GREY CLOAK TECH INC.

CONSULTING SERVICES AGREEMENT

 

This Consulting Services Agreement (this “ Agreement ”) is made and entered into on September 25, 2015 (the “ Effective Date ”) by and between Grey Cloak Tech Inc., a Nevada corporation (the “ Company ”) and The Dunn Group, LLC, a Minnesota limited liability company (the “ Consultant ”). Each of the Company and the Consultant shall be referred to as a “ Party ” and collectively as the “ Parties .”

 

RECITALS

 

WHEREAS, the Company is engaged in the detection of advertising click fraud and clean advertising (CleanStreamAds ^tm ) business;

 

WHEREAS, the Consultant through its principal, Brian J. Dunn (“ Dunn ”) has commercial experience in a variety of business segments related to the business of the Company;

 

WHEREAS, the Company wishes to engage the consulting services of Consultant; and

 

WHEREAS, Consultant wishes to provide the Company with consulting services.

 

NOW, THEREFORE, for good and adequate consideration, the receipt and sufficient of which is hereby acknowledged, the Parties hereto hereby agree as follows:

 

1. CONSULTING SERVICES

 

The Company hereby authorizes, appoints and engages the Consultant to perform the following services in accordance with the terms and conditions set forth in this Agreement ( the “ Consulting Services ”) and the Consultant agrees to provide the Consulting Services through Dunn:

 

A.                 assist the Company is promoting its “Fraudlytic” software and services, including the Company’s CleanStreamAds ^tm services;

 

B.                  assist the Company is developing a comprehensive “go to market” strategy for its “IP Reputation System”;

 

C.                  participate in the acquisition of IP addresses for the IP Reputation System by managing the overall strategy and sales effort for acquisition of those IP addresses;

 

D.                 provide services consistent with the daily operations of the Company, including but not limited to the negotiation of contracts with clients; and

 

E.                  undertake such duties and exercise such powers in relation to the Company and its business as the Company’s Board of Directors shall from time to time assign.

 

2. TERM OF AGREEMENT

 

A. Term . This Agreement is effective on the Effective Date and will continue until terminated pursuant to section 2(B) (the “ Term ”).

 

B. Termination . Either party may terminate this Agreement at any time upon thirty (30) days prior written notice to the other party, or such shorter period as the parties may agree upon.

 

C. Survival . The rights and obligations contained in sections 17 and 18 will survive any termination or expiration of this Agreement

 

3. COMPENSATION TO CONSULTANT

 

The Consultant shall be compensated as set forth in Exhibit A .

 

4. REPRESENTATIONS AND WARRANTIES OF CONSULTANT

 

Consultant represents and warrants to and agrees with the Company that:

 

A. This Agreement has been duly authorized, executed and delivered by Consultant. This Agreement constitutes the valid, legal and binding obligation of Consultant, enforceable in accordance with its terms, except as rights to indemnity hereunder may be limited by applicable federal or state securities laws, and except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditor’s rights generally.

 

B. The consummation of the transactions contemplated hereby will not result in any breach of the terms or conditions of, or constitute a default under, any agreement or other instrument to which Consultant is a party, or violate any order, applicable to Consultant, of any court or federal or state regulatory body or administrative agency having jurisdiction over Consultant or over any of its property, and will not conflict with or violate the terms of Consultant’s current employment or any consulting agreements to which Consultant is a party.

 

C. Consultant will disclose to any third party with which Consultant may have a potential or actual conflict of interest, and will further disclose to any such third party reasonably requested by the Company, the existence of Consultant’s relationship with the Company pursuant to this Agreement. Consultant shall provide copies of all such disclosure to the Company.

 

D. Consultant has the qualifications and abilities to perform the Consulting Services in a professional manner without the advice or control of the Company.

 

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents, warrants, covenants to and agrees with Consultant that this Agreement has been duly authorized, and executed by the Company and is a binding obligation of the Company, enforceable in accordance with its terms, except as rights to indemnity hereunder may be limited by applicable federal or state securities laws, and except in each case as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditor’s rights generally.

 

6. INDEPENDENT CONTRACTOR

 

It is the express intention of the Parties that Consultant is an independent contractor and not an employee, agent, joint venturer or partner of the Company. Nothing in this Agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee between the Company and Consultant or any employee or agent of Consultant. Both Parties acknowledge that Consultant is not an employee for state or federal tax purposes. Consultant shall retain the right to perform services for others during the term of this Agreement. Consultant shall not be entitled to any of the benefits afforded to the Company’s employees including, without limitation, workers’ compensation, unemployment insurance, vacation or sick pay. Consultant’s services will be performed with no direct supervision from the Company; and while the desired result of Consultant’s services will be mutually agreed upon, the Company will exercise no control or direction as to the means and methods for accomplishing this result.

 

In the performance of Consultant’s services, the services and the hours Consultant is to work on any given day will be entirely within Consultant’s control. Consultant will perform its services for the Company in a workmanlike manner and in accordance with applicable industry standards.

 

7. NOTICES

 

Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; or (iii) by facsimile transmission upon acknowledgment of receipt of electronic transmission. Notice shall be sent to the addresses set forth below or such other address as either party may specify in writing.

 

To the Company: Grey Cloak Tech Inc.

10300 W. Charleston

Las Vegas, NV 89135

Attn: Fred Covely

Facsimile: (253) 679-9194

 

with a copy to: Clyde Snow & Sessions, PC

201 S. Main Street, 13th Floor

Salt Lake City, UT 84111

Attn: Brian A. Lebrecht

Facsimile: (801) 521-6280

 

To the Director: Brian J. Dunn

5 Circle East

Edina, MN 55436

Email: brian@thedunngroup.com

 

8. ASSIGNMENT

 

Except as expressly permitted by this Agreement, neither party shall assign, delegate, or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other party. Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

 

10. CHOICE OF LAW AND VENUE

 

This Agreement and the rights of the Parties hereunder shall be governed by and construed in accordance with the laws of the State of Nevada including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws. Any action brought by any Party hereto shall be brought within the State of Nevada, County of Clark.

 

11. ENTIRE AGREEMENT

 

Except as provided herein, this Agreement, including exhibits, contains the entire agreement of the Parties, and supersedes all existing negotiations, representations, or agreements and all other oral, written, or other communications between them concerning the subject matter of this Agreement. There are no representations, agreements, arrangements, or understandings, oral or written, between and among the Parties hereto relating to the subject matter of this Agreement that are not fully expressed herein. The terms of this Agreement will govern all consulting services undertaken by the Consultant for the Company.

 

12. SEVERABILITY

 

Should any provisions of this Agreement be held by a court of law to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.

 

13. CAPTIONS

 

The captions in this Agreement are inserted only as a matter of convenience and for reference and shall not be deemed to define, limit, enlarge, or describe the scope of this Agreement or the relationship of the Parties, and shall not affect this Agreement or the construction of any provisions herein.

 

14. COUNTERPARTS

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.

 

15. MODIFICATION

 

No change, modification, addition, or amendment to this Agreement shall be valid unless in writing and signed by all Parties hereto.

 

16. ATTORNEYS FEES

 

Except as otherwise provided herein, if a dispute should arise between the Parties including, but not limited to arbitration, the prevailing Party shall be reimbursed by the non-prevailing Party for all reasonable expenses incurred in resolving such dispute, including reasonable attorneys’ fees.

 

17. NON-COMPETE AND CONFIDENTIALITY

 

A. Consultant shall not, during the term of this Agreement and for a period of one (1) year thereafter, for any reason, either directly or indirectly: (i) become associated with, render services to, invest in, represent, advise or otherwise participate in as an officer, employee, director, stockholder, partner, promoter, agent of, consultant for or otherwise, any business which is competitive with the business of the Company or any of its subsidiaries, provided that Consultant may own equity of certain business entities engaging in similar business as that of the Company subject to the prior approval by the Board of Directors; (ii) for its own account or for the account of any other person or entity, interfere with the Company’s relationship with any of its suppliers, material customers, accounts, brokers, representatives or agents; (iii) call on, solicit, or take away any of Company’s customers or potential customers about whom Consultant became aware as a result of Consultant’s services to the Company, either for Consultant or for any other person or entity; or (iv) solicit or take away or attempt to solicit or take away any of Company’s employees or contractors either for Consultant or for any other person or entity.

 

B. Confidentiality . Consultant shall maintain in strict confidence all information he has obtained or shall obtain from the Company which the Company has

designated as “confidential” or which is, by its nature confidential, relating to the Company’s business, operations, properties, assets, services, condition (financial or otherwise), liabilities, employee relations, customers (including customer usage statistics), suppliers, prospects, technology, or trade secrets, except to the extent such information (i) is in the public domain through no act or omission of the Company, (ii) is required to be disclosed by law or a valid order by a court or other governmental body, or (iii) is independently learned by Consultant outside of this relationship (the “ Confidential Information ”).

 

3.3  Nondisclosure and Nonuse Obligations . Consultant will use the Confidential Information solely to perform the Consultant Services for the benefit of the Company. Consultant will treat all Confidential Information of the Company with the same degree of care as Consultant treats his own Confidential Information, and Consultant will use his best efforts to protect the Confidential Information. Consultant will not use the Confidential Information for his own benefit or the benefit of any other person or entity, except as may be specifically permitted in this Agreement. Consultant will immediately give notice to the Company of any unauthorized use or disclosure by or through him, or of which he becomes aware, of the Confidential Information. Consultant agrees to assist the Company in remedying any such unauthorized use or disclosure of the Confidential Information.

 

3.4  Return of the Company Property . All materials furnished to Consultant by the Company, whether delivered to Consultant by the Company or made by Consultant in the performance of Consultant Services under this Agreement (the “ Company Property ”), are the sole and exclusive property of the Company. Consultant agrees to promptly deliver the original and any copies of the Company Property to the Company at any time upon the Company’s request. Upon termination of this Agreement by either party for any reason, Consultant agrees to promptly deliver to the Company or destroy, at the Company’s option, the original and any copies of the Company Property. Consultant agrees to certify in writing that Consultant has so returned or destroyed all such the Company Property.

 

18. WORK FOR HIRE.

 

Consultant and the Company expressly agree that the Consulting Services is “work made for hire,” and Consultant expressly waives and relinquishes any and all authorship, copyright, ownership or other statutory or common law claims to the Consulting Services or any copyrightable work derived therefrom, or any interest or rights in any such work. Consultant further agrees that, in the event it is subsequently determined by a court of competent jurisdiction or otherwise that notwithstanding the foregoing language, Consultant retains any right, title or interest in or to the Consulting Services or any copyrightable work derived therefrom, or any interest or rights in any such work, Consultant irrevocably agrees to sell, transfer and assign any and all such right, title and interest to the Company immediately upon the Company’s request for the sum of One Dollar ($1.00).

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

 

“ Company ”	“ Consultant ”
Grey Cloak Tech Inc.,	The Dunn Group, LLC,
a Nevada corporation	a Minnesota limited liability company
/s/ Fred Covely	/s/ Brian J. Dunn
By: Fred Covely	Brian J. Dunn, Chief Manager
Its: President
The undersigned principal of Consultant agrees to bound personally by the provisions of Sections 17 and 18 to the same extent as such provisions apply to Consultant.
Brian J. Dunn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

COMPENSATION

 

The Company shall compensation the Consultant as follows:

 

1. Upon execution of this Agreement, the Company shall issue to Consultant warrants to purchase one million (1,000,000) shares of the Company’s common stock (the “ Warrants ”) in the form attached hereto as Exhibit B .

 

2. During the term of this Agreement and the six (6) month period following the termination of this Agreement (the “ Tail Period ”), Consultant shall receive a ten percent (10%) commission on all (i) “Fraudlytic” software sales, (ii) CleanStreamAds ^tm services sales, and (iii) IP Reputation sales, that are a direct a result of Consultant’s efforts.

 

3. During the term of this Agreement and the Tail Period, in the event Consultant is involved in locating or identifying a third-party company, venture capital firm or financial institution which enters into a transaction with the Company (on terms acceptable to the Company in its sole and absolute discretion) as a direct result of Consultant’s efforts, Consultant shall receive a fee equal to three percent (3%) of the value thereof to the Company.

 

4. During the term of this Agreement and the Tail Period, in the event a third-party acquires of all or substantially all of the equity interests of the Company, or all or substantially all of the assets of the Company (on terms acceptable to the Company, its Board of Directors and shareholders, in their sole and absolute discretion), Consultant shall receive a fee equal to (i) three percent (3%) of the consideration received by the Company or its shareholders if the aggregate consideration is four hundred million dollars ($400,000,000) or less, or (ii) four percent (4%) of the consideration received by the Company or its shareholders if the aggregate consideration is exceeds four hundred million dollars ($400,000,000), in the same form as the consideration received by the Company or its shareholders.

 

GREY CLOAK TECH INC.

DIRECTOR AGREEMENT

 

This Director Agreement (the “ Agreement ”) is made and entered into on September 25, 2015, with an effective date as set forth in Section 1.1 hereof, by and between Grey Cloak Tech Inc., a Nevada corporation (the “ Company ”), and Brian J. Dunn, an individual (the “ Director ”). Each of the Company and the Director shall be referred to as a “ Party ” and collectively as the “ Parties .”

 

I. SERVICES

 

1.1  Board of Directors . Effective as of the date that the Director is appointed to the Company’s Board of Directors, and subject to the Company’s procurement of an insurance policy as set forth in Section 2.4 hereof (the “ Effective Date ”), Director will have been appointed as a member of the Company’s Board of Directors (the “ Board ”), to serve until the earlier of the date on which Director ceases to be a member of the Board for any reason or the date of termination of this Agreement in accordance with Section 5.2 hereof (such earlier date being the “ Expiration Date ”). The Board shall consist of the Director and such other members as nominated and elected pursuant to the then current Articles of Incorporation, as amended from time to time, of the Company and its Bylaws (the “ Articles ”).

 

1.2  Director Services . Director’s services to the Company hereunder shall include service on the Board to manage the business of the Company in accordance with applicable law and the then current Articles, and such other services in his capacity as a director of the Company as mutually agreed to by Director and the Company (the “ Director Services ”).

 

II. COMPENSATION

 

2.1  Expense Reimbursement . The Company shall reimburse Director for all reasonable and pre-approved travel and other out-of-pocket expenses incurred in connection with the Director Services rendered by Director.

 

2.2  Fees to Director . The Company will not pay Director any cash fees for the Director Services.

 

2.3 Warrants . The Company will issue to the Director warrants to purchase up to 2,000,000 shares of the Company’s common stock (the “ Warrants ”) in the form attached hereto as Exhibit A , exercisable at twenty five cents ($0.25) per share for a period of seven (7) years from the date hereof. The Warrants shall be subject to vesting as set forth therein.

 

2.4  Director and Officer Liability Insurance . Subject to Article VI hereof, the Company’s director and officer liability insurance policy shall provide Director with

 

coverage for damages and losses incurred in connection with the Director Services as set forth in such policy, which shall have a coverage limit of no less than $1,000,000.

 

III. DUTIES OF DIRECTOR

 

3.1  Fiduciary Duties . In fulfilling his managerial responsibilities, Director shall be charged with a fiduciary duty to the Company and all of its shareholders. Director shall be attentive and inform himself of all material facts regarding a decision before taking action, and agrees to be an active participant in the activities of the Company to which the Board is providing oversight. In addition, Director’s actions shall be motivated solely by the best interests of the Company and its shareholders. Director agrees to use his best efforts to attend all telephonic and in-person Board meetings, and agrees that he will in any event attend at least 75% of such meetings.

 

3.2  Confidentiality . Director shall maintain in strict confidence all information he has obtained or shall obtain from the Company which the Company has designated as “confidential” or which is, by its nature confidential, relating to the Company’s business, operations, properties, assets, services, condition (financial or otherwise), liabilities, employee relations, customers (including customer usage statistics), suppliers, prospects, technology, or trade secrets, except to the extent such information (i) is in the public domain through no act or omission of the Company, (ii) is required to be disclosed by law or a valid order by a court or other governmental body, or (iii) is independently learned by Director outside of this relationship (the “ Confidential Information ”).

 

3.3  Nondisclosure and Nonuse Obligations . Director will use the Confidential Information solely to perform the Director Services for the benefit of the Company. Director will treat all Confidential Information of the Company with the same degree of care as Director treats his own Confidential Information, and Director will use his best efforts to protect the Confidential Information. Director will not use the Confidential Information for his own benefit or the benefit of any other person or entity, except as may be specifically permitted in this Agreement. Director will immediately give notice to the Company of any unauthorized use or disclosure by or through him, or of which he becomes aware, of the Confidential Information. Director agrees to assist the Company in remedying any such unauthorized use or disclosure of the Confidential Information.

 

3.4  Return of the Company Property . All materials furnished to Director by the Company, whether delivered to Director by the Company or made by Director in the performance of Director Services under this Agreement (the “ Company Property ”), are the sole and exclusive property of the Company. Director agrees to promptly deliver the original and any copies of the Company Property to the Company at any time upon the Company’s request. Upon termination of this Agreement by either party for any reason, Director agrees to promptly deliver to the Company or destroy, at the Company’s option, the original and any copies of the Company Property. Director agrees to certify in writing that Director has so returned or destroyed all such the Company Property.

 

IV. COVENTANTS OF DIRECTOR

 

4.1  No Conflict of Interest . During the term of this Agreement and for a period of one (1) year thereafter, Director shall not be employed by, own, manage, control or participate in the ownership, management, operation or control of any business entity that is in direct competition with the Company or otherwise undertake any obligation inconsistent with the terms hereof, provided that Director may own equity of certain business entities engaging in similar business as that of the Company subject to the prior approval by the Board, and provided further that Director may continue Director’s current affiliation or other current relationships with the entity or entities described on  Exhibit B  (all of which entities are referred to collectively as “ Current Affiliations ”). This Agreement is subject to the current terms and agreements governing Director’s relationship with Current Affiliations, and nothing in this Agreement is intended to be or will be construed to inhibit or limit any of Director’s obligations to Current Affiliations. Director represents that nothing in this Agreement conflicts with Director’s obligations to Current Affiliations. A business entity shall be deemed to be in “direct competition with the Company” for purpose of this Article IV only if and to the extent it is primarily engaged in the business substantially similar to the Company’s detection of advertising click fraud and CleanStreamAds ^tm business.

 

4.2  Noninterference with Business . During the term of this Agreement, and for a period of one (1) year after the Expiration Date, Director agrees not to interfere with the business of the Company in any manner. By way of example and not of limitation, Director agrees not to solicit or induce any employee, independent contractor, customer or supplier of the Company to terminate or breach his or her employment, contractual or other relationship with the Company.

 

V. TERM AND TERMINATION

 

5.1  Term . This Agreement is effective on the Effective Date and will continue until terminated pursuant to section 5.2.

 

5.2  Termination . Either party may terminate this Agreement at any time upon thirty (30) days prior written notice to the other party, or such shorter period as the parties may agree upon.

 

5.3  Survival . The rights and obligations contained in Articles III, IV, and VI will survive any termination or expiration of this Agreement.

 

VI. INDEMNIFICATION

 

6.1 Authority . The Company’s Articles do not expressly provide for the indemnification of its officers and directors. Nonetheless, under the Nevada Revised Statutes, a director or officer is not liable for damages resulting from an act or a failure to act in his or her capacity as a director or officer unless it is proved that the act or failure

 

was (1) a breach of his or her fiduciary duties as a director or officer, and (2) involved intentional misconduct, fraud, or a knowing violation of law.

 

6.2 Indemnification .

 

(a)                 the Company will indemnify Director to the fullest extent permitted under applicable law if Director was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding of any kind, whether civil, criminal, administrative or investigative and whether formal or informal (including actions by or in the right of the Company and any preliminary inquiry or claim by any person or authority), by reason of the fact that Director is or was a director, officer, partner, trustee, employee or agent of the Company or is or was serving at the Company’s request as a director, officer, employee or agent of another corporation (including a Subsidiary), limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise, whether or not for profit, or by reason of anything done or not done by Director in any such capacity (collectively, “ Covered Matters ”). Such indemnification will cover all Expenses (as defined in paragraph 6.5(a) below), liabilities, judgments (including punitive and exemplary damages), penalties, fines (including excise taxes relating to employee benefit plans and civil penalties) and amounts paid in settlement that are incurred or imposed upon Director in connection with a Covered Matter (collectively, “ Indemnified Amounts ”).

 

(b)                Director will be indemnified for all Indemnified Amounts and the Company will defend Director against claims (including threatened claims and investigations) in any way related to Director’s service as a director including claims brought by or on behalf of the Company or any Subsidiary, except if it is finally determined by the court of last resort (or by a lower court if not timely appealed) that (1) the payment is prohibited by applicable law or (2) Director engaged in intentional misconduct for the primary purpose of significant personal financial benefit through actions adverse to the Company’s and its shareholders’ best interests. As used in this Agreement, (1) “intentional misconduct” will not include violations of disclosure or reporting requirements of federal securities laws or a breach of fiduciary duties (including duties of loyalty or care) if Director relied on advice of counsel to the Company, or otherwise reasonably believed that there was no violation of such requirements or breach of fiduciary duty; and (2) “significant personal financial benefit” will not include compensation or employee benefits for past or prospective services to the Company or the Company’s successor or in connection with an agreement not to compete or similar agreement, or any benefit received by directors or officers or shareholders of the Company generally.

 

(c)                 If Director is entitled under this Agreement to indemnification for less than all of the amounts incurred by Director in connection with a Covered Matter, the Company will indemnify Director for the indemnifiable amount.

 

6.3 Claims for Indemnification . Director will give the Company written notice of any claim for indemnification under this Agreement. Payment requests will include a

 

schedule setting forth in reasonable detail the amount requested and will be accompanied (or, if necessary, followed) by copies of the relevant invoice or other documentation. Upon the Company’s request, Director will provide the Company with a copy of the document or pleading, if any, notifying Director of the Covered Matter. To the extent practicable, the Company will pay Indemnified Amounts directly without requiring Director to make any prior payment.

 

6.4 Determination of Right to Indemnification .

 

(a) Director will be presumed to be entitled to indemnification under this Agreement and will receive such indemnification, subject to paragraph 6.4(b) below, irrespective of whether the Covered Matter involves allegations of intentional misconduct, alleged violations of Section 16(b) of the Securities Exchange Act of 1934, alleged violations of Section 10(b) of Securities Exchange Act of 1934 (including Rule 10b-5 thereunder), breach of Director’s fiduciary duties (including duties of loyalty or care) or any other claim.

 

(b) If, in the opinion of counsel to the Company, applicable law permits indemnification in a Covered Matter only as authorized in the specific case upon a determination that indemnification is proper in the circumstances because Director has met a standard of conduct established by applicable law, and upon an evaluation of Indemnification Amounts to be paid in connection with such Covered Matter, the following will apply:

 

(1)                the Company will give Director notice that a determination and evaluation will be made under this paragraph 6.4(b); such notice will be given immediately after receipt of counsel’s opinion that such a determination and evaluations necessary and will include a copy of such opinion.

 

(2)                Such determination and evaluation will be made in good faith, as follows:

 

(A)              by a majority vote of a quorum of the Company’s Board of Directors who are not parties or threatened to be made parties to the Covered Matter in question (“ Disinterested Directors ”) or, if such a quorum is not obtainable, by a majority vote of a committee of Disinterested Directors who are selected by the Board; or

 

(B)               by an attorney or firm of attorneys, having no previous relationship with the Company or Director, which is selected by the Company and Director; or

 

(C)               by all independent directors of the Company who are not parties or threatened to be made parties to the Covered Matter.

 

(3)                Director will be entitled to a hearing before the entire Board of Directors of the Company and any other person or persons making the

 

determination and evaluation under clause (2) above. Director will be entitled to be represented by counsel at such hearing.

 

(4)                The cost of a determination and evaluation under this paragraph 6.4(b) (including attorneys’ fees and other expenses incurred by Director in preparing for and attending the hearing contemplated by clause (3) above and otherwise in connection with the determination and evaluation under this paragraph 6.4(b)) will be borne by the Company.

 

(5)                The determination will be made as promptly as possible after final adjudication of the Covered Matter.

 

(6)                Director will be presumed to have met the required standard of conduct under this Section 6.4(b) unless it is clearly demonstrated to the determining body that Director had not met the required standard of conduct.

 

6.5 Advance of Expenses .

 

(a) Before final adjudication of a Covered Matter, upon Director’s request pursuant to paragraph 6.3 above, the Company will promptly either advance Expenses directly or reimburse Director for all Expenses. As used in this Agreement, “Expenses” means all costs and expenses (including attorneys’ fees, expert fees, other professional fees and court costs) incurred by Director in connection with a Covered Matter other than judgments, penalties, fines and settlement amounts.

 

(b) If, in the opinion of counsel to the Company, applicable law permits advancement of Expenses only as authorized in the specific case upon a determination that Director has met a standard of conduct established by applicable law, the determination will be made at the Company’s cost, in good faith and as promptly as possible after Director’s request, in accordance with clauses (1) through (4) and (6) of paragraph 6.4(b) above. Because of the difficulties inherent in making any such determination before final disposition of the Covered Matter, to the extent permitted by law such advance will be made if (1) the facts then known to those persons making the determination, without conducting a formal independent investigation, would not preclude advancement of Expenses under applicable law and (2) Director submits to the Company a written affirmation of Director’s belief that Director has met the standard of conduct necessary for advancement of Expenses under the circumstances.

 

(c) Director will repay any Expenses that are advanced under this paragraph 6.5 if it is ultimately determined, in a final, non-appealable judgment rendered by the court of last resort (or by a lower court if not timely appealed), that Director is not entitled to be indemnified against such Expenses. This undertaking by Director is an unlimited general undertaking but no security for such undertaking will be required.

 

6.6 Defense of Claim .

 

(a) Except as provided in paragraph 6.6(c) below, the Company, jointly with any other indemnifying party, will be entitled to assume the defense of any Covered Matter as to which Director requests indemnification.

 

(b) Counsel selected by the Company to defend any Covered Matter will be subject to Director’s advance written approval, which will not be unreasonably withheld.

 

(c) Director may employ Director’s own counsel in a Covered Matter and be fully reimbursed therefore if (1) the Company approves, in writing, the employment of such counsel or (2) either (A) Director has reasonably concluded that there may be a conflict of interest between the Company and Director or between Director and other parties represented by counsel employed by the Company to represent Director in such action or (B) the Company has not employed counsel reasonably satisfactory to Director to assume the defense of such Covered Matter promptly after Director’s request.

 

(d)                Neither the Company nor Director will settle any Covered Matter without the other’s written consent, which will not be unreasonably withheld.

 

(e)                 If Director is required to testify (in court proceedings, depositions, informal interviews or otherwise), consult with counsel, furnish documents or take any other reasonable action in connection with a Covered Matter, the Company will pay Director a fee for Director’s efforts at a rate equal to the amount payable to Director for attending Board and Board committee meetings, plus reimbursement for all reasonable expenses incurred by Director in connection therewith.

 

6.7 D&O Insurance . The parties will cooperate to obtain advances of Expenses, indemnification payments and consents from D&O Insurance carriers in any Covered Matter to the full extent of applicable D&O Insurance. The existence of D&O Insurance coverage will not diminish or limit the Company’s obligation to make indemnification payments to Director. Amounts paid directly to Director with respect to a Covered Matter by the Company’s D&O Insurance carriers will be credited to the amounts payable by the Company to Director under this Agreement.

 

6.8 Limitations of Actions; Limitation of Liability . No action will be brought by or on behalf of the Company against Director or Director’s heirs or personal representatives relating to Director’s service as a director, after the expiration of one year from the date Director ceases (for any reason) to serve as a Director of the Company, and any claim or cause of action of the Company will be extinguished and deemed released unless asserted by the filing of a legal action before the expiration of such period.

 

6.9 Rights Not Exclusive . The Indemnification provided to Director under this Agreement will be in addition to any indemnification provided to Director by law,

 

agreement, Board resolution, provision of the Articles of Incorporation or Bylaws of the Company or otherwise.

 

6.10 Subrogation . Upon payment of any Indemnified Amount under this Agreement, the Company will be subrogated to the extent of such payment to all of Director’s rights of recovery therefore and Director will take all reasonable actions requested by the Company (at no cost or penalty to Director) to secure the Company’s rights under this paragraph 11 including executing documents.

 

6.11 Continuation of Indemnity . All of the Company’s obligations under this Agreement will continue as long as Director is subject to any actual or possible Covered Matter, notwithstanding Director’s termination of service as a director.

 

VII. MISCELLANEOUS

 

7.1  Assignment . Except as expressly permitted by this Agreement, neither party shall assign, delegate, or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other party. Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

 

7.2  No Waiver . The failure of any party to insist upon the strict observance and performance of the terms of this Agreement shall not be deemed a waiver of other obligations hereunder, nor shall it be considered a future or continuing waiver of the same terms.

 

7.3  Notices . Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; or (iii) by facsimile transmission upon acknowledgment of receipt of electronic transmission. Notice shall be sent to the addresses set forth below or such other address as either party may specify in writing.

 

	To the Company:		Grey Cloak Tech Inc.
			10300 W. Charleston
			Las Vegas, NV 89135
			Attn: Fred Covely
			Facsimile: (253) 679-9194
	with a copy to:		Clyde Snow & Sessions, PC
			201 S. Main Street, 13th Floor
			Salt Lake City, UT 84111
			Attn: Brian A. Lebrecht
			Facsimile: (801) 521-6280

 

  Page 8 of 10

	To the Director:		Brian J. Dunn
			5 Circle East
			Edina, MN 55436
			Email: brian@thedunngroup.com

 

7.4  Choice of Law and Venue . This Agreement and the rights of the Parties hereunder shall be governed by and construed in accordance with the laws of the State of Nevada including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws. Any action brought by any Party hereto shall be brought within the State of Nevada, County of Clark.

 

7.5  Severability . Should any provisions of this Agreement be held by a court of law to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.

 

7.6  Entire Agreement . Except as provided herein, this Agreement, including exhibits, contains the entire agreement of the Parties, and supersedes all existing negotiations, representations, or agreements and all other oral, written, or other communications between them concerning the subject matter of this Agreement. There are no representations, agreements, arrangements, or understandings, oral or written, between and among the Parties hereto relating to the subject matter of this Agreement that are not fully expressed herein. The terms of this Agreement will govern all Director Services undertaken by Director for the Company.

 

7.7  Amendments . This Agreement may only be amended, modified or changed by an agreement signed by the Company and Director. The terms contained herein may not be altered, supplemented or interpreted by any course of dealing or practices.

 

7.8  Captions . The captions in this Agreement are inserted only as a matter of convenience and for reference and shall not be deemed to define, limit, enlarge, or describe the scope of this Agreement or the relationship of the Parties, and shall not affect this Agreement or the construction of any provisions herein.

 

7.9  Modification . No change, modification, addition, or amendment to this Agreement shall be valid unless in writing and signed by all Parties hereto.

 

7.10  Attorneys Fees . Except as otherwise provided herein, if a dispute should arise between the Parties including, but not limited to arbitration, the prevailing Party shall be reimbursed by the non-prevailing Party for all reasonable expenses incurred in resolving such dispute, including reasonable attorneys’ fees.

 

7.11  Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.

 

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

 

“ Company ”	“ Director ”
Grey Cloak Tech Inc.,
a Nevada corporation
/s/ Fred Covely	/s/ Brian J. Dunn
By: Fred Covely	Brian J. Dunn
Its: President

 

  Page 10 of 10

EXHIBIT A

 

Warrants

 

 

 

 

 

 

 

 

 

 

EXHIBIT B

 

Current Affiliations

 

 

 

 

 

 

 

 

GREY CLOAK TECH INC.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

 

Grey Cloak Dunn Group Warrant

 

COMMON STOCK PURCHASE WARRANT

 

THIS IS TO CERTIFY that, for value received, The Dunn Group, LLC, a Minnesota limited liability company, or its assigns (the “Holder”) is entitled, subject to the terms and conditions set forth herein, to purchase from Grey Cloak Tech Inc., a Nevada corporation (the “Company”) up to one million (1,000,000) fully paid and nonassessable shares of common stock of the Company (the “Warrant Securities”) at the initial price of twenty five cents ($0.25) per share but subject to adjustment as provided in Section 4 below (the “Exercise Price”).

 

1. Exercisability .

 

(A) General Exercisability . Subject to the vesting schedule in Section 2, below, this Warrant may be exercised between the date hereof and seven (7) years thereafter, by presentation and surrender hereof to the Company of a notice of election to purchase duly executed and accompanied by payment by check or wire transfer of the Exercise Price, or election to utilize the provisions of Section 1(B).

 

(B) Cashless Conversion of Warrants . Notwithstanding any provisions herein to the contrary, the Holder may convert this Warrant into that number of shares of the Company’s common stock by surrender of this Warrant at the principal office of the Company together with the properly endorsed form of election to purchase in which event the Company shall issue to the holder hereof a number of shares of the Company’s common stock computed using the following formula:

 

X = Y (A-B)

A

Where X = the number of shares of the Company’s common stock to be issued to the holder hereof

 

Y = the number of shares of the Company’s common stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)

A = the fair market value of one share of the Company’s common stock (at the date of such calculation)

B = the Exercise Price

All references herein to an “exercise” of the Warrant shall include a conversion pursuant to this Section. For the purposes of the above calculation, the Fair Market Value of one share of the Company’s common stock as of a particular date shall mean:

 

(a) If traded on a securities exchange or the NASDAQ National Market, the Fair Market Value shall be deemed to be the closing price of the common stock of the Company on such exchange or market on the date in question. If there is no closing selling price for such common stock on the date in question, then the fair market value shall be the closing selling price on the last preceding date for which such a quotation exists;

 

(b) If actively traded over-the-counter, the Fair Market Value shall be deemed to be the closing bid price of the common stock of the Company on the date in question. If there is no closing bid price for such common stock on the date in question, then the fair market value shall be the closing bid price on the last preceding date for which such a quotation exists;

 

(c) If the Company’s common stock is traded on multiple platforms, the Board of Directors of the Company shall determine the primary market for such common stock; and

 

(d) If there is no active public market, the “Fair Market Value” shall be the value thereof, as determined in good faith by the Company’s Board of Directors after taking into account such factors as the Board of Directors of the Company shall deem appropriate.

 

A stock certificate representing the appropriate number of shares of the common stock shall be delivered to the holder hereof within five (5) business days following the date of exercise.

 

2. Vesting Schedule . This Warrant shall vest (a) immediately upon a Change of Control of the Company during the term of that certain Consulting Services Agreement between the Holder and the Company of even date herewith (the “Consulting Agreement”) or the Tail Period (as defined therein), or (b) in installments upon the successful acquisition by the Company, during the term of the Consulting Agreement, or the Tail Period, of the following number of IP addresses as a direct result of Holder’s efforts, as more fully set forth in the Consulting Agreement: (i) one-third (1/3) upon the acquisition of 17,000,000 IP addresses, (ii) one-third (1/3) upon the acquisition of an additional 17,000,000 IP addresses, and (iii) one-third (1/3) upon the acquisition of an additional 16,000,000 IP addresses.

 

A “Change of Control” will be deemed to have occurred if:

 

(i) any “person” as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) is or becomes the “beneficial owner” as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities. For purposes of this clause (a), the term “beneficial owner” does not include any employee benefit plan maintained by the Company that invests in the Company’s voting securities; or

 

(ii) during any period of two (2) consecutive years there shall cease to be a majority of the Board comprised as follows: individuals who at the beginning of such period constitute the Board or new directors whose nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved; or

 

(iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 70% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets; provided, however, that no change in control will be deemed to have occurred if such merger, consolidation, sale or disposition of assets, or liquidation is not subsequently consummated.

 

3. Manner of Exercise . In case of the purchase of less than all the Warrant Securities, the Company shall cancel this Warrant upon the surrender hereof and shall execute and deliver a new warrant of like tenor for the balance of the Warrant Securities. Upon the exercise of this Warrant, the issuance of certificates for securities, properties or rights underlying this Warrant shall be made forthwith (and in any event within three (3) business days thereafter) without charge to the Holder including, without limitation, any

 

tax that may be payable in respect of the issuance thereof: provided, however, that the Company shall not be required to pay any tax in respect of income or capital gain of the Holder.

 

If and to the extent this Warrant is exercised, in whole or in part, the Holder shall be entitled to receive a certificate or certificates representing the Warrant Securities so purchased, upon presentation and surrender to the Company of the form of election to purchase attached hereto duly executed, and accompanied by payment of the purchase price.

 

4. Adjustment in Number of Shares .

 

(A) Adjustment for Reclassifications . In case at any time or from time to time after the issue date the holders of the Common Stock of the Company (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefore, other or additional stock or other securities or property (including cash) by way of stock split, spin-off, reclassification, combination of shares or similar corporate rearrangement (exclusive of any stock dividend of its or any subsidiary’s capital stock), then and in each such case the Holder of this Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property which such Holder would hold on the date of such exercise if on the issue date he had been the holder of record of the number of shares of Common Stock of the Company called for on the face of this Warrant and had thereafter, during the period from the issue date, to and including the date of such exercise, retained such shares and/or all other or additional stock and other securities and property receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period. In the event of any such adjustment, the Exercise Price shall be adjusted proportionally.

 

(B) Adjustment for Reorganization, Consolidation, Merger . In case of any reorganization of the Company (or any other corporation the stock or other securities of which are at the time receivable on the exercise of this Warrant) after the issue date, or in case, after such date, the Company (or any such other corporation) shall consolidate with or merge into another corporation or convey all or substantially all of its assets to another corporation, then and in each such case the Holder of this Warrant, upon the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities or property to which such Holder would be entitled had the Holder exercised this Warrant immediately prior thereto, all subject to further adjustment as provided herein; in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.

 

5. No Requirement to Exercise . Nothing contained in this Warrant shall be construed as requiring the Holder to exercise this Warrant prior to or in connection with the effectiveness of a registration statement.

 

6. No Stockholder Rights . Unless and until this Warrant is exercised, this Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company, or to any other rights whatsoever except the rights herein expressed, and, no dividends shall be payable or accrue in respect of this Warrant.

 

7. Piggyback Registration Rights . If the Company, at any time, proposes to conduct an offering of its securities so as to register any of its securities under the Securities Act of 1933 (the “Act”), including under an S-1 Registration Statement or otherwise, the Company will at such time give written notice to the Holder of its intention so to do. If the offering being registered includes an underwriter, then subject to the approval of the underwriters, and upon the written request of the Holder, given within 10 days after receipt of any such notice, the Company will use its best efforts to cause the common stock underlying the exercise of the Warrants to be registered under the Act (with the securities which we are proposing to register).

 

8. Exchange . This Warrant is exchangeable upon the surrender hereof by the Holder to the Company for new warrants of like tenor representing in the aggregate the right to purchase the number of Warrant Securities purchasable hereunder, each of such new warrants to represent the right to purchase such number of Warrant Securities as shall be designated by the Holder at the time of such surrender.

 

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it and reimbursement to the company of all reasonable expenses incidental thereto, and upon surrender and cancellation hereof, if mutilated, the Company will make and deliver a new warrant of like tenor and amount, in lieu hereof.

 

9. Elimination of Fractional Interests . The Company shall not be required to issue certificates representing fractions of securities upon the exercise of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of fractional interests. All fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of securities, properties or rights receivable upon exercise of this Warrant.

 

10. Reservation of Securities . The Company shall at all times reserve and keep available out of its authorized shares of Common Stock or other securities, solely for the purpose of issuance upon the exercise of this Warrant, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Principal Value, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any stockholder.

 

11. Notices to Holder . If at any time prior to the expiration of this Warrant or its exercise, any of the following events shall occur:

 

(a) the Company shall take a record of the holders of any class of its securities for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or

 

(b) the Company shall offer to all the holders of a class of its securities any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option or warrant to subscribe therefor; or

 

(c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed.

 

then, in any one or more said events, the Company shall give written notice of such event to the Holder at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholder entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be.

 

12. Transferability . This Warrant may not be transferred or assigned by the Holder without prior approval by the Company, which the Company may withhold in its sole discretion, except for a Permitted Transfer. A “Permitted Transfer” means a transfer to the Holder’s member and such member’s family members or a trust their benefit upon the death of the Holder’s member or for estate planning purposes of the Holder’s member.

 

13. Informational Requirements . The Company will transmit to the Holder such information, documents and reports as are generally distributed to stockholders of the Company concurrently with the distribution thereof to such stockholders.

 

14. Notice . Notices to be given to the Company or the Holder shall be deemed to have been sufficiently given if delivered personally or sent by overnight courier or messenger, or by facsimile transmission. Notices shall be deemed to have been received on the date of personal delivery or facsimile transmission. The address of the Company and of the Holder shall be as set forth in the Company’s books and records.

 

15. Choice of Law and Venue . This Warrant and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of

 

Nevada including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws. Any action brought by any party hereto shall be brought within the State of Nevada, County of Clark.

 

16. Successors . All the covenants and provisions of this Warrant shall be binding upon and inure to the benefit of the Company, the Holder and their respective legal representatives, successors and assigns.

 

17. Attorneys’ Fees . Except as otherwise provided herein, if a dispute should arise between the parties including, but not limited to arbitration, the prevailing party shall be reimbursed by the non-prevailing party for all reasonable expenses incurred in resolving such dispute, including reasonable attorneys’ fees.

 

[remainder of page intentionally left blank, signature page to follow]

 

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by the signature of its President and to be delivered in Las Vegas, Nevada.

 

Dated: September 25, 2015	Grey Cloak Tech Inc.,
	a Nevada corporation
	/s/ Fred Covely
	By: Fred Covely
	Its: President
Acknowledged:
/s/ Brian J. Dunn
Brian J. Dunn, Chief Manager of The Dunn Group, LLC

 

 

 

 

 

 

[FORM OF ELECTION TO PURCHASE]

 

Date: _________________

 

GREY CLOAK TECH INC.

Attn: President

 

Ladies and Gentlemen:

 

[ ] The undersigned hereby elects to exercise the warrant issued to it by Grey Cloak Tech Inc. (the “Company”) pursuant to the Common Stock Purchase Warrant Agreement between the Company and ______________, dated ________ (the “Warrant Agreement”) and to purchase thereunder ___________ (________) shares of Common Stock of the Company (the “Shares”) at a purchase price of twenty five cents ($0.25) per share or an aggregate purchase price of _______________ Dollars ($_______) (the “Purchase Price”).

 

[ ] The undersigned hereby elects under the provision set forth in Section 1(B) of the Warrant Agreement to make a net exercise of the Warrant as to __________ shares.

 

Pursuant to the terms of the Warrant Agreement the undersigned has delivered the aggregate Purchase Price herewith in full in cash or by certified check or wire transfer, if applicable.

 

The certificate(s) or other instruments for such shares shall be issued in the name of the undersigned or as otherwise indicated below.

 

 

Signature:
[name]
[address]

 

GREY CLOAK TECH INC.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

 

Grey Cloak Director’s Warrant No. 1

 

COMMON STOCK PURCHASE WARRANT

 

THIS IS TO CERTIFY that, for value received, Brian J. Dunn, an individual, or his assigns (the “Holder”) is entitled, subject to the terms and conditions set forth herein, to purchase from Grey Cloak Tech Inc., a Nevada corporation (the “Company”) up to two million (2,000,000) fully paid and nonassessable shares of common stock of the Company (the “Warrant Securities”) at the initial price of twenty five cents ($0.25) per share but subject to adjustment as provided in Section 4 below (the “Exercise Price”).

 

1. Exercisability .

 

(A) General Exercisability . Subject to the vesting schedule in Section 2, below, this Warrant may be exercised between the date hereof and seven (7) years thereafter, by presentation and surrender hereof to the Company of a notice of election to purchase duly executed and accompanied by payment by check or wire transfer of the Exercise Price, or election to utilize the provisions of Section 1(B).

 

(B) Cashless Conversion of Warrants . Notwithstanding any provisions herein to the contrary, the Holder may convert this Warrant into that number of shares of the Company’s common stock by surrender of this Warrant at the principal office of the Company together with the properly endorsed form of election to purchase in which event the Company shall issue to the holder hereof a number of shares of the Company’s common stock computed using the following formula:

 

X = Y (A-B)

A

Where X = the number of shares of the Company’s common stock to be issued to the holder hereof

 

Y = the number of shares of the Company’s common stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)

A = the fair market value of one share of the Company’s common stock (at the date of such calculation)

B = the Exercise Price

All references herein to an “exercise” of the Warrant shall include a conversion pursuant to this Section. For the purposes of the above calculation, the Fair Market Value of one share of the Company’s common stock as of a particular date shall mean:

 

(a) If traded on a securities exchange or the NASDAQ National Market, the Fair Market Value shall be deemed to be the closing price of the common stock of the Company on such exchange or market on the date in question. If there is no closing selling price for such common stock on the date in question, then the fair market value shall be the closing selling price on the last preceding date for which such a quotation exists;

 

(b) If actively traded over-the-counter, the Fair Market Value shall be deemed to be the closing bid price of the common stock of the Company on the date in question. If there is no closing bid price for such common stock on the date in question, then the fair market value shall be the closing bid price on the last preceding date for which such a quotation exists;

 

(c) If the Company’s common stock is traded on multiple platforms, the Board of Directors of the Company shall determine the primary market for such common stock; and

 

(d) If there is no active public market, the “Fair Market Value” shall be the value thereof, as determined in good faith by the Company’s Board of Directors after taking into account such factors as the Board of Directors of the Company shall deem appropriate.

 

A stock certificate representing the appropriate number of shares of the common stock shall be delivered to the holder hereof within five (5) business days following the date of exercise.

 

2. Vesting Schedule . This Warrant shall vest according to the following schedule:

 

(A)              One-half (1/2) of the warrants will vest upon Holder’s appointment to the Company’s Board of Directors; and

 

(B)               One-half (1/2) of the warrants will vest on the earlier of (i) April 1, 2016, subject to the condition that Holder is a member of the Company’s Board of Directors on such date, or (ii) a Change of Control (as defined below) while Holder is a member of the Company’s Board of Directors.

 

A “Change of Control” will be deemed to have occurred if:

 

(i) any “person” as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) is or becomes the “beneficial owner” as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities. For purposes of this clause (a), the term “beneficial owner” does not include any employee benefit plan maintained by the Company that invests in the Company’s voting securities; or

 

(ii) during any period of two (2) consecutive years there shall cease to be a majority of the Board comprised as follows: individuals who at the beginning of such period constitute the Board or new directors whose nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved; or

 

(iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 70% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets; provided, however, that no change in control will be deemed to have occurred if such merger, consolidation, sale or disposition of assets, or liquidation is not subsequently consummated.

 

Upon termination of Holder’s service as a member of the Company’s Board of Directors, for any reason or for no reason at all, the non-vested warrants shall terminate immediately.

 

3. Manner of Exercise . In case of the purchase of less than all the Warrant Securities, the Company shall cancel this Warrant upon the surrender hereof and shall execute and deliver a new warrant of like tenor for the balance of the Warrant Securities. Upon the exercise of this Warrant, the issuance of certificates for securities, properties or rights underlying this Warrant shall be made forthwith (and in any event within three (3) business days thereafter) without charge to the Holder including, without limitation, any tax that may be payable in respect of the issuance thereof: provided, however, that the Company shall not be required to pay any tax in respect of income or capital gain of the Holder.

 

If and to the extent this Warrant is exercised, in whole or in part, the Holder shall be entitled to receive a certificate or certificates representing the Warrant Securities so purchased, upon presentation and surrender to the Company of the form of election to purchase attached hereto duly executed, and accompanied by payment of the purchase price.

 

4. Adjustment in Number of Shares .

 

(A) Adjustment for Reclassifications . In case at any time or from time to time after the issue date the holders of the Common Stock of the Company (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefore, other or additional stock or other securities or property (including cash) by way of stock split, spin-off, reclassification, combination of shares or similar corporate rearrangement (exclusive of any stock dividend of its or any subsidiary’s capital stock), then and in each such case the Holder of this Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property which such Holder would hold on the date of such exercise if on the issue date he had been the holder of record of the number of shares of Common Stock of the Company called for on the face of this Warrant and had thereafter, during the period from the issue date, to and including the date of such exercise, retained such shares and/or all other or additional stock and other securities and property receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period. In the event of any such adjustment, the Exercise Price shall be adjusted proportionally.

 

(B) Adjustment for Reorganization, Consolidation, Merger . In case of any reorganization of the Company (or any other corporation the stock or other securities of which are at the time receivable on the exercise of this Warrant) after the issue date, or in case, after such date, the Company (or any such other corporation) shall consolidate with or merge into another corporation or convey all or substantially all of its assets to another corporation, then and in each such case the Holder of this Warrant, upon the

exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities or property to which such Holder would be entitled had the Holder exercised this Warrant immediately prior thereto, all subject to further adjustment as provided herein; in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.

 

5. No Requirement to Exercise . Nothing contained in this Warrant shall be construed as requiring the Holder to exercise this Warrant prior to or in connection with the effectiveness of a registration statement.

 

6. No Stockholder Rights . Unless and until this Warrant is exercised, this Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company, or to any other rights whatsoever except the rights herein expressed, and, no dividends shall be payable or accrue in respect of this Warrant.

 

7. Piggyback Registration Rights . If the Company, at any time, proposes to conduct an offering of its securities so as to register any of its securities under the Securities Act of 1933 (the “Act”), including under an S-1 Registration Statement or otherwise, the Company will at such time give written notice to the Holder of its intention so to do. If the offering being registered includes an underwriter, then subject to the approval of the underwriters, and upon the written request of the Holder, given within 10 days after receipt of any such notice, the Company will use its best efforts to cause the common stock underlying the exercise of the Warrants to be registered under the Act (with the securities which we are proposing to register).

 

8. Exchange . This Warrant is exchangeable upon the surrender hereof by the Holder to the Company for new warrants of like tenor representing in the aggregate the right to purchase the number of Warrant Securities purchasable hereunder, each of such new warrants to represent the right to purchase such number of Warrant Securities as shall be designated by the Holder at the time of such surrender.

 

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it and reimbursement to the company of all reasonable expenses incidental thereto, and upon surrender and cancellation hereof, if mutilated, the Company will make and deliver a new warrant of like tenor and amount, in lieu hereof.

 

9. Elimination of Fractional Interests . The Company shall not be required to issue certificates representing fractions of securities upon the exercise of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of fractional interests. All fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of securities, properties or rights receivable upon exercise of this Warrant.

 

10. Reservation of Securities . The Company shall at all times reserve and keep available out of its authorized shares of Common Stock or other securities, solely for the purpose of issuance upon the exercise of this Warrant, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Principal Value, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any stockholder.

 

11. Notices to Holder . If at any time prior to the expiration of this Warrant or its exercise, any of the following events shall occur:

 

(a) the Company shall take a record of the holders of any class of its securities for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or

 

(b) the Company shall offer to all the holders of a class of its securities any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option or warrant to subscribe therefor; or

 

(c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed.

 

then, in any one or more said events, the Company shall give written notice of such event to the Holder at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholder entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be.

 

12. Transferability . This Warrant may not be transferred or assigned by the Holder without prior approval by the Company, which the Company may withhold in its sole discretion, except for a Permitted Transfer. A “Permitted Transfer” means a transfer to the Holder’s family members or a trust their benefit upon the death of the Holder or for estate planning purposes of the Holder.

 

13. Informational Requirements . The Company will transmit to the Holder such information, documents and reports as are generally distributed to stockholders of the Company concurrently with the distribution thereof to such stockholders.

 

14. Notice . Notices to be given to the Company or the Holder shall be deemed to have been sufficiently given if delivered personally or sent by overnight courier or messenger, or by facsimile transmission. Notices shall be deemed to have been received on the date of personal delivery or facsimile transmission. The address of the Company and of the Holder shall be as set forth in the Company’s books and records.

 

15. Choice of Law and Venue . This Warrant and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of

 

Nevada including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws. Any action brought by any party hereto shall be brought within the State of Nevada, County of Clark.

 

16. Successors . All the covenants and provisions of this Warrant shall be binding upon and inure to the benefit of the Company, the Holder and their respective legal representatives, successors and assigns.

 

17. Attorneys’ Fees . Except as otherwise provided herein, if a dispute should arise between the parties including, but not limited to arbitration, the prevailing party shall be reimbursed by the non-prevailing party for all reasonable expenses incurred in resolving such dispute, including reasonable attorneys’ fees.

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by the signature of its President and to be delivered in Las Vegas, Nevada.

 

Dated: September 25, 2015	Grey Cloak Tech Inc.,
	a Nevada corporation
	/s/ Fred Covely
	By: Fred Covely
	Its: President
Acknowledged:
/s/ Brian J. Dunn
Brian J. Dunn

 

 

 

 

 

 

[FORM OF ELECTION TO PURCHASE]

 

Date: _________________

 

GREY CLOAK TECH INC.

Attn: President

 

Ladies and Gentlemen:

 

[ ] The undersigned hereby elects to exercise the warrant issued to it by Grey Cloak Tech Inc. (the “Company”) pursuant to the Common Stock Purchase Warrant Agreement between the Company and ______________, dated ________ (the “Warrant Agreement”) and to purchase thereunder ___________ (________) shares of Common Stock of the Company (the “Shares”) at a purchase price of twenty five cents ($0.25) per share or an aggregate purchase price of _______________ Dollars ($_______) (the “Purchase Price”).

 

[ ] The undersigned hereby elects under the provision set forth in Section 1(B) of the Warrant Agreement to make a net exercise of the Warrant as to __________ shares.

 

Pursuant to the terms of the Warrant Agreement the undersigned has delivered the aggregate Purchase Price herewith in full in cash or by certified check or wire transfer, if applicable.

 

The certificate(s) or other instruments for such shares shall be issued in the name of the undersigned or as otherwise indicated below.

 

 

Signature:
[name]
[address]