Document:

exv10w1

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     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 Executive his earned but unpaid Base Salary and accrued
vacation pay through the Date of Termination, as soon as 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

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right 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.

101 N. Robinson, Suite 920

Oklahoma City, OK 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.

*      *      *      *

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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/ JOSEPH HARROZ JR.
 

	 	 
	 

	 	     Joseph Harroz, Jr.	 	 

“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. dated July 23, 2008 (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. dated July 23, 2008 (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

1

 

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                     , ___.

	 	 	 	 	 
	 

	 	 	 	 

2exv10w2

EXHIBIT A

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

          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
Rick D. Simpson (“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.

          23. Term. The initial term of Executive’s employment by the Company under this
Agreement shall commence on July 1, 2008, or such earlier date as Executive’s employment with the
Company actually commences, (the “Effective Date”) and terminate on June 30, 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.

          24. 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.

          25. Place of Performance. Executive’s place of employment will be the Company’s
principal executive offices in Oklahoma City, Oklahoma.

          26. Compensation and Related Matters.

 

 

               (f) Base Salary. During the Employment Period, the Company will pay Executive a base
salary of not less than One Hundred Thirty-Five Thousand Dollars ($135,000) 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.

               (g) 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 30,000 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 45,000 shares of Restricted Stock in July of 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.

               (h) 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.

               (i) 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.

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

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

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

2

 

               (e) 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.

               (f) 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
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.

3

 

               (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.

          28. Termination Procedure.

               (c) 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.

               (d) 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.

          29. 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.

               (e) 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:

                    (v) 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);

                    (vi) 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

4

 

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;

                    (vii) 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

                    (viii) 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.

               (f) 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):

                    (iv) 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;

                    (v) 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

                    (vi) 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.

               (g) 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):

                    (iv) 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 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;

5

 

                    (v) 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

                    (vi) 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.

               (h) 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.

          30. 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.

          31. Confidential Information; Non-Solicitation.

               (g) 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.

               (h) 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

6

 

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.

               (i) 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.

               (j) 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.

               (k) 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.

               (l) 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.

          32. 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.

          33. 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

7

 

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.

          34. 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.

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

          36. Agreement Binding on Successors.

8

 

               (c) 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.

               (d) 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.

          37. 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.

101 N. Robinson, Suite 920

Oklahoma City, OK 73102

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.

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

9

 

          39. 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.

          40. 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.

          41. 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.

          42. 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.

          43. 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.

          44. 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.

*    *    *    *

10

 

          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/ RICK D. SIMPSON
	 

	 	 	 	Rick D. Simpson

“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. dated July 23, 2008 (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. dated July 23, 2008 (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

1

 

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                     , ___.

	 	 	 	 	 
	 

	 	 	 	 

2

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