EMPLOYMENT AGREEMENT
Exhibit 10.3
THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of the 5th day of October
2010 with an effective date of October 7, 2010, is entered into by and between GRAYMARK HEALTHCARE,
INC., an Oklahoma corporation (the “Company”) and XXXXXX X. XXXXXXXX, XX. (“Executive”).
WHEREAS, the Company desires to retain the Executive as its employee and Executive desires to
make the Executive’s services available to the Company; 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.
NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth below, the
parties hereby agree as follows:
1. Employment. The Company hereby employs 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 are “at will” and either can terminate this Agreement with or without cause as
provided in this agreement. The Executive acknowledges that the Company operates in Minnesota and
Oklahoma City and that he will spend a significant portion of his time in these locations, however,
he will not be required to relocate from his existing residence in Pembroke Pines, Florida.
2. Executive’s Duties. Executive is employed on a full-time basis. Executive will
serve as Senior Vice President of Corporate Development of the Company. During the Employment
Period, Executive will report directly to the Chief Executive Officer (the “CEO”). 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. Executive’s Compensation.
(a) Base Salary. During the Employment Period, the Company will pay Executive an
annual base salary (“Base Salary”) of not less than Two Hundred Thousand Dollars ($200,000) 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) Stock Option Award. Upon execution of this Agreement, Executive shall be awarded
stock options exercisable for the purchase of Fifty Thousand (50,000) common stock shares of the
Company for the closing sale price on the date of grant (or, if not available on that date, the
most recently reported closing sale price) in accordance with the Graymark Healthcare, Inc. 2008
Long-Term Incentive Plan (“Long-Term Incentive Plan”) (or a substitute or successor plan).
(c) Benefits. 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.
(f) Reimbursement. Executive shall be entitled to reimbursement for all reasonable
expenses, including travel and entertainment, incurred by Executive in the performance of his
duties. Executive will maintain records and written receipt as required by the Company policy and
reasonably requested by the Company to substantiate such expenses.
4. Term. The initial term of Executive’s employment by the Company pursuant to this
Agreement shall commence on October 7, 2010 (the “Effective Date”) and terminate on September 30,
2013 (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.
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 guilty or no contest to a felony
which relates to the 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 CEO, within the reasonable scope of Executive’s duties, which failure
is not cured within thirty (30) days after receipt of written notice specifically identifying said
failure. 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 stock
option awards below the minimum specified in Subsection 3(b);
(3) any requirement that Executive relocate from his residence in Pembroke Pines,
Florida; or
(4) any other action or inaction that constitutes a material breach by the Company of
this Agreement.
The Executive must provide notice to the Company of the existence of one of the conditions
described above within ninety (90) days of the Executive’s discovery of the existence of the
condition. The Company has a period of thirty (30) days after receipt of written 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 Executive will not be a breach of this Agreement and will entitle Executive
to the Compensation and benefits described in Section 7(a) hereof.
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(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 11. 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 Base Salary less all applicable federal and
state payroll tax withholdings (if any);
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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;
(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; and
(v) all unvested stock options issued to Executive pursuant to the Long-Term Incentive Plan
shall vest immediately prior to the Date of Termination and be exercisable by Executive for one (1)
year after the Termination Date.
Provided however, no payment under this Section 7(a) shall be due or payable to Executive
after the Termination Date in the event that Executive shall assert or claim that any part of this
Agreement (including but not limited to Sections 9, 10, or 12) is invalid or unenforceable,
in whole or in part.
(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, within thirty (30) days of 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.
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(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 3(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, within thirty (30) days of the Date of Termination,
and (B) provide Executive with disability benefits pursuant to the terms of the Company’s
disability programs and/or practices, if any;
(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. 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 two
years 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, directly or indirectly, seek to persuade any employee, contractor, customer, vendor
or subcontractor of the Company, or any affiliated entity or any person who was an employee,
contractor, customer, vendor or subcontractor of the Company or any affiliated entity during the
Covered Period, to discontinue, breach or terminate his or her employment, contract, or
relationship with the Company, or such affiliated entity or to become employed or engaged 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 Sections 8(a), 8(b) and
8(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 Sections 8(a), 8(b) and 8(c) hereof.
(e) Continuing Operation. Except as specifically provided in this Section 8,
the termination of Executive’s employment or of this Agreement will have no effect on the
continuing operation of this Section 8.
(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 8 which are in writing and are developed by the Company in the
ordinary course of business, provided, however, that such agreements, policies or requirements do
not expand the scope and/or limitations of Section 8.
9. Condition. Executive agrees, if his employment is terminated under circumstances
entitling him to payments under Section 7(a) of this Agreement, as a condition precedent to
the right to receive the payments set forth under Section 7(a), he will execute a waiver
and release, through which Executive releases the Company and its governing body, from any and all
claims which the Executive has or may have, in a form reasonably acceptable to the Company, other
than as to the right to receive payments as provided in Section 7(a).
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10. 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 five years following the termination of this Agreement for any reason whatsoever,
Executive shall be covered by a Company held liability insurance policy, with limits no less than
those in force during the term of this Agreement, covering acts or omissions occurring prior to (i)
the termination of this Agreement or (ii) the termination of employment of the Executive.
11. 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 8. 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.
12. 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:
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.
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13. 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 party to
this Agreement, except that this Agreement shall be assignable to any successor in interest of the
Company or any successor in interest to substantially all of the assets of the Company.
14. Withholding. All payments hereunder will be subject to any required withholding
of federal, state and local taxes pursuant to any applicable law or regulation.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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.
20. 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.
* * * *
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IN WITNESS WHEREOF, the parties have executed this Agreement effective the date first above
written.
| “COMPANY” GRAYMARK HEALTHCARE, INC. |
||||
| By: | /s/ XXXXXXX XXXXXX | |||
| Xxxxxxx Xxxxxx, Chairman and | ||||
| Chief Executive Officer | ||||
| “EXECUTIVE” |
||||
| /s/ XXXXXX X. XXXXXXXX, XX. | ||||
| Xxxxxx X. Xxxxxxxx, Xx. | ||||
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