8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 13, 2009

GRAYMARK HEALTHCARE, INC.

(Exact name of registrant as specified in its charter)

Oklahoma
(State or other jurisdiction
of incorporation) 001-34171
(Commission File Number) 20-0180812
(I.R.S. Employer
Identification No.)

210 Park Avenue, Suite 1350
Oklahoma City, Oklahoma
(Address of principal executive offices) 73102
(Zip Code)

Registrant’s telephone number, including area code: (405) 601-5300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14a-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into Material Definitive Agreement.

     On October 13, 2009, we, at Graymark Healthcare, Inc., entered into an Employment Agreement with Stanton Nelson, our Chief Executive Officer, and Grant A. Christianson, our Chief Financial Officer. Furthermore, we entered into an Amended and Stated Employment Agreement with Lewis P. Zeidner, our Chief Operating Officer. The material terms of the Employment Agreements and the Amended and Restated Employment Agreement are summarized below.

Employment Agreement of Stanton Nelson

     Employment Period. The initial term of employment is three years commencing on October 1, 2009 (the “effective date”). On each anniversary date the employment term will be automatically extended. If at least 120 days prior to the anniversary date, we may notify Mr. Nelson that the employment period will not be extended, but the employment term will continue for the remainder of the then current employment term.

     Executive Officer Position. In accordance with the terms of the Employment Agreement, the employment of Mr. Nelson is full time requiring best efforts and due diligence, and may be terminated with or without cause. Mr. Nelson is to serve as our Chief Executive Officer and Chairman of the Board of Directors. Except to a limited extent and as expressly permitted by us, Mr. Nelson is prohibited from serving as an officer or director of a publicly-held company, own an interest in a company that interferes with his full-time employment or that is engaged in a business activity similar to our subsidiaries ApothecaryRx, LLC or SDC Holdings, LLC.

     Compensation. Mr. Nelson is to receive an annual base salary of $1.00 and an award of 100,000 restricted stock shares annually pursuant to our 2008 Long-term Incentive Plan, as well as any bonus compensation as determined in our discretion. Mr. Nelson is also entitled to participate in the employee benefit plans and programs maintained and provided to our executive officers and employees. He is entitled to reimbursement of reasonable and ordinary expenses incurred on our behalf, based upon substantiated documentation of the expenditure and four weeks of fully paid, calendar-year vacation.

     Employer Termination. The agreement is for a three-year term ending September 30, 2012, subject to termination with or without cause. We have the right to terminate the Employment Agreement without cause (for any reason) on at least 30-day advance notice (“Without Cause Termination”). In the event of Without Cause Termination, Mr. Nelson will be entitled to an award of 300,000 restricted common stock shares under our 2008 Long-term Incentive Plan and the continuation of all employee benefits for one year, unless he asserts any provision of his Employment Agreement is invalid or unenforceable.

     We may terminate Mr. Nelson’s Employment Agreement in the event of the following:

• He engages in gross personal misconduct which materially injures us, or any fraud or deceit regarding our business or customers or suppliers;

• He enters a plea of no contest (nolo contendere) to or is convicted of a felony;

• He willfully and repeatedly fails to perform his duties after receiving notice and being provided an opportunity to correct such actions; or

• He breaches any material term or provision of his Employment Agreement (“For Cause Termination”).

Prior to any For Cause Termination, a written determination specifying the reasons for termination must be delivered and received and Mr. Nelson will have the following 30 days to request a meeting to be heard and contest the reasons for termination.

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     Executive Officer Termination. Mr. Nelson has the right to terminate his Employment Agreement, either with or without cause. A without cause termination requires the providing of 30-day advance notice to us. In the event of a without cause termination, all future obligations under the Employment Agreement will terminate.

     Mr. Nelson has the right to terminate his Employment Agreement for cause in the event we fail to pay or deliver the compensation or provide employee benefits in accordance with his Employment Agreement after providing 30-days advance notice (“Employer Breach”). In the event of termination as a result of Employer Breach, He will be entitled to receive as severance compensation an award of 300,000 restricted common stock shares under our 2008 Long-term Incentive Plan deliverable within 30 days following the termination date and continuance of all employee benefits for one year.

     Disability; Death. In the event a physical or mental condition prevents performance of Mr. Nelson (i.e., disability), in our reasonable judgment from performing his duties for a period of three consecutive months, his employment may be terminated for cause. In this case, he will be entitled to receive 50,000 shares of restricted stock under our 2008 Long-term Incentive Plan and benefits payable under his Employment Agreement will continue for six months, reduced by any disability plan benefits.

     Upon his death, Mr. Nelson’s Employment Agreement will terminate; however, his estate will be entitled to receive 50,000 shares of restricted stock under our 2008 Long-term Incentive Plan and continuation of employee benefits provided under the Employment Agreement for six months.

     In the event of termination of the Mr. Nelson’s Employment Agreement as a result of his disability or death and he was not otherwise in default under the terms of his Employment Agreement, we will be required to cause Mr. Nelson’s or his estate to be discharged and released from all personal guarantees of our debts, except with respect to Mr. Nelson’s personal guaranty of our Arvest Bank loan will continue to the extent of his common stock shares.

     Confidentiality. Mr. Nelson is required to maintain the confidentiality of the information that constitutes trade secrets or is of a business or confidential nature, regardless of the source of the confidential information or how it was obtained. This confidentiality is to be maintained during his employment and the two years following termination of his Employment Agreement.

     Non-competition and Non-solicitation Covenants. During the 24 months following employment termination, Mr. Nelson agreed as follows:

• Not to acquire, attempt to acquire, solicit, perform services (directly or indirectly) 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 sleep centers or in the retail sale of pharmaceutical drugs or providing of sleep disorder diagnostic services, in any city in the United States in which we or our subsidiaries owns a pharmacy or sleep disorder diagnostic center or that is within 40 miles of a pharmacy or sleep disorder diagnostic center owned by us or our subsidiaries; and

• Not to solicit, induce, entice or attempt to entice (directly or indirectly) any of our employees, officers or directors (except the executive officer’s personal secretary, if any), contractors, customers, vendors or subcontractors to terminate or breach any relationship us or our subsidiaries or any of our affiliates, and

• Not to solicit, induce, entice or attempt to entice any our customers, vendors or subcontractors to cease doing business with us or any of our subsidiaries or us or any of our affiliates.

     Arbitration. Any dispute or controversy arising out or relating to Mr. Nelson’s employment or employment termination that cannot be resolved by agreement will be submitted to binding arbitration before a single arbitrator in accordance with the Rules for Commercial Cases of the American Arbitration Association and in accordance with the Federal Arbitration Act. The arbitrator’s judgment will be final and binding, subject solely to challenge on the grounds of fraud or gross misconduct. The arbitrator will be limited to awarding compensatory damages. The arbitration proceedings will be the sole and exclusive remedies and procedures for the resolution of

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disputes and controversies; however, a preliminary injunction or other provisional judicial relief may be sought if deemed reasonably necessary to avoid irreparable damage or to preserve the status quo pending arbitration.

Employment Agreement of Grant A. Christianson

     Employment Period. The initial term of employment is three years commencing on August 1, 2009 (the “effective date”). On each anniversary date the employment term will be automatically extended. If at least 120 days prior to the anniversary date, we may notify Mr. Christianson that the employment period will not be extended, but the employment term will continue for the remainder of the then current employment term.

     Executive Officer Position. In accordance with the terms of the Employment Agreement, Mr. Christianson is employed as our Chief Financial Officer. Mr. Christianson is to provide all services reasonably required to fully execute his duties and responsibilities. He is permitted, to the extent the activities do not interfere with the performance of his duties and responsibilities or violate the terms of his Employment Agreement, to (i) manage his personal, financial and legal affairs, and (ii) serve on industry, civic or charitable boards or committees.

     Compensation. Mr. Christianson is to receive an annual base salary of $140,000 subject to increase by our Compensation Committee. We agreed to grant to Mr. Christianson 135,000 shares of restricted stock under our 2008 Long-term Incentive Plan, subject to Mr. Christianson’s continuous employment, the shares vest in five annual installments of 15,000 shares effectively on October 13, 2009, 30,000 shares on August 1, 2010, 45,000 shares on August 1, 2011, 30,000 shares on August 1, 2012 and 15,000 shares on August 1, 2013. Mr. Christianson is entitled to participate in the employee benefit plans and programs maintained and provided to our executive officers and employees. Also, he is entitled to reimbursement of reasonable and ordinary expenses incurred on our behalf based upon substantiated documentation of the expenditure and 20 business days of annual vacation.

     Employer Termination. We may terminate the employment agreement with or without cause on 30-day notice. The bases for a “for cause” termination are (i) the conviction or a plea of no contest to a felony that relates to his employment; (ii) an act or acts of dishonesty taken and intended to result in substantial personal enrichment at our expense; or (iii) the “willful” failure to follow a direct lawful written order from the chairman of our board of directors, within the reasonable scope of his duties and the failure is not cured within 30 days. However, no act or failure to act by Mr. Christianson will be deemed “willful” unless done or omitted to be done by him, not in good faith and without reasonable belief that his action or omission was in our best interest.

     Mr. Christianson has the right to terminate his employment for “good reason” defined as

• a material diminution in his authority, duties or responsibilities;

• our reduction of his base salary or a reduction in the equity incentives described above;

• the requirement that he be based at any office or location that is more than 60 miles from Golden Valley, Minnesota , except for travel reasonably required in the performance of his responsibilities; or

• any other action or inaction that constitutes our material breach of the Employment Agreement, including the failure of our successor to assume the Employment Agreement.

In the event termination for “good reason” (or “without cause” by us) we agreed to pay Mr. Christianson 200% of his base salary (initially $280,000) and insurance benefits for 18 months.

     Confidentiality. Mr. Christianson is required to maintain the confidentiality of the information that constitutes trade secrets or is of a business or confidential nature, regardless of the source of the confidential information or how it was obtained.

     Non-solicitation Covenants. During one year following his employment termination, Mr. Christianson agreed either personally or by or through his agent or by letters, circulars or advertisements and whether for himself

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or on behalf of any other person, seek to persuade any one of our employees or any person who was one of our employees during the one-year period, to discontinue his or her employment with us or to become employed in a business or activities likely to be competitive with ours.

     Arbitration. Any dispute or controversy arising out or relating to the Mr. Christianson’s employment or employment termination that cannot be resolved by agreement will be submitted to binding arbitration before a single arbitrator in accordance with the Rules for Commercial Cases of the American Arbitration Association and in accordance with the Federal Arbitration Act. The arbitrator’s judgment will be final and binding, subject solely to challenge on the grounds of fraud or gross misconduct. The arbitrator will be limited to awarding compensatory damages. The arbitration proceedings will be the sole and exclusive remedies and procedures for the resolution of disputes and controversies; however, a preliminary injunction or other provisional judicial relief may be sought if deemed reasonably necessary to avoid irreparable damage or to preserve the status quo pending arbitration.

Amended and Restated Employment Agreement of Lewis P. Zeidner

     The Amended and Restated Employment Agreement (the “Amendment”) is an amendment and restatement of the Employment Agreement of Lewis P. Zeidner with an effective date of January 1, 2008, the terms and conditions of which were previously reported on Form 8-K. Other than as indicated below, the terms and conditions of the earlier reported Employment Agreement remain unchanged and effective.

     Mr. Zeidner’s duties and responsibilities were elevated to those of our Chief Operating Office and Chief Executive Officer and President of our subsidiary, SDC Holdings, LLC, while retaining the same positions with our subsidiary, ApothecaryRx, LLC.

     Mr. Zeidner’s annual base compensate was increased to $235,000. Furthermore, Mr. Zeidner was awarded pursuant to a Stock Option Award Agreement five-year stock options exercisable for the purchase of 100,000 common stock shares for an exercise price of $2.30 per share. In addition, he is entitled to receive five-year stock option awards on October 1, 2010 and 2011 exercisable for the purchase of 75,000 common stock shares, subject to his continuous employment with us or any of our subsidiaries. Also, in the event ApothecaryRx, LLC achieves 90% of the budgeted net income during the 12-month period ending September 2010and 2011, Mr. Zeidner will be entitled to a stock option award exercisable for the purchase of 25,000 common stock shares. Each stock option award was or will be made pursuant to our 2008 Long-term Incentive Plan. In the event ApothecaryRx, LLC is sold or otherwise divested by us at any time prior to September 2011, the stock options that may then be awarded to Mr. Zeidner based upon achievement of the 12-month budgeted net income during the following 12-month period or periods will be awarded to Mr. Zeidner. Under the terms of each Stock Option Award Agreement, the stock options vest or become exercisable in three installments, the first on the date of Stock Option Award Agreement and on the following second and third anniversary dates. Furthermore, in the event of a “change of control” as defined in our 2008 Long-term Incentive Plan, 50% of the then unvested stock options will vest and become exercisable by Mr. Zeidner.

Item 5.02 Departure of Directors or Certain Officer; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.

Employment Agreements of Stanton Nelson and Grant A. Christianson; Amended and Restated Employment Agreement of Lewis P. Zeidner

     On October 13, 2009, we entered into an Employment Agreement with each of Stanton Nelson, our Chief Executive Officer, and Grant A. Christianson, our Chief Financial Officer, and, with our subsidiary, ApothecaryRx, LLC, the Amended and Restate Employment Agreement with Lewis P. Zeidner. See Item 1.01 Entry into Material Definitive Agreement, above.

     Furthermore, on October 13, 2009, in conjunction with and pursuant to the terms of the Employment Agreement, Mr. Nelson was awarded 100,000 fully vested restricted common stock shares pursuant to our 2008 Long-term Incentive Plan. In conjunction with and pursuant to the terms of the Employment Agreement, Mr. Christianson was awarded 135,000 restricted common stock shares pursuant to our 2008 Long-term Incentive Plan.

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On October 13, 2009, our common stock had a reported closing sale price on the NASDAQ Capital Market of $2.30 per share and the restricted share grants to Messrs. Nelson and Christianson had aggregate values of $230,000 and $310,500, respectively. The restricted common stock shares awarded to Mr. Christianson will vest, subject to his continuous employment, in annual five installments of 15,000 shares effectively on October 13, 2009 and following in installments of 30,000 shares, 45,000 shares, 30,000 shares and 15,000 shares on August 1, 2010 through 2013. One half of Mr. Christianson’s the stock award shares will vest if his employment terminates, other than as result of death or disability, or without “for cause” termination and the unvested shares will be forfeited. In the event of a “change of control” (as defined in our 2008 Long-term Incentive Plan), the unvested share grants will become fully vested. Mr. Christianson’s restricted stock award is non-transferable, other than those common stock shares that become fully vested. The shares were or will be issued to Messrs. Nelson and Christianson without registration under the Securities Act of 1933, as amended.

     Mr. Zeidner in conjunction with and pursuant to the Amended and Restated Employment Agreement was awarded stock options exercisable for the purchase of 100,000 common stock shares for $2.30 per share under our 2008 Long-Term Incentive Plan. The options vest in three installments of 33,333 shares October 13, 2009, 33,334 shares on October 1, 2010 and 33,333 shares on October 1, 2011, the second and third vesting installments are subject to Mr. Zeidner’s continuous employment. Furthermore, in the event of a “change of control” as defined in our 2008 Long-term Incentive Plan, 50% of the then unvested stock options will vest.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

10.1	Employment Agreement between Registrant and Stanton Nelson dated October 13, 2009.
10.2	Employment Agreement between Registrant and Grant A. Christianson dated October 13, 2009.
10.3	Amended and Restated Employment Agreement among Registrant, ApothecaryRx, LLC and Lewis P. Zeidner dated October 13, 2009.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GRAYMARK HEALTHCARE, INC. (Registrant)
By:	/S/ STANTON NELSON
	Stanton Nelson, Chief Executive Officer

Date: October 14, 2009

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EX-10.1

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made effective October 1, 2009 (the “Effective Date”), between GRAYMARK HEALTHCARE, INC, an Oklahoma corporation (“GRMH”), and STANTON NELSON, an individual (the “Executive” and collectively with GRMH, the “parties” or individually the “party”).

     WHEREAS, GRMH desires to retain the services of the Executive and the Executive desires to make the Executive’s services available to GRMH, and

     NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, GRMH and the Executive agree as follows:

1. Employment. GRMH hereby employ the Executive as an employee and Chairman of the Board of Directors 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 relationship of the Executive with GRMH is “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 GRMH consistent with developing and maintaining a quality business operation.

2.1

Specific Duties. The Executive will serve as either or both the Chief Executive Officer and Chairman of the Board of Directors of GRMH or such other position and title as 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 GRMH in accordance with this Agreement.

2.2

Rules and Regulations. GRMH may adopt an employee manual which addresses frequently asked questions regarding employee relations with GRMH. The employee manual will be subject to change without notice in the sole discretion of 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 approved by 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

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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 Board of Directors of GRMH all above Permitted Activities at the time of the execution of this Agreement and thereafter upon written request.

4. GRMH Management Committee. Omitted.

5. Executive’s Compensation. GRMH 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 One and No/100 Dollar ($1.00). The Base Salary will be payable upon execution of this Agreement and on October 1 following the Effective Date during the term of this Agreement.
5.2	Restrict Stock Award. Upon execution of this Agreement, and on October 1 of each year during the term of this Agreement, the Executive shall be awarded 100,000 common stock shares of GRMH (the “Shares”) pursuant to and in accordance with the Graymark Healthcare, Inc. 2008 Long-term Incentive Plan (the “2008 Plan”) (or a substitute or successor plan to the 2008 Plan). The Shares shall be subject be fully vested and not subject to forfeiture on the applicable October 1 award date.
5.3	Bonus. In addition to the Base Salary described at Section 5.1 of this Agreement, 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 absolute discretion of GRMH in such amounts and at such times as 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 GRMH for and generally available to employees of 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 GRMH for and generally available to its executive officers, all in accordance with the terms of such plans and programs. GRMH shall reimburse the Executive for all reasonable and ordinary expenses incurred by him on behalf of 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 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 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, 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. GRMH will have the following rights to terminate this Agreement:

7.1.1 Termination without Cause. 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 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) 300,000 fully vested restricted common stock shares in accordance with the 2008 Plan, reduced by the number of restricted common stock shares awarded to the Executive pursuant to Section 5.2, less all applicable federal and state payroll tax withholdings (if any), to be issued in equal monthly installments over 24 months; 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. GRMH may terminate this Agreement for cause upon written notice if the Executive: (a) engages in gross personal misconduct which materially injures GRMH, or any fraud or deceit regarding the business of GRMH or its 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 GRMH, (i) the Executive shall be entitled to receive all compensation, reimbursements and benefits

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under this Agreement that are either payable to the Executive or that are earned by the Executive as of the Termination Date, and (ii) 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 GRMH. Thereafter, the Executive shall have the right for a period of thirty (30) days to request a 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 GRMH then serving, at which meeting the Executive will have an opportunity to be heard. In the event of a termination for cause by 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 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 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) GRMH will have no further obligations to Executive hereunder including, without limitation, any obligation of 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 GRMH. For purposes of this Section 7.2.2, the term “cause” shall mean a breach by 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 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 severance compensation: (x) 300,000 fully vested restricted common stock shares in accordance with the 2008 Plan, reduced by the number of restricted common stock shares awarded to the Executive pursuant to Section 5.2, less all applicable federal and state payroll tax withholdings (if any), to be issued in equal monthly installments

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over 24 months; 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 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, and the number of common stock shares specified in Section 5.2 based upon the Fair Market Value (as defined in the 2008 Plan) of the common stock shares will be reduced by any benefits payable under any disability plans provided by 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 GRMH may thereafter terminate this Agreement without compensation to the Executive’s estate except: (a) the obligation to deliver 50,000 fully vested restricted common stock shares pursuant to and accordance with the 2008 Plan, 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 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 GRMH, 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 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 GRMH will remain the property of GRMH. 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 GRMH. All such personal items will be removed from such offices no later than ten (10) days after the effective date of termination and GRMH shall be authorized to discard any items remaining thereafter. Prior to the effective date of

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	termination, the Executive will cooperate with 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 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 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. GRMH shall have the right of offset under this Agreement.
7.7	Release of GRMH. The Executive agrees, if his employment is terminated under circumstances entitling him to payments under Section 7.1.1 or Section 7.2.2 of this Agreement, that in consideration for the payments described in Section 7.1.1 or Section 7.2.2, the Executive will execute a General Release in substantially the form attached hereto as Exhibit A, through which the Executive releases GRMH from any and all claims as may relate to or arise out of the Executive’s employment relationship (excluding claims Executive may have under any “employee pension plan” as described in Section 3(3) of ERISA or any claims under this Agreement). The form of the Release may be modified as needed to reflect changes in the applicable law or regulations that are needed to provide a legally enforceable and binding Release to GRMH at the time of execution.

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 GRMH. The Executive agrees not to disclose to any person other than the employees or approved legal counsel of 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 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 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 and (c) financial information or business plans of 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 GRMH), deliver to GRMH all originals and copies of the documents or materials containing Confidential Information. For purposes of this Agreement, GRMH expressly includes any of its 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 GRMH for any reason with or without cause as applicable, the Executive will not directly or indirectly:

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(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.

     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 SDC Holdings, LLC and ApothecaryRx, LLC, both wholly-owned subsidiaries of GRMY 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 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 GRMH. Whenever requested by 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 GRMH to: (a) assign and convey or otherwise make available to 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 GRMH to be taken by the Executive after the termination of this Agreement involves more than a de minimis amount of time, GRMH shall reasonably compensate the Executive for his time.

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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 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 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 Executive:	Mr. Stanton Nelson 101 North Robinson, Suite 900 Oklahoma City, Oklahoma 73102
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

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	successor in interest of GRMH or any successor in interest to substantially all of the assets of 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.
12.5	Entire Agreement. Except as provided in this Agreement, this Agreement is the final, complete and exclusive expression of the agreement between GRMH and the Executive, supersedes and replaces in all respects any prior employment agreements and on execution the employment relationship between GRMH and the Executive after the effective date of this Agreement will be governed by the terms of this Agreement or any other agreements, oral or otherwise. 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]

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

/S/ STANTON NELSON  

STANTON NELSON, individually 

Date: October 13, 2009
(the “Executive”) 

GRAYMARK HEALTHCARE, INC.
By:	/S/ JOSEPH HARROZ, JR.
	Joseph Harroz, Jr., President
	Date: October 13, 2009 (“GRMH”)

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EXHIBIT A

NOTICE. Various laws, including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Pregnancy Discrimination Act of 1978, the Equal Pay Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Americans With Disabilities Act, the Employee Retirement Income Security Act and the Veterans Reemployment Rights Act (all as amended from time to time), prohibit employment discrimination based on sex, race, color, national origin, religion, age, disability, eligibility for covered employee benefits and veteran status. You may also have rights under laws such as the Older Worker Benefit Protection Act of 1990, the Worker Adjustment and Retraining Act of 1988, the Fair Labor Standards Act, the Family and Medical Leave Act, the Occupational Health and Safety Act and other federal, state and/or municipal statutes, orders or regulations pertaining to labor, employment and/or employee benefits. These laws are enforced through the United States Department of Labor and its agencies, including the Equal Employment Opportunity Commission (EEOC), and various state and municipal labor departments, fair employment boards, human rights commissions and similar agencies.

This General Release is being provided to you in connection with the Employment Agreement between you and Graymark Healthcare, Inc. with an effective date of October 1, 2009 (the “Agreement”). The federal Older Worker Benefit Protection Act requires that you have at least twenty-one (21) days, if you want it, to consider whether you wish to sign a release such as this one in connection with a special, individualized severance package. You have until the close of business twenty-one (21) days from the date you receive this General Release to make your decision. You may not sign this General Release until, at the earliest, your official date of separation from employment.

BEFORE EXECUTING THIS GENERAL RELEASE YOU SHOULD REVIEW THESE DOCUMENTS CAREFULLY AND CONSULT WITH YOUR ATTORNEY.

You may revoke this General Release within seven (7) days after you sign it and it shall not become effective or enforceable until that revocation period has expired. If you do not accept the severance package and sign and return this General Release, or if you exercise your right to revoke the General Release after signing it, you will not be eligible for the special, individualized severance package. Any revocation must be in writing and must be received by Graymark Healthcare, Inc., 101 N. Robinson, Suite 920, Oklahoma City, OK 73102, within the seven-day period following your execution of this General Release.

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GENERAL RELEASE

In consideration of the special, individualized severance package offered to me by Graymark Healthcare, Inc. (the “Company”) and the separation benefits I will receive as reflected in the Employment Agreement between me and Graymark Healthcare, Inc. with an effective date of October 1, 2009 (the “Agreement”), I hereby release and discharge Graymark Healthcare, Inc. and its predecessors, successors, affiliates, parent, subsidiaries and partners and each of those entities’ employees, officers, directors and agents (hereafter collectively referred to as the “Company”) from all claims, liabilities, demands, and causes of action, known or unknown, fixed or contingent, which I may have or claim to have against the Company either as a result of my past employment with the Company and/or the severance of that relationship and/or otherwise, and hereby waive any and all rights I may have with respect to and promise not to file a lawsuit to assert any such claims.

This General Release includes, but is not limited to, claims arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Pregnancy Discrimination Act of 1978, the Equal Pay Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Americans With Disabilities Act, the Employee Retirement Income Security Act or 1974 and the Veterans Reemployment Rights Act (all as amended from time to time). This General Release also includes, but is not limited to, any rights I may have under the Older Workers Benefit Protection Act of 1990, the Worker Adjustment and Retraining Act of 1988, the Fair Labor Standards Act, the Family and Medical Leave Act, the Occupational Health and Safety Act and any other federal, state and/or municipal statutes, orders or regulations pertaining to labor, employment and/or employee benefits. This General Release also applies to any claims or rights I may have growing out of any legal or equitable restrictions on the Company’s rights not to continue an employment relationship with its employees, including any express or implied employment contracts, and to any claims I may have against the Company for fraudulent inducement or misrepresentation, defamation, wrongful termination or other retaliation claims in connection with workers’ compensation or alleged “whistleblower” status or on any other basis whatsoever.

It is specifically agreed, however, that this General Release does not have any effect on any rights or claims I may have against the Company which arise after the date I execute this General Release or on any vested rights I may have under any of the Company’s qualified or non-qualified benefit plans or arrangements as of or after my last day of employment with the Company, or on any of the Company’s obligations under the Agreement or as otherwise required under the Consolidated Omnibus Budget and Reconciliation Act of 1985 (COBRA).

I have carefully reviewed and fully understand all the provisions of the Agreement and General Release, including the foregoing Notice. I have not relied on any representation or statement, oral or written, by the Company or any of its representatives, which is not set forth in those documents.

The Agreement and this General Release, including the foregoing Notice, set forth the entire agreement between me and the Company with respect to this subject. I understand that my receipt and retention of the separation benefits covered by the Agreement are contingent not only on my execution of this General Release, but also on my continued compliance with my other obligations under the Agreement. I acknowledge that the Company gave me twenty-one (21) days to consider whether I wish to accept or reject the separation benefits I am eligible to receive

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under the Agreement in exchange for this General Release. I also acknowledge that the Company advised me to seek independent legal advice as to these matters, if I chose to do so. I hereby represent and state that I have taken such actions and obtained such information and independent legal or other advice, if any, that I believed were necessary for me to fully understand the effects and consequences of the Agreement and General Release prior to signing those documents.

Dated this ___ day of _________ , ___.

______________________________________

_________________________
 

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EX-10.2

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of the 13th day of October 2009 with an effective date of August 1, 2009, is entered into by and between GRAYMARK HEALTHCARE, INC., an Oklahoma corporation (the “Company”) and GRANT A. CHRISTIANSON (“Executive”).

     IN CONSIDERATION of the premises and the mutual covenants set forth below, the parties hereby agree as follows:

     WHEREAS, the Company desires to retain the Executive as its employee; and

     WHEREAS, in order to provide an incentive to the Executive to become employed by the Company, the Company believes it is necessary to enter into this Agreement, and more specifically, to provide the proper incentive to the Executive by authorizing the granting of restricted stock as provided in this Agreement.

     1. Term. The initial term of Executive’s employment by the Company pursuant to this Agreement shall commence on August 1, 2009 (the “Effective Date”) and terminate on July 31, 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 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 5 of this Agreement.

     2. Position and Duties. Executive will serve as Chief Financial Officer of the Company. During the Employment Period, Executive will report directly to the Chairman of the Board (the “Chairman”). Executive shall perform all services reasonably required to fully execute the duties and responsibilities associated with the Company and its affiliates. Executive will devote substantially all of his working time, attention and energies (other than absences due to illness or vacation) to the performance of his duties for the Company. Notwithstanding the above, Executive will be permitted, to the extent such activities do not interfere with the performance by Executive of his duties and responsibilities under this Agreement or violate this Agreement, to (i) manage Executive’s personal, financial and legal affairs, and (ii) serve on industry, civic or charitable boards or committees.

     3. Place of Performance. Executive’s place of employment will be the principal executive offices of ApothecaryRx, LLC, the Company’s subsidiary, in Golden Valley, Minnesota.

     4. Compensation and Related Matters.

          (a) Base Salary. During the Employment Period, the Company will pay Executive an annual base salary (“Base Salary”) of not less than (i) Eleven Thousand Six Hundred Sixty-six and 66/100 Dollars ($11,666.66) per month during the period August 1, 2009 through December 31, 2009 (One Hundred Forty Thousand Dollars ($140,000) per year on a pro rated monthly basis), (ii) Thirteen Thousand Three Hundred Thirty-three and 33/100 Dollars ($13,333.33) per month during the period January 1, 2010 through June 30, 2010 (One Hundred Sixty Thousand Dollars ($160,000) per year on a pro rated monthly basis), and (iii) Fifteen Thousand Dollars ($15,000) per month commencing on July 1, 2010 (One Hundred Eighty Thousand Dollars ($180,000) per year on a pro rated monthly basis), in approximate equal installments in accordance with the Company’s customary payroll practices. Executive’s Base Salary may be increased, but not decreased, pursuant to annual review by the Company’s Compensation Committee. In the event Executive’s Base Salary is increased, the increased amount will then constitute the Base Salary for all purposes of this Agreement.

          (b) Equity Incentives. Contemporaneous with the execution of this Agreement, pursuant to the Graymark Healthcare, Inc. 2008 Long-Term Incentive Plan (“Long-Term Incentive Plan”) the Company will grant to Executive One Hundred Thirty-five Thousand (135,000) shares of Restricted Stock under the terms of the Restricted Stock Award Agreement. The grant of the Restricted Stock Award will be made in accordance with all applicable laws and regulations.

          (c) Welfare, Pension and Incentive Benefit. During the Employment Period, Executive (and his spouse and/or dependents to the extent provided in the applicable plans and programs) will be entitled to participate in and be covered under all the welfare benefit plans or programs maintained by the Company for the benefit of its senior executive officers pursuant to the terms of such plans and programs including, without limitation, all medical, life, hospitalization, dental, disability, accidental death and dismemberment and travel accident insurance plans and programs. In addition, during the Employment Period, Executive will be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time to time by the Company for the benefit of its senior executive officers.

          (d) Vacation. Executive shall be entitled to at least twenty (20) business days of paid vacation for each calendar year during the Employment Period. Executive may use his vacation in a reasonable manner based upon the business needs of the Company. Unused vacation days will accrue from year to year without limitation.

          (e) Fringe Benefits. During the Employment Period, the Company will provide Executive with such other fringe benefits as commensurate with Executive’s position.

     5. Termination. Executive’s employment under this Agreement may be terminated during the Employment Period under the following circumstances:

          (a) Death. Executive’s employment under this Agreement will terminate upon his death.

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          (b) Disability. If, as a result of Executive’s incapacity due to physical or mental illness, Executive is substantially unable to perform his duties under this Agreement (with or without reasonable accommodation, as defined under the Americans With Disabilities Act) for an entire period of six (6) consecutive months, and within thirty (30) days after a Notice of Termination (as defined in Section 6(a)) is given after such six (6) month period, and Executive does not return to the substantial performance of his duties on a full-time basis, the Company has the right to terminate Executive’s employment under this Agreement for “Disability,” and such termination will not be a breach of this Agreement by the Company.

          (c) Cause. The Company has the right to terminate Executive’s employment for Cause, and such termination will not be a breach of this Agreement by the Company. “Cause” means termination of employment for one of the following reasons: (i) the conviction of Executive by a federal or state court of competent jurisdiction or a plea of no contest to a felony which relates to Executive’s employment at the Company; (ii) an act or acts of dishonesty taken by Executive and intended to result in substantial personal enrichment of Executive at the expense of the Company or any affiliate; or (iii) Executive’s “willful” failure to follow a direct lawful written order from the Chairman, within the reasonable scope of Executive’s duties, which failure is not cured within thirty (30) days. For purposes of this Subsection (c), no act or failure to act on Executive’s part shall be deemed “willful” unless done or omitted to be done by Executive, not in good faith and without reasonable belief that Executive’s action or omission was in the best interest of the Company.

          (d) Good Reason. Executive may terminate his employment with the Company for “Good Reason.” For purposes of this Agreement, “Good Reason” shall mean the occurrence without the written consent of Executive, of one of the events set forth below:

          (1) a material diminution in the Executive’s authority, duties or responsibilities;

          (2) the reduction by the Company of Executive’s Base Salary or a reduction in the equity incentives below the minimum specified in Subsection 4(b);

          (3) the requirement that Executive be based at any office or location that is more than 60 miles from the ApothecaryRx, LLC’s current location in Golden Valley, Minnesota, except for travel reasonably required in the performance of Executive’s responsibilities; or

          (4) any other action or inaction that constitutes a material breach by the Company of this Agreement such as the failure of any successor to the Company to assume this Agreement pursuant to Section 14.

The Executive must provide notice to the Company of the existence of one of the conditions described above within ninety (90) days of the initial existence of the condition. The Company has a period of 30 days after receipt of notice from the Executive to remedy the situation. If the Company fails to remedy the condition, the Executive may terminate his employment for Good Reason by providing a Notice of Termination to the Company within thirty (30) days of the expiration of the Company’s period to remedy the condition. Termination for Good Reason by the

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Executive will not be a breach of this Agreement and will entitle Executive to the Compensation and benefits described in Section 7(a) hereof.

          (e) Without Cause. The Company has the right to terminate Executive’s employment under this Agreement without Cause by providing Executive with a Notice of Termination, subject to the obligations set forth in Section 7(a) hereof.

          (f) Voluntary Termination. Executive may voluntarily terminate employment with the Company at any time, and if such termination is not for Good Reason, then Executive shall only be entitled to compensation and benefits as described in Section 7(b) hereof.

     6. Termination Procedure.

          (a) Notice of Termination. Any termination of Executive’s employment by the Company or by Executive during the Employment Period (other than termination pursuant to Section 5(a)) will be communicated by written Notice of Termination to the other party in accordance with Section 15. For purposes of this Agreement, a “Notice of Termination” means a written notice which indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment.

          (b) Date of Termination. “Date of Termination” shall mean (i) if Executive’s employment is terminated by his death, the date of his death, (ii) if Executive’s employment is terminated due to Disability pursuant to Section 5(b), thirty (30) days after Notice of Termination (provided that Executive has not returned to the substantial performance of his duties on a full-time basis during such thirty (30) day period), (iii) if Executive’s employment is terminated for Good Reason pursuant to Section 5(d), the date on which a Notice of Termination provided in accordance with such Section is given or any later date (within thirty (30) days after the giving of such Notice of Termination) set forth in such Notice of Termination, or (iv) if Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within thirty (30) days after the giving of such Notice of Termination) set forth in such Notice of Termination.

     7. Compensation Upon Termination or During Disability. In the event of Executive’s Disability or termination of his employment under this Agreement during the Employment Period, the Company will provide Executive with the payments and benefits set forth below.

          (a) Termination by Company Without Cause or by Executive for Good Reason. If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason:

               (i) the Company will pay to Executive within thirty (30) days of the Date of Termination in a single lump sum payment (A) his earned but unpaid Base Salary and accrued vacation pay through the Date of Termination and (B) an amount equal to his then total annual Base Salary multiplied by two (2);

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               (ii) the Company will maintain in full force and effect, for the continued benefit of Executive (and his spouse and/or his dependents, as applicable) for a period of eighteen (18) months following the Date of Termination, the medical, hospitalization, and dental programs in which Executive (and his spouse and/or his dependents, as applicable) participated immediately prior to the Date of Termination, at the level in effect and upon substantially the same terms and conditions (including, without limitation, contributions required by Executive for such benefits) as existed immediately prior to the Date of Termination; provided, if Executive (or his spouse) is eligible for Medicare or a similar type of governmental medical benefit, such benefit shall be the primary provider before Company medical benefits are provided. However, if Executive becomes reemployed with another employer and is eligible to receive medical, hospitalization and dental benefits under another employer—provided plan, the medical, hospitalization and dental benefits described herein shall be secondary to those provided under such other plan during the applicable period;

               (iii) the Company will reimburse Executive, pursuant to the Company’s policy, for reasonable business expenses incurred, but not paid, prior to the Date of Termination; and

               (iv) Executive will be entitled to any other rights, compensation and/or benefits as may be due to Executive following such termination to which he is otherwise entitled in accordance with the terms and provisions of any plans or programs of the Company.

          (b) Termination by Company for Cause or by Executive Without Good Reason. If Executive’s employment is terminated by the Company for Cause or by Executive (other than for Good Reason):

               (i) the Company will pay Executive his earned but unpaid Base Salary and his accrued vacation pay (to the extent required by law or the Company’s vacation policy) through the Date of Termination, as soon as practicable following the Date of Termination;

               (ii) the Company will reimburse Executive, pursuant to the Company’s policy, for reasonable business expenses incurred, but not paid, prior to the Date of Termination, unless such termination resulted from a misappropriation of Company funds; and

               (iii) Executive will be entitled to any other rights, compensation and/or benefits as may be due to Executive following termination to which he is otherwise entitled in accordance with the terms and provisions of any plans or programs of the Company.

          (c) Disability. During any period that Executive fails to perform his duties under this Agreement as a result of incapacity due to physical or mental illness (“Disability Period”), Executive will continue to receive his full Base Salary set forth in Section 4(a) until his employment is terminated pursuant to Section 5(b). In the event Executive’s employment is terminated for Disability pursuant to Section 5(b):

               (i) the Company will (A) pay to Executive his earned but unpaid Base Salary and accrued vacation pay through the Date of Termination, as soon as

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practicable following the Date of Termination, and (B) provide Executive with disability benefits pursuant to the terms of the Company’s disability programs and/or practices;

               (ii) the Company will reimburse Executive, pursuant to the Company’s policy, for reasonable business expenses incurred, but not paid, prior to the Date of Termination; and

               (iii) Executive will be entitled to any other rights, compensation and/or benefits as may be due to Executive following such termination to which he is otherwise entitled in accordance with the terms and provisions of any plans or programs of the Company.

          (d) Death. If Executive’s employment is terminated by his death, the Company will pay in a lump sum to Executive’s beneficiary, or personal or legal representatives or estate, as the case may be, Executive’s earned but unpaid Base Salary as of the date of death, accrued vacation and unreimbursed business expenses and amounts due under any plans, programs or arrangements of the Company through the Date of Termination.

     8. Mitigation. Executive will not be required to mitigate amounts payable under this Agreement by seeking other employment or otherwise, and there will be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided herein.

     9. Confidential Information; Non-Solicitation.

          (a) Nondisclosure of Confidential Information. Executive acknowledges that it is the policy of the Company to maintain as secret and confidential (i) all valuable and unique information, (ii) other information heretofore or hereafter acquired by the Company, or any affiliated entity and deemed by it to be confidential, and (iii) information developed or used by the Company or any affiliated entity relating to the business, operations, employees and customers of the Company or any affiliated entity including, but not limited to, any customer lists or employee information (all such information described in clauses (i), (ii) and (iii) above, other than information which is known to the public or becomes known to the public through no fault of Executive, is hereinafter referred to as “Confidential Information”). The parties recognize that the services to be performed by Executive pursuant to this Agreement are special and unique and that by reason of his employment by the Company after the date hereof, Executive has acquired and will acquire Confidential Information. Executive recognizes that all such Confidential Information is the property of the Company. Accordingly, at any time during or after the Employment Period, Executive shall not, except in the proper performance of his duties under this Agreement, directly or indirectly, without the prior written consent of the Company, disclose to any Person other than the Company, whether or not such Person is a competitor of the Company, and shall use his best efforts to prevent the publication or disclosure of any Confidential Information obtained by, or which has come to the knowledge of, Executive prior or subsequent to the date hereof. Notwithstanding the foregoing, Executive may disclose to other Persons, as part of his occupation, information with respect to the Company or any affiliated entity, which (i) is of a type generally not considered by standards of the healthcare industry to be proprietary, or (ii) is otherwise consented to in writing by the Company.

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          (b) Non-Solicitation. Executive shall not, during the Employment Period or for one year following his Date of Termination (the “Covered Period”), either personally or by or through his agent or by letters, circulars or advertisements and whether for himself or on behalf of any other person, seek to persuade any employee of the Company, or any affiliated entity or any person who was an employee of the Company or any affiliated entity during the Covered Period, to discontinue his or her status or employment with the Company, or such affiliated entity or to become employed in a business or activities likely to be competitive with the Company, or any affiliated entity.

          (c) Obligations of Executive Upon Termination. Upon termination of this Agreement for any reason, Executive shall return to the Company all documents and copies of documents in his possession relating to any Confidential Information including, but not limited to, internal and external business forms, manuals, correspondence, notes and computer programs, and Executive shall not make or retain any copy or extract of any of the foregoing. In addition, Executive shall resign from all positions held with the Company or any affiliated entities.

          (d) Remedies. Executive acknowledges and understands that paragraphs 9(a), 9(b) and 9(c) and the other provisions of this Agreement are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of the provisions of this Agreement would cause the Company irreparable harm. In the event of a breach or threatened breach by Executive of the provisions of this Agreement, the Company shall be entitled to an injunction restraining him from such breach. Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing, or limiting the Company’s ability to pursue, any other remedies available for any breach or threatened breach of this Agreement by Executive. The provision of this Agreement relating to arbitration of disputes shall not be applicable to the Company to the extent it seeks an injunction in any court to restrain Executive from violating paragraphs 9(a), 9(b) and 9(c) hereof.

          (e) Continuing Operation. Except as specifically provided in this Section 9, the termination of Executive’s employment or of this Agreement will have no effect on the continuing operation of this Section 9.

          (f) Additional Related Agreements. Executive agrees to sign and to abide by the provisions of any additional agreements, policies or requirements of the Company related to the subject of this Section 9 which are in writing and are developed by the Company in the ordinary course of business.

     10. Release. Executive agrees, if his employment is terminated under circumstances entitling him to payments under Section 7(a) of this Agreement, that in consideration for the payments described in Section 7(a), he will execute a General Release in substantially the form attached hereto as Exhibit A, through which Executive releases the Company from any and all claims as may relate to or arise out of his employment relationship (excluding claims Executive may have under any “employee pension plan” as described in Section 3(3) of ERISA or any claims under this Agreement). The form of the Release may be modified as needed to reflect changes in the applicable law or regulations that are needed to provide a legally enforceable and binding Release to the Company at the time of execution.

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     11. Indemnification and Insurance. Executive shall be indemnified and held harmless by the Company during the term of this Agreement and following any termination of this Agreement for any reason whatsoever in the same manner as would any other key management employee of the Company with respect to acts or omissions occurring prior to (a) the termination of this Agreement or (b) the termination of employment of Executive. In addition, during the term of this Agreement and for a period of three years following the termination of this Agreement for any reason whatsoever, Executive shall be covered by a Company held liability insurance policy, covering acts or omissions occurring prior to (i) the termination of this Agreement or (ii) the termination of employment of Executive.

     12. Arbitration; Legal Fees and Expenses. The parties agree that Executive’s employment and this Agreement relate to interstate commerce, and that any disputes, claims or controversies between Executive and the Company which may arise out of or relate to Executive’s employment relationship or this Agreement shall be settled by arbitration. This agreement to arbitrate shall survive the termination of this Agreement. Any arbitration shall be in accordance with the Rules of the American Arbitration Association and undertaken pursuant to the Federal Arbitration Act. Arbitration will be held in Oklahoma City, Oklahoma unless the parties mutually agree on another location. The decision of the arbitrator(s) will be enforceable in any court of competent jurisdiction. The parties agree that punitive, liquidated or indirect damages shall not be awarded by the arbitrator(s) unless such damages would have been awarded by a court of competent jurisdiction. Nothing in this agreement to arbitrate, however, shall preclude the Company from obtaining injunctive relief from a court of competent jurisdiction prohibiting any ongoing breaches by Executive of this Agreement including, without limitation, violations of Section 9. If any contest or dispute arises between the Company and Executive regarding any provision of this Agreement, the arbitrator shall award to the prevailing party, the reasonable attorney fees, costs and expenses incurred by the prevailing party in connection with such contest or dispute.

     13. Certain Additional Payments by the Company. Anything in this Agreement to the contrary notwithstanding, in the event it is determined that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including, by example and not by way of limitation, acceleration by the Company of the date of vesting or payment or rate of payment under any plan, program or arrangement of the Company (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. The amount of Gross-Up Payment to which the Executive is entitled under this Section shall be determined by an accounting firm selected by the Company with the approval of the Executive (the “Accounting Firm”). The Gross-Up Payment shall be paid within 60 days of the end of the year in which it is determined that a payment to the Executive is subject to the Excise Tax. Executive agrees to facilitate and cooperate with the Company’s defense of any assessment of tax, interest or penalty arising from any payment or distribution by the Company or acceleration of the right

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to benefits and Participant shall facilitate any claim for refund prosecuted by the Company as to such matters.

     14. Agreement Binding on Successors.

          (a) Company’s Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred except that the Company will require any successor (whether direct or indirect, by purchase, merger, reorganization, sale, transfer of stock, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place. As used in this Agreement, “Company” means the Company as herein defined, and any successor to its or the Company’s business and/or assets (by merger, purchase or otherwise) which executes and delivers the agreement provided for in this Section 14 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (b) Executive’s Successors. No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than his rights to payments or benefits under this Agreement, which may be transferred only by will or the laws of descent and distribution. Upon Executive’s death, this Agreement and all rights of Executive under this Agreement shall inure to the benefit of and be enforceable by Executive’s beneficiary, or personal or legal representatives, or estate, to the extent any such person succeeds to Executive’s interests under this Agreement. In the event of Executive’s death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his estate or other legal representative(s). If Executive should die following his Date of Termination while any amounts would still be payable to him under this Agreement if he had continued to live, unless otherwise provided, all such amounts shall be paid in accordance with the terms of this Agreement to his beneficiary or personal or legal representatives or estate.

     15. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:

At his last known address
evidenced on the Company’s
payroll records.

If to the Company:

Graymark Healthcare, Inc.
1350 Oklahoma Tower
210 Park Avenue
Oklahoma City, Oklahoma 73102

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or to such other address as any party may have furnished to the other in writing in accordance with this Agreement, except that notices of change of address shall be effective only upon receipt.

     16. Withholding. All payments hereunder will be subject to any required withholding of federal, state and local taxes pursuant to any applicable law or regulation.

     17. Miscellaneous. No provisions of this Agreement may be amended, modified, or waived unless agreed to in writing and signed by Executive and by a duly authorized officer of the Company. No waiver by either party of any breach by the other party of any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. The respective rights and obligations of the parties under this Agreement shall survive Executive’s termination of employment and the termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oklahoma without regard to its conflicts of law principles.

     18. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

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

     20. Section Headings. The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and will not affect its interpretation.

     21. Entire Agreement. Except as provided elsewhere herein and except for the other documents and agreements contemplated in accordance herewith, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter.

     22. Further Assurances. The parties hereby agree, without further consideration, to execute and deliver such other instruments or to take such other action as may reasonably be required to effectuate the terms and provisions of this Agreement.

[SIGNATURES ON FOLLOWING PAGE]

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

GRAYMARK HEALTHCARE, INC.
By:	/S/ STANTON NELSON
	Stanton Nelson, Chairman and Chief Executive
	Officer

“COMPANY”

/S/ GRANT A. CHRISTIANSON  

Grant A. Christianson 

“EXECUTIVE”

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EXHIBIT A

NOTICE. Various laws, including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Pregnancy Discrimination Act of 1978, the Equal Pay Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Americans With Disabilities Act, the Employee Retirement Income Security Act and the Veterans Reemployment Rights Act (all as amended from time to time), prohibit employment discrimination based on sex, race, color, national origin, religion, age, disability, eligibility for covered employee benefits and veteran status. You may also have rights under laws such as the Older Worker Benefit Protection Act of 1990, the Worker Adjustment and Retraining Act of 1988, the Fair Labor Standards Act, the Family and Medical Leave Act, the Occupational Health and Safety Act and other federal, state and/or municipal statutes, orders or regulations pertaining to labor, employment and/or employee benefits. These laws are enforced through the United States Department of Labor and its agencies, including the Equal Employment Opportunity Commission (EEOC), and various state and municipal labor departments, fair employment boards, human rights commissions and similar agencies.

This General Release is being provided to you in connection with the Employment Agreement between you and Graymark Healthcare, Inc. with an effective date of August 1, 2009 (the “Agreement”). The federal Older Worker Benefit Protection Act requires that you have at least twenty-one (21) days, if you want it, to consider whether you wish to sign a release such as this one in connection with a special, individualized severance package. You have until the close of business twenty-one (21) days from the date you receive this General Release to make your decision. You may not sign this General Release until, at the earliest, your official date of separation from employment.

BEFORE EXECUTING THIS GENERAL RELEASE YOU SHOULD REVIEW THESE DOCUMENTS CAREFULLY AND CONSULT WITH YOUR ATTORNEY.

You may revoke this General Release within seven (7) days after you sign it and it shall not become effective or enforceable until that revocation period has expired. If you do not accept the severance package and sign and return this General Release, or if you exercise your right to revoke the General Release after signing it, you will not be eligible for the special, individualized severance package. Any revocation must be in writing and must be received by Graymark Healthcare, Inc., 101 N. Robinson, Suite 920, Oklahoma City, OK 73102, within the seven-day period following your execution of this General Release.

GENERAL RELEASE

In consideration of the special, individualized severance package offered to me by Graymark Healthcare, Inc. and the separation benefits I will receive as reflected in the Employment Agreement between me and Graymark Healthcare, Inc. with an effective date of August 1, 2009 (the “Agreement”), I hereby release and discharge Graymark Healthcare, Inc. and its predecessors, successors, affiliates, parent, subsidiaries and partners and each of those entities’ employees, officers, directors and agents (hereafter collectively referred to as the “Company”) from all claims, liabilities, demands, and causes of action, known or unknown, fixed or contingent, which I may have or claim to have against the Company either as a result of my past employment with the Company and/or the severance of that relationship and/or otherwise, and hereby waive any and all rights I may have with respect to and promise not to file a lawsuit to assert any such claims.

This General Release includes, but is not limited to, claims arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Pregnancy Discrimination Act of 1978, the Equal Pay Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Americans With Disabilities Act, the Employee Retirement Income Security Act or 1974 and the Veterans Reemployment Rights Act (all as amended from time to time). This General Release also includes, but is not limited to, any rights I may have under the Older Workers Benefit Protection Act of 1990, the Worker Adjustment and Retraining Act of 1988, the Fair Labor Standards Act, the Family and Medical Leave Act, the Occupational Health and Safety Act and any other federal, state and/or municipal statutes, orders or regulations pertaining to labor, employment and/or employee benefits. This General Release also applies to any claims or rights I may have growing out of any legal or equitable restrictions on the Company’s rights not to continue an employment relationship with its employees, including any express or implied employment contracts, and to any claims I may have against the Company for fraudulent inducement or misrepresentation, defamation, wrongful termination or other retaliation claims in connection with workers’ compensation or alleged “whistleblower” status or on any other basis whatsoever.

It is specifically agreed, however, that this General Release does not have any effect on any rights or claims I may have against the Company which arise after the date I execute this General Release or on any vested rights I may have under any of the Company’s qualified or non-qualified benefit plans or arrangements as of or after my last day of employment with the Company, or on any of the Company’s obligations under the Agreement or as otherwise required under the Consolidated Omnibus Budget and Reconciliation Act of 1985 (COBRA).

I have carefully reviewed and fully understand all the provisions of the Agreement and General Release, including the foregoing Notice. I have not relied on any representation or statement, oral or written, by the Company or any of its representatives, which is not set forth in those documents.

The Agreement and this General Release, including the foregoing Notice, set forth the entire agreement between me and the Company with respect to this subject. I understand that my receipt and retention of the separation benefits covered by the Agreement are contingent not only on my execution of this General Release, but also on my continued compliance with my other

obligations under the Agreement. I acknowledge that the Company gave me twenty-one (21) days to consider whether I wish to accept or reject the separation benefits I am eligible to receive under the Agreement in exchange for this General Release. I also acknowledge that the Company advised me to seek independent legal advice as to these matters, if I chose to do so. I hereby represent and state that I have taken such actions and obtained such information and independent legal or other advice, if any, that I believed were necessary for me to fully understand the effects and consequences of the Agreement and General Release prior to signing those documents.

Dated this ____ day of                                         , ___.

_____________________ 

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EX-10.3

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.

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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

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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.

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

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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.

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

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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 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

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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

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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

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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.

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     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

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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.

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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]

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     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”)

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