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AudioEye, Inc. 8-K
[audioeye_8k.htm]
 
Exhibit 10.1

AGREEMENT AND PLAN OF MERGER
 
AGREEMENT AND PLAN OF MERGER (this “Agreement”), as of March 22, 2013 by and
between AudioEye, Inc., a Delaware corporation (“AE”), and AudioEye Acquisition
Corporation, a Nevada corporation (“AEAC”).
 
WHEREAS, the Boards of Directors of AE and AEAC deem it advisable for the mutual
benefit of AE and AEAC and their respective stockholders that AEAC be merged
with and into AE (the “Merger”), and have approved this Agreement; and
 
WHEREAS, the Boards of Directors of AE and AEAC have unanimously resolved to
recommend to their respective stockholders acceptance of the Merger and the
other transactions contemplated herein.
 
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and for the purpose of setting
forth certain terms and conditions of the Merger, and the mode of carrying the
same into effect, AEAC and AE hereby agree as follows:
 
ARTICLE 1
MERGER AND ORGANIZATION
 
SECTION 1.1 The Merger.  As of the Effective Date (as hereinafter defined),
subject to the terms and conditions hereof and in accordance with the provisions
of the Delaware General Corporation Law and the Nevada Revised Statutes, AEAC
shall be merged with and into AE.  AE shall be the surviving entity (the
“Surviving Entity”) and the separate existence of AEAC shall cease as of the
Effective Date.  AE and AEAC are herein sometimes referred to as the
“Constituent Corporations.”  It is the intention of the parties hereto that the
Merger qualify as a tax-free reorganization under Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the “Code”), and related sections
thereunder.
 
SECTION 1.2 Effect of Merger.  The parties agree to the following provisions
with respect to the Merger:
 
(a)   Name of Surviving Corporation.  As of the Effective Date, the name of the
Surviving Entity shall continue to be AudioEye, Inc.
 
(b)   Certificate of Incorporation.  As of the Effective Date, the Certificate
of Incorporation of the Surviving Entity shall continue unchanged and be the
Certificate of Incorporation of the Surviving Entity.
 
(c)   By-Laws.  As of the Effective Date, the By-Laws of the Surviving Entity
shall continue unchanged and be the Bylaws of the Surviving Entity.
 
 
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(d)   Corporate Organization.  Commencing with the Effective Date, the Surviving
Entity shall continue its corporate existence as a Delaware corporation and
(i) it shall thereupon and thereafter possess all rights, privileges, powers,
franchises and property (real, personal and mixed) of each of the Constituent
Corporations; (ii) all debts due to either of the Constituent Corporations, on
whatever account, all causes in action and all other things belonging to either
of the Constituent Corporations shall be taken and deemed to be transferred to
and shall be vested in the Surviving Entity by virtue of the Merger without
further act or deed; and (iii) all rights of creditors and all liens, if any,
upon any property of any of the Constituent Corporations shall be preserved
unimpaired, limited in lien to the property affected by such liens immediately
prior to the Effective Date, and all debts, liabilities and duties of the
Constituent Corporations shall thenceforth be attached to the Surviving
Entity.  Without limiting the generality of the foregoing, the 8% Secured
Convertible Debentures of AEAC (the “Debentures”) shall be assumed by AE, and
the conversion price immediately following the Effective Date shall be $0.25 per
share of AE Common Stock.
 
(e)   Filing of Certificate of Merger.  Subject to and promptly following the
satisfaction or waiver of all the conditions precedent to the Merger set forth
herein, AE and AEAC shall cause the Merger to be consummated by filing with the
Secretary of State of the States of Delaware and Nevada a certificate of Merger
(the “Articles of Merger”) in such form as is required by and executed in
accordance with the relevant provisions of Delaware and Nevada law and as
otherwise agreed to by AE and AEAC (the date of such filing being the “Effective
Date”).  AEAC and AE shall use commercially reasonable efforts to cause the
Articles of Merger to be filed with the Secretary of State of the States of
Delaware and Nevada so that the Effective Date occurs on the Closing Date (as
defined below).
 
(f)   Closing.  Upon the terms and subject to the conditions set forth herein,
the consummation of the Merger and the other transactions contemplated by this
Agreement (the “Closing”) shall be held at the offices of TroyGould PC, 1801
Century Park East, 16th Floor, Los Angeles, California 90067, commencing at
10:00 a.m. local time on the second business day after satisfaction of the last
to be satisfied of the conditions set forth in Article 7 (other than those
conditions that, by their terms, are to be satisfied at the Closing), or at such
other time, date or place as the parties hereto may mutually agree (the “Closing
Date”).
 
(g)   Further Assurances.  If at any time after the Effective Date, the
Surviving Entity shall consider or be advised that any deeds, bills of sale,
assignments or assurances or any other things are necessary, desirable or proper
(a) to vest, perfect or confirm, of record or otherwise, in the Surviving
Entity, its right, title or interest in, to or under any of the rights,
properties or assets of the Constituent Corporations acquired or to be acquired
as a result of the Merger, or (b) otherwise to carry out the purposes of this
Agreement, the Constituent Corporations agree that the Surviving Entity and its
proper officers and directors shall be authorized to execute and deliver, in the
name and on behalf of the Constituent Corporations, all such deeds, bills of
sale, assignments and assurances and do, in the name and on behalf of the
Constituent Corporations, all such other acts and things necessary, desirable or
proper to best perfect or confirm its right, title or interest in, to or under
any of the rights, properties or assets of the Constituent Corporations acquired
or to be acquired as a result of the Merger and otherwise to carry out the
purposes of this Agreement.
 
 
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(h)   Officers and Directors.  Upon consummation of the Merger, the officers and
directors of AE immediately prior to the Effective Date shall continue to be the
officers and directors of the Surviving Entity.
 
(i)   Events Occurring Immediately Prior to the Closing.  It is currently
contemplated that prior to the Merger becoming effective under Delaware and
Nevada law, AEAC shall close a private offering under Regulation D, Rule 506, as
promulgated by the Securities and Exchange Commission (“SEC”) under the
Securities Act of 1933, as amended (the “Securities Act”), pursuant to which it
may issue additional AEAC Debentures (the “Private Placements”).  All of the
Debentures will be included in the convertible securities of AEAC that are
outstanding at the time of the Merger and will be assumed by the Surviving
Entity in accordance with Sections 1.2(d) and 2.1(c), below.
 
ARTICLE 2
THE MERGER
 
SECTION 2.1 Conversion of Shares in the Merger.
 
On the Effective Date, and without any action on the part of either of the
Constituent Corporations, each of the following shall occur:
 
(a)   Each share of AEAC Common Stock issued and outstanding immediately prior
to the Effective Date shall be converted into .94134 restricted share of AE
Common Stock (the “Merger Shares”).  All such shares of AEAC Common Stock shall
no longer be outstanding and shall automatically be cancelled and shall cease to
exist, and each certificate previously evidencing any such shares shall
thereafter represent the right to receive, upon the surrender of such
certificate in accordance with the provisions of Section 2.4 hereof,
certificates evidencing such numbers of shares of AE Common Stock, respectively,
into which such shares of AEAC Common Stock were converted.  The holders of such
certificates previously evidencing shares of AEAC Common Stock outstanding
immediately prior to the Effective Date shall cease to have any rights with
respect to such shares of AEAC Common Stock except as otherwise provided herein
or by law;
 
(b)   Any shares of AEAC capital stock held in the treasury of AEAC immediately
prior to the Effective Date shall automatically be canceled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto; and
 
(c)   The Debentures shall be converted into Debentures of AE as provided in
Section 1.2(d), above.
 
SECTION 2.2 Further Transfer of Stock.  Prior to the Merger, each shareholder of
AEAC may distribute all or any of its shares of AEAC Common Stock as it
determines in accordance with any and all applicable state and federal
securities laws, and shall provide counsel to AE with a list of any such
transfers at the time of Closing for delivery to the Transfer Agent (as defined
below).
 
 
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SECTION 2.3 Surrender of Certificates.  AE has designated Corporate Stock
Transfer, Inc. as Transfer Agent (the “Transfer Agent”) hereunder.  Immediately
following the Closing, AE shall have mailed and/or made available to each former
AEAC shareholder a notice and letter of transmittal advising such holder of the
effectiveness of the Merger and the procedure for receiving shares of common
stock of the Surviving Entity.  Upon the surrender to the Transfer Agent of the
certificates evidencing AEAC stock, together with a letter of transmittal from
each former AEAC stockholder, duly executed and completed in accordance with the
instructions thereon, the Transfer Agent shall promptly issue shares of common
stock of the Surviving Entity to the former AEAC shareholders in accordance with
the terms of this Agreement.  In order to receive the shares of AE Common Stock,
among other things, the former AEAC stockholders will be required to make
customary investment representations in view of the restricted status of such
shares.
 
ARTICLE 3
 
ADDITIONAL AGREEMENTS IN CONNECTION WITH THE MERGER
 
SECTION 3.1 Reasonable Efforts. Subject to the terms and conditions hereof, each
of the parties hereto agrees to use any and all reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the conditions of Closing set forth herein.
 
SECTION 3.2 AEAC Stockholder Consent.  AEAC shall, at a meeting of its
stockholders duly called by the Board of Directors of AEAC to be held as soon as
practicable following execution of this Agreement, or by written consent by the
holders of a majority of its capital stock, present the following proposal for
the authorization and approval of the stockholders of AEAC and recommend its
adoption by the stockholders:
 
(a)   ratification of this Agreement and authorization of the consummation of
the Merger and the other transactions contemplated herein.
 
SECTION 3.3 AE Stockholder Consent.  AE shall, at a meeting of its stockholders
duly called by the Board of Directors of AE to be held as soon as practicable
following execution of this Agreement, or by written consent by the holders of a
majority of its capital stock, present the following proposal for the
authorization and approval of the stockholders of AE and recommend its adoption
by the stockholders:
 
(a)   ratification of this Agreement and authorization of the consummation of
the Merger and the other transactions contemplated herein.
 
ARTICLE 4
 
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF AE
 
AE represents and warrants to, and agrees with AEAC, as follows:
 
SECTION 4.1 Organization and Good Standing.  AE is a duly incorporated and
validly existing corporation in good standing under the laws of the state of
Delaware, with all requisite power and authority  (corporate and other) to own
its properties and conduct its business.
 
 
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SECTION 4.2 Authorization; Binding Agreement.  AE has the corporate power and
authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby.  This Agreement has been duly and validly
authorized, executed and delivered by AE, and subject to any requisite approval
of the Merger by the stockholders of AE, constitutes a valid and binding
agreement of AE, enforceable against AE in accordance with its terms.
 
SECTION 4.3 Absence of Breach.  The execution, delivery and performance by AE of
this Agreement, and the performance by AE of its obligations hereunder, do not
(i) conflict with or result in a breach of any of the provisions of its
Certificate of Incorporation or by-laws, (ii) subject to obtaining the
governmental and other consents referred to in Section 4.5 hereof, contravene
any law, rule or regulation of any state or of the United States or any
political subdivision thereof or therein, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which, singly or
in the aggregate, would have a material adverse effect on AE, or (iii) conflict
in any respect with or result in a breach of or default under any indenture,
loan or credit agreement (appropriate waivers having been obtained) or any other
agreement or instrument to which AE is a party or by which AE properties may be
affected or bound, which, singly or in the aggregate, would have a material
adverse effect on AE.
 
SECTION 4.4 Capitalization.  The authorized capital stock of AE consists of
100,000,000 shares of common stock, par value $0.00001 per share, of which
37,190,447 shares are issued and outstanding as of the date hereof, and
10,000,000 shares of Preferred Stock, of which no shares are outstanding.  All
of the outstanding shares of capital stock of AE have been duly authorized and
validly issued and are fully paid and nonassessable.  AE is not aware of any
voting trusts, voting agreements or similar understandings applicable to the
shares.  Except for outstanding options to purchase up to 2,820,000 shares of
common stock issued under the AudioEye, Inc. 2012 Incentive Compensation Plan
and warrants to purchase up to 3,652,672 shares of Common Stock, AE does not
have any outstanding options, warrants, calls, rights, commitments, convertible
securities and other securities pursuant to which the holder, directly or
indirectly, has the right to acquire (with or without additional consideration)
capital stock or equity securities of AE, or any other agreement or commitment
which restricts the transfer of or otherwise relates to the shares of its common
stock.
 
SECTION 4.5 Governmental and Other Consents, etc.  Subject to the requisite
stockholder approval, no consent, waiver, approval, license or authorization of
or designation, declaration or filing with any governmental agency or authority
or other public persons or entities on the part of AE is required in connection
with the execution or delivery by AE of this Agreement or the consummation by AE
of the transactions contemplated hereby other than (i) filings in the State of
Delaware in accordance with state law thereof, (ii) filings under state
securities “Blue Sky” or anti-takeover laws and (iii) under Regulation D of the
Securities Act.
 
SECTION 4.6 Authorization of Shares.  As of the Effective Date, the shares of
AE’s Common Stock to be issued and delivered to the AEAC stockholders hereunder
and in connection herewith will, when so issued and delivered, constitute duly
authorized, validly and legally issued, fully-paid, and non-assessable shares of
capital stock, free of all liens and encumbrances.
 
 
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ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF AEAC
 
AEAC represents and warrants to AE as follows:
 
SECTION 5.1 Organization and Good Standing.  AEAC is a duly incorporated and
validly existing corporation in good standing under the laws of Nevada, with all
requisite power and authority (corporate and other) to own its properties and
conduct its businesses.
 
SECTION 5.2 Authorization; Binding Agreement.  AEAC has the corporate power and
authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby.  This Agreement has been duly and validly
authorized, executed and delivered by AEAC and, subject to any requisite
approval by the stockholders of AEAC, constitutes a valid and binding agreement
of AEAC enforceable against AEAC in accordance with its terms.
 
SECTION 5.3 Absence of Breach.  The execution, delivery and performance by AEAC
of this Agreement, and the performance by AEAC of its obligations hereunder, do
not (i) conflict with or result in a breach of any of the provisions of its
Articles of Incorporation or by-laws, (ii) subject to obtaining the governmental
and other consents referred to in Section 5.4 hereof, contravene any law, rule
or regulation of any state or of the United States or any political subdivision
thereof or therein, or any order, writ, judgment, injunction, decree,
determination or award currently in effect, which, singly or in the aggregate,
would have a material adverse effect on AEAC, or (iii) conflict in any respect
with or result in a breach of or default under any indenture, loan or credit
agreement (appropriate waivers having been obtained) or any other agreement or
instrument to which AEAC  is a party or by which AEAC  properties may be
affected or bound, which, singly or in the aggregate, would have a material
adverse effect on AEAC.
 
SECTION 5.4 Governmental and Other Consents, etc.  Subject to the requisite
stockholder approval, no consent, approval, license or authorization of or
designation, declaration or filing with any governmental agency or authority or
other public persons or entities on the part of AEAC is required in connection
with the execution or delivery by AEAC of this Agreement or the consummation by
AEAC of the transactions contemplated hereby other than filings in the state of
Nevada in accordance with the laws of that state.
 
SECTION 5.5 Capitalization.  The authorized capital stock of AEAC consists of
100,000,000 shares of Common Stock, par value $.0001per share, of which
25,500,000 shares were outstanding on the date of this Agreement, and 10,000,000
shares of Preferred Stock, par value $.0001 per share, of which no shares were
outstanding.  AEAC is not aware of any voting trusts, voting agreements or
similar understandings applicable to the shares.  Except for the Debentures with
an aggregate principal balance of $1,400,200, AEAC does not have any outstanding
options, warrants, calls, rights, commitments, convertible securities and other
securities pursuant to which the holder, directly or indirectly, has the right
to acquire (with or without additional consideration) capital stock or equity
securities of AEAC, or any other agreement or commitment which restricts the
transfer of or otherwise relates to the shares of its common stock.
 
 
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SECTION 5.6 Securities Law Compliance.  To the best knowledge of AEAC, all of
its stockholders are “accredited investors” as such term is defined in Rule 501
promulgated under the Securities Act of 1933, as amended.
 
ARTICLE 6
COVENANTS
 
SECTION 6.1 Stockholder Approval.  Each party covenants to use commercially
reasonable efforts to obtain the required approvals of its respective
stockholders as soon as is reasonably practical following the date hereof.  In
this regard, each party covenants to provide its stockholders with such
information as may be required under law.
 
SECTION 6.2 Securities Law Compliance.  AE covenants to comply with all
requirements of state and federal securities laws in connection with the
issuance of the Shares to the AEAC stockholders as contemplated hereby.
 
ARTICLE 7
CONDITIONS
 
SECTION 7.1 Conditions to Each Party’s Obligation to Effect the Merger.  The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
 
(a)   this Agreement and the transactions contemplated hereby having been
approved and adopted at or prior to the Effective Date by the requisite vote of
the stockholders of each company as required by applicable law; and
 
(b)   no preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States or any
foreign jurisdiction preventing the consummation of the Merger shall be in
effect.
 
SECTION 7.2 Conditions to Obligation of AEAC  to Effect the Merger.  The
obligation of AEAC to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Date of the following additional conditions, any one
or more of which may be waived by AEAC:
 
(a)   AE shall have performed in all material respects its agreements contained
in this Agreement required to be performed on or prior to the Effective Date;
 
(b)   the representations and warranties of AE set forth in this Agreement shall
be true and correct in all material respects on and as of the Effective Date as
if made on and as of such date, except as contemplated or permitted by this
Agreement;
 
(c)   No action or preceding before any court or governmental or regulatory
authority or body, United States, federal or state or foreign, shall have been
instituted (and be pending) or threatened by any government or governmental
authority, which seeks to prevent or delay the consummation of the Merger or
which challenges any of the terms or provisions of this Agreement;
 
 
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(d)   No order issued by any United States federal or state or foreign
governmental or regulatory authority or body of by any court of competent
jurisdiction nor any statute, rule, regulation or executive order promulgated or
enacted by any United States federal or state or foreign governmental authority
which prevents the consummation of the Merger shall be in effect;
 
(e)   AEAC shall have received all necessary and required consents or exemptions
from required parties;
 
(f)   The Merger shall be permitted by applicable state law and otherwise and AE
shall have sufficient shares of its capital stock authorized to complete the
Merger and the transactions contemplated hereby; and
 
(g)   The shares of restricted AE capital stock to be issued to AEAC
stockholders at Closing will be validly issued, nonassessable and fully paid
under Delaware corporation law and will be issued in a nonpublic offering in
compliance with all federal, state and applicable securities laws.
 
SECTION 7.3 Conditions to the Obligation of AE to Effect the Merger.  The
obligation of AE to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Date of the following additional conditions, any one or
more of which may be waived by AE:
 
(a)   AEAC shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the
Effective Date;
 
(b)   The representations and warranties of AEAC set forth in this Agreement
shall be true and correct in all material respects on and as of the Effective
Date as if made on and as of such date, except as contemplated or permitted by
this Agreement;
 
(c)   AE shall have received all necessary and required consents or exemptions
from required parties;
 
(d)   No action or proceeding before any court or governmental or regulatory
authority or body, United States federal or state or foreign, shall have been
instituted (and be pending or threatened) by any government or governmental
authority, which seeks to prevent or delay the consummation of the Merger or
which challenges any of the terms or provisions of this Agreement;
 
(e)   No order issued by any United States federal or state or foreign
governmental or regulatory authority or body, or by any court of competent
jurisdiction nor any statute, rule, regulation, or executive order promulgated
or enacted by any United States, federal, or state or foreign government or
governmental authority, which prevented the consummation of the Merger or
materially and adversely affects the business, financial condition, or
operations of AE shall be in effect; and
 
(f)   AE shall have received all necessary and required consents and exemptions
from required parties.
 
 
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SECTION 7.4 Waiver of Condition; Right to Proceed.  Unless stated otherwise
herein, if any of the conditions to the obligations of AEAC and AE specified in
Sections 7.2 and 7.3 hereof has not been satisfied, AEAC or AE, as the case may
be, in addition to any other rights which may be available to them or it, shall
have the right to waive such conditions and to proceed with the Merger (subject
to satisfaction of the other conditions contained herein, unless also waived).
 
ARTICLE 8
TERMINATION
 
SECTION 8.1 Termination Events.  This Agreement may be terminated at any time
prior to the Closing, in writing:
 
(a)   by AEAC, if:
 
(i) a material breach of any provision of this Agreement has been committed by
AE and such breach has not been cured within ten days after the breach and has
not been expressly waived in writing; or
 
(ii) any of the conditions in Section 7.2 have not been satisfied as of the
Closing or if satisfaction of such a condition is or becomes impossible (other
than through the failure of AEAC to comply with its obligations under this
Agreement) and AEAC has not expressly waived such condition in writing on or
before the Closing.
 
(b)   by AE, if:
 
(i) a material breach of any provision of this Agreement has been committed by
AEAC and such breach has not been cured within ten days after the breach and has
not been expressly waived in writing; or
 
(ii) any of the conditions in Section 7.3 have not been satisfied as of the
Closing or if satisfaction of such a condition is or becomes impossible (other
than through the failure of AE to comply with its obligations under this
Agreement) and AE has not expressly waived such condition in writing on or
before the Closing.
 
(c)   by mutual consent of AE and AEAC.
 
SECTION 8.2 Effect of Termination.  Each party’s right of termination under
Section 7.1 hereof is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies.  If this Agreement is terminated pursuant to
Section 7.1 hereof, all further obligations of the parties under this Agreement
will terminate; provided, however, that if this Agreement is terminated by a
party because of the material breach of this Agreement by the other party or
because one or more of the conditions to the terminating party’s obligations
under this Agreement is not satisfied as a result of the other party’s failure
to comply with its obligations under this Agreement, the terminating party’s
right to pursue all legal remedies will survive such termination.
 
 
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ARTICLE 9
GENERAL AGREEMENTS
 
SECTION 9.1 Cooperation.  Each of the parties hereto shall cooperate with the
other in every reasonable way in carrying out the transactions contemplated
herein, and in delivering all documents and instruments deemed reasonably
necessary or useful by counsel for any party hereto.
 
SECTION 9.2 Funds.  AE shall incur all costs and expenses in connection with
this Agreement and the transactions contemplated hereby.
 
SECTION 9.3 Survival of Representations and Warranties.  All representations and
warranties in this Agreement or in any instrument or certificate delivered
pursuant to this Agreement delivered on or prior to the Effective Date shall
survive the consummation of the Merger.
 
SECTION 9.4 Notices.  All notices and other communications under this Agreement
shall be in writing and shall be deemed given (i) when delivered personally by
hand (with written confirmation of receipt), (ii) when sent by facsimile (with
written confirmation of transmission) or (iii) one business day following the
day sent by overnight courier (with written confirmation of receipt), in each
case at the following addresses and facsimile numbers (or to such other address
or facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):
 

 
(a) If to AE, to:
 
9070 S. Rita Road, Suite 1450
Tucson, Arizona 85147
Attention: President
Facsimile: (520) 844-2989
 
(b) If to AEAC, to:
 
4200 S. Saguaro Path Ct.
Tucson, Arizona 85730
Attention: President
Facsimile: (520) 844-2989

The date of any such notice shall be the date hand delivered or otherwise
transmitted or mailed.
 
SECTION 9.5 Amendment.  This Agreement (including the documents and instruments
referred to herein or therein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof, (b) is not
intended to confer upon any other person any rights or remedies hereunder, and
(c) shall not be assigned by operation of law or otherwise.  This Agreement may
be amended or modified in whole or in part to the extent permitted by Delaware
law at any time, by an agreement in writing executed in the same manner as this
Agreement after authorization to do so by the Board of Directors of AEAC and AE.
 
SECTION 9.6 Waiver.  At any time prior to the Effective Date, the parties hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representation and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein.  Any agreement on the part of a party hereto to any
such extension or waiver shall be valid is set forth in an instrument in writing
signed on behalf of such party.
 
 
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SECTION 9.7 Brokers.  AEAC and AE represent and warrant that no broker, finder
or investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the Merger.
 
SECTION 9.8 Publicity.  So long as this Agreement is in effect, the parties
hereto shall not issue or cause the publication of any press release or other
announcement with respect to the Merger or this Agreement without the consent of
the other party, which consent shall not be unreasonably withheld or delayed
where such release or announcement is required by applicable law.
 
SECTION 9.9 Headings.  The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
 
SECTION 9.10 Successors and Assigns.  This Agreement shall be binding upon and
insure to the benefit of and enforceable by the respective successors and
assigns of the parties hereto.
 
SECTION 9.11 Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.

**Remainder of Page Intentionally Left Blank**

 
 
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SIGNATURE PAGE TO
 
AGREEMENT AND PLAN OF MERGER
 
BY AND BETWEEN
 
AUDIOEYE, INC.
 
AND
 
AUDIOEYE ACQUISITION CORPORATION

 
IN WITNESS WHEREOF the parties have executed this Agreement by their duly
authorized officers as of the date set forth above.
 

 
AUDIOEYE, INC.
         
By: ______________________________________________________
 
Nathaniel T. Bradley, President
         
AUDIOEYE ACQUISITION CORPORATION
         
By: ______________________________________________________
 
Nathaniel T. Bradley, President

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