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Item 1.01
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Entry into a Material Definitive Agreement.
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Acquisition of Eqova Life Sciences and the
Share Exchange Agreement
On October 17, 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, Eqova Life Sciences, a Nevada corporation,
Patrick Stiles, and Patrick Stiles in his capacity as the Selling Members’ Representative, whereby we issued and exchanged
1,100,000 shares of our Series A Convertible Preferred Stock for all of the outstanding securities of Eqova Life Sciences. Through
this exchange of securities pursuant to the Exchange Agreement (the “
Exchange
”), Eqova Life Sciences is now
our wholly-owned subsidiary. The shares of Series A Convertible Preferred Stock issued in this transaction are convertible into
an aggregate number of shares that would equal 66% of our outstanding common stock after conversion. Each Share of our Series A
Convertible Preferred Stock is convertible into 0.00006% of our outstanding common stock as of the date of conversion.
Per a Shareholders Agreement,
dated October 17, 2017, by and among the Company, Fred Covely, William Bossung, Patrick Stiles and the Eqova Life Sciences Shareholders,
only one-half of the shares issued in the Exchange to the Eqova Life Sciences Shareholders are fully vested. The other half will
vest upon the earliest date of Eqova Life Sciences’ achievement of one of the following: (i) $100,000 of gross sales per
month for three consecutive months, or (ii) $300,000 of gross sales in any calendar quarter. Any shares that remain unvested on
October 17, 2019 will be repurchased by the Company at a price of $0.01 per share. We agreed not to issue any shares of Series
A Convertible Preferred Stock without the consent of a majority of the Series A Convertible Preferred Stockholders.
The Share Exchange Agreement
contains customary representations and warranties made by the Company and by Eqova Life Sciences. Eqova Life Sciences will indemnify
us for losses resulting from its breach of the Share Exchange Agreement. The Share Exchange Agreement and the Shareholders Agreement
also contain other certain terms and conditions which are common in such agreements, and reference is made herein to the text of
those agreements which will be filed in our next Quarterly Report on Form 10-Q.
As part of the Exchange,
we have brought on Eqova Life Sciences’ President and Director, Patrick Stiles, to serve as our President and Chief Executive
Officer and as a Director on our Board of Directors.
A press release issued
on October 23, 2017 announcing the acquisition of Eqova Life Sciences is attached hereto as Exhibit 99.1 and is incorporated herein
by this reference.
Stiles Employment Agreement
On October 17, 2017, we
entered into an Employment Agreement with Patrick Stiles, President of Eqova Life Sciences. Pursuant to Mr. Stiles’ Employment
Agreement, we have agreed to pay Mr. Stiles an annual base salary of $140,000, and he may receive employee stock options as determined
by the Board of Directors. Mr. Stiles’ 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. Stiles will receive severance equal to three months’ pay at his most recent
Base Salary. If Mr. Stiles 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. Stiles’ termination.
Capitalized terms in this section not defined herein have the meaning given to such terms in the Employment Agreement.
Mr. Stiles’ 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. Stiles prior to termination of the Employment Agreement. Mr. Stiles’
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 October 17, 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. 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.