THIS EMPLOYMENT
AGREEMENT (this “Agreement”), dated as of the
5th day of December 2008, is entered into by and between
GRAYMARK HEALTHCARE, INC., an Oklahoma corporation (the
“Company”) and Joseph Harroz, Jr.
(“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 under this Agreement shall commence on July 15,
2008, or such earlier date as Executive’s employment with the
Company actually commences, (the “Effective Date”) and
terminate on July 14, 2011 (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 President and
Chief Operating 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 Company’s principal executive offices in Oklahoma City,
Oklahoma.
4.
Compensation and Related Matters .
(a)
Base Salary . During the Employment Period, the Company will
pay Executive a base salary of not less than Two Hundred Fifty
Thousand Dollars ($250,000) per year (“Base Salary”),
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 100,000 shares of Restricted
Stock under the terms of the Restricted Stock Award Agreement. In
addition to the initial grant, the Company shall make additional
grants of Restricted Stock in the amount of 150,000 shares of
Restricted Stock annually in 2009 and 2010, subject to the vesting
schedule provided in the Restricted Stock Award Agreement and such
other terms and conditions as may be incorporated into the
Long-Term Incentive Plan adopted by the Company. The grant of the
Restricted Stock Award will be made in accordance with all
applicable laws and regulations. With respect to grants in 2011 and
subsequent years, the determination as to the grant of additional
Restricted Stock Awards shall be made in the discretion of the
Compensation Committee pursuant to the Long-Term Incentive Plan
commensurate with the equity incentives offered to similarly
situated executives of the Company. With regard to the approval of
this Agreement and the granting of the Restricted Stock Awards, the
Executive while a member of the Board of Directors of the Company
shall not participate in the voting for the approval or disapproval
of the Agreement or the granting of the Restricted Stock
Awards.
(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:
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(a)
Death . Executive’s employment under this Agreement
will terminate upon his death.
(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 Company’s current location in
Oklahoma City, Oklahoma 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
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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 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
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accrued
vacation pay through the Date of Termination and (B) an amount
equal to his then total annual Base Salary multiplied by two
(2);
(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):
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(i) the
Company will (A) pay to E
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