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.
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2.1
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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.
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2.2
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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.
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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:
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5.1
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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.
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5.2
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Stock Option Awards
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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
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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.
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5.3
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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
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absolute
discretion of the Company or GRMH in such amounts and at such times
as the Company or GRMH may determine.
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5.4
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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.
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5.5
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Compensation Review
. The compensation of
the Executive will be reviewed not less frequently than annually by
the Company and GRMH.
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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.
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7.1
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Termination by Company
. The Company and GRMH
will have the following rights to terminate this
Agreement:
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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
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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 earne
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