a special, unique and extraordinary
character and that it would be difficult or impossible to replace such
services.  Furthermore, the parties acknowledge that monetary damages alone
would not be an adequate remedy for any breach by Executive of Section 12 or
Section 13 of this Agreement. Accordingly, Executive agrees that any breach by
Executive of Section 12 or Section 13 of this Agreement shall entitle the
Company, in addition to all other legal remedies available to it, to apply to
any court of competent jurisdiction to seek to enjoin such breach. The parties
understand and intend that each restriction agreed to by Executive hereinabove
shall be construed as separable and divisible from every other restriction, that
the unenforceability of any restriction shall not limit the enforceability, in
whole or in part, of any other restriction, and that one or more or all of such
restrictions may be enforced in whole or in part as the circumstances warrant.
In the event that any restriction in this Agreement is more restrictive than
permitted by law in the jurisdiction in which the Company seeks enforcement
thereof, such restriction shall be limited to the extent permitted by law. The
remedy of injunctive relief herein set forth shall be in addition to, and not in
lieu of, any other rights or remedies that the Company may have at law or in
equity.

 

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(b)       Neither Executive nor the Company may assign or delegate any of their
rights or duties under this Agreement without the express written consent of the
other; provided, however, that the Company shall have the right to delegate its
obligation of payment of all sums due to Executive hereunder, provided that such
delegation shall not relieve the Company of any of its obligations hereunder.

 

(c)       During the term of this Agreement, the Company (i) shall indemnify and
hold harmless Executive and his heirs and representatives as, and to the extent,
provided in the Company’s bylaws and (ii) shall cover Executive under the
Company’s directors’ and officers’ liability insurance on the same basis as it
covers other senior executive officers and directors of the Company.

 

(d)       Agreement constitutes and embodies the full and complete understanding
and agreement of the parties with respect to Executive’s employment by the
Company, supersedes all prior understandings and agreements, whether oral or
written, between Executive and the Company, and shall not be amended, modified
or changed except by an instrument in writing executed by the party to be
charged (it being understood that, pursuant to Section 7, Share Awards shall
govern with respect to the subject matter thereof). The invalidity or partial
invalidity of one or more provisions of this Agreement shall not invalidate any
other provision of this Agreement. No waiver by either party of any provision or
condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time.

 

(e)       This Agreement shall inure to the benefit of, be binding upon and
enforceable against, the parties hereto and their respective successors, heirs,
beneficiaries and permitted assigns.

 

(f)       The headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.

 

(g)       All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when personally delivered, sent by registered or certified mail,
return receipt requested, postage prepaid, or by reputable national overnight
delivery service (e.g. Federal Express) for overnight delivery to the Company at
its principal executive office or to Executive at his address of record in the
Company’s records, or to such other address as either party may hereafter give
the other party notice of in accordance with the provisions hereof.  Notices
shall be deemed given on the sooner of the date actually received or the third
business day after deposited in the mail or one business day after deposited
with an overnight delivery service for overnight delivery.

 

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(h)       This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Arizona without reference to principles of
conflicts of laws and each of the parties hereto irrevocably consents to the
exclusive jurisdiction and venue of the federal and state courts located in the
County of Pima, State of Arizona.

 

(i)       This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one of the same instrument. The parties hereto have
executed this Agreement as of the date set forth above.

 

(j)       Executive represents and warrants to the Company that he or she has
the full power and authority to enter into this Agreement and to perform his
obligations hereunder and that the execution and delivery of this Agreement and
the performance of his obligations hereunder will not conflict with any
agreement to which Executive is a party.

 

(k)       The Company represents and warrants to Executive that it has the full
power and authority to enter into this Agreement and to perform its obligations
hereunder and that the execution and delivery of this Agreement and the
performance of its obligations hereunder will not conflict with any agreement to
which the Company is a party.

 

[Remainder of page intentionally left blank; signature page follows.]

 

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IN WITNESS WHEREOF, Executive and the Company have caused this Executive
Employment Agreement to be executed as of the date first above written.

 

  THE COMPANY:         AUDIOEYE, INC.         By: /s/ Todd A. Bankofier    
Name:       Todd Bankofier     Title:         Chief Executive Officer        
EXECUTIVE:         /s/ Sean Bradley   Sean Bradley

 

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