Document:

Exhibit 4.2

 

 

COMMON STOCK AND WARRANT PURCHASE AGREEMENT

 

This Common Stock and
Warrant Purchase Agreement (this “Agreement”) is made and entered into as of December 19, 2016, by and
among AudioEye, Inc., a Delaware corporation (the “Company”), and the investors set forth on Exhibit A
attached hereto (each an “Investor” and collectively, the “Investors”).

 

RECITALS

 

The Company desires
to sell to the Investors, and the Investors desire to purchase from the Company, (i) shares (the “Shares”)
of common stock, $0.00001 par value per share, of the Company (“Common Stock”) and (ii) warrants to purchase
the Company’s Common Stock (the “Warrants”), in the form attached as Exhibit B hereto (the
“Financing”).

 

AGREEMENT

 

In consideration of
the foregoing recitals and the mutual promises set forth in this Agreement, the parties to this Agreement agree as follows:

 

Section 1.                
AUTHORIZATION AND SALE.

 

1.1 
Authorization. The Company has duly authorized the issuance and sale, pursuant to the terms of this Agreement,
of the Shares and Warrants against payment of the purchase price therefor.

 

1.2 
Subscription. Upon the terms and subject to the conditions set forth in this Agreement, each Investor, severally
and not jointly, hereby irrevocably subscribes for and agrees to purchase, and the Company hereby agrees to issue and sell to the
Investors, at the Closing (as defined below), the number of Shares indicated opposite such Investor’s name on Exhibit A
in the column captioned “Shares of Common Stock” and Warrants to purchase the number of shares of Common Stock set
forth opposite such Investor’s name on Exhibit A in the column captioned “Warrant Shares” for the aggregate
purchase price set forth opposite such Investor’s name on Exhibit A in the column captioned “Purchase Price”
(the “Investor’s Commitment”). Each Investor shall pay the Investor’s Commitment in full
by wire transfer of immediately available funds to the Company at the Closing. Notwithstanding anything in this Agreement to the
contrary, the Company shall have no obligation to issue any Shares or Warrants, or shares of Common Stock into which the Warrants
are exercisable (collectively, the “Issuable Shares,” and together with the Warrants, the “Securities”)
to any person who is a resident of a jurisdiction in which the issuance of any of the Securities would constitute a violation of
the securities, “blue sky” or other similar laws of such jurisdiction (collectively referred to as the “State
Securities Laws”).

 

1.3 
Closing. The initial closing of the purchase and sale of the Shares and Warrants hereunder (the “Initial
Closing”) shall take place at the offices of DLA Piper LLP (US), 401 Congress Avenue, Suite 2500, Austin, Texas 78701,
on or about the date hereof, or at such other time and place as the Company and the Investors mutually agree upon (which time and
place are referred to in this Agreement as the “Initial Closing Date”).

 

    Common Stock and Warrant Purchase Agreement; 12-2016
  

     

    

 

1.4 
Additional Closings.

 

(a)                  
From and after the Initial Closing, the Company shall have the right to sell up to the balance of the remaining Shares and
Warrants pursuant to this Agreement at one or more additional closings occurring within 30 days of the Initial Closing Date (each,
an “Additional Closing”), and to add additional entities and persons as “Investors” hereunder
and as parties hereto. No Investor in the Initial Closing is obligated to purchase Shares in the Additional Closing.

 

(b)                 
The aggregate number of Shares issued in any Closings shall not exceed 7,142,857 Shares and the aggregate number of shares
issuable upon exercise of Warrants issued in any Closings shall not exceed 800,000 shares. Each Additional Closing shall take place
at the offices of DLA Piper LLP (US), 401 Congress Avenue, Suite 2500, Austin, Texas 78701, on a date or dates determined by the
Company and the Investors purchasing additional Shares and Warrants at such Additional Closing (each such date, an “Additional
Closing Date”). Any Shares and Warrants issued pursuant to this Section 1.4 shall be deemed to be “Shares”
and “Warrants,” respectively, for all purposes under this Agreement and at the same per share Purchase Price. The Initial
Closing and each Additional Closing shall constitute and be treated as a “Closing” hereunder, and the
Initial Closing Date and each Additional Closing Date shall constitute and be treated as a “Closing Date”
hereunder. At the Initial Closing and each Additional Closing, the Company shall issue and deliver to the Investors participating
in such Closing the Shares and the Warrants, each registered in the name of such Investors, against payment to the Company of the
purchase price therefor.

 

1.5 
Separate Sales. The Company’s agreement with each of the Investors is a separate agreement, and the sale
of the Shares and the Warrants to each of the Investors is a separate sale.

 

1.6 
Use of Proceeds. The Company shall use the proceeds from the sale of the Shares and Warrants set forth herein
solely for working capital and other general corporate purposes.

 

Section 2.                
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each of the Investors that:

 

2.1 
Organization, Good Standing and Qualification. The Company has been duly incorporated and organized, and is validly
existing and in good standing, under the laws of the State of Delaware. The Company has all requisite corporate power and authority
to execute, deliver, and perform its obligations under this Agreement and the Warrants (the “Transaction Agreements”),
and any other agreements contemplated by Transaction Agreements, to own and operate its properties and assets, and to carry on
its business as currently conducted and as presently proposed to be conducted. The Company is presently qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the Company’s assets or financial condition.

 

2.2 
Due Authorization. All corporate action on the part of the Company, its directors and stockholders necessary
for the authorization, execution, delivery, and performance of all obligations of the Company under the Transaction Agreements,
the authorization, issuance, reservation for issuance, and delivery of all of the Issuable Shares has been taken or shall be taken
prior to the Closing, and this Agreement constitutes, and the Warrants when executed and delivered shall constitute, valid and
legally binding obligations of the Company, enforceable in accordance with their respective terms, except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization, or other laws of general application relating to or affecting the enforcement
of creditors’ rights generally and (ii) the effect of rules of law governing the availability of equitable remedies, and
shall be free of any liens, encumbrances, or restrictions on transfer (other than those created or contemplated by the Transaction
Agreements or under applicable state and/or federal securities laws).

 

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2.3 
Valid Issuance of Securities. The Shares and Warrants, when issued and paid for as provided in this Agreement,
shall be duly authorized and validly issued, fully paid, and nonassessable. The Issuable Shares have been duly and validly reserved
for issuance, and upon issuance in accordance with the terms hereof or the Warrants, shall be duly authorized and validly issued,
fully paid, and nonassessable.

 

2.4 
Governmental Consents. No consent, approval, order, or authorization of or registration, qualification, designation,
declaration, or filing with, any federal, state, or local governmental authority is required on the part of the Company in order
to enable the Company to execute, deliver, and perform its obligations under the Transaction Agreements except for such qualifications
or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement,
which qualifications or filings have been made or will be made promptly following the applicable Closing Date, in accordance with
applicable law.

 

2.5 
Noncontravention. The execution, delivery, and performance of the Transaction Agreements and the consummation
of the transactions contemplated by this Agreement and by the Transaction Agreements shall not result in any such violation or
default or be in conflict with or result in a violation or breach of, with or without the passage of time or the giving of notice
or both, the Company’s certificate of incorporation or bylaws, any judgment, order, or decree of any court or arbitrator
to which the Company is a party or is subject, any agreement or contract of the Company, or, to the Company’s knowledge,
a violation of any statute, law, regulation, or order, or an event which results in the creation of any lien, charge, or encumbrance
upon any asset of the Company.

 

2.6 
SEC Documents. The Company has filed all reports, schedules, forms, statements and other documents required to
be filed by the Company with the SEC since January 1, 2014, pursuant to Sections 13(a), 14(a) and 15(d) of the of the Securities
and Exchange Act of 1934, as amended (the “Exchange Act”) (collectively, the “SEC Documents”).
As of its respective filing date, each SEC Document complied in all material respects with the requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Document, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. Except to the extent that information contained
in any SEC Document has been revised or superseded by a later filed SEC Document, none of the SEC Documents as of the date hereof
contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date
of this Agreement, to the knowledge of the Company, none of the SEC Documents is the subject of any ongoing review by the SEC.
The audited consolidated financial statements and the unaudited quarterly financial statements (including, in each case, the notes
thereto) of the Company included in the SEC Documents when filed complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, have been prepared in all material respects in accordance with United States
generally accepted accounting principles (except, in the case of unaudited quarterly statements, as permitted by Form 10-Q of the
SEC or other rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited quarterly statements, to normal year-end adjustments).

 

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Section 3.                
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor represents and warrants to, and agrees with the
Company, severally and not jointly and only with respect to itself, that:

 

3.1 
Authorization. The Investor has full power and authority to enter into this Agreement and this Agreement constitutes
the Investor’s valid and legally binding obligation, enforceable in accordance with its terms except (i) as may be limited
by applicable bankruptcy, insolvency, reorganization, or other laws of general application relating to or affecting the enforcement
of creditors’ rights generally, and (ii) as may be limited by the effect of rules of law governing the availability of equitable
remedies.

 

3.2 
Purchase for Own Account. The Securities shall be acquired for investment for the Investor’s own account,
not as a nominee or agent, and not with a view to the public resale or distribution of the Securities within the meaning of the
Securities Act of 1933, as amended (the “Securities Act”) and the Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same. If other than an individual, the Investor also represents
that it has not been formed for the specific purpose of acquiring the Securities.

 

3.3 
Exempt Offering. The Investor acknowledges that the Securities have not been registered under the Securities
Act and are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon
the representations of the Investors contained in this Agreement.

 

3.4 
Disclosure of Information. The Investor believes that it has received all the information it considers necessary
or appropriate for deciding whether to purchase any Securities pursuant to this Agreement. The Investor has had an opportunity
to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and
the business, properties, prospects, and financial condition of the Company and to obtain additional information (to the extent
the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information
furnished to the Investor or to which the Investor had access.

 

3.5 
Investment Experience. The Investor has experience as an investor in securities of companies in the development
stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment in the Securities, and
has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of this
investment in the Securities.

 

3.6 
Accredited Investor Status. The Investor is an “accredited investor” within the meaning of Securities
and Exchange Commission (“SEC”) Rule 501 of Regulation D, as presently in effect.

 

3.7 
Restricted Securities. The Investor understands that the Securities are characterized as “restricted securities”
under the Securities Act inasmuch as they are being (or shall be) acquired from the Company in a transaction not involving a public
offering and that under the Securities Act and applicable regulations under the Securities Act such Securities may be resold without
registration under the Securities Act only in certain limited circumstances. In this connection, the Investor represents that it
is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed by SEC Rule 144 and by the
Securities Act. The Investor understands that the Company is under no obligation to register any of the Securities sold under this
Agreement except as provided pursuant to Section 5.1. The Investor understands that no market now exists for any of the
Securities, and that it is uncertain whether a market, public or otherwise, shall ever exist for the Securities.

 

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3.8 
Further Limitations on Disposition. Without in any way limiting the representations set forth above, the Investor
further agrees not to make any disposition of all or any portion of the Securities unless and until:

 

(a)                  
there is then in effect a Registration Statement (as defined below) covering such proposed disposition and such disposition
is made in accordance with such Registration Statement; or

 

(b)                 
the Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement
of the circumstances surrounding the proposed disposition, and, if reasonably requested by the Company, the Investor shall, at
the expense of the Investor or its transferee, furnish the Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition shall not require registration of such Securities under the Securities Act.

 

Notwithstanding the
provisions of Subsections (a) and (b) above, no such Registration Statement or opinion of counsel shall be required
for: any transfer of any Securities by an Investor (i) pursuant to a transaction exempt from the registration requirements
of the Securities Act, (ii) to any affiliate of such Investor, to a family member of such Investor, or to any trust, partnership,
limited liability company or custodianship established for estate-planning purposes for the primary benefit of such Investor or
his or her family members or (iii) if the Securities have been held for the appropriate amount of time for the Securities to be
permitted to be resold under Rule 144 and the selling Investor is not an affiliate or otherwise subject to the volume limitations
in Rule 144; provided that in each of the foregoing cases the transferee shall, prior to giving effect to such transfer,
agree in writing to be subject to the terms of this Section to the same extent as if the transferee were an original Investor under
this Agreement.

 

3.9 
Legends. It is understood that the instruments evidencing the Securities shall bear legends substantially similar
to the legends set forth below (in addition to any legend required under applicable state securities laws):

 

(a)                  
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER UNITED STATES FEDERAL OR STATE SECURITIES
LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES
FEDERAL OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE COMPANY,
TO BE EVIDENCED BY AN OPINION OF SHAREHOLDER’S COUNSEL, IN A FORM ACCEPTABLE TO THE COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION
PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.”

 

(b)                 
Any other legends required by State Securities Laws applicable to any individual Investor or under any agreement to which
the Investor is a party to with the Company.

 

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(c)                  
The legend set forth in Section 3.9(a) shall be removed and the Company shall issue a certificate (or issue in an
uncertificated form) without such legend or any other legend to the Investors if (a) such Securities are sold pursuant to an effective
Registration Statement (provided that each of the Investors agrees to only sell such Securities during such time that the Registration
Statement is effective and not withdrawn or suspended, and only as permitted by the Registration Statement), (b) such Securities
are sold or transferred pursuant to, and in accordance with all requirements of, Rule 144 (including, if applicable, the volume,
manner-of-sale and notice filing provisions of Rule 144), or (c) such Securities are eligible for sale under Rule 144, without
the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Securities
and without volume or manner-of-sale restrictions. The Company shall bear all costs incurred by it or an Investor relating to the
removal of the legend in accordance with this Section 3.9(c), provided that the Company shall not be liable for any transfer
taxes relating to the issuance of a new certificate or statement in the name of any person other than the relevant Investor and
its affiliates.

 

Section 4.       
CONDITIONS.

 

4.1 
Conditions to the Obligations of the Investors at Closing. The obligation of each of Investor to purchase Shares
and a Warrant at any Closing is subject to the fulfillment, or the waiver by such Investor, of the following conditions on or
before such Closing.

 

(a)                  
The representations and warranties in Section 2 shall be true, accurate and complete at and as of the Closing in
all material respects (except with respect to any provisions including the word “material” or words of similar import
with respect to which such representations shall be true, accurate and complete) with the same effect as though such representations
and warranties had been made on and as of the date of the Closing.

 

(b)                 
The Company shall have performed and complied with all agreements and conditions in this Agreement required to be performed
or complied with by the Company prior to or at the Closing.

 

(c)                  
All corporate and other proceedings in connection with the transactions contemplated in this Agreement and the Transaction
Agreements and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form
to the Investor, or counsel to the Investors, and the Investor or its special counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably request.

 

(d)                 
Approvals of the appropriate governing authority of each Investor necessary for performance of the transactions contemplated
by the Transaction Agreements shall have been obtained.

 

(e)                  
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by this Agreement.

 

(f)                  
The Common Stock shall not have been suspended, as of such Closing Date, by the SEC.

 

(g)                  
There shall have been no material adverse effect on the Company.

 

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4.2 
Conditions to the Obligations of the Company at Closing. The obligations of the Company to issue and sell
Shares and Warrants to an Investor at any Closing are subject to the fulfillment, or the waiver by the Company, of the following
condition on or before such Closing.

 

(a)                  
The representations and warranties of the Investors in Section 3 shall be true, accurate and complete at and
as of the Closing in all material respects with the same effect as though such representations and warranties had been made on
and as of the date of the Closing.

 

(b)                 
The Company shall have obtained all necessary permits and qualifications, or shall have the availability of exemptions therefrom,
required by any state for the offer and sale of the Securities.

 

(c)                  
Approvals of the Board (as defined below) necessary for performance of the transactions contemplated by the Transaction
Agreements shall have been obtained.

 

Section 5.       
POST-CLOSING COVENANTS.

 

5.1 
Registration Rights. If the Company proposes to register any of its Common Stock under the Securities Act in
connection with the public offering of such securities for cash within the twelve (12) month period immediately following the Initial
Closing Date, the Company shall use commercially reasonable efforts to (i) provide notice of such registration to each Investor
and (ii) upon written request of any such Investor within ten (10) days after such notice is given by the Company, include the
Issuable Shares then beneficially held by such Investor in such registration. 

 

5.2 
Indemnification of Investors. The Company will indemnify and hold each Investor and its shareholders, members,
partners, direct and indirect investors, directors, managers, officers, employees, affiliates and agents (and any other persons
with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each
person who controls such Investor (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the shareholders, members, partners, direct and indirect investors, directors, managers, officers, employees, affiliates and
agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such
title or any other title) of such controlling persons (each, a “Investor Party”) harmless from any and
all losses, liabilities, obligations, claims, contingencies, penalties, fees, damages, fines, charges, contingencies, costs and
expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and disbursements
and costs of investigation, defending or preparing to defend that any such Investor Party may suffer or incur (irrespective of
whether any such Investor Party is a party to the action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced or threatened (each, a “Proceeding”)
for which indemnification hereunder is sought) as a result of or relating to (a) any misrepresentation or any breach of any of
the representations, warranties, obligations, covenants or agreements made by the Company in this Agreement or in any other Transaction
Agreement and (b) any Proceeding instituted against an Investor in any capacity, or any of them or their respective affiliates,
with respect to any of the transactions contemplated by the Transaction Agreements (unless such Proceeding is based upon a misrepresentation
by such Investor or a breach of such Investor’s representations, warranties, obligations, covenants or agreements under any
Transaction Agreement or any agreements or understandings such Investor may have with any such shareholder or any violations by
such Investor of state or federal securities laws or any conduct by such Investor which constitutes fraud, gross negligence or
willful misconduct). The indemnity agreements contained herein shall not be an exclusive remedy but shall be in addition to any
cause of action or similar right in law or in equity of any Investor Party against the Company or others, and any liabilities the
Company may be subject to pursuant to law.

 

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5.3 
Indemnification of the Company. Each Investor, severally and not jointly with the other Investor, will indemnify
and hold harmless the Company, and its officers, directors, controlling persons, agents, advisors, representatives and employees
(each, a “Company Party”), from any and losses, liabilities, obligations, claims, contingencies, penalties,
fees, damages, fines, charges, contingencies, costs and expenses, including all judgments, amounts paid in settlements, court costs
and reasonable attorneys’ fees and disbursements and costs of investigation, defending or preparing to defend that any such
Company Party may suffer or incur (irrespective of whether any such Company Party is a party to the Proceeding for which indemnification
hereunder is sought) as a result of or relating to any misrepresentation or any breach of any of the representations, warranties,
obligations, covenants or agreements made by such Investor in this Agreement or in any other Transaction Agreement to which it
is a party. The indemnity agreements contained herein shall not be an exclusive remedy but shall be in addition to any cause of
action or similar right in law or in equity of the Company against such Investor or others and any liabilities such Investor may
be subject to pursuant to law.

 

5.4    
Furnishing of Information. In order to enable the Investors to sell the Securities under Rule 144, for a period
of twelve (12) months from each Closing Date, the Company shall use its commercially reasonable efforts to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act. During such twelve (12) month periods, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Investors and make publicly available in accordance with Rule
144(c) such information as is required for the Investors to sell the Securities under Rule 144.

 

5.5    
Securities Laws Disclosure; Publicity; Confidentiality. By 5:30 P.M., New York City time, on or prior to the
fourth (4th) trading day immediately following the date hereof, the Company shall issue a press release (the “Press
Release”) disclosing all material terms of the transactions contemplated hereby and file a Current Report on Form
8-K with the SEC describing the terms of the Transaction Agreements. Each Investor, severally and not jointly with the other Investors,
covenants that until such time as the transactions contemplated by this Agreement are required to be publicly disclosed by the
Company as described in this Section 5.5, such Investor will maintain the confidentiality of all disclosures made to it
in connection with this transaction (including the existence and terms of this transaction).

 

Section 6.       
GENERAL PROVISIONS.

 

6.1 
Successors and Assigns. Except as otherwise provided in this Agreement, the provisions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties to this Agreement (including
permitted transferees of any Securities).

 

6.2 
Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than
the parties to this Agreement and their respective successors and assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.

 

6.3 
Governing Law. This Agreement shall be governed by and construed exclusively in accordance with the internal
laws of the State of Delaware.

 

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6.4 
Counterparts. This Agreement may be executed in two or more counterparts (including, without limitation, facsimile
counterparts), each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

 

6.5 
Headings. The headings and captions used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement. All references in this Agreement to sections, subsections, exhibits, and schedules
shall, unless otherwise provided, refer to sections and subsections of this Agreement and exhibits and schedules attached to this
Agreement, all of which exhibits and schedules are incorporated in this Agreement by this reference.

 

6.6 
Notices. All notices, requests, consents, and other communications under this Agreement shall be in writing and
shall be delivered personally or by facsimile transmission or by nationally recognized overnight delivery service or by first class
certified or registered mail, return receipt requested, postage prepaid:

 

If to the Company,
at 5210 E Williams Circle, Tucson, Arizona 85711, Attention: Chief Executive Officer, or at such other address or addresses as
may have been furnished by giving five days advance written notice to all other parties, with a copy (which shall not constitute
notice) to DLA Piper LLP (US), 401 Congress Avenue, Suite 2500, Austin, Texas 78701, Attention: Paul Hurdlow.

 

If to an Investor,
at its address set forth on Exhibit A, or at such other address or addresses as may have been furnished to the Company
by giving five days advance written notice.

 

Notices provided in
accordance with this Section shall be deemed delivered upon personal delivery (including confirmed facsimile) or three business
days after deposit in the mail.

 

6.7 
No Finder’s Fees. Each party represents that it neither is nor shall be obligated for any finder’s
or broker’s fee or commission in connection with the transactions contemplated by this Agreement. Each Investor, severally
and not jointly, agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in
the nature of a finder’s or broker’s fee (and any asserted liability) for which such Investor or any of its officers,
partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finder’s or broker’s fee (and any asserted liability)
in connection with this Financing for which the Company is responsible.

 

6.8 
Attorneys’ Fees and Expenses. Each party to this Agreement agrees to pay its own fees and expenses arising
in connection with the negotiation and execution of this Agreement and consummation of the transactions contemplated in this Agreement.
If any action, suit, or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated
under this Agreement, the prevailing party shall recover all of such party’s costs and attorneys’ fees incurred in
each such action, suit, or other proceeding, including any and all appeals or petitions from such action, suit or other proceeding.

 

6.9 
Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent
of the Company and the Investors holding a majority of the then-outstanding Shares issued pursuant to this Agreement. Any amendment
or waiver effected in accordance with this Section shall be binding upon each Investor and the Company.

 

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6.10 Severability.
If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if such provision(s) were so excluded and shall be
enforceable in accordance with its terms.

 

6.11 Entire
Agreement. This Agreement, together with all exhibits and schedules to this Agreement, constitutes the entire agreement
and understanding of the parties with respect to the subject matter of this Agreement and supersedes any and all prior negotiations,
correspondence, agreements, understandings, duties, or obligations between the parties with respect to the subject matter of this
Agreement.

 

6.12 Further
Assurances. From and after the date of this Agreement, upon the request of the Investors or the Company, the Company and
the Investors shall execute and deliver such instruments, documents, or other writings as may be reasonably necessary or desirable
to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.

 

6.13 Delays
or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any Investor upon any breach or
default of the Company under this Agreement shall impair any such right, power, or remedy of such Investor nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default therefore or
thereafter occurring. Any waiver, permit, consent, or approval of any kind or character on the part of any Investor of any breach
or default under this Agreement or any waiver on the part of any Investor of any provisions or conditions of this Agreement must
be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any Investor, shall be cumulative and not alternative.

 

6.14 Confidentiality.
Except as required by law, each Investor agrees that it shall keep confidential and shall not disclose or divulge any confidential,
proprietary, or secret information which such Investor may obtain from the Company pursuant to financial statements, reports, and
other materials submitted by the Company to such Investor pursuant to this Agreement or otherwise, or pursuant to visitation or
inspection rights granted under this Agreement or in the Transaction Agreements, unless such information is known, or until such
information becomes known, to the public, other than as a result of the failure by any Investor to comply with this provision;
provided that an Investor may disclose such information to its attorneys, accountants, and financial advisors to the extent
necessary to obtain their services in connection with its investment in the Company.

 

6.15 Survival.
The representations, warranties and covenants contained herein shall continue and survive the execution of this Agreement.

  

 

[Signature Pages Follow]

 

    Common Stock and Warrant Purchase Agreement; 12-2016
10

     

    

 

IN WITNESS WHEREOF,
the parties to this Agreement have executed this Agreement as of the date first written above.

 

	 	AUDIOEYE, INC.
	 	 
	 	 
	 	By:  	 
	 	Name:  	 
	 	Title:	 

 

 

Signature
Page to AudioEye, Inc.

Common Stock and Warrant Purchase Agreement

    Stock and Warrant Purchase Agreement; 12-2016
 

     

    

 

IN WITNESS WHEREOF,
the parties to this Agreement have executed this Agreement as of the date first written above.

 

	 	INVESTOR
	 	 
	 	 
	 	If Entity:
	 	 	 
	 	Entity Name:  	 
	 	 	 
	 	 	 
	 	By:  	 
	 	 	 
	 	Name:  	 
	 	 	 
	 	Title:  	 
	 	 	 
	 	 	 
	 	If Individual:
	 	 	 
	 	Name: 	 
	 	 	 
	 	Signature:  	 
	 	 	 
	 	 	 
	Purchase Amount: $ 	 	 	 

 

 

Signature
Page to AudioEye, Inc.

Common Stock and Warrant Purchase Agreement

    Stock and Warrant Purchase Agreement; 12-2016
 

     

    

EXHIBIT A

 

 

SCHEDULE OF INVESTORS

 

Initial Closing

 

	INVESTORS	SHARES OF COMMON STOCK 	WARRANT SHARES	PURCHASE PRICE
	 	 	 	 
	Total:	 	 	 

 

 

 

    Stock and Warrant Purchase Agreement; 12-2016
 

     

    

EXHIBIT B

 

 

FORM OF WARRANT

 

 

 

    Stock and Warrant Purchase Agreement; 12-2016Exhibit

Exhibit 10.1

EXECUTION COPY

December 21, 2016
Aetna Inc.
151 Farmington Avenue, RC6A
Hartford, Connecticut 06156
Attention:    General Counsel

Echo Merger Sub, Inc.
151 Farmington Avenue, RC6A
Hartford, Connecticut 06156
Attention:    General Counsel

Echo Merger Sub, LLC
151 Farmington Avenue, RC6A
Hartford, Connecticut 06156
Attention:    General Counsel

Humana Inc.
500 West Main Street
Louisville, KY 40202
Attention:    Law Department

Reference is made to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of July 2, 2015, among Aetna Inc., a Pennsylvania corporation (“Parent”), Echo Merger Sub, Inc., a Delaware corporation and a direct, wholly owned Subsidiary of Parent, Echo Merger Sub, LLC, a Delaware limited liability company and a direct, wholly owned Subsidiary of Parent, and Humana Inc., a Delaware corporation (the “Company”).  Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement.

1.Pursuant to Section 11.03 of the Merger Agreement and in order to extend the End Date, the Company hereby unconditionally and irrevocably agrees to not exercise its right to terminate the Merger Agreement pursuant to Section 10.01(b)(i) of the Merger Agreement (the “Company Waived Termination Rights”) during the Waiver Period.  For purposes of this letter agreement, the term “Waiver Period” means the period beginning on December 31, 2016 and ending at 11:59 p.m. (Eastern time) on February 15, 2017. During the Waiver Period, the Company shall not exercise the Company Waived Termination Rights, and any exercise of the Company Waived Termination Rights by the Company during the Waiver Period shall be null and void and of no force or effect.  

2.Pursuant to Section 11.03 of the Merger Agreement and in order to extend the End Date, Parent hereby unconditionally and irrevocably agrees to not exercise its right to terminate the Merger Agreement pursuant to Section 10.01(b)(i) of the Merger Agreement (the “Parent Waived Termination Rights”) during the Waiver Period.  During the Waiver Period, Parent shall not exercise the Parent Waived Termination Rights, and any exercise of the Parent Waived Termination Rights by Parent during the Waiver Period shall be null and void and of no force or effect.

3.The waivers, consents and agreements set forth in paragraphs 1 and 2 of this letter agreement shall not operate as waivers of, or consents to, and shall not in any way affect, any other right or obligation of the parties to the Merger Agreement under, or any provision contained in, the Merger Agreement, including without limitation the rights of the parties under Section 10.01(b)(ii) of the Merger Agreement.

4.Except as specifically provided herein, the Merger Agreement is in all respects unaffected by this letter agreement.  All of the terms, conditions and provisions of the Merger Agreement as hereby modified shall be and remain in full force and effect and are hereby in all respects reaffirmed, ratified and confirmed in all respects.  Whenever the Merger Agreement is referred to in the Merger Agreement or in any other agreements, documents or instruments, such reference shall be deemed to be to the Merger Agreement as modified by this letter agreement.

5.Any provision of this letter agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this letter agreement or, in the case of a waiver, by each party against whom the waiver is to be effective.

1

6.This letter agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such state.  

7.Each of the parties hereto (i) irrevocably consents to the service of the summons and complaint and any other process in any action or proceeding relating to the transactions contemplated hereby, on behalf of itself or its property, in accordance with Section 11.01 of the Merger Agreement or in such other manner as may be permitted by Applicable Law, and nothing in this paragraph 7 or Section 11.08 of the Merger Agreement shall affect the right of any party to serve legal process in any other manner permitted by Applicable Law, (ii) irrevocably and unconditionally consents and submits itself and its property in any action or proceeding to the exclusive general jurisdiction of the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware) in the event any dispute arises out of this letter agreement or the transactions contemplated hereby, or for recognition and enforcement of any judgment in respect thereof, (iii) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iv) agrees that any actions or proceedings arising in connection with this letter agreement or the transactions contemplated hereby shall be brought, tried and determined only in the Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware), (v) waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same and (vi) agrees that it shall not bring any action relating to this letter agreement or the transactions contemplated hereby in any court other than the aforesaid courts.

8.EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH 8.

9.This letter agreement may be signed in any number of counterparts, including by facsimile or by email with .pdf attachments, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This letter agreement shall become effective when each party hereto shall have received a counterpart hereof signed and delivered (by electronic communication, facsimile or otherwise) by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by each of the other parties hereto, this letter agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any oral or written agreement or other communication).

10.This letter agreement, the unaltered portions of the Merger Agreement and the Confidentiality Agreement constitute the entire agreement between the parties with respect to the subject matter thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter thereof.

[Signature page follows.] 

2

IN WITNESS WHEREOF, the parties hereto have caused this letter agreement to be duly executed by their respective authorized officers as of the day and year first above written.
	
		
	HUMANA INC.

	 
	 

	By:
	/s/ Brian A. Kane

	 
	Name: Brian A. Kane

	 
	Title: Senior Vice President & Chief

	 
	Financial Officer

	 
	 

	ECHO MERGER SUB, INC.

	 
	 

	By:
	/s/ Bjorn B. Thaler

	 
	Name: Bjorn B. Thaler

	 
	Title: President

	 
	 

	ECHO MERGER SUB, LLC

	 
	 

	By:
	/s/ Bjorn B. Thaler

	 
	Name: Bjorn B. Thaler

	 
	Title: President

	 
	 

	AETNA INC.

	 
	 

	By:
	/s/ Thomas J. Sabatino, Jr.

	 
	Name: Thomas J. Sabatino, Jr.

	 
	Title: Executive Vice President and

	 
	General Counsel

3

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