Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 17, 2021 (the
“Effective Date”), Christopher Hundley, age 46, was appointed President of AudioEye, Inc. (the “Company”). Mr.
Hundley served as the Company’s Chief Technology Officer from March 2021 to September 17, 2021. From August 2018 to March 2020,
Mr. Hundley served in engineering leadership roles for Drift, a hypergrowth startup that created the conversational marketing category.
From September 2014 to August 2018, Mr. Hundley served as the Chief Executive Officer and Chief Technology Officer for Siftrock, an email
marketing automation SaaS company Mr. Hundley founded that was acquired by Drift in 2018.
In addition, on the Effective
Date, Mr. Varacalli, the Company’s President, was appointed Chief Operating Officer of the Company. Mr. Varacalli served as President
beginning in August 2020 and was Chief Technology Officer of the Company from June 2020 until August 2020. From June 2019 to May 2020,
he was Founding Partner of Kickstand LLC, a software agency in Portland, Oregon. From August 2015 until May 2019, Mr. Varacalli was Director
of Engineering at The Kroger Co. in Cincinnati, Ohio where he managed teams of software engineers.
There are no arrangements
or understandings between Mr. Hundley or Mr. Varacalli and any other person pursuant to which he was selected as an officer of the Company.
There are no family relationships between Mr. Hundley or Mr. Varacalli and any director or executive officer of the Company. Mr. Hundley
and Mr. Varacalli are not and have not been a party to any transaction required to be disclosed herein pursuant to Item 404(a) of Regulation
S-K.
Mr.
Hundley is party to an Offer Letter (the “Offer Letter”) with the Company, which provides for an annual base salary
of $350,000. Pursuant to the Offer Letter, in April 2021, Mr. Hundley was granted: (a) 35,335 restricted stock units (“RSUs”)
under the AudioEye, Inc. 2020 Equity Incentive Plan (the “2020 Plan”), which RSUs vest in three equal annual installments
commencing on the first anniversary of March 22, 2021, Mr. Hundley’s employment start date, subject to Mr. Hundley’s continued
service to the Company as of each of the vesting dates with respect to each tranche; and (ii) up to 23,556 performance stock units (“PSUs”)
under the 2020 Plan, to be earned, if at all, in tranches over each of the years in the four-year period of 2021-2024, based on established
performance goals for each of those years. Mr. Hundley was also granted 30,581 RSUs pursuant to the terms of the 2020 Plan in June 2021,
which RSUs vest in three equal installments commencing on the first anniversary of June 15, 2021.
Mr. Hundley has also entered
into a Confidentiality, Proprietary Rights, Non-Competition, and Non-Solicitation Agreement with the Company that includes standard confidentiality
and assignment of work product provisions. This agreement also provides that Mr. Hundley will not, during his employment with the Company
and for a one-year period thereafter, compete with the Company or solicit the Company’s employees, independent contractors or customers.
Mr. Varacalli’s cash
compensation is being changed to a base salary of $275,000, with no bonus opportunity.