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Item 1.01
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Entry into a Material Definitive Agreement.
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Acquisition of ShareRails, LLC and the Share
Exchange Agreement
On March 31, 2017, Grey
Cloak Tech Inc. (the “
Company
” also referred to herein as “
us
,” “
we
” and
“
our
”), entered into a Share Exchange Agreement by and among the Company, ShareRails, LLC, Joseph Nejman, Dmitry
Chourpo and Joseph Nejman, in his capacity as the Selling Members’ Representative whereby we issued and exchanged 91,619,170
shares of our common and 2,857,685 shares of our Series A Convertible Preferred Stock for all of the outstanding units of ShareRails,
LLC, a Delaware limited liability company (“
ShareRails
”). Through this exchange of securities pursuant to the
Exchange Agreement (the “
Exchange
”), ShareRails is now our wholly-owned subsidiary.
Following the issuance
of our common stock in the ShareRails acquisition, and certain stock exchanges as outlined below, we have 72,508,922 shares of
common stock issued and outstanding.
ShareRails provides its
customers with a unique, interactive mobile platform for connecting shoppers and retailers. ShareRails has been operated by its
two founders who will continue to work with us and ShareRails to service their existing enterprise clients and expand our customer
base. We believe that together we will be able to further expand our reach into the social commerce and retail marketing industry.
As part of the Exchange,
we have brought on one of ShareRails’ founders, Joseph Nejman, to serve as our President and on our Board of Directors.
The Share Exchange Agreement
contains customary representations and warranties made by the Company and by ShareRails. We may rescind the Share Exchange Agreement
if the Selling Members’ Representative is unable to provide us, within 10 days of the Exchange, a consent signed by all the
members of ShareRails whereby the members agree to participate in the Exchange and be bound by the Share Exchange Agreement. ShareRails
will indemnify us for losses resulting from its breach of the Share Exchange Agreement. The Share Exchange Agreement also contains
other certain terms and conditions which are common in such agreements, and reference is made herein to the text of the Share Exchange
Agreement which will be filed in our next Quarterly Report on Form 10-Q.
Nejman Employment Agreement
On March 31, 2017, we entered
into an Employment Agreement with Joseph Nejman, our President. Pursuant to Mr. Nejman’s Employment Agreement, we have agreed
to pay Mr. Nejman an annual base salary of $140,000, and he may receive employee stock options as determined by the Board of Directors.
Any employee stock options granted will vest immediately upon the consummation of aggregate equity financing by the Company equal
to $2,000,000 that results from Mr. Nejman’s direct efforts. Mr. Nejman is eligible to receive a 20% commission on gross
sales that are a direct result of his sales efforts, up to a maximum of his base salary in any calendar year. Mr. Nejman’s
employment is “at will” and either party may terminate the agreement at any time.
If terminated without Cause
or as a result of Constructive Termination, Mr. Nejman will receive severance equal to three months pay at his most recent Base
Salary. If Mr. Nejman is terminated for Cause, Disability or death, or voluntarily resigns, he will not receive any severance,
only unpaid salary as of the date of termination and vested benefits. The Employment Agreement includes non-compete and non-solicitation
provisions that apply during the term of the Employment Agreement and for a period of one year after Mr. Nejman’s termination.
Capitalized terms in this section not defined herein have the meaning given to such terms in the Employment Agreement.
Mr. Nejman’s Employment
Agreement also requires that certain proprietary information of the Company be kept confidential. The Company will be the owner
of certain intellectual property conceived or made by Mr. Nejman prior to termination of the Employment Agreement. Mr. Nejman’s
Employment Agreement also contains other certain terms and conditions which are common in such agreements, and reference is made
herein to the text of the Employment Agreement which will be filed in our next Quarterly Report on Form 10-Q.
Bossung Employment Agreement
On March 31, 2017, we entered
into an Employment Agreement with William Bossung, our Chief Financial Officer. Pursuant to Mr. Bossung’s Employment Agreement,
we have agreed to pay Mr. Bossung an annual base salary of $140,000, and he may receive employee stock options as determined by
the Board of Directors. Any employee stock options granted will vest immediately upon the consummation of aggregate equity financing
by the Company equal to $2,000,000 that results from Mr. Bossung’s direct efforts. Mr. Bossung is eligible to receive a 20%
commission on gross sales that are a direct result of his sales efforts, up to a maximum of his base salary in any calendar year.
Mr. Bossung’s employment is “at will” and either party may terminate the agreement at any time.
If terminated without Cause
or as a result of Constructive Termination, Mr. Bossung will receive severance equal to three months pay at his most recent Base
Salary. If Mr. Bossung is terminated for Cause, Disability or death, or voluntarily resigns, he will not receive any severance,
only unpaid salary as of the date of termination and vested benefits. The Employment Agreement includes non-compete and non-solicitation
provisions that apply during the term of the Employment Agreement and for a period of one year after Mr. Bossung’s termination.
Capitalized terms in this section not defined herein have the meaning given to such term in the Employment Agreement.
Mr. Bossung’s Employment
Agreement also requires that certain proprietary information of the Company be kept confidential. The Company will be the owner
of certain intellectual property conceived or made by Mr. Bossung prior to termination of the Employment Agreement. Mr. Bossung’s
Employment Agreement also contains other certain terms and conditions which are common in such agreements, and reference is made
herein to the text of the Employment Agreement which will be filed in our next Quarterly Report on Form 10-Q.
Covely Information Systems – Development
Services Agreement
On March 31, 2017, we entered
into a Development Services Agreement with Covely Information Systems, a company owned and operated by Fred Covely, our Chief Executive
Officer (the “
Covely Agreement
”). Pursuant to the Covely Agreement, we have agreed to pay Covely Information
Services for services depending on monthly programming hours and hosting fees, as billed by Covely Information Systems. Billing
will be variable and based on the income we receive from one of our clients and other services performed on our behalf. Payment
is subject to deferment to the following month for any portion we are unable to pay because of insufficient capital. Covely Information
Systems is an independent contractor and either party may terminate the agreement at any time.
If the Covely Agreement
is terminated for any reason, Covely Information Systems will not receive any severance, only the amount due for services performed
prior to the date of termination. The Covely Agreement includes non-compete and non-solicitation provisions that apply during the
term of the Covely Agreement and for a period of one year after termination. Capitalized terms in this section not defined herein
have the meaning given to such term in the Covely Agreement.
The Covely Agreement also
requires that certain proprietary information of the Company be kept confidential. The Company will be the owner of certain intellectual
property conceived or made by Covely Information Systems prior to termination of the Covely Agreement. The Covely Agreement also
contains other certain terms and conditions which are common in such agreements, and reference is made herein to the text of the
Covely Agreement which will be filed in our next Quarterly Report on Form 10-Q.
Dimicho Pty. Ltd. – Development Services
Agreement
On April 1, 2017, we entered
into a Development Services Agreement with Dimicho Pty. Ltd., a company owned and operated by Dmitry Chourpo, one of the founders
and prior owners of ShareRails (the “
Dimicho Agreement
”). Pursuant to the Dimicho Agreement, we have agreed
to pay Dimicho Pty. Ltd. $8,000 per month for development and support of our software applications and web services. The payment
is subject to deferment to the following month for any portion we are unable to pay because of insufficient capital. Dimicho Pty.
Ltd. will dedicate no less than one full-time development resource exclusively to our client needs, work projects and business
interest. Dimicho Pty. Ltd. is an independent contractor and either party may terminate the agreement at any time.
If the Dimicho Agreement
is terminated for any reason, Dimicho Pty. Ltd. will not receive any severance, only the amount due for services performed prior
to the date of termination. The Dimicho Agreement includes non-compete and non-solicitation provisions that apply during the term
of the Dimicho Agreement and for a period of one year after termination. Capitalized terms in this section not defined herein have
the meaning given to such term in the Dimicho Agreement.
The Dimicho Agreement also
requires that certain proprietary information of the Company be kept confidential. The Company will be the owner of certain intellectual
property conceived or made by Dimicho Pty. Ltd. prior to termination of the Dimicho Agreement. The Dimicho Agreement also contains
other certain terms and conditions which are common in such agreements, and reference is made herein to the text of the Dimicho
Agreement which will be filed in our next Quarterly Report on Form 10-Q.