EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made
effective October 1, 2009, between APOTHECARY Rx, LLC, an Oklahoma limited
liability company (the “Company”), GRAYMARK HEALTHCARE, INC, an Oklahoma
corporation (“GRMH”), and LEWIS P. ZEIDNER, an individual (the “Executive” and
collectively with the Company and GRMH, the “parties” or individually the
“party”). This Agreement amends, supplements and restates in whole the
Employment Agreement amongst the Company, GRMH and Executive made effective
January 1, 2008 (the “Original Agreement”).
     WHEREAS, the Company and GRMH desire to retain the services of the
Executive and the Executive desires to make the Executive’s services available
to the Company and GRMH, and
     WHEREAS, GRMH is the sole owner of the Company.
     NOW, THEREFORE, in consideration of the mutual promises herein contained,
the Company, GRMH and the Executive agree as follows:
1. Employment. The Company and GRMH hereby employ the Executive as an employee
and the Executive hereby accepts such employment subject to the terms and
conditions contained in this Agreement. Subject to the terms of this Agreement,
the employment relationships of the Executive with the Company and GRMH are “at
will” and either can terminate this Agreement with or without cause as provided
in this Agreement.
2. Executive’s Duties. The Executive is employed on a full-time basis.
Throughout the term of this Agreement, the Executive will use the Executive’s
best efforts and due diligence to assist GRMH in the acquisition and operation
of pharmacies and sleep centers, and the long term profitable operation of the
Company and GRMH consistent with developing and maintaining quality business
operations.

  2.1   Specific Duties. The Executive will serve as the President and/or Chief
Executive Officer of the Company and SDC Holdings, LLC (one of GRMH’s
wholly-owned subsidiaries) and Chief Operating Officer of GRMH or such other
position and title as the Company or GRMH and Executive shall mutually determine
from time to time. The Executive will use the Executive’s best efforts to
perform all of the services required to fully and faithfully execute the offices
and positions to which the Executive is appointed and such other services as may
be reasonably directed by the Company or GRMH in accordance with this Agreement.
More specifically the Executive shall have general executive charge, management
and control, of the properties, business and operations of the Company and SDC
Holdings, LLC and GRMH with all such powers as may be reasonably incident to
such responsibilities and authority including matters related to budgeting and
cost containment, employment of personnel and personnel terminations, and
general contracting in the normal course of business.

1

--------------------------------------------------------------------------------

 

  2.2   Rules and Regulations. Each of the Company and GRMH may adopt an
employee manual which addresses frequently asked questions regarding employee
relations with the Company. The employee manual will be subject to change
without notice in the sole discretion of the Company or GRMH at any time. The
Executive agrees to comply with the applicable employee manual except to the
extent inconsistent with this Agreement. In the event of a conflict between the
employee manual and this Agreement, this Agreement will control over the terms
of the employee manual.

3. Other Activities. Except for the activities (the “Permitted Activities”)
expressly permitted by this Agreement or approved by the governing body of the
Company and the Board of Directors of GRMH in writing, during the term of this
Agreement, the Executive will not: (a) serve as an officer or director of any
corporation, partnership, company or firm whose securities are publicly traded;
(b) except for passive investments that do not violate this Agreement and do not
interfere with the full time employment of Executive, serve as a general
partner, manager or officer of any corporation, partnership, limited liability
company, other company or firm; or (c) directly or indirectly invest in,
participate in or acquire an interest in any company, business or entity which
is engaged, directly or indirectly, in the retail sale of pharmaceutical drugs
or providing of sleep diagnostic services. The limitations in this Section 3
will not prohibit a passive investment by the Executive in publicly traded
securities where the equity interest owned by the Executive does not exceed 2%
of the total outstanding equity interests of the publicly traded company. The
Executive shall disclose in writing to the Company and the Board of Directors of
GRMH all above Permitted Activities at the time of the execution of this
Agreement and thereafter upon written request. The Company and GRMH expressly
acknowledge that, during the term of this Agreement, the Executive may serve as
a director of, and own not more than 2% of the total outstanding equity of,
eq-Life LLC.
4. GRMH Management Committee. Executive hereby agrees to the termination of the
Management Committee and the Executive’s appointment to the Management Committee
as contemplated in the Original Agreement.
5. Executive’s Compensation. The Company agrees to compensate the Executive,
subject to the terms of this Agreement, as follows:

  5.1   Base Salary. A base salary (the “Base Salary”), in an annual rate of not
less than Two Hundred Thirty-five Thousand Dollars ($235,000). The Base Salary
will commence on the Effective Date of this Agreement and will be payable in
arrears bi-weekly during the term of this Agreement with the first installment
to be paid on the Company’s next regular pay period after the Effective Date of
this Agreement.     5.2   Stock Option Awards.

5.2.1 Base Stock Option Awards. Upon execution of this Agreement the Executive
shall be awarded stock options exercisable for the purchase of One Hundred
Thousand (100,000) common stock shares and on September 30, 2010 and 2011 for
services performed during the preceding twelve (12) months, the Executive shall
be awarded stock options exercisable for the purchase of Seventy-Five Thousand
(75,000) common stock shares of GRMH (collectively the “Option Shares”) for the
closing sale price (or, if not available on that date, the most recently
reported closing sale price) in accordance with the Graymark Healthcare, Inc.
2008 Long-term

2

--------------------------------------------------------------------------------

 

Incentive Plan (the “2008 Plan”) (or a substitute or successor plan to the 2008
Plan) substantially in the form attached to this Agreement as Appendix A,
Appendix B and Appendix C (each referred to as the “Stock Option Award”).
5.2.1 Company Performance Stock Option Awards. In the event the Company shall
during the 12 months ending on September 30, 2010 or 2011 achieve operating
results equal to or in excess of ninety percent (90%) of the budgeted net income
for such 12 months (the “12-month Budgeted Income Level”), the Executive shall
be awarded stock options pursuant to a Stock Option Award Agreement exercisable
for the purchase of Twenty-Five Thousand (25,000) common stock shares of GRMH in
accordance with the 2008 Plan. Provided, however, in the event the operations of
the Company fails to achieve the 12-month Budged Income Lever during the
applicable 12-month period, the Compensation Committee and Board of Directors
may in their sole discretion authorize and approve a stock option award to the
Executive exercisable for up to Twenty-Five Thousand (25,000) common stock
shares based upon and in recognition of trends and developments within the
retail pharmacy industry that contributed to the failure to achieve the 12-month
Budgeted Income Level and in recognition that the failure to achieve the
12-month Budged Income Level was not attributable to the failure of Executive to
devote time, attention and effort to the business endeavors of the Company. The
stock options awarded pursuant to this Section 5.2.2 shall be under the 2008
Plan and evidenced by one or more Stock Option Award Agreements and shall be in
addition to the stock options awarded to the Executive pursuant to
Section 5.2.1. Each stock option award pursuant to this Section 5.2.2 shall vest
in three equal installments, the first installment to vest on October 1, 2010 or
October 1, 2011, as may be applicable, and the second and third installments
shall vest on the first and second anniversary date of the applicable Stock
Option Award Agreement. Furthermore, in the event the Company shall be sold or
otherwise divested by GRMH prior to (i) September 30, 2010, the Executive shall
be deemed for purposes of this Section 5.2.2 to have achieved the 12-month
Budgeted Income level for each of the 12-month periods ending September 30, 2010
and 2011 and shall be awarded the stock options on an accelerated basis pursuant
to this Section 5.2.2 or (ii) September 30, 2011, the Executive shall be deemed
for purposes of this Section 5.2.2 to have achieved the 12-month Budgeted Income
level for each of the 12-month periods ending September 30, 2011 and shall be
awarded the stock options on an accelerated basis pursuant to this
Section 5.2.2.
5.2.3 Continuous Employment and Change of Control. Subject to the requirement of
the Executive’s continuous employment by the Company and GRMH, in the event of a
“change of control” (as defined in the 2008 Plan), fifty percent (50%) of the
unvested common stock shares for which the stock options may be exercised as
evidenced by a Stock Option Award Agreement executed and delivered to the
Executive prior to the “change of control” shall immediately vest and become
exercisable by the Executive.

  5.3   Bonus. In addition to the Base Salary described at Section 5.1 of this
Agreement, the Company and GRMH may periodically review and may pay bonus
compensation to the Executive. Any bonus compensation determined to be paid, if
any, will be at the

3

--------------------------------------------------------------------------------

 

      absolute discretion of the Company or GRMH in such amounts and at such
times as the Company or GRMH may determine.

  5.4   Benefits. During the term of this Agreement, the Executive shall be
entitled to participate in any employee benefit plans and programs which are
maintained by the Company or GRMH for and generally available to employees of
the Company or GRMH, all in accordance with the terms of such plans and
programs. In addition, the Executive shall be entitled to participate in any
employee benefit plans and programs that are maintained by the Company or GRMH
for and generally available to its executive officers, all in accordance with
the terms of such plans and programs. The Company or GRMH shall reimburse the
Executive for all reasonable and ordinary expenses incurred by him on behalf of
the Company or GRMH in the course of the Executive’s duties upon the
presentation by the Executive of appropriate documentation substantiating the
amount of and purpose for which such expenses were incurred, in accordance with
Company or GRMH policy. The Executive will be entitled to take up to four
(4) weeks of paid vacation each calendar year during the term of this Agreement,
without carryover to the following calendar year.     5.5   Compensation Review.
The compensation of the Executive will be reviewed not less frequently than
annually by the Company and GRMH.

6. Term. In the absence of termination as set forth in Section 7 below, this
Agreement shall extend for a term of three (3) years commencing on the Effective
Date of this Agreement and ending on September 30, 2012 (the “Employment
Period”); provided, however, that commencing on the one-year anniversary of the
Effective Date and each annual anniversary of such date (the “Renewal Date”) the
Employment Period shall be automatically extended so as to terminate three
(3) years from such Renewal Date. If at least 120 days prior to the Renewal
Date, the Company or GRMH gives Executive notice that the Employment Period will
not be so extended, this Agreement will continue for the remainder of the then
current Employment Period and expire. The Employment Period may be sooner
terminated under Section 7 of this Agreement.
7. Termination. This Agreement will continue in effect until the expiration of
the term set forth in Section 6 of this Agreement, unless earlier terminated
pursuant to this Section 7.

  7.1   Termination by Company. The Company and GRMH will have the following
rights to terminate this Agreement:

7.1.1 Termination without Cause. The Company and GRMH may terminate this
Agreement without cause at any time by the service of written notice of
termination to the Executive specifying an effective date of such termination
not sooner than thirty (30) days after the date of such notice (the “Termination
Date”). In the event this Agreement is terminated without cause by the Company
and GRMH (i) the Executive shall be entitled to receive all compensation,
reimbursements and benefits hereunder which were either payable to the Executive
or which had been earned by the Executive as of the Termination Date, and
(ii) the Executive will receive as severance compensation, conditioned upon
Executive being in compliance with all provisions of this Agreement and no
default having occurred or be continuing: (x) the sum of Two Hundred Thirty-five
Thousand ($235,000) less all applicable

4

--------------------------------------------------------------------------------

 

federal and state payroll tax withholdings (if any), to be paid in equal monthly
installments over twelve (12) months without interest; and (y) the continuance
of all benefits under Section 5.3 of this Agreement for one (1) year after the
Termination Date. The parties acknowledge that the amount payable pursuant to
clause (ii) (x) includes payment for all vacation pay payable to the Executive
through the Termination Date and, therefore, no amounts shall be payable
pursuant to clause (i) for accrued vacation pay. Provided however, no payment
under this section 7.1.1 shall be due or payable to Executive after the
Termination Date in the event that Executive shall assert or claim that any part
of any this Agreement (including but not limited to Sections 8, 9, 10 or 11) is
invalid or unenforceable, in whole or part.
7.1.2 Termination for Cause. The Company or GRMH may terminate this Agreement
for cause upon written notice if the Executive: (a) engages in gross personal
misconduct which materially injures the Company or GRMH, or any fraud or deceit
regarding the business of the Company or GRMH or its or their customers or
suppliers; (b) enters a plea of nolo contendere to or is convicted of a felony;
(c) willfully and repeatedly fails to perform the Executive’s duties under this
Agreement after receiving notice and being provided an opportunity to correct
such actions or (d) breaches any material term or provision of this Agreement
(“for cause”). In the event this Agreement is terminated for cause by the
Company or GRMH, (i) the Executive shall be entitled to receive all
compensation, reimbursements and benefits under this Agreement that are either
payable to the Executive or that are earned by the Executive as of the
Termination Date, and (ii) the Company and GRMH will not have any obligation to
provide any further payments or benefits to the Executive after the effective
date of such termination. This Agreement will not be deemed to have terminated
for cause unless a written determination specifying the reasons for such
termination shall be made and delivered to the Executive by the Company and
GRMH. Thereafter, the Executive shall have the right for a period of thirty
(30) days to request a Company and GRMH meeting to be held at a mutually
agreeable time and location within such thirty (30) days and attended by the
governing body (or a representative appointed for this purpose) of the Company
and GRMH then serving, at which meeting the Executive will have an opportunity
to be heard. In the event of a termination for cause by the Company and GRMH,
Executive acknowledges the Funding Agreement (defined below) shall continue in
full force and effect.

  7.2   Termination by Executive. The Executive will have the following rights
to terminate this Agreement:

7.2.1 Termination Without Cause. The Executive may voluntarily terminate this
Agreement without cause by the service of written notice of such termination to
the Company and GRMH specifying an effective date of such termination thirty
(30) days after the date of such notice, during which time Executive may use
remaining accrued vacation days or, at the option of the Company and GRMH, be
paid for such days. In the event this Agreement is terminated without cause by
the Executive, (i) the Executive shall be entitled to receive all compensation,
reimbursements and benefits hereunder that are either payable to the Executive
or that had been earned by the Executive as of the Termination Date, and
(ii) the Company and GRMH will have no further obligations to Executive
hereunder including, without limitation, any

5

--------------------------------------------------------------------------------

 

obligation of either the Company or GRMH to provide any further compensation,
payments or benefits to the Executive after the effective date of such
termination. In the event this Agreement is terminated without cause by the
Executive, Executive acknowledges the Funding Agreement (defined below) shall
continue in full force and effect.
7.2.2 Termination for Cause. The Executive may terminate this Agreement at any
time for cause by giving written notice thereof to the Company and GRMH. For
purposes of this Section 7.2.2, the term “cause” shall mean a breach by the
Company or GRMH of any material term or provision set forth in Sections 5.1 or
5.3 of this Agreement for the payment of compensation or benefits to which
Executive is entitled under this Agreement, which breach is not cured within
thirty (30) days after notice of such breach to the Company and GRMH by the
Executive setting forth the facts upon which the breach is based. In the event
this Agreement is terminated by the Executive for cause, (i) the Executive shall
be entitled to receive all compensation, reimbursements and benefits hereunder
which were either payable to the Executive or which had been earned by the
Executive as of the termination date, and (ii) the Executive shall be entitled
to receive as termination compensation: (x) the sum of Two Hundred Thirty-five
Thousand Dollars ($235,000) less all applicable federal and state payroll tax
withholdings (if any), to be paid within thirty (30) days after the termination
date; and (y) the continuance of all benefits under Section 5.3 of this
Agreement for one (1) year after the Termination Date.

  7.3   Incapacity of Executive. If the Executive suffers from a physical or
mental condition which, in the reasonable judgment of the Company and GRMH,
prevents the Executive in whole or in part from performing the duties specified
herein for a period of three (3) consecutive months, the employment of Executive
may be terminated. The termination for such incapacity shall be deemed as a
termination with cause, and all compensation and benefits payable under
Section 5 of this Agreement will be continued for six (6) months if the
Executive shall be in compliance with all of the material terms of this
Agreement, and no default by Executive under this Agreement shall have occurred
or shall be continuing. Notwithstanding the foregoing, the Executive’s Base
Salary specified in Section 5.1 of this Agreement will be reduced by any
benefits payable under any disability plans provided by the Company and GRMH
under Section 5 of this Agreement. Provided however, that no such compensation
as set forth in this 7.3 shall be due and payable in the event that and to the
extent of a default that has occurred and is continuing under the terms of the
Funding Agreement.     7.4   Death of Executive. If the Executive should become
deceased during the term of this Agreement, such shall be deemed a termination
for cause and the Company or GRMH may thereafter terminate this Agreement
without compensation to the Executive’s estate except: (a) the obligation to
continue the Base Salary payments under Section 5.1 of this Agreement for six
(6) months after the effective date of such termination, and (b) the obligation
to continue the benefits described in Section 5.3 of this Agreement, if any or
if applicable, for six (6) months after the effective date of such termination,
in both cases if the Executive was in compliance with all of the material terms
of this Agreement and no default by the Executive under this

6

--------------------------------------------------------------------------------

 

      Agreement has occurred or is continuing. Provided however, that no such
compensation as set forth in this 7.4 shall be due and payable in the event that
and to the extent of a default that has occurred and is continuing under the
terms of the Funding Agreement.

  7.5   Effect of Termination. The termination of this Agreement will terminate
all obligations of the Executive to render services on behalf of the Company and
GRMY, provided that the Executive will maintain the confidentiality of all
information that is acquired by the Executive during the term of the Executive’s
employment in accordance with Section 8 of this Agreement. Except as otherwise
provided in this Section 7, no accrued bonus, severance pay or other form of
compensation will be payable by the Company or GRMH to the Executive by reason
of the termination of this Agreement. All keys, entry cards, credit cards,
files, records, financial information, furniture, furnishings, equipment,
computers and laptops, software, supplies and other items relating to the
Company or GRMH will remain the property of the Company or GRMH, as may be
applicable. The Executive shall have the right to retain and remove all personal
property and effects that are owned by the Executive and located in the offices
of the Company or GRMH. All such personal items will be removed from such
offices no later than ten (10) days after the effective date of termination and
the Company or GRMH, as may be applicable, shall be authorized to discard any
items remaining thereafter. Prior to the effective date of termination, the
Executive will cooperate with the Company and GRMH to provide for the orderly
termination of the Executive’s employment.     7.6   Condition. As a condition
precedent to the right to receive the payments set forth in this Section 7, the
Executive (or his personal representative) shall execute a waiver and release of
all claims against the Company, its governing body, and GRMH and its governing
body and the other party to the Funding Agreement, which the Executive has or
may have, in form reasonably acceptable to the Company and GRMH, other than as
to the right to receive payments as provided in this Section 7 or as set forth
in and applicable under Section 7.7 below and the Executive shall be and remain
in compliance at all times with this Agreement. Each of the Company and GRMH
shall have the right of offset under this Agreement.     7.7   Release of
Executive. GRMH and the Company agree that if the employment of Executive with
the Company and GRMH is terminated pursuant to Section 7.1.1 or 7.2.2, GRMH and
Company shall cause the Executive to be discharged and released from all
personal guarantees of debt provided by the Executive on behalf of the Company
or GRMH, including but not limited to that certain Loan Agreement among GRMH,
SDC Holdings, LLC, the Company, Oliver Company Holdings, LLC, Roy T. Oliver,
Stanton M. Nelson, Roy T. Oliver as Trustee of the Roy T. Oliver Revocable Trust
dated June 15, 2004, Vahid Salalati, Kevin Lewis, Roger Ely, the Executive and
Arvest Bank, dated May 21, 2008 and as amended and the related agreements and
documents thereunder (the “Funding Agreement”). GRMH and Company agree that if
the employment of Executive with the Company and GRMH is terminated pursuant to
Section 7.3 or 7.4, GRMH and Company shall cause Executive to be discharged and
released from all personal guarantees of debt provided by the Executive on
behalf of the Company or GRMH, except that

7

--------------------------------------------------------------------------------

 

      Executive acknowledges and agrees that such guarantees (including under
the Funding Agreement) shall continue to apply to the extent of but limited to
the shares of GRMH issued to Executive.

8. Confidentiality. The Executive recognizes that the nature of the Executive’s
services are such that the Executive will have access to information which
constitutes trade secrets, and/or is of a business or confidential nature, that
is of great value to the Company or GRMH. The Executive agrees not to disclose
to any person other than the employees or approved legal counsel of the Company
or GRMH nor use for any purpose, other than the performance of this Agreement,
any such confidential information (“Confidential Information”), regardless of
the source of the Confidential Information or how same shall be obtained. All
such Confidential Information shall be the sole and exclusive property of the
Company or GRMH, as applicable. Confidential Information includes, but is not
limited to, data or material (regardless of form) which is any of the following:
(a) trade secret, non-public information, or information proprietary to the
Company or GRMH, (b) information pertaining to proposed or pending pharmacy
acquisitions or sales, proposed or pending sleep center acquisitions, or other
proposed or pending business of GRMH or the Company and (c) financial
information or business plans of the Company or GRMH. The Executive agrees that
the provisions of this Section 8 will survive the termination, expiration or
cancellation of this Agreement for a period of two (2) years. The Executive
will, upon any termination of this Agreement (or at any other time requested by
the Company or GRMH), deliver to the Company and GRMH, as may be applicable, all
originals and copies of the documents or materials containing Confidential
Information. For purposes of this Agreement, GRMH expressly includes any of
their affiliated corporations, partnerships, limited liability companies and
other entities.
9. Restrictive Covenant. Notwithstanding any provision of this Agreement to the
contrary, and in further consideration of the terms of this Agreement, for a
period of twenty-four (24) months after Executive is no longer employed by the
Company and GRMH for any reason with or without cause as applicable, the
Executive will not directly or indirectly:

  (a)   acquire, attempt to acquire, solicit, perform services in any capacity
for, or aid another in the acquisition or attempted acquisition of an interest
in any business that is involved in the acquisition of retail pharmacies or that
is involved in the retail sale of pharmaceutical drugs or the providing of sleep
disorder diagnostic services, in any city in the United States where GRMH or any
of its affiliated corporations, partnerships, limited liability companies or
other entities owns a pharmacy or sleep center, or that is within 40 miles of a
pharmacy or sleep center location owned by GRMH or any of its affiliated
corporations, partnerships, limited liability companies or other entities; or  
  (b)   solicit, induce, entice or attempt to entice any employee, officer or
director (except the Executive’s personal secretary, if any), contractor,
customer, vendor or subcontractor of GRMH or any of its affiliated corporations,
partnerships, limited liability companies or other entities to terminate or
breach any relationship with GRMH or any of its affiliated corporations,
partnerships, limited liability companies or other entities, or     (c)  
solicit, induce, entice or attempt to entice any customer, vendor or
subcontractor of GRMH or any of its affiliated corporations, partnerships,
limited liability companies or other entities to cease doing business with GRMH
or any of its affiliated corporations, partnerships, limited liability companies
or other entities.

8

--------------------------------------------------------------------------------

 

     Executive agrees that the Executive will not circumvent or attempt to
circumvent the foregoing agreements by any future arrangement or through the
actions of a third party.
     Executive agrees the above separate restrictions will not work any undue
hardship on Executive, such restrictions are reasonable and that such
restrictions will not keep Executive from earning a living or obtaining
reasonable employment. Executive is a stockholder of GRMH and former direct
member of the Company and agrees that the restrictions herein are in further
consideration thereof, this Agreement and the sale and transfer of all goodwill
associated with the former ownership of Company held by Executive pursuant to
that certain Exchange Agreement dated November 19, 2007.
10. Proprietary Matters. The Executive expressly understands and agrees that any
and all improvements, inventions, discoveries, processes, applications, patents,
copyrights, trade names, trademarks, know-how, trade secrets, or other
proprietary matters (“Proprietary Items”) that are principally related to the
business of the Company or GRMH and which were generated or conceived by the
Executive during the term of this Agreement, whether generated or conceived
during the Executive’s regular working hours or otherwise, and whether
patentable, subject to copyright or trademark protection or not, will be the
sole and exclusive property of the Company or GRMH, as applicable. Whenever
requested by the Company or GRMH (either during the term of this Agreement or
thereafter), the Executive will assign or execute any and all applications,
assignments and or other instruments and do all things reasonably necessary or
appropriate in order to permit the Company or GRMH, as may be applicable, to:
(a) assign and convey or otherwise make available to the Company or GRMH the
sole and exclusive right, title, and interest in and to the Proprietary Items;
or (b) apply for, obtain, maintain, enforce and defend patents, copyrights,
trade names, or trademarks of the United States or of foreign countries for the
Proprietary Items. In the event any action requested by the Company or GRMH to
be taken by the Executive after the termination of this Agreement involves more
than a de minimis amount of time, the Company or GRMH shall reasonably
compensate the Executive for his time.
11. Arbitration. The parties will attempt to promptly resolve any dispute or
controversy arising out of or relating to this Agreement or termination of the
Executive by the Company or GRMH. Any negotiations pursuant to this Section 11
shall be confidential and will be treated as compromise and settlement
negotiations for all purposes. If the parties are unable to resolve the dispute,
the dispute will be submitted to binding arbitration before a single arbitrator
in accordance with the Rules for Commercial Cases of the American Arbitration
Association and shall be undertaken pursuant to the Federal Arbitration Act. The
arbitrator will be instructed and empowered to take reasonable steps to expedite
the arbitration and the arbitrator’s judgment will be final and binding upon the
parties subject solely to challenge on the grounds of fraud or gross misconduct.
The arbitrator is not empowered to award punitive or exemplary damages but only
compensatory damages and each party hereby irrevocably waives any damages or
right thereto other than such compensatory damages. The arbitrator shall be
empowered to apply the remedy of specific enforcement. The arbitration will be
held in Oklahoma City, Oklahoma. Judgment upon any verdict in arbitration may be
entered in any court of competent jurisdiction. Each party will initially bear
its own costs in connection with the arbitration and the costs of the arbitrator
will be borne by the party who the arbitrator determines did not prevail in the
matter. The procedures specified in this Section 11 will be the sole and
exclusive remedies and procedures for the resolution of disputes and
controversies between the parties arising out of or relating to this Agreement.
Notwithstanding the foregoing, a party may seek

9

--------------------------------------------------------------------------------

 

a preliminary injunction or other provisional judicial relief if in such party’s
judgment such action is necessary to avoid irreparable damage or to preserve the
status quo pending arbitration. The parties hereby consent to the exclusive
jurisdiction of and proper venue in, either the Federal District Court for the
Western District of Oklahoma or Oklahoma County District Court, sitting in
Oklahoma County, Oklahoma (as applicable) for purposes of any permitted action
in the nature of a preliminary injunction.
12. Miscellaneous. The parties further agree as follows:

  12.1   Time. Time is of the essence of each provision of this Agreement.    
12.2   Notices. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement will be in writing and
will be deemed to have been given when delivered personally or by confirmed
telefacsimile to the party designated to receive such notice, or on the date
following the day sent by overnight courier, or on the third (3rd) business day
after the same is sent by certified mail, postage and charges prepaid, directed
to the following address or to such other or additional addresses as any party
might designate by written notice to the other party:

     
To the Company:
  ApothecaryRx, LLC
210 Park Avenue, Suite 1350
Oklahoma City, Oklahoma, 73102
 
   
To the Executive:
  Mr. Lewis P. Zeidner
5400 Union Terrace Lane North
Plymouth, Minnesota 55442
 
   
To GRMH:
  Graymark Healthcare, Inc.
210 Park Avenue, Suite 1350
Oklahoma City, Oklahoma, 73102

  12.3   Assignment. Neither this Agreement nor any of the parties’ rights or
obligations hereunder can be transferred or assigned without the prior written
consent of the other parties to this Agreement, except that this Agreement shall
be assignable to any successor in interest of the Company or GRMH or any
successor in interest to substantially all of the assets of the Company or GRMH.
    12.4   Construction and Severability. This Agreement is intended to be
interpreted, construed and enforced in accordance with the laws of the State of
Oklahoma, notwithstanding any conflict of law principles. The rule of
construction that an agreement shall be construed against the drafter shall not
apply as all parties hereto have negotiated and drafted this Agreement. If any
provision of this Agreement or the application thereof to any person or
circumstance is determined, to any extent, to be invalid or unenforceable, the
remainder of this Agreement, or the application of such provision to persons or
circumstances other than those as to which the same is held invalid or
unenforceable, will not be affected thereby, and each term and provision of this
Agreement will be valid and enforceable to the fullest extent permitted by law.

10

--------------------------------------------------------------------------------

 

  12.5   Entire Agreement. Except as provided in this Agreement, this Agreement
is the final, complete and exclusive expression of the agreement among and
between the Company, GRMH and the Executive, supersedes and replaces in all
respects the Original Agreement and any other prior employment agreements and on
execution the employment relationship among and between the Company, GRMH and
the Executive after the effective date of this Agreement will be governed by the
terms of this Agreement and not by the Original Agreement or any other
agreements, oral or otherwise. That certain Employment Agreement by and between
Company and Executive dated June 30, 2006 (“Prior Agreement”) was terminated
pursuant to the Original Agreement and Executive waived and released any claim
the Executive had or may have had under or relating to the Prior Agreement. No
modification of this Agreement will be effective unless made by a written
agreement executed by all of the parties. No inducement to any party exists
except as set forth in this Agreement in writing. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an original but all of
which taken together shall constitute one and the same instrument.     12.6  
Binding Effect. This Agreement will be binding on the parties and their
respective successors, legal representatives and permitted assigns.     12.7  
Attorneys’ Fees. If any party institutes a permissible action or proceeding or
an arbitration against any other party relating to the provisions of this
Agreement or any default hereunder, the unsuccessful party to such action or
proceeding will reimburse the successful party therein for the reasonable
expenses of attorneys’ fees and disbursements and litigation expenses incurred
by the successful party.

[SIGNATURES ON FOLLOWING PAGE]

11

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as of the Effective Date.

            APOTHECARYRx, LLC, an Oklahoma limited liability company
      By:   /S/ STANTON NELSON         Stanton Nelson, Manager      Date:
October 13, 2009
(the “Company”)     

                  /S/ LEWIS P. ZEIDNER       LEWIS P. ZEIDNER, individually     
Date: October 13, 2009
(the “Executive”)        Graymark Healthcare, Inc.
      By:   /S/ STANTON NELSON         Stanton Nelson, Chief Executive Officer 
    Date: October 13, 2009
(“GRMH”)     

12