LOCK-UP AND STOCK PLEDGE
AGREEMENT
THIS LOCK-UP AND
STOCK PLEDGE AGREEMENT (this “ Agreement ”),
dated September 14, 2009, by and among GRAYMARK HEALTHCARE,
INC., an Oklahoma corporation (the “ Company ”),
SDC HOLDINGS, LLC, an Oklahoma limited liability company (“
SDC ”), AVASTRA SLEEP CENTRES LIMITED (in liquidation)
f/k/a Avastra, Ltd., an Australian corporation (“
Parent ”) and AVASTRAUSA, INC., a Delaware corporation
(“ Avastra ”). Parent and Avastra are referred
to collectively herein, as the “ Stockholders
.”
A. SDC is a
wholly owned subsidiary of the Company.
B. SDC,
Parent and Avastra entered into that certain Stock Sale Agreement
dated August 19, 2009, as amended by that certain First
Amendment to Stock Sale Agreement dated August 23, 2009, and
as further amended by that certain Second Amendment to Stock Sale
Agreement dated as of the date hereof (the “ Stock Sale
Agreement ”) pursuant to which SDC agreed to purchase and
Avastra agreed to sell 100% of the issued and outstanding capital
stock of (i) somniTech, Inc., a Kansas corporation, and
somniCare, Inc., a Kansas corporation (collectively “
Somni ”), and (ii) Avastra Eastern Sleep Centers,
Inc., a New York corporation (“ Eastern
”).
C. Pursuant
to the Stock Sale Agreement, as a portion of the consideration for
the purchase of the Eastern capital stock, Avastra directed the
Company to issue to Parent a number of shares of its common stock,
par value $.0001 (the “ Company Common Stock ”)
valued at $1,344,000 based on the average of the closing price of
the Company Common Stock on the Nasdaq Capital Market for the
twenty (20) trading days prior to the closing of the purchase
of the Eastern capital stock (the “ Stock
Consideration ”).
D. Pursuant
to the Stock Sale Agreement, the Stock Consideration shall be
subject to the terms of a lock-up agreement.
E. SDC may
make claims against Parent pursuant to Section 7(b) of the Second
Amendment to Stock Sale Agreement dated as of the date hereof (a
“ Claim ”).
F. The
parties desire to enter into this Agreement contemporaneously with
the closing of the purchase of the Eastern capital stock to
(i) provide for the issuance of the Stock Consideration,
(ii) restrict the sale, assignment, transfer, conveyance,
hypothecation or alienation of the Stock Consideration,
(iii) provide for the pledge of the Stock Consideration to SDC
to secure SDC’s rights to make a Claim against the Stock
Consideration, and (iv) provide for the procedures for
asserting and recovering for a Claim against the Stock
Consideration, all on the terms set forth below.
NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants
contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.
Issuance of Company Common Stock . Upon closing of
the purchase of the Eastern capital stock, the Company shall issue
in the name of Parent stock certificates representing ownership of
an aggregate of 652,795 shares of Company Common Stock. The parties
acknowledge and agree that the 652,795 shares of Company Common
Stock issued pursuant hereto have a value of $1,344,000.
2.
Stockholders’ Representations and Warranties .
The Stockholders jointly and severally represent and warrant as
follows:
(a) The
Stock Consideration will be acquired for the Stockholders’
own accounts without the participation of any other person, with
the intent of holding the Stock Consideration for investment and
without the intent of participating, directly or indirectly, in a
distribution of the Stock Consideration and not with a view to, or
for resale in connection with, any distribution of the Stock
Consideration.
(b) The
Stockholders have such knowledge and experience in financial, tax
and business matters as to be capable of evaluating the merits and
risks of, and bearing the economic risks entailed by, an investment
in the Company and of protecting its interests in connection with
this transaction. The Stockholders recognize and acknowledge that
an investment in the Company involves a high degree of risk. The
Stockholders are able to bear the economic risks of the investment
in the Stock Consideration, including the risk of a complete loss
of the value of the Stock Consideration.
(c) The
Stockholders have had adequate opportunity to review the
Company’s reports filed with the Securities and Exchange
Commission (the “ Company SEC Reports ”) and to
ask questions of and receive answers from the Company with respect
to the information contained in the Company SEC Reports.
(d) The
Stockholders acknowledge that neither the Company nor any of its
agents, employees or affiliates has made any representations or
warranties, oral or otherwise, concerning the Company, other than
those set forth herein or contained in the Company SEC Reports. In
making the decision to accept Stock Consideration as a portion of
the consideration for SDC’s purchase of the Eastern capital
stock, the Stockholders did not rely upon any information other
than as set forth herein or the results of the Stockholders’
independent review of the Company SEC Reports.
(e) The
Stockholders understand and agree that the Stock Consideration will
be issued to Parent without registration under any state law
relating to the registration of securities for sale, and will be
issued and sold in reliance on the exemptions from registration
under the Securities Act of 1933, as amended (the “
Securities Act ”), provided by Section 4(2)
thereof and the rules and regulations promulgated
thereunder.
(f) The
Stock Consideration cannot be offered for sale, sold or transferred
by Parent other than pursuant to: (i) (A) an effective
registration under the Securities Act, or (B) an exemption
from registration under the Securities Act; (ii) evidence
satisfactory to the Company of compliance with the applicable
securities laws of other jurisdictions; and (iii) the
restrictions
2
on sale
contained in Section 4 of this Agreement. The Company shall be
entitled to rely upon an opinion of counsel satisfactory to it with
respect to compliance with the above laws.
(g) The
Stockholders understand that there will be placed on the
certificates for the Stock Consideration, or any substitution
therefore, in addition to any other legend which may be required, a
legend stating in substance:
THE SHARES
EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR UNDER THE SECURITIES ACT OF ANY OTHER
STATE, AND THE SHARES MAY NOT BE RESOLD, ASSIGNED OR TRANSFERRED BY
A PURCHASER THEREOF WITHOUT BEING REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY OTHER APPLICABLE STATE SECURITIES LAW OR UNLESS
AN EXEMPTION FROM REGISTRATION IS AVAILABLE IN THE OPINION OF
COUNSEL TO THE COMPANY.
FURTHERMORE,
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
OF A LOCK-UP AND PLEDGE AGREEMENT DATED SEPTEMBER 14, 2009, A COPY
OF WHICH MAY BE INSPECTED AT THE COMPANY’S PRINCIPAL
OFFICE.
3.
Representations of the Company . The Company hereby
represents and warrants to the Stockholders that:
(a) The
Stock Consideration has been duly authorized and, when issued in
accordance with the Stock Sale Agreement, will be duly and validly
issued, fully paid, and nonassessable, free and clear of all liens
and preemptive rights.
(b) The
Company has filed all Company SEC Reports required to be filed with
the Securities and Exchange Commission and as of their respective
dates, such Company SEC Reports complied in all material respects
with the applicable securities laws. As of their respective dates,
none of the Company SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, except for such statements, if any, as have been
corrected by subsequent filings with the Securities and Exchange
Commission.
(c) No
person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the sale of
the Stock Consideration.
(a) Parent
irrevocably agrees that, without the prior written consent of
th
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