Employment Agreement

Severance Agreement

 

 

 

Exhibit 10(c)

AMENDED & RESTATED

CERNER EXECUTIVE EMPLOYMENT AGREEMENT

This Cerner Executive Employment Agreement, as amended and restated, describes the formal employment relationship between Neal L. Patterson (“you"/“your”) and Cerner Corporation, a Delaware corporation (“Cerner”). This amended and restated Agreement is effective on January 1, 2008.

RECITALS

A.

 

You were one of the three (3) founders of Cerner and have been employed by Cerner since its inception on January 4, 1980. You have been its leader since the inception of the company, driving most of its strategic direction. You own a substantial amount of shares of Cerner’s capital stock.

 

B.

 

You and Cerner desired to set forth the terms and conditions on which you would continue to be employed by Cerner as its Chief Executive Officer, and accordingly entered into an Executive Employment Agreement (the “2005 Employment Agreement”) effective on November 10, 2005 (the “Effective Date”). Section 10 of the 2005 Employment Agreement specifically authorized amendments to the 2005 Employment Agreement that were necessary for the agreement to comply with Section 409A of the Internal Revenue Code. This amended and restated Employment Agreement has been amended to incorporate such changes required by Section 409A of the Internal Revenue Code.

 

C.

 

In consideration for your continuing employment with Cerner, the potential severance payments and potential acceleration of the vesting of outstanding equity incentive awards described herein, and the potential benefits to you in the event of a Change in Control (as defined herein), and other good and valuable consideration, the receipt and sufficiency of which you and Cerner hereby acknowledge, you and Cerner hereby agree to the following terms and conditions.

 

1.

 

EMPLOYMENT RELATIONSHIP.

 

A.

 

Type. To the extent permitted by law, your employment relationship with Cerner is “at will,” which means that you may resign from Cerner at any time, for any reason, or for no reason at all, and without advance notice (except as described below). It also means that Cerner may terminate your employment at any time, for any legally permitted reason, or for no reason at all, and without advance notice, subject to Cerner’s potential obligations to you under Paragraph 1(E) below.

 

 

 

 

 

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B.

 

Compensation. You will be paid a base salary, specified use of Cerner’s airplane and you may receive a bonus, all as determined by the Board of Directors from time to time. You will be entitled to receive the benefits generally provided to other Cerner Associates, and such other benefits as determined by the Board of Directors from time to time. In addition, Cerner shall reimburse you for your reasonable travel, meals, entertainment, and other similar expenses reasonably incurred in the performance of your duties, as long as such expenses are accompanied by valid receipts and any other documentation required pursuant to any applicable Cerner policy. The Board of Directors will have the ability to review the expenses presented, and any expenses that are reasonably rejected by the Board of Directors shall be reimbursed by you to Cerner.

 

 

C.

 

Duties. You will be employed as Cerner’s Chief Executive Officer and Chairman of the Board of Directors to perform the duties and responsibilities normally attendant with such positions and as assigned to you from time to time by the Board of Directors. You shall report directly to the Board of Directors. You will not be precluded from engaging in other business activities outside normal business hours so long as other such business activities do not detract from your activities on behalf of Cerner.

 

 

D.

 

Resignation and Termination. Cerner may terminate your employment (i) at any time with or without Cause, or (ii) upon your Disability. Your employment with Cerner shall be deemed automatically terminated upon your death. You may resign your employment with Cerner at any time. You agree to give Cerner written notice of your intention to resign from employment at least thirty (30) days prior to the last day you intend to work at Cerner. You also agree to report to Cerner the identity of your new employer (if any) and the nature of your proposed duties for that employer. Cerner, however, reserves the right either to accelerate your intended effective termination date to an earlier actual date or to allow your intended effective termination date to stand. Upon your resignation or the termination of your employment, you agree to promptly execute a Termination Statement in the form of Attachment I and, if you are entitled to any severance payments or benefits described in Paragraph 1(E) below, a written severance agreement containing normal and customary provisions, including but not limited to, a release releasing Cerner from any claims against Cerner related to your employment with Cerner that you might have at the time of or following the termination of your employment, and reasonable and customary representations and warranties.

 

 

 

 

If you resign with fewer than thirty (30) days’ notice, or if you actually leave Cerner’s employ prior to expiration of the notice period and without the permission of Cerner, then you agree that (to the extent permitted by law) no vacation pay, base salary or other compensation otherwise due or accruing in accordance with Cerner policies, from the date of your resignation notice until the

 

 

 

 

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time of your approved effective termination date, will be owed or paid to you by Cerner.

 

 

E.

 

Severance Payments.

 

1.

 

Non-Change in Control: If Cerner terminates your employment (which for purposes of this entire Agreement, shall have the same meaning as a “separation from service” under Section 409A of the Code) without Cause (as defined herein) prior to a change in control, Cerner will pay you, commencing within 30 days of your termination of employment, severance pay equal to the sum of (i)  three (3) years’ base salary (based on your annual base salary at the time of the termination), plus (ii) three (3) times the average annual cash bonus you received from Cerner during the three (3) years preceding the termination of your employment, less normal tax and payroll deductions. Such severance pay will be payable pro rata during the three (3) year severance term on Cerner’s regular paydays. Also, in the event Cerner terminates your employment without Cause, (i) for three (3) years following your termination without Cause, Cerner shall arrange to provide you with health, vision and dental insurance benefits that are substantially similar to the benefits provided to you by Cerner immediately prior to the termination of your employment and (ii) all of the equity incentive awards granted to you under any Cerner equity incentive plans after the date hereof that would have vested based on the passage of time during the three (3) year period following the date of your termination had you not been terminated without Cause, shall immediately vest.

 

 

a.

 

Notwithstanding the above, if you are “specified employee” (as defined in section 409A(a)(2)(B)(i) of the Code) (a “Specified Employee”) at the time you become eligible to be paid any amounts under this Paragraph 1(E)1 as a result of Cerner terminating your employment without Cause prior to a Change in Control, such payment(s) shall be made as follows:

 

 

 

 

(I) That portion of the total amount to be paid to you during the six-month period immediately following your termination of employment which does not exceed two times the lesser of (A) or (B) below, shall be paid pro rata during such six month period on Cerner’s regular paydays.

 

 

 

 

(A) The sum of your annualized compensation based upon the annual rate of pay for services provided to Cerner for Cerner’s taxable year preceding the taxable year in

 

 

 

 

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which you terminate employment with Cerner (adjusted for any increase during that prior year that was expected to continue indefinitely if you had not terminated employment); or

 

 

 

 

(B) The maximum amount that may be taken into account under a qualified plan pursuant to section 401(a)(17) of the Code for the year of your termination of employment.

 

 

 

 

(II) That portion of the total amount to be paid to you during the six-month period immediately following your termination of employment which exceeds two times the lesser of (A) or (B) above shall be set aside in a separate bank account by Cerner, and such amounts shall not be accessible by Cerner for any reason other than performance under this Agreement, however such amounts would still be subject to Cerner creditors, until the first day after six months following your termination of employment, at which time all delayed amounts shall be paid in a lump sum.

 

 

 

 

(III) All amounts to be paid after the six-month period immediately following your termination shall be paid pro-rata on Cerner’s regular paydays as set forth above in Paragraph 1(E)1.

 

2.

 

Change in Control: If there is a Change in Control (as defined herein) of Cerner, and either (i) your employment with Cerner is terminated without Cause within twelve (12) months following the date the Change in Control becomes effective, or (ii) you resign your employment with Good Reason (as defined herein) within twelve (12) months after the date the Change in Control becomes effective, then Cerner will pay you, on or commencing on a date (as the case may be depending on whether such amount is to be paid in a lump sum or installments) within 30 days (or six months if you are a Specified Employee, see 1(E)2.d below) of your termination of employment, severance pay equal to the sum of (a) three (3) years’ base salary (based on your annual base salary at the time of the termination or resignation), plus (b) three (3) times the average annual cash bonus you received from Cerner during the three (3) years preceding such termination or resignation, less normal tax and payroll deductions.

 

 

a.

 

If your employment is terminated without Cause, or you resign for Good Reason, within twelve (12) months following the date the Change in Control becomes effective and the Change in Control would constitute a change in control event specified under Section 409A(a)(2)(A)(v) of the Code, the entire amount of such severance pay shall be paid in one lump-sum payment.

 

 

 

 

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b.

 

If your employment is terminated without Cause, or you resign for Good Reason, within twelve (12) months following the date the Change in Control becomes effective but the Change in Control does not constitute a change in control event specified under Section 409A(a)(2)(A)(v) of the Code, the severance payments will be payable pro rata during the three (3) year severance term on Cerner’s regular paydays.

 

 

c.

 

In addition to any severance payment or severance payments, in the event your employment is terminated without Cause, or you resign for Good Reason, within twelve (12) months following the date the Change in Control becomes effective, Cerner will also arrange to provide you with health, vision and dental insurance benefits that are substantially similar to the benefits provided to you by Cerner immediately prior to the termination of your employment for a period of three (3) years following such termination or resignation of your employment.

 

 

d.

 

Notwithstanding the above, if you are “specified employee” (as defined in section 409A(a)(2)(B)(i) of the Code) (a “Specified Employee”) at the time you become eligible to be paid any amounts under this Paragraph 1(E)2 as a result of a termination from employment occurring after a Change in Control, no payments will be made until the first day following six months after you terminate employment.

 

 

e.

 

In addition, following a Change in Control, 50% of each equity incentive award granted to you under any Cerner equity incentive plans after June 1, 2005 and prior to the date the Change in Control becomes effective that has not yet vested will become vested on the date the Change in Control becomes effective. The remaining 50% of each such equity incentive award that has not yet vested will continue to vest according to its vesting schedule, unless your employment is terminated without Cause or you resign with Good Reason within twelve (12) months following the date the Change in Control becomes effective, in which case 100% of all equity incentive awards made after June 1, 2005 will become fully vested upon the effective date of such termination or resignation.

 

3.

 

Further, notwithstanding anything to the contrary in this Agreement, if you breach any provision in Paragraph 2, 3, 4 or 6 of this Agreement following the termination of your employment with Cerner, Cerner’s obligation, if applicable, to deliver severance payments and benefits to you under this Paragraph 1(E), and the vesting of any equity incentive awards described in this Paragraph 1(E), will cease immediately, you will reimburse Cerner

 

 

 

 

 

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the amount of severance payments delivered to you by Cerner prior to such breach by you, and you will forfeit to Cerner all equity incentive awards (or the proceeds of exercised awards) that vested based on or after such termination of your employment and prior to your breach.

 

 

4.

 

Because the severance payments described in this Paragraph 1(E) may be covered by the Employee Retirement Income Security Act of 1974, as amended, the Claims Review Procedures attached hereto at Attachment II may apply.

 

 

5.

 

In the event Cerner terminates your employment with Cause or as a result of your Disability, in the event of your death, or if you resign your employment (other than for Good Reason within twelve (12) months following a Change in Control), Cerner will owe you no further compensation or benefits, and (except as may be otherwise specifically provided in the applicable equity incentive plan or grant) your equity incentive awards will cease vesting on the date of such termination, death or resignation.

2.

 

AGREEMENT NOT TO DISCLOSE OR TO USE CONFIDENTIAL INFORMATION.

 

 

 

You agree that you will forever maintain the confidentiality of Confidential Information. You will never disclose Confidential Information except to persons who have both the right and need to know it, and then only for the purpose and in the course of performing Cerner duties, or of permitting or assisting in the authorized use of Cerner solutions and services. In the event your employment with Cerner terminates (voluntarily or involuntarily), you will promptly deliver to Cerner all Confidential Information, including any Confidential Information on any laptop, computer or other communication equipment used by you during your employment with Cerner.

 

 

 

The above statement includes an agreement to abide by Cerner’s internal security and privacy policies as well as all client security and privacy policies that are relevant to your job position. As Chief Executive Officer and Chairman of the Board of Directors of a healthcare information technology provider, you may have access to confidential patient information, which may be protected by federal, state and/or local laws. You agree to maintain the confidentiality of all such confidential patient information, including but not limited to health, medical, financial or personal information, in any form, and you agree not to use any such information in any manner other than as expressly permitted by all applicable rules and regulations.

 

 

 

You are aware that Cerner does not expect nor does it want you to disclose trade secrets or other confidential information of any of your former employers, and you acknowledge that it is your responsibility not to disclose to Cerner any information in the nature of a trade secret which would violate your legal obligation to others.

 

 

 

 

 

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3.

 

NEW SOLUTIONS AND IDEAS.

 

 

 

In consideration for your continuing employment with Cerner, the mid-year adjustments of your base salary provided in 2005, bonus and equity incentive plan participation, the potential severance payments and potential acceleration of the vesting of outstanding equity incentive awards described herein, and the potential benefits to you in the event of a Change in Control of Cerner (the sufficiency of such consideration you hereby acknowledge), you agree and hereby assign and transfer to Cerner, without further consideration, your entire right, title and interest in and to all such New Solutions and Ideas including any patents, copyrights, trade secrets and other proprietary rights in the same that you may have developed, authored or conceived, in whole or in part, prior to the Effective Date, or that you may develop, author or conceive, in whole or in part, on or after the Effective Date. You waive any and all moral rights and similar rights of copyright holders in other countries, including but not limited to rights of attribution and integrity, which you would otherwise have in any New Solutions and Ideas.

 

 

 

In furtherance of this Agreement, you agree to execute promptly, at Cerner’s expense, a written assignment of title to Cerner, and all letters (and applications for letters) of patent and copyright, in all countries, for any New Solutions or Ideas required to be assigned by this Agreement. You also agree to assist Cerner or its nominee in every reasonable way (at Cerner’s request and expense, but at no charge to Cerner), both during and after your time of employment at Cerner, in vesting and defending title to the New Solutions and Ideas in and for Cerner, in any and all countries, including the attainment and preservation of patents, copyrights, trade secrets and other proprietary rights.

 

 

 

This Paragraph does not apply to your New Solutions and Ideas which do not relate directly or indirectly to the business of Cerner, and which are developed entirely on your own time.

 

4.

 

NON-COMPETITION AND NON-SOLICITATION.

 

 

 

In consideration for your continuing employment with Cerner, the mid-year adjustments of your base salary provided in 2005, bonus and equity incentive plan participation, the potential severance payments and potential acceleration of the vesting of outstanding equity incentive awards described herein, and the potential benefits to be provided to you in the event of a Change in Control of Cerner (the sufficiency of such consideration you hereby acknowledge), during the term of this Agreement and for a period of two (2) years after the voluntary or involuntary termination of your employment with Cerner (with or without Cause or Good Reason, as defined herein):

 

A.

 

You will tell any prospective new employer, prior to accepting employment that this Agreement exists.

 

 

B.

 

You will not, directly or indirectly for yourself or for any other person, entity or organization, provide services directly or indirectly of a type similar to those

 

 

 

 

 

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related to or involved with your employment at Cerner to any Conflicting Organization (i) in the United States, or (ii) in any country in which Cerner has a business interest. However, you may accept employment with a large Conflicting Organization whose business is diversified, but only with respect to the portion of such Conflicting Organization’s business that does not involve and is not related to a Conflicting Solution.

 

 

C.

 

Notwithstanding the foregoing, nothing contained in this Paragraph 4 shall prohibit you (after your termination of employment with Cerner) from taking a position with a general consulting organization whose only Conflicting Solution is the provision of consulting services to the healthcare industry, so long as you personally do not thereby provide or assist in providing consulting services to a Client with respect to any Cerner solution, product, process or service or any Conflicting Solution or to any Client upon which you called or whose account you supervised, directly or indirectly, on behalf of Cerner at any time during the last three (3) years of your employment by Cerner.

 

 

D.

 

You agree not, directly or indirectly on behalf of yourself or on behalf of any other person, entity or organization, to employ, solicit for employment, or otherwise seek to employ or retain any Cerner Associate, or in any way assist or facilitate any such employment, solicitation or retention effort.

 

 

You have carefully read and considered the provisions of this Paragraph 4 and agree that (i) the restrictions set forth herein are fair and reasonable and are reasonably required for the protection of Cerner’s interests, and (ii) your experience, capabilities and personal assets are such that the restrictive provisions of this Paragraph 4 would not deprive you from either earning a livelihood in the unrestricted business activities that remain open to you or from otherwise adequately supporting yourself and your family.

 

5.

 

PUBLICITY RELEASE.

 

 

 

You consent to the use of your name, voice and picture (including but not limited to use in still photographs, videotape and film formats, and both during and after your period of employment at Cerner) for advertising, promotional, public relations, and other business purposes (including its and their use in newspapers, brochures, magazines, journals and films or videotapes) by Cerner.

 

6.

 

CERNER PROPERTY.

 

 

 

You understand that you may be assigned various items of Cerner property and equipment to help you carry out your Cerner responsibilities, including but not limited to keys, credit cards, access cards, Confidential Information, laptops, computer related and other office equipment, wireless telephone, pagers and/or other computer or communication devices (“Cerner Property”). When such Cerner Property is issued, you will formally acknowledge receipt of it when requested to do so and will take all

 

 

 

 

 

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reasonable precautions and actions necessary to safeguard and maintain it in normal operating condition. You further agree to accept financial responsibility for damage or wear to the Cerner Property you are issued beyond that associated with normal business use. You will notify Cerner immediately of any such damage or loss. If your employment with Cerner terminates (for any reason), you will immediately return to Cerner all Cerner Property which you have been issued or which otherwise belongs to Cerner. You understand that Cerner’s vacation policy states that upon termination, for whatever reason, vacation pay will be paid out, if paid out at all, in accordance with the policy only after Cerner has received all Cerner Property issued to you or then in your possession. You agree to reimburse Cerner for any attorneys’ fees and other collection charges incurred by Cerner in the event it becomes necessary to file a replevin or other legal action to recover the Cerner Property from you.

 

7.

 

SYSTEMS AND PHYSICAL SECURITY.

 

 

 

You understand the importance of both systems and physical security to the daily operations of Cerner and to the protection of business information. You will, therefore, comply with and assist in the vigorous enforcement of all policies, practices, and procedures which may be developed to ensure the integrity of Cerner systems and facilities.

 

8.

 

REMEDIES.

 

 

 

By signing this Agreement, you agree that the promises you have made in it are of a special nature, and that any breach, violation or evasion by you of the terms of this Agreement will result in immediate and irreparable harm to Cerner. It will also cause damage to Cerner in amounts difficult to ascertain. Accordingly, Cerner shall be entitled to the remedies of injunction and specific performance, as well as to all other legal and equitable remedies which may be available to Cerner. You and Cerner hereby waive the posting of any bond or surety required prior to the issuance of an injunction hereunder. However, in the event that a court refuses to honor the waiver of bond, you and Cerner agree to a bond of $500. In addition, unless otherwise prohibited by law, you and Cerner waive the award of consequential and/or punitive damages in any action related to this Agreement or your employment with Cerner.

 

9.

 

INDEMNIFICATION.

 

 

 

You agree to indemnify, defend and hold Cerner harmless from and against any damages (including reasonable attorneys’ fees), liability, actions, suits or other claims arising out of your breach of this Agreement. Cerner agrees to indemnify, defend and hold you harmless from and against any damages (including reasonable attorneys’ fees), liability, actions, suits or other claims arising out of Cerner’s breach of this Agreement.

 

10.

 

MODIFIED 280G CARVE-BACK.

 

 

 

 

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Notwithstanding anything contained in this Agreement to the contrary, if on an after-tax basis the aggregate payments and benefits paid pursuant to Section 1.E would be larger if the portion of such payments and benefits constituting “parachute payments” under Code Section 280G were reduced by the minimum amount necessary to avoid the imposition of the excise tax under Code Section 4999, then such payments and benefits shall be reduced by the minimum amount necessary to avoid such excise tax. 

 

11.

 

MODIFICATION.

 

 

 

This Agreement may not be modified in any respect, except by a written agreement executed by you and Cerner. However, (a) Cerner may from time to time publish and adopt supplementary policies with respect to the subject matter of this Agreement, and you agree that such supplementary policies shall be binding upon you; and (b) Cerner may modify this Agreement from time to time without your consent if Cerner’s legal counsel deems doing so to be advisable to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and you agree that any such modifications shall be binding upon you.

 

12.

 

NOTICES.

 

 

 

Any notice required or permitted to be given pursuant to the terms of the Agreement shall be sufficient if given in writing and if personally delivered by receipted hand delivery to you or to Cerner, or if deposited in the United States mail, postage prepaid, first class or certified mail, to you at your residence address or to Cerner’s corporate headquarters address or to such other addresses as each party may give the other party notice in accordance with this Agreement.

 

13.

 

TERM OF THIS AGREEMENT.

 

 

 

This Agreement begins as noted above and will continue in perpetuity, even though you are an at-will employee and your employment can be terminated by you or by Cerner as described elsewhere herein. Notwithstanding the termination of the employment relationship underlying this Agreement, the rights and obligations set forth in this Agreement with respect to both parties shall survive such termination as necessary to permit the intent of the provisions to be carried out.

 

14.

 

GOVERNING LAW; JURISDICTION AND LEGAL FEES.

 

 

 

This Agreement will be governed by, construed, interpreted, and its validity determined, under the laws of the State of Missouri, without regard to its conflict of law principles. You and Cerner each hereby irrevocably and unconditionally submit to the nonexclusive jurisdiction of any Missouri state court or federal court of the United States of America sitting in Kansas City, Missouri and any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement. You and Cerner agree and acknowledge that venue in any such court is proper. In any such action or proceeding,

 

 

 

 

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the non-prevailing party shall pay the reasonable attorneys’ fees and costs of the prevailing party.

 

15.

 

SEVERABILITY.

 

 

 

If any provision of this Agreement is held to be unenforceable, then this Agreement will be deemed amended to the extent necessary to eliminate the otherwise unenforceable provision, and the rest of this Agreement will remain valid and enforceable. In the event that any provisions of Paragraphs 2, 3, or 4 of this Agreement relating to time period and/or areas of restrictions shall be declared by a court of competent jurisdiction to exceed the maximum time period or areas such court deems reasonable and enforceable, said time period and/or areas of restriction shall be deemed to become and thereafter be the maximum time period and/or areas that such court deems reasonable and enforceable.

 

16.

 

ENTIRE AGREEMENT AND PRIOR AGREEMENTS.

 

 

 

You hereby acknowledge receipt of a signed counterpart of this Agreement and acknowledge that it is your entire agreement with Cerner concerning the subject matter. This Agreement cancels, terminates and supersedes any of your previous oral or written understandings or agreements with Cerner or with any director, officer or representative of Cerner with respect to your employment with Cerner.

 

17.

 

SUCCESSORS.

 

 

 

This Agreement shall be binding upon Cerner’s successors and assigns. This Agreement shall also be binding upon your heirs, spouse, assigns and legal representatives. You, however, agree that you may not delegate the performance of any of your obligations or duties hereunder, or assign any rights hereunder, without the prior written consent of Cerner. Any such reported delegation or assignment in the absence of any such written consent shall be void. Cerner may assign this Agreement to the acquiring entity in a Change of Control transaction without your consent.

 

 

 

This amended and restated Employment Agreement is executed as of this 1st day of January, 2008.

 

 

 

 

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/s/ Neal L. Patterson  

 

 

Neal L. Patterson 

 

 

 

 

 

 

Cerner Corporation
 

 

 

By:  

/s/ Julia M. Wilson  

 

 

 

Julia M. Wilson 

 

 

 

Vice President and Chief People Officer 

 

 

 

 

 

 

 

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APPENDIX A

DEFINITION OF TERMS

ASSOCIATE means a Cerner employee.

CAUSE means your material breach of this Agreement, fraud against Cerner, misappropriation of Cerner’s assets, embezzlement from Cerner, theft from Cerner, material neglect of your duties and responsibilities hereunder, your arrest and indictment for a crime involving drug abuse, violence, dishonesty or theft, or your taking any action or omitting to take any action that results in a violation of the Sarbanes-Oxley Act of 2002, or any related statutes, laws or regulations.

CERNER CORPORATION and CERNER mean Cerner Corporation, a Delaware corporation. The terms also cover all of Cerner Corporation’s parent, subsidiary and affiliate corporations and business enterprises, both presently existing and subsequently created or acquired. Such affiliate corporation may be directly or indirectly controlled by Cerner or related to Cerner by equity ownership.

CHANGE IN CONTROL means:

     (i) The acquisition by any individual, entity or group (a “Person”) within the meaning of Section 12(d)(3) or 13(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either: (A) the then outstanding shares of common stock of Cerner (the “Outstanding Cerner Common Stock”), or (B) the combined voting power of the then outstanding voting securities of Cerner entitled to vote generally in the election of directors (the “Outstanding Cerner Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (X) any acquisition directly from Cerner, (Y) any acquisition by Cerner, or (Z) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Cerner or any corporation controlled by Cerner; or

     (ii) Individuals who, as of the date hereof, constitute the Cerner Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Cerner’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

 

 

 

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     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Cerner ( a “Business Combination”), in each case, unless, following such Business Combination, (A), all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Cerner Common Stock and Outstanding Cerner Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of Cerner resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Cerner or all or substantially all of Cerner’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Cerner Common Stock and Outstanding Cerner Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of Cerner or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of Cerner resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Board of Directors of Cerner resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the board, providing for such Business Combination; or

     (iv) Approval by the shareholders of Cerner of a complete liquidation or dissolution of Cerner.

CLIENT means any actual or potential customer or licensee of Cerner.

CODE means the Internal Revenue Code of 1986 as from time to time amended.

CONFIDENTIAL INFORMATION means Cerner, Client and Supplier trade secrets, and Cerner, Cerner Associate, Client and Supplier information which is not generally known, and is proprietary or confidential to Cerner, Clients or Suppliers. It includes, but is not limited to, research, design, development, installation, purchasing, accounting, marketing, selling, servicing, finance, business systems, business practices, documentation, methodology, procedures, manuals (both internal and user), program listings, computer programs and software in source code, object or other form, working papers, Client and Supplier lists, marketing and sales materials not otherwise available to the general public, sales activity information, compensation plans, your personal compensation or performance evaluations (specifically, no Associate may disclose Cerner compensation structures or bonus programs with Conflicting Organizations, in addition, Associates in supervisory or managerial roles may not disclose their personal compensation or their performance evaluations with anyone other than their manager or with Cerner Human Resources), patient information and other client-related data, and all other non-public information of Cerner and its Associates, Clients and Suppliers. CONFIDENTIAL INFORMATION shall not include any information that has been voluntarily disclosed to the

 

 

 

 

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public by Cerner (except where such public disclosure has been made by you without authorization) or that has been independently developed and disclosed without confidentiality protections by others, or that otherwise enters the public domain through lawful means.

CONFLICTING ORGANIZATION means any person or organization engaged (or planning to become engaged) in research, development, installation, marketing, selling or servicing with respect to a Conflicting Solution.

CONFLICTING SOLUTION means any solution, product, process or service which is the same as, similar to, or competes with any Cerner solution, product, process or service with which you worked or supervised, directly or indirectly, during the last three (3) years of your employment by Cerner, or about which you have acquired Confidential Information or which you developed, authored or conceived, in whole or in part, at any time during your past or future employment by Cerner.

DISABILITY means a physical or mental illness, as determined by an accredited physician, which causes you to be unable to perform your duties hereunder for ninety (90) consecutive days, or for an aggregate of ninety (90) days during any period of twelve (12) consecutive months.

GOOD REASON means (1) the material reduction of your authority, duties and job responsibilities (except for such subordination in duties and job responsibilities as may normally be required due to Cerner’s change from an independent business entity to a subsidiary or division of another corporate entity), including, without limitation, a change in your reporting structure such that you no longer report to the Board of Directors or if you are no longer serving as Chief Executive Officer of the business enterprise that constituted Cerner prior to the Change in Control, (2) a reduction in your annual salary and cash bonus opportunity to an amount below 100% of the salary and cash bonus opportunity in effect prior to the Change in Control, or (3) the relocation of the principal location in which you are required to perform your duties hereunder to more than twenty-five (25) miles from the Kansas City metropolitan area.

NEW SOLUTIONS AND IDEAS means discoveries, computer programs, improvements, works of authorship, designs, methods, ideas, solutions and products (whether or not they are described in writing, reduced to practice, patentable or copyrightable) which results from any work performed by you for Cerner, or involve the use of any Cerner equipment, supplies, facilities or Confidential Information, or relate directly to the business of Cerner, or relate to Cerner’s actual or demonstrably anticipated research or development.

SUPPLIER means any actual or potential licensor, vendor, supplier, contractor, agent, consultant or other purveyor of products or services to Cerner.

 

 

 

 

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APPENDIX B

SUMMARY OF ATTACHMENTS

The following documents are incorporated as attachments to this Employment Agreement.

 

 

 

Attachment

 

Description

I

 

Termination Statement

II

 

Claims Review Procedures

 

 

 

 

 

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ATTACHMENT I

TERMINATION STATEMENT

I represent that I have complied with and will continue to comply with all of the provisions of the Cerner Executive Employment Agreement entered into between Cerner Corporation and me on the 1st day of January, 2008 in that:

1.

 

I have not improperly disclosed or otherwise misused any Confidential Information covered by such Agreement. I shall continue to comply with all the continuing terms of the Agreement, including but not limited to the non-disclosure and (for the required term) non-compete and non-solicit provisions, and also including but not limited to the reporting of any New Solutions and Ideas conceived or made by me as covered by the Agreement.

 

2.

 

I do not have in my possession, nor have I taken with me or failed to return, any records, plans, information, drawings, designs, documents, computer programs or software, manuals, formulae, statistics, correspondence, client or supplier lists, specifications, blueprints, reproductions, sketches, notes, reports, proposals, or other documents or materials, or copies of them, or any equipment (including any laptops, computer equipment, office equipment, wireless telephone, pagers and/or other computer or communication devices provided to me by Cerner), credit cards or other property belonging to Cerner or its Clients or suppliers. I have returned to Cerner (or will return within 10 calendar days or earlier if requested by Cerner) all Confidential Information, as specified by such Agreement, and all correspondence and other writings. I have returned (or will return within 10 calendar days or earlier if requested by Cerner) all keys and other means of access to Cerner’s premises. Failure to return such Cerner Property as defined in Paragraph 6 of my Employment Agreement will result in any vacation pay and/or severance payments or benefits, if applicable, that is due to me under the terms of Cerner’s vacation policy or my Employment Agreement to be withheld until the return to Cerner of all such Cerner Property. In addition, if I fail to return such Cerner Property, then any equity incentive awards I am entitled to under my Employment Agreement will cease to vest, I will reimburse Cerner the amount of any severance payments delivered to me by Cerner, and I will forfeit to Cerner all equity incentive awards (or the proceeds of exercised awards) that are then vested.

 

3.

 

I understand that, with regard to all provisions of my Employment Agreement relating to non-disclosure, non-solicitation, confidentiality of information and New Solutions and Ideas, such provisions shall not cease as of this termination but shall continue in full force and effect in perpetuity or as otherwise indicated within such Employment Agreement. In compliance with my Employment Agreement, I shall continue to preserve as confidential all Confidential Information as defined in such Employment Agreement.

 

4.

 

I understand that upon my breach of Paragraphs 2, 3, 4 or 6 of my Employment Agreement, Cerner’s obligation, if any, to deliver severance payments and benefits under Paragraph 1(E) of my Employment Agreement, and the vesting of any equity incentive

 

 

 

 

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awards described in Paragraph 1(E) of my Employment Agreement will cease immediately, I will reimburse Cerner the amount of severance payments delivered to me by Cerner prior to such breach by me, and I will forfeit to Cerner all equity incentive awards (or the proceeds of exercised awards) that vested after termination or resignation of my employment with Cerner and prior to my breach.

 

 

 

 

 

 

 

 

 

 

Executive Signature

 

Printed Name

 

 

 

 

 

 

 

 

 

 

Date

 

 

 

 

 

 

 

 

 

 

 

 

Termination Date

 

 

 

 

 

 

 

 

 

Cerner Corporation

 

 

 

 

 

 

 

 

 

 

 

 

By

 

 

 

 

 

 

 

 

 

 

 

 

Title

 

 

 

 

 

 

 

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ATTACHMENT II

CLAIMS REVIEW PROCEDURES

     In the event that any benefits payable under the terms of this Executive Employment Agreement shall become subject to the Employer Retirement Income Securities Act (“ERISA”), the following claims procedure shall apply to all such benefits (but shall not apply to any benefits that are not subject to ERISA):

     I. Initial Claims.

     If benefits under this Agreement become due, Cerner will notify you as to the amount of benefits you are entitled to, the duration of such benefit, the time the benefit is to commence and other pertinent information concerning your benefit. If you have been denied a benefit under the Agreement, or if you feel that the benefit which has been given to you is not accurate, you may file a claim with Cerner. If a claim for benefit is denied by Cerner, Cerner shall provide you with written or electronic notification of any adverse benefit determination within ninety (90) days after receipt of the claim unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written or electronic notice indicating the special circumstances and the date by which a final decision is expected to be rendered shall be furnished to you. In no event shall the period of extension exceed one hundred eighty (180) days after receipt of the claim. The notice of denial of the claim shall set forth:

 

(a)

 

The specific reason or reasons for the adverse determination;

 

 

(b)

 

Reference to the specific Agreement provisions on which the determination is based;

 

 

(c)

 

A description of any additional material or information necessary for you to perfect the claim, and an explanation of why such material or information is necessary; and

 

 

(d)

 

A description of the applicable review procedures and the time limits applicable to such procedures, including a statement of your right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

     You (or your duly authorized representative) may review pertinent documents and submit issues and comments in writing to Cerner. If you fail to appeal such action to Cerner in writing within the prescribed period of time described in the next section, Cerner’s adverse determination shall be final, binding and conclusive.

 

 

 

 

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     II. Appeal.

     In the event of an adverse benefit determination, you may appeal the adverse determination by giving written notice to Cerner within 60 days after receipt of the notice of adverse benefit determination. Cerner may hold a hearing or otherwise ascertain such facts as it deems necessary and shall render a decision which shall be binding upon both parties. The appeal procedure shall:

 

(a)

 

Provide you at least 60 days following receipt of a notification of an adverse benefit determination within which to appeal the determination;

 

 

(b)

 

Provide you the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits;

 

 

(c)

 

Provide that you shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits; and

 

 

(d)

 

Provide for a review that takes into account all comments, documents, records, and other information submitted by you relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

     The decision of Cerner shall be made within sixty (60) days after the receipt by Cerner of the notice of appeal, unless special circumstances require an extension of time for processing, in which case a decision of Cerner shall be rendered as soon as possible but not later than one hundred twenty (120) days after receipt of the request for review. If such an extension of time is required, written or electronic notice of the extension shall be furnished to you prior to the commencement of the extension. The decision of Cerner shall be provided in written or electronic form to you and shall include the following:

 

(a)

 

The specific reason or reasons for the adverse determination;

 

 

(b)

 

Reference to the specific Agreement provisions on which the benefit determination is based;

 

 

(c)

 

A statement that you are entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by reference to DOL regulation section 2560.503-1(m)(8); and

 

 

(d)

 

A statement describing any voluntary appeal procedures (if any) that may be available and your right to obtain the information about such procedures, and a statement of your right to bring an action under ERISA section 502(a).

 

 

 

 

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EX-10.(L) 7 c24264exv10wxly.htm 2005 ENHANCED SEVERANCE PAY PLAN AS AMENDED AND RESTATED

 

Exhibit 10(l)

CERNER CORPORATION

2005 ENHANCED SEVERANCE PAY PLAN

As Amended and Restated for I.R.C. § 409A Effective January 1, 2008

     SECTION 1. Introduction.

          (a) Purpose. Cerner Corporation and its United States-based wholly-owned subsidiaries (“Cerner”) value the contributions of their Associates and take measures to create and maintain a productive and fulfilling work environment. However, Cerner recognizes that business needs, an Associate’s work performance or other reasons may require termination of employment. At any point during an Associate’s employment, Cerner may choose to terminate the employment relationship.

          Because employment with Cerner is at-will, Cerner has no obligation to compensate any Associate upon termination from his or her employment other than as may be provided in that Associate’s Cerner Associate Employment Agreement or as specifically set forth in this 2005 Enhanced Severance Pay Plan (“Plan”). Cerner values its Associates and is interested in helping to mitigate the financial hardship caused by business conditions or other factors necessitating a termination.

          (b) Overview. Generally, this Plan provides enhanced Severance Benefits to Associates upon either a (i) “Non-CIC Severance” or (ii) “CIC Severance”, as such terms are defined herein. Cerner expressly reserves the right to amend or terminate this Plan, or the benefits provided hereunder, at any time; provided, however, that no such amendment or termination shall occur with respect to the CIC Severance Benefits after the occurrence of a Change in Control.

          (c) Summary Plan Description. This Plan document also constitutes the Summary Plan Description for the Plan.

     SECTION 2. Definitions.

          Certain capitalized terms used herein are defined parenthetically throughout this Plan and/or defined in this Section 2.

          (a) Associate. “Associate” means an employee of Cerner.

          (b) Beneficial Ownership. “Beneficial Ownership”, “Beneficial Owner” or “Beneficially Own” shall have the same meaning as such terms are used in Rule 13d-3 of the Exchange Act.

 

 

 

          (c) Board. “Board” means the Board of Directors of Cerner Corporation.

          (d) Cause. “Cause” means an Eligible Associate’s (i) material breach of his/her Employment Agreement or material neglect of his/her duties and responsibilities thereunder, (ii) fraud against Cerner, (iii) misappropriation of Cerner’s assets, (iv) embezzlement from Cerner, (v) theft from Cerner, (vi) acts resulting in the arrest and indictment for a crime involving drug abuse, violence, dishonesty or theft, or (vii) act or failure to take any action that results in a violation of the Sarbanes-Oxley Act of 2002, or any related statutes, laws or regulations.

          (e) Change in Control. “Change in Control” means:

          (i) The acquisition by any “Person” (as the term “person” is used for purposes of Section 13(d) or 14(d) of the Exchange Act) of Beneficial Ownership of thirty-five percent (35%) or more of either: (A) the then outstanding shares of common stock of Cerner Corporation (the “Outstanding Cerner Common Stock”), or (B) the combined voting power of the then outstanding voting securities of Cerner Corporation entitled to vote generally in the election of the Board’s directors (the “Outstanding Cerner Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (X) any acquisition directly from Cerner, (Y) any acquisition by Cerner, or (Z) any acquisition by any Associate benefit plan (or related trust) sponsored or maintained by Cerner Corporation or any corporation controlled by Cerner; or

          (ii) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a Board director subsequent to the date hereof whose appointment or election, or nomination for election by Cerner’s shareholders, was approved by a vote of at least a majority of the Board directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Board directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

          (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Cerner (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Cerner Common Stock and Outstanding Cerner Voting Securities immediately prior to such Business Combination Beneficially Own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of Cerner Corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Cerner or all or substantially all of Cerner’s assets either

2

 

 

directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Cerner Common Stock and Outstanding Cerner Voting Securities, as the case may be, (B) no Person (excluding any Associate benefit plan (or related trust) of Cerner or such corporation resulting from such Business Combination) Beneficially Owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of Cerner Corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Board resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

          (iv) Approval by the shareholders of Cerner Corporation of a complete liquidation or dissolution of Cerner.

          (f) CIC Protected Period. “CIC Protected Period” means the period beginning on the effective date of a Change in Control and ending on the one-year anniversary of such effective date.

          (g) CIC Severance. “CIC Severance” means, at any time during the CIC Protected Period, an Eligible Associate’s termination of employment with Cerner (or its successor), that that also qualifies as a separation from service under Section 409A of the Code, due to (i) Cerner’s (or its successor’s) termination without Cause of the Eligible Associate’s employment, or (ii) the Eligible Associate’s resignation for Good Reason.

          (h) CIC Severance Benefits. “CIC Severance Benefits” means those severance benefits set forth in Section 4(b) that, provided an Eligible Associate is entitled to receive such benefits in accordance with Section 3, the Eligible Associate receives following a CIC Severance.

          (i) CIC Week of Severance Pay. A “CIC Week of Severance Pay” means an Eligible Associate’s: (i) regular weekly base rate of pay in effect on the effective date of a CIC Severance (prior to any reductions taken for payroll taxes, income tax withholdings, elective deferrals made to or in connection with Cerner’s Associate benefit plans or Executive Deferred Compensation Plan, and excluding any overtime, bonuses, commissions, premium pay, benefits, expense reimbursements, etc.), plus (ii) the average annual cash bonus the Associate had received from Cerner during the three (3) years preceding the CIC Severance (prior to any reductions taken for payroll taxes, income tax withholdings, elective deferrals made to or in connection with Cerner’s Associate benefit plans or Executive Deferred Compensation Plan, and excluding any overtime, bonuses, commissions, premium pay, benefits, expense reimbursements, etc.), divided by 52 weeks. For example, a CIC Week of Severance Pay for an Eligible Associate whose: (i) annual base salary (excluding the pay and benefits listed above) is $52,000, and (ii) whose average annual cash bonus received during the three (3) years preceding the CIC Severance is $15,600, would be $1,000 ($52,000/52 weeks) plus $300 ($15,600/52 weeks), equaling a CIC Week of Severance Pay of $1,300. Cerner’s cash bonus plan currently pays a bonus, if earned, following each fiscal quarter of Cerner. When calculating the average annual

3

 

 

cash bonus, the actual cash bonus paid to the Associate (or earned but not yet paid for the most recent full fiscal quarter preceding the CIC Severance) for the twelve (12) consecutive full Cerner fiscal quarters immediately preceding the CIC Severance shall be included in the calculation of the Associate’s average annual cash bonus for the three (3) years preceding the CIC Severance. If the Associate has not been employed by Cerner for twelve (12) consecutive full Cerner fiscal quarters immediately prior to the CIC Severance, the average annual cash bonus received by such Associate shall be calculated based on the number of consecutive full fiscal quarters the Associate has been employed by Cerner immediately prior to the CIC Severance and adjusted to equal a yearly average. For avoidance of all doubt, the calculation of average annual cash bonus shall not include any sales commissions or similar payments received by an Associate based on individual sales or contracts signed with Cerner clients.

          (j) COBRA. “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

          (k) Code. “Code” means the Internal Revenue Code of 1986, as amended.

          (l) Eligible Associate. “Eligible Associate” means an individual who: (i) is a permanent, full-time salaried Associate on the U.S. payroll of Cerner, as determined by Cerner’s employment records; and (ii) has entered into an Employment Agreement. The determination of whether an Associate is an Eligible Associate shall be made by the Plan Administrator, in its sole discretion, and such determination shall be binding and conclusive on all persons. In no event shall part-time Associates, interns or independent contractors be Eligible Associates.

          (m) Employment Agreement. “Employment Agreement” means an Eligible Associate’s then current Cerner Associate Employment Agreement with Cerner.

          (n) Exchange Act. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (o) Excess Severance Benefits. “Excess Severance Benefits” means any Severance Benefits that exceed the limit provided in Treas. Reg. Section 1.409A-1(b)(9)(iii).

          (p) Good Reason. “Good Reason” means, without an Eligible Associate’s express written consent: (i) a material adverse change in the Eligible Associate’s authority, duties or job responsibilities (except for such subordination in duties and job responsibilities as may normally be required due to Cerner’s change from an independent business entity to a subsidiary or division of another corporate entity); or (ii) a reduction of 5% or more to an Eligible Associate’s annual salary and cash bonus opportunity in effect prior to the Change in Control; provided, however, the Eligible Associate must provide notice to Cerner (or its successors) within 30 days after the adverse change or reduction and must give Cerner (or its successors) at least 30 days to remedy the event or condition. In no event will an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by Cerner (or its successors) constitute Good Reason.

          (q) Non-CIC Severance. “Non-CIC Severance” means at any time, other than during a CIC Protected Period, an Eligible Associate’s termination of employment with Cerner, that also qualifies as a separation from service under Section 409A of the Code, by Cerner, other

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than for Cause, due to reorganization, restructuring, unsatisfactory work performance (other than where such unsatisfactory work performance is deliberate), or for other reasons as determined by the Plan Administrator in its sole discretion to constitute a Non-CIC Severance. Without limitation, the following events and reasons shall not constitute a Non-CIC Severance:

               (i) death;

               (ii) disability;

               (iii) voluntary resignation (regardless of the circumstances surrounding the Eligible Associate’s decision to resign);

               (iv) retirement;

               (v) discharge by Cerner for any other work related reason other than redundancy or unsatisfactory work performance (including, without limitation, absenteeism, misconduct, refusal to transfer to an equivalent position that does not require relocation, failure to return to work after an approved leave of absence, insubordination, violation of Cerner’s rules or policies, dishonesty, deliberate unsatisfactory performance, etc.);

               (vi) entering military duty;

               (vii) CIC Severance; or

               (viii) Termination for Cause.

          (r) Non-CIC Severance Benefits. “Non-CIC Severance Benefits” means those severance benefits set forth in Section 4(a) that, provided an Eligible Associate is entitled to receive such benefits in accordance with Section 3, the Eligible Associate receives following a Non-CIC Severance.

          (s) Plan Administrator. “Plan Administrator” means the person or entity specified as such in Section 7.

          (t) Role Level. “Role Level” means an Eligible Associate’s designated category of employment as specified by Cerner’s current employment classification hierarchy. In the event Cerner changes its hierarchy structure, the Role Levels specified in this Plan shall refer to the equivalent Role Level under any new classification scheme.

          (u) Severance Benefits. “Severance Benefits” means either CIC Severance Benefits or Non-CIC Severance Benefits.

          (v) Specified Associate. “Specified Associate” means an Associate that would be a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder.

          (w) Week of Severance Pay. “Week of Severance Pay” means an Eligible Associate’s regular weekly base rate of pay in effect on the effective date of a Non-CIC

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Severance (prior to any reductions taken for payroll taxes, income tax withholdings, elective deferrals made to or in connection with Cerner’s Associate benefit plans or Executive Deferred Compensation Plan, and excluding any overtime, bonuses, commissions, premium pay, benefits, expense reimbursements, etc.). For example, a Week of Severance Pay for an Eligible Associate whose annual base salary as of the Non-CIC Severance (excluding the pay and benefits listed above) is $52,000, would be $1,000 ($52,000/52 weeks).

          (x) Year of Service. “Year of Service” means, with respect to an Eligible Associate, each period of twelve (12) consecutive months of full-time employment by Eligible Associate with Cerner beginning with the Associate’s full-time employment commencement date with Cerner and ending with the day preceding the anniversary of such date in the next and all succeeding years. No partial Years of Service shall be credited under this Plan nor will prorated Severance Benefits be paid for any fractional Year of Service.

     SECTION 3. Entitlement for Severance Benefits

          (a) Entitlement. Subject to the exceptions set forth below in Section 3(b), an Eligible Associate shall be entitled to receive either the Non-CIC Severance Benefits or the CIC Severance Benefits described below in Section 4, upon experiencing a Non-CIC Severance or CIC Severance, respectively, and provided that the following conditions are satisfied:

               (i) The Eligible Associate’s termination of employment with Cerner must have constituted either a CIC Severance or Non-CIC Severance. In no event shall an Associate’s leave during one of Cerner’s recognized leave programs constitute a termination of employment event under this Plan,

               (ii) Following or in connection with the Eligible Associate’s termination of employment, the Eligible Associate must comply with all transition assistance requests of Cerner, to Cerner’s satisfaction, such as aiding in the location of files and documents, returning all Cerner property and repaying any amounts owed Cerner, and

               (iii) With respect to and in connection with a Non-CIC Severance only, the Eligible Associate has, after the Eligible Associate’s termination of employment, properly executed and delivered to Cerner a Severance and Release Agreement with Cerner that provides for an irrevocable and complete release of all present and future claims by Eligible Associate.

          (b) Exceptions to Severance Entitlement. An Eligible Associate will not receive Severance Benefits under this Plan in the following circumstances, as determined in the Plan Administrator’s sole discretion:

               (i) The Eligible Associate’s Associate Employment Agreement (or amendments or supplement thereto) provides that none of the benefits provided under this Plan or any other broad-based Cerner severance plan or policy shall apply to such Associate. In such a case, such Associate’s severance benefits, if any, shall be governed by the terms of such Associate Employment Agreement (as amended or supplemented).

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               (ii) The Associate breaches the terms and conditions of his/her Cerner Associate Employment Agreement (including, without limitation, violating the non-competition provisions thereof).

               (iii) With respect to Non-CIC Severance Benefits only: (a) the Eligible Associate’s employment termination is in connection with the sale, divesture or other disposition of the stock or assets of any subsidiary, division or other operating unit of Cerner or any of its subsidiaries (“Operating Unit”) (or part thereof) which does not constitute a Change in Control (a “Transaction”), and the Eligible Associate is offered continued employment, or continues in employment, with the divested Operating Unit (or part thereof) or the purchaser of the stock or assets of the Operating Unit (or part thereof), or one of such purchaser’s affiliates (the “Post-Transaction Employer”), as the case may be, on terms and conditions that would not constitute Good Reason, and (b) Cerner obtains an agreement from the Post-Transaction Employer, enforceable by the Eligible Associate, to provide (or Cerner agrees to provide) severance pay, if the Eligible Associate accepts the offered employment or continues in employment with the Post-Transaction Employer or its affiliates following the Transaction, at least equal to the severance pay set forth in Section 4(a) payable upon a Non-CIC Severance termination of the Eligible Associate’s employment with the Post-Transaction Employer or its affiliates within the six (6) month period following the Transaction. For purposes of this Section 3(b)(iii), the term “Good Reason” shall have the meaning ascribed to it in this Plan, but the term “Cerner” as it is used in such definition shall be deemed to refer to the Post-Transaction Employer employing the Eligible Associate after the Transaction. For avoidance of doubt, in the circumstances described in the first sentence of this Section 3(b)(iii), the Eligible Associate shall not be entitled to receive Non-CIC Severance Benefits under Section 4(a) whether or not the Eligible Associate accepts the offered employment or continues in employment. Except as to separate severance benefits Cerner may itself expressly agree to in writing to provide in connection with a Transaction (as contemplated by subpart (b) of the first sentence of this Section 3(b)(iii)), the provisions of this Section 3(b)(iii) do not create any entitlement to Severance Benefits from Cerner in any circumstances whatsoever and are to be construed solely as a limitation on such entitlement in the circumstances herein set forth.

     SECTION 4. Severance Benefits.

          (a) Non-CIC Severance Benefits: If the termination of an Eligible Associate’s employment constitutes a Non-CIC Severance, Cerner shall pay the Eligible Associate an amount of severance pay based on the Eligible Associate’s Role Level and Years of Service with Cerner as of the effective date of such termination. The amount of such severance pay shall be equal to: (i) a Week of Severance Pay for such Eligible Associate multiplied by (ii) that number set forth in the matrix below that corresponds to the Eligible Associate’s Role Level and Years of Service with Cerner.

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Severance Matrix

 

 

 

 

 

 

 

 

 

 

 

 

 

Role Level 4

 

 

 

Level 1

 

 

 

Levels 2 and 3

 

 

 

Levels 6

Years of

 

 

 

(V.P.’s –

 

Level 1

 

(Managers & Sr.

 

Levels 4 and

 

and 7

Service 6

 

Cabinet

 

nonCabinet)

 

(Directors)

 

Managers)

 

5 (Sr. Staff)

 

(Staff)

>10 Years

 

52 (Weeks)

 

32 (Weeks)

 

24 (Weeks)

 

16 (Weeks)

 

12 (Weeks)

 

8 (Weeks)

5-10 Years

 

36 (Weeks)

 

24 (Weeks)

 

18 (Weeks)

 

12 (Weeks)

 

9 (Weeks)

 

6 (Weeks)

2-5 Years

 

24 (Weeks)

 

16 (Weeks)

 

12 (Weeks)

 

8 (Weeks)

 

6 (Weeks)

 

4 (Weeks)

0-2 Years

 

16 (Weeks)

 

10 (Weeks)

 

6 (Weeks)

 

4 (Weeks)

 

3 (Weeks)

 

2 (Weeks)

          (b) CIC Severance Benefits. If the termination of an Eligible Associate’s employment constitutes a CIC Severance, Cerner shall pay the Eligible Associate an amount of severance pay based on the Eligible Associate’s Role Level and Years of Service with Cerner as of the effective of such termination. The amount of such severance pay shall be equal to: (i) a CIC Week of Severance Pay for such Eligible Associate multiplied by (ii) that number set forth in the matrix above that corresponds to both the Eligible Associate’s Role Level and Years of Service with Cerner, multiplied by 1.5.

          (c) Form of Payment.

               (i) Except with respect to Excess Severance Benefits, in the event of a Non-CIC Severance that occurs before any Change in Control, Non-CIC Severance Benefits shall be paid in a lump sum or, if the Plan Administrator elects, as salary continuation (without interest) on regularly scheduled paydays of Cerner for the applicable severance period or some other method, but in no event shall payments continue beyond the last day of the second calendar year following the calendar year the Non-CIC Severance occurs.

               (ii) Subject to Section 4(c)(v) below, in the event of a CIC Severance, CIC Severance Benefits shall be paid in a lump sum as soon as practicable within 90 days of the CIC Severance.

               (iii) Subject to Section 4(c)(v) below, in the event of a Non-CIC Severance that occurs after any Change in Control, Non-CIC Severance Benefits shall be paid in a lump sum as soon as practicable within 90 days of the Non-CIC Severance.

               (iv) Subject to Section 4(c)(v) below, all Excess Severance Benefits shall be paid in a lump sum as soon as practicable within 90 days of the CIC Severance or Non-CIC Severance.

               (v) If the Associate receiving any Severance Payment under this Plan is a Specified Associate, then any payment that the Associate would otherwise have been paid under Section 4(c)(ii), (iii) or (iv) above shall be paid on the first day of the seventh month following the CIC or Non-CIC Severance.

               (vi) Any Severance Benefits, including Excess Severance Benefits, that are subject to the offset provisions of Section 6(c) of the Plan will be paid at the time and in the

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form the Company determines would allow payment of such offset benefits to comply with Code section 409A.

          (d) Withholding. All Severance Benefits made under this Plan will be subject to applicable withholding for federal, state and local taxes. If any Eligible Associate is indebted to Cerner at his or her termination date, Cerner reserves the right to offset any Severance Benefits under this Plan by the amount of such indebtedness.

     SECTION 5. Employment.

          (a) No Modification of Associate Employment Agreements. This Plan shall not modify any terms of an Eligible Associate’s Employment Agreement, including but not limited to the type of employment relationship, the Associate’s obligations and continuing obligations set forth therein.

          (b) Limitation on Associate Rights. This Plan shall not give any Associate the right to be retained in the service of Cerner or interfere with or restrict the right of Cerner to terminate the employment of any Associate.

          (c) Changed Decisions. Cerner has the right to cancel or reschedule the effective date of an Eligible Associate’s employment termination. An Eligible Associate will not be eligible for any Severance Benefits under this Plan if the Eligible Associate’s employment termination is canceled by Cerner, or if the Eligible Associate is offered an opportunity to return to work or have his or her employment reinstated with Cerner.

     SECTION 6. Relation to Other Benefits and Pay

          (a) COBRA. Associates and their dependents covered under one or more of Cerner’s group health plans may be eligible for continuation coverage pursuant to the federal COBRA law. This Plan does not provide Associates or their dependents with any greater right to continuation coverage than what the federal COBRA law requires.

          (b) Other Benefit Plans. Eligibility, coverage and benefits under other Cerner benefit plans (e.g., any group life, disability, accidental death, retirement, stock plans, etc.) are governed by the terms of those respective plans. This Plan does not provide Associates or their beneficiaries and dependents with any greater eligibility, coverage or benefits than what such plans provide.

          (c) Offset of Benefits. Except as may otherwise be specifically provided for in an Associate’s Employment Agreement, the amount of any Severance Benefits paid under this Plan is in lieu of, and not in addition to, any other severance an Eligible Associate may otherwise be entitled to receive from Cerner, including under a Cerner Associate Employment Agreement or other document. Notwithstanding the payment provisions of Section 4(c) and subject to the immediately preceding sentence, the Company may, at its sole option and discretion, pay other severance benefits according to the time and form specified in the plan or agreement to which the other severance benefit applies, if the Company determines that doing so would allow both this Plan and the other plan or agreement to operate in compliance with Code section 409A.

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          (d) Integration with Other Payments. Severance Benefits paid under this Plan are not intended to duplicate benefits such as pay-in-lieu of notice, severance pay, workers compensation wage replacement, disability pay, or similar benefits or pay under other benefit plans, severance programs, employment agreements, transaction documents or applicable laws, such as the WARN Act. In the event such other pay or benefits is payable to an Eligible Associate, Severance Benefits under this Plan will be reduced accordingly or, alternatively, pay or benefits previously paid under this Plan will be treated as having been paid to satisfy other pay or benefit obligations. In either case, the Plan Administrator, in its sole discretion, will determine how to apply this provision and may override other provisions in the Plan in doing so. This provision, however, shall not preclude an otherwise Eligible Associate from receiving any payments under a Cerner Performance Plan (CPP) or any pay for accrued vacation under Cerner’s separate CPP or vacation policy, as may be amended from time-to-time. CPP and pay for accrued vacation, if any, shall be paid pursuant to the terms of those separate plans or policies.

          (e) Reemployment. If an Eligible Associate is reemployed by Cerner while Severance Benefits are still payable under the Plan, all such Severance Benefits will cease, except as otherwise specified by the Plan Administrator, in its sole discretion.

     SECTION 7. Plan Administration.

          (a) Plan Administrator. The Plan is administered by Cerner, which is the Plan Administrator under the Employee Retirement Income Security Act of 1974 (“ERISA”). It is the responsibility of the Plan Administrator to ensure that the Plan is administered in accordance with its terms. It is also the responsibility of the Plan Administrator to explain any rights and benefits that an Eligible Associate may have under the Plan and to answer any questions which an Eligible Associate may have. The Plan Administrator maintains all documents which comprise the Plan and annual filings, if any, which are prepared for the Plan. If you have any questions regarding the Plan, you should review these available documents. The Plan Administrator may, but is not required to, adopt rules and regulations of uniform applicability in its interpretation and implementation of the Plan. The Plan Administrator may require each Eligible Associate to submit, in such form as it shall deem reasonable and acceptable, proof of any information which the Plan Administrator finds necessary or desirable for the proper administration of the Plan.

          (b) Exclusive Discretion. The Plan Administrator has full and complete discretionary authority to determine eligibility for benefits under the Plan and to construe and interpret the terms of the Plan. In making any decision or resolving any disputes, Cerner shall have full and complete discretionary authority to (i) construe and interpret the provisions of the Plan and to determine the right of any person to any interest in or eligibility for any benefit under the Plan, and (ii) make any and all factual determinations necessary to determine the right of any person to any interest in or eligibility for any benefit under the Plan; and, no person shall be entitled to any benefit or interest under this Plan if Cerner decides in its discretion that there is no entitlement to that benefit or interest. Decisions of Cerner shall be final, binding and conclusive upon all parties.

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     SECTION 8. Amendment or Termination

          Cerner, acting through its Chief Executive Officer, Chief Financial Officer, Chief Legal Officer or Chief People Officer, has the right, in its nonfiduciary capacity, to amend the Plan or to terminate it at any time, prospectively or retroactively, for any reason or no reason, without notice, including discontinuing or eliminating benefits; provided, however, that no such amendment or termination shall affect the right to any unpaid benefit of any Eligible Associate whose termination date has occurred prior to such amendment or termination of the Plan and provided further that no amendment or termination shall occur with respect to the CIC Severance Benefits after the occurrence of a Change in Control.

     SECTION 9. Claims and Appeal Procedure

          (a) Initial Claim. If benefits under this Plan become due, the Plan Administrator will notify you as to the amount of benefits you are entitled to, the duration of such benefit, the time the benefit is to commence and other pertinent information concerning your benefit. If you have been denied a benefit under the Plan, or if you feel that the benefit which has been given to you is not accurate, you may file a claim with the Plan Administrator. If a claim for benefit is denied by the Plan Administrator, the Plan Administrator shall provide you with written or electronic notification of any adverse benefit determination within ninety (90) days after receipt of the claim unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written or electronic notice indicating the special circumstances and the date by which a final decision is expected to be rendered shall be furnished to you. In no event shall the period of extension exceed one hundred eighty (180) days after receipt of the claim. The notice of denial of the claim shall set forth:

               (i) The specific reason or reasons for the adverse determination;

               (ii) Reference to the specific plan provisions on which the determination is based;

               (iii) A description of any additional material or information necessary for you to perfect the claim, and an explanation of why such material or information is necessary; and

               (iv) A description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of your right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

          You (or your duly authorized representative) may review pertinent documents and submit issues and comments in writing to the Plan Administrator. If you fail to appeal such action to the Plan Administrator in writing within the prescribed period of time described in the next section, the Plan Administrator’s adverse determination shall be final, binding and conclusive.

          (b) Appeal. In the event of an adverse benefit determination, you may appeal the adverse determination by giving written notice to the Plan Administrator within 60 days after

11

 

 

receipt of the notice of adverse benefit determination. The Plan Administrator may hold a hearing or otherwise ascertain such facts as it deems necessary and shall render a decision which shall be binding upon both parties. The appeal procedure shall:

               (i) Provide you at least 60 days following receipt of a notification of an adverse benefit determination within which to appeal the determination;

               (ii) Provide you the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits;

               (iii) Provide that you shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits; and

               (iv) Provide for a review that takes into account all comments, documents, records, and other information submitted by you relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

          The decision of the Plan Administrator shall be made within sixty (60) days after the receipt by the Plan Administrator of the notice of appeal, unless special circumstances require an extension of time for processing, in which case a decision of Cerner shall be rendered as soon as possible but not later than one hundred twenty (120) days after receipt of the request for review. If such an extension of time is required, written or electronic notice of the extension shall be furnished to you prior to the commencement of the extension. The decision of the Plan Administrator shall be provided in written or electronic form to you and shall include the following:

               (i) The specific reason or reasons for the adverse determination;

               (ii) Reference to the specific plan provisions on which the benefit determination is based;

               (iii) A statement that you are entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by reference to DOL Regulation Section 2560.503-1 (m)(8); and

               (iv) A statement describing any voluntary appeal procedures offered by the Plan and your right to obtain the information about such procedures, and a statement of your right to bring an action under ERISA section 502(a).

     SECTION 10. Statement of ERISA Rights

          The following statement is required by federal statute. Certain portions of this statement may not apply to your particular situation or to this Plan.

12

 

 

          (a) Information About This Plan and Your Benefits. If you become a participant in the Cerner Corporation Enhanced Severance Pay Plan you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan participants shall be entitled to:

 

 

Examine, without charge, at the Plan Administrator’s office and at other specified locations, the Plan documents and, if any, copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual reports and plan descriptions.

 

 

 

Obtain copies of all Plan documents and other plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies.

 

 

 

Receive a summary of the Plan’s annual financial report, if one is required to be prepared. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report if an annual report is required to be filed with the Department of Labor.

          (b) Prudent Actions by Plan Fiduciaries. In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

          (c) Enforce Your Rights. If your claim for a Plan benefit is denied in whole or in part you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that plan fiduciaries misuse the plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

          (d) Assistance with Your Questions. If you have any questions about this Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Employee Benefits and Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits and Security

13

 

 

Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

     SECTION 11. Additional Information

          (a) Name and Address of Plan Sponsor and Plan Administrator. The name and address of the Plan Sponsor and the Plan Administrator is:

Cerner Corporation
2800 Rockcreek Parkway
North Kansas City, MO 64117
EIN: 43-1196944
Telephone: (816) 201-1024

          (b) Type of Administration. The Plan is administered by Cerner Corporation.

          (c) Plan Number. The Plan number is 513.

          (d) Plan Year. The Plan Year ends on December 31.

          (e) Agent For Service of Legal Process. Service of legal process may be made upon the Plan Sponsor (which is also the Plan Administrator) at the above address.

          (f) Plan Costs. Plan costs are paid by Cerner. The Plan is funded out of Cerner’s general assets.

          (g) Insurance. Benefits provided by this Plan are not insured by the Pension Benefit Guaranty Corporation under Title IV of ERISA because the insurance provisions under ERISA are not applicable to the Plan.

     SECTION 12. Governing Law.

          This Plan is an “employee welfare benefit plan” within the meaning of Section 3(1) of ERISA and it shall be interpreted, administered, and enforced in accordance with that law. To the extent that state law is applicable, the statutes and common law of the State of Missouri, excluding any that mandate the use of another jurisdiction’s laws, shall apply. Without limiting the generality of this Section 12, it is intended that the Plan comply with Section 409A of the Code, and, in the event that this Plan is determined to be a “deferred compensation plan” within the meaning of Section 409A(d)(1) of the Code, Cerner shall, as necessary, adopt such conforming amendments as are necessary to comply with Section 409A of the Code.

     SECTION 13. Basis of Payments to and From the Plan

          The Plan shall be unfunded, and all cash payments under the plan shall be paid only from the general assets of Cerner.

14

 

 

     SECTION 14. Limitation on IRC Section 280G Parachute Payments

          In the event that any Severance Benefit payment to be made under this Plan would cause an Eligible Associate to be liable for any excise tax under Code section 4999(a), the aggregate amount of such Severance Benefit shall be reduced by the minimal amount necessary such that the Eligible Associate is no longer subject to such excise tax.   Any determination or calculation made by Cerner relating to this Section 14, including, but not limited to, any calculation of an Eligible Associate’s “base amount” as defined in Code section 280G(b)(3), or an Eligible Associate’s anticipated “parachute payment,” as defined in Code section 280G(b)(2), shall be final, conclusive and binding on the Eligible Associate.

     SECTION 15. Construction.

          Where the context so indicates, the singular will include the plural and vice versa. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan. Unless the context clearly indicates to the contrary, a reference to a statute or document shall be construed as referring to any subsequently enacted, adopted, or executed counterpart.

15

 

 

 

EX-10.(L) 3 ex10l-severancepayplanamen.htm AMENDED ENHANCED SEVERANCE PAY PLAN

Exhibit 10(l)

 

CERNER CORPORATION

 

2005 ENHANCED SEVERANCE PAY PLAN

As Amended and Restated (for I.R.C. § 409A) Effective December 31, 2012

 

 

SECTION 1.INTRODUCTION.

(a)    Purpose. Cerner Corporation and its United States-based wholly-owned subsidiaries ("Cerner") value the contributions of their Associates and take measures to create and maintain a productive and fulfilling work environment. However, Cerner recognizes that business needs, an Associate's work performance or other reasons may require termination of employment. At any point during an Associate's employment, Cerner may choose to terminate the employment relationship.

Because employment with Cerner is at-will, Cerner has no obligation to compensate any Associate upon termination from his or her employment other than as may be provided in that Associate's Cerner Associate Employment Agreement or as specifically set forth in this 2005 Enhanced Severance Pay Plan ("Plan"). Cerner values its Associates and is interested in helping to mitigate the financial hardship caused by business conditions or other factors necessitating a termination.

(b)    Overview. Generally, this Plan provides enhanced Severance Benefits to Associates upon either a (i) "Non-CIC Severance" or (ii) "CIC Severance", as such terms are defined herein. Cerner expressly reserves the right to amend or terminate this Plan, or the benefits provided hereunder, at any time; provided, however, that no such amendment or termination shall occur with respect to the CIC Severance Benefits after the occurrence of a Change in Control.

(c)    Summary Plan Description. This Plan document also constitutes the Summary Plan Description for the Plan.

SECTION 2.    DEFINITIONS.

Certain capitalized terms used herein are defined parenthetically throughout this Plan and/or defined in this Section 2.

(a)    Associate. “Associate” means an employee of Cerner.

(b)    Beneficial Ownership. "Beneficial Ownership", "Beneficial Owner" or "Beneficially Own" shall have the same meaning as such terms are used in Rule 13d-3 of the Exchange Act.

(c)    Board. "Board" means the Board of Directors of Cerner Corporation.

 

1


 

(d)    Cause. "Cause" means an Eligible Associate's (i) material breach of his/her Employment Agreement or material neglect of his/her duties and responsibilities thereunder, (ii) fraud against Cerner, (iii) misappropriation of Cerner's assets, (iv) embezzlement from Cerner, (v) theft from Cerner, (vi) acts resulting in the arrest and indictment for a crime involving drug abuse, violence, dishonesty or theft or (vii) act or failure to take any action that results in a violation of the Sarbanes-Oxley Act of 2002, or any related statutes, laws or regulations.

(e)    Change in Control. "Change in Control" means:

(i)    The acquisition by any "Person" (as the term "person" is used for purposes of Section 13(d) or 14(d) of the Exchange Act) of Beneficial Ownership of thirty-five percent (35%) or more of either: (A) the then outstanding shares of common stock of Cerner Corporation (the "Outstanding Cerner Common Stock"), or (B) the combined voting power of the then outstanding voting securities of Cerner Corporation entitled to vote generally in the election of the Board's directors (the "Outstanding Cerner Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (X) any acquisition directly from Cerner, (Y) any acquisition by Cerner or (Z) any acquisition by any Associate benefit plan (or related trust) sponsored or maintained by Cerner Corporation or any corporation controlled by Cerner; or

(ii)    Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a Board director subsequent to the date hereof whose appointment or election, or nomination for election by Cerner's shareholders, was approved by a vote of at least a majority of the Board directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Board directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii)    Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Cerner (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Cerner Common Stock and Outstanding Cerner Voting Securities immediately prior to such Business Combination Beneficially Own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of Cerner Corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Cerner or all or substantially all of Cerner's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Cerner Common Stock

 

2


 

and Outstanding Cerner Voting Securities, as the case may be, (B) no Person (excluding any Associate benefit plan (or related trust) of Cerner or such corporation resulting from such Business Combination) Beneficially Owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of Cerner Corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the Board resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv)    Approval by the shareholders of Cerner Corporation of a complete liquidation or dissolution of Cerner.

(f)    CIC Protected Period. "CIC Protected Period" means the period beginning on the effective date of a Change in Control and ending on the one-year anniversary of such effective date.

(g)    CIC Severance. "CIC Severance" means, at any time during the CIC Protected Period, an Eligible Associate's termination of employment with Cerner (or its successor), that also qualifies as a separation from service under Section 409A of the Code, due to (i) Cerner's (or its successor’s) termination without Cause of the Eligible Associate's employment, or (ii) the Eligible Associate's resignation for Good Reason.

(h)    CIC Severance Benefits. "CIC Severance Benefits" means those severance benefits set forth in Section 4(b) that, provided an Eligible Associate is entitled to receive such benefits in accordance with Section 3, the Eligible Associate receives following a CIC Severance.

(i)    CIC Week of Severance Pay. A "CIC Week of Severance Pay" means an Eligible Associate's: (i) regular weekly base rate of pay in effect on the effective date of a CIC Severance (prior to any reductions taken for payroll taxes, income tax withholdings, elective deferrals made to or in connection with Cerner's Associate benefit plans or Executive Deferred Compensation Plan, and excluding any overtime, bonuses, commissions, premium pay, benefits, expense reimbursements, etc.), plus (ii) the average annual cash bonus the Associate had received from Cerner during the three (3) years preceding the CIC Severance (prior to any reductions taken for payroll taxes, income tax withholdings, elective deferrals made to or in connection with Cerner's Associate benefit plans or Executive Deferred Compensation Plan, and excluding any overtime, bonuses, commissions, premium pay, benefits, expense reimbursements, etc.), divided by 52 weeks. For example, a CIC Week of Severance Pay for an Eligible Associate whose: (i) annual base salary (excluding the pay and benefits listed above) is $52,000, and (ii) whose average annual cash bonus received during the three (3) years preceding the CIC Severance is $15,600, would be $1,000 ($52,000/52 weeks) plus $300 ($15,600/52 weeks), equaling a CIC Week of Severance Pay of $1,300. Cerner’s cash bonus plan currently pays a bonus, if earned, following each fiscal quarter of Cerner. When calculating the average annual cash bonus, the actual cash bonus paid to the Associate (or earned but not yet paid for the most recent full fiscal quarter preceding the CIC Severance) for the twelve (12) consecutive full Cerner fiscal quarters immediately preceding the

 

3


 

CIC Severance shall be included in the calculation of the Associate’s average annual cash bonus for the three (3) years preceding the CIC Severance. If the Associate has not been employed by Cerner for twelve (12) consecutive full Cerner fiscal quarters immediately prior to the CIC Severance, the average annual cash bonus received by such Associate shall be calculated based on the number of consecutive full fiscal quarters the Associate has been employed by Cerner immediately prior to the CIC Severance and adjusted to equal a yearly average. For avoidance of all doubt, the calculation of average annual cash bonus shall not include any sales commissions or similar payments received by an Associate based on individual sales or contracts signed with Cerner clients.

(j)    COBRA. "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(k)    Code. "Code" means the Internal Revenue Code of 1986, as amended.

(l)    Eligible Associate. "Eligible Associate" means an individual who: (i) is a permanent, full-time salaried Associate on the U.S. payroll of Cerner, as determined by Cerner's employment records; and (ii) has entered into an Employment Agreement. The determination of whether an Associate is an Eligible Associate shall be made by the Plan Administrator, in its sole discretion, and such determination shall be binding and conclusive on all persons. In no event shall part-time Associates, interns or independent contractors be Eligible Associates.

(m)    Employment Agreement. "Employment Agreement" means an Eligible Associate's then current Cerner Associate Employment Agreement with Cerner.

(n)    Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(o)    Excess Severance Benefits. "Excess Severance Benefits" means any Severance Benefits that exceed the limit provided in Treas. Reg. Section 1.409A-1(b)(9)(iii).

(p)    Good Reason. "Good Reason" means, without an Eligible Associate's express written consent: (i) a material adverse change in the Eligible Associate's authority, duties or job responsibilities (except for such subordination in duties and job responsibilities as may normally be required due to Cerner's change from an independent business entity to a subsidiary or division of another corporate entity); or (ii) a reduction of 5% or more to an Eligible Associate's annual salary and cash bonus opportunity in effect prior to the Change in Control; provided, however, the Eligible Associate must provide notice to Cerner (or its successors) within 30 days after the adverse change or reduction and must give Cerner (or its successors) at least 30 days to remedy the event or condition. In no event will an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by Cerner (or its successors) constitute Good Reason.

(q)    Non-CIC Severance. "Non-CIC Severance" means at any time, other than during a CIC Protected Period, an Eligible Associate's termination of employment with Cerner, that also qualifies as a separation from service under Section 409A of the Code, by Cerner, other than for Cause, due to reorganization, restructuring, unsatisfactory work performance (other than where

 

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such unsatisfactory work performance is deliberate), or for other reasons as determined by the Plan Administrator in its sole discretion to constitute a Non-CIC Severance. Without limitation, the following events and reasons shall not constitute a Non-CIC Severance:

(i)    death;

(ii)    disability;

(iii)    voluntary resignation (regardless of the circumstances surrounding the Eligible Associate's decision to resign);

(iv)    retirement;

(v)    discharge by Cerner for any other work related reason other than redundancy or unsatisfactory work performance (including, without limitation, absenteeism, misconduct, refusal to transfer to an equivalent position that does not require relocation, failure to return to work after an approved leave of absence, insubordination, violation of Cerner's rules or policies, dishonesty, deliberate unsatisfactory performance, etc.);

(vi)    entering military duty;

(vii)    CIC Severance; or

(viii)    Termination for Cause.

(r)    Non-CIC Severance Benefits. "Non-CIC Severance Benefits" means those severance benefits set forth in Section 4(a) that, provided an Eligible Associate is entitled to receive such benefits in accordance with Section 3, the Eligible Associate receives following a Non-CIC Severance.

(s)    Plan Administrator. "Plan Administrator" means the person or entity specified as such in Section 7.

(t)    Role Level. "Role Level" means an Eligible Associate's designated category of employment as specified by Cerner's current employment classification hierarchy. In the event Cerner changes its hierarchy structure, the Role Levels specified in this Plan shall refer to the equivalent Role Level under any new classification scheme.

(u)    Severance Benefits. “Severance Benefits” means either CIC Severance Benefits or Non-CIC Severance Benefits.

(v)    Specified Associate. "Specified Associate" means an Associate that would be a "specified employee" as defined in Section 409A(a)(2)(B)(i) of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder.

(w)    Week of Severance Pay. "Week of Severance Pay" means an Eligible Associate's regular weekly base rate of pay in effect on the effective date of a Non-CIC Severance

 

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(prior to any reductions taken for payroll taxes, income tax withholdings, elective deferrals made to or in connection with Cerner's Associate benefit plans or Executive Deferred Compensation Plan, and excluding any overtime, bonuses, commissions, premium pay, benefits, expense reimbursements, etc.). For example, a Week of Severance Pay for an Eligible Associate whose annual base salary as of the Non-CIC Severance (excluding the pay and benefits listed above) is $52,000, would be $1,000 ($52,000/52 weeks).

(x)    Year of Service. "Year of Service" means, with respect to an Eligible Associate, each period of twelve (12) consecutive months of full-time employment by Eligible Associate with Cerner beginning with the Associate's full-time employment commencement date with Cerner and ending with the day preceding the anniversary of such date in the next and all succeeding years. No partial Years of Service shall be credited under this Plan nor will prorated Severance Benefits be paid for any fractional Year of Service.

SECTION 3.    ENTITLEMENT FOR SEVERANCE BENEFITS

(a)    Entitlement. Subject to the exceptions set forth below in Section 3(b), an Eligible Associate shall be entitled to receive either the Non-CIC Severance Benefits or the CIC Severance Benefits described below in Section 4, upon experiencing a Non-CIC Severance or CIC Severance, respectively, and provided that the following conditions are satisfied:

(i)    The Eligible Associate's termination of employment with Cerner must have constituted either a CIC Severance or Non-CIC Severance. In no event shall an Associate’s leave during one of Cerner’s recognized leave programs constitute a termination of employment event under this Plan,

(ii)    Following or in connection with the Eligible Associate's termination of employment, the Eligible Associate must comply with all transition assistance requests of Cerner, to Cerner's satisfaction, such as aiding in the location of files and documents, returning all Cerner property and repaying any amounts owed Cerner, and

(iii)    With respect to and in connection with a Non-CIC Severance only, the Eligible Associate has executed and delivered to Cerner (and not revoked by the end of any applicable revocation period) a Severance and Release Agreement with Cerner, such agreement providing for an irrevocable and complete release of all present and future claims by the Eligible Associate, within twenty-one (21) days or forty-five (45) days, whichever period is required under applicable law. The end of any applicable revocation period, which in no event is to exceed seven (7) days, is referred to in this Plan as the “Release Period Deadline.”

(b)    Exceptions to Severance Entitlement. An Eligible Associate will not receive Severance Benefits under this Plan in the following circumstances, as determined in the Plan Administrator's sole discretion:

(i)    The Eligible Associate's Employment Agreement (or amendments or supplement thereto) provides that none of the benefits provided under this Plan or any other

 

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broad-based Cerner severance plan or policy shall apply to such Associate. In such a case, such Associate's severance benefits, if any, shall be governed by the terms of such Employment Agreement (as amended or supplemented).

(ii)    The Associate breaches the terms and conditions of his/her Employment Agreement (including, without limitation, violating the non-competition provisions thereof).

(iii)    With respect to Non-CIC Severance Benefits only: (a) the Eligible Associate's employment termination is in connection with the sale, divesture or other disposition of the stock or assets of any subsidiary, division or other operating unit of Cerner or any of its subsidiaries ("Operating Unit") (or part thereof) which does not constitute a Change in Control (a "Transaction"), and the Eligible Associate is offered continued employment, or continues in employment, with the divested Operating Unit (or part thereof) or the purchaser of the stock or assets of the Operating Unit (or part thereof), or one of such purchaser's affiliates (the "Post-Transaction Employer"), as the case may be, on terms and conditions that would not constitute Good Reason, and (b) Cerner obtains an agreement from the Post-Transaction Employer, enforceable by the Eligible Associate, to provide (or Cerner agrees to provide) severance pay, if the Eligible Associate accepts the offered employment or continues in employment with the Post-Transaction Employer or its affiliates following the Transaction, at least equal to the severance pay set forth in Section 4(a) payable upon a Non-CIC Severance termination of the Eligible Associate's employment with the Post-Transaction Employer or its affiliates within the six (6) month period following the Transaction. For purposes of this Section 3(b)(iii), the term "Good Reason" shall have the meaning ascribed to it in this Plan, but the term "Cerner" as it is used in such definition shall be deemed to refer to the Post-Transaction Employer employing the Eligible Associate after the Transaction. For avoidance of doubt, in the circumstances described in the first sentence of this Section 3(b)(iii), the Eligible Associate shall not be entitled to receive Non-CIC Severance Benefits under Section 4(a) whether or not the Eligible Associate accepts the offered employment or continues in employment. Except as to separate severance benefits Cerner may itself expressly agree to in writing to provide in connection with a Transaction (as contemplated by subpart (b) of the first sentence of this Section 3(b)(iii)), the provisions of this Section 3(b)(iii) do not create any entitlement to Severance Benefits from Cerner in any circumstances whatsoever and are to be construed solely as a limitation on such entitlement in the circumstances herein set forth.

SECTION 4.    SEVERANCE BENEFITS.

(a)    Non-CIC Severance Benefits: If the termination of an Eligible Associate's employment constitutes a Non-CIC Severance, Cerner shall pay the Eligible Associate an amount of severance pay based on the Eligible Associate's Role Level and Years of Service with Cerner as of the effective date of such termination. The amount of such severance pay shall be equal to: (i) a Week of Severance Pay for such Eligible Associate multiplied by (ii) that number set forth in a severance matrix, adopted periodically by management, outlining the severance benefits to which

 

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Eligible Associates shall be entitled (“Severance Matrix”). The Severance Matrix shall be attached hereto as Exhibit A, and dated to reflect the most recent adoption date by management.

(b)    CIC Severance Benefits. If the termination of an Eligible Associate's employment constitutes a CIC Severance, Cerner shall pay the Eligible Associate an amount of severance pay based on the Eligible Associate's Role Level and Years of Service with Cerner as of the effective date of such termination. The amount of such CIC Severance Benefits shall be equal to: (i) a CIC Week of Severance Pay for such Eligible Associate multiplied by (ii) that number set forth in the current Severance Matrix, multiplied by 1.5.

(c)    Form of Payment.

(i)    Before any Change in Control and except with respect to Excess Severance Benefits, all Non-CIC Severance Benefits shall be paid in a lump sum or, if the Plan Administrator elects, as salary continuation (without interest) on regularly scheduled paydays of Cerner for the applicable severance period or some other method, but in no event shall payments continue beyond the last day of the twenty-fourth (24th) month following the month in which the Non-CIC Severance occurs.

(ii)    Before a Change in Control, all Non-CIC Severance Benefits which are Excess Severance Benefits shall be paid in a lump sum as soon as practicable within 75 days of the Non-CIC Severance.

(iii)    After a Change in Control and subject to the immediately following sentence, all Severance Benefits shall be paid in lump sum and (A) if the Severance Benefits are on account of a Non-CIC Severance, such that the payment of such benefits is subject to the Severance and Release Agreement requirements described above in Section 3(a)(iii), such Non-CIC Severance Benefits shall be paid on the last day of the Release Period Deadline, and (B) if the Severance Benefits are on account of a CIC Severance, such that the payment of such benefits is not subject to the Severance and Release Agreement requirements described above in Section 3(a)(iii), such CIC Severance Benefits shall be paid within seventy-five (75) days of the CIC Severance. Notwithstanding the immediately preceding sentence, if the Associate receiving any Severance Payment subject to this Section 4(c)(iii) is a Specified Associate, then the payment of any Severance Benefits shall be delayed until and paid on the first day of the seventh month following the CIC or Non-CIC Severance.

(iv)    All Severance Benefit payments are subject to the offset provisions of Section 6(c) of the Plan.

(d)    Withholding. All Severance Benefits made under this Plan will be subject to applicable withholding for federal, state and local taxes. If any Eligible Associate is indebted to Cerner at his or her termination date, Cerner reserves the right to offset any Severance Benefits under this Plan by the amount of such indebtedness.

 

 

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SECTION 5.    EMPLOYMENT.

(a)    No Modification of Associate Employment Agreements. This Plan shall not modify any terms of an Eligible Associate's Employment Agreement, including but not limited to the type of employment relationship, the Associate's obligations and continuing obligations set forth therein.

(b)    Limitation on Associate Rights. This Plan shall not give any Associate the right to be retained in the service of Cerner or interfere with or restrict the right of Cerner to terminate the employment of any Associate.

(c)    Changed Decisions. Cerner has the right to cancel or reschedule the effective date of an Eligible Associate's employment termination. An Eligible Associate will not be eligible for any Severance Benefits under this Plan if the Eligible Associate's employment termination is canceled by Cerner, or if the Eligible Associate is offered an opportunity to return to work or have his or her employment reinstated with Cerner.

SECTION 6.    RELATION TO OTHER BENEFITS AND PAY

(a)    COBRA. Associates and their dependents covered under one or more of Cerner's group health plans may be eligible for continuation coverage pursuant to the federal COBRA law. This Plan does not provide Associates or their dependents with any greater right to continuation coverage than what the federal COBRA law requires.

(b)    Other Benefit Plans. Eligibility, coverage and benefits under other Cerner benefit plans (e.g., any group life, disability, accidental death, retirement, stock plans, etc.) are governed by the terms of those respective plans. This Plan does not provide Associates or their beneficiaries and dependents with any greater eligibility, coverage or benefits than what such plans provide.

(c)    Offset of Benefits. Except as may otherwise be specifically provided for in an Associate's Employment Agreement, the amount of any Severance Benefits paid under this Plan is in lieu of, and not in addition to, any other severance an Eligible Associate may otherwise be entitled to receive from Cerner, including under an Employment Agreement or other document. Notwithstanding the payment provisions of Section 4(c)(i) with respect to any Severance Benefit payment before a Change in Control, the Company may offset any amount otherwise owed to the Company against any Severance Benefit the Cerner Associate may be entitled to provided such offset is not in contravention of Code section 409A, and (ii) with respect to any Severance Benefit payment after a Change in Control, the Company may offset any amount otherwise owed to the Company against any Severance Benefits in accordance with Treasury Regulation § 1.409A-3(j)(4)(xiii) or in any other manner which the Company determines that doing so would allow both this Plan and the other plan or agreement to operate in compliance with Code section 409A.

(d)    Integration with Other Payments. Severance Benefits paid under this Plan are not intended to duplicate benefits such as pay-in-lieu of notice, severance pay, workers compensation wage replacement, disability pay, or similar benefits or pay under other benefit plans,

 

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severance programs, employment agreements, transaction documents or applicable laws, such as the WARN Act. In the event such other pay or benefits is payable to an Eligible Associate, Severance Benefits under this Plan will be reduced accordingly or, alternatively, pay or benefits previously paid under this Plan will be treated as having been paid to satisfy other pay or benefit obligations. In either case, the Plan Administrator, in its sole discretion, will determine how to apply this provision and may override other provisions in the Plan in doing so. This provision, however, shall not preclude an otherwise Eligible Associate from receiving any payments under a Cerner Performance Plan (CPP) or any pay for accrued vacation under Cerner’s separate CPP or vacation policy, as may be amended from time-to-time. CPP and pay for accrued vacation, if any, shall be paid pursuant to the terms of those separate plans or policies.

(e)    Reemployment. If an Eligible Associate is reemployed by Cerner while Severance Benefits are still payable under the Plan, all such Severance Benefits will cease, except as otherwise specified by the Plan Administrator, in its sole discretion.

SECTION 7.    PLAN ADMINISTRATION.

(a)    Plan Administrator. The Plan is administered by Cerner, which is the Plan Administrator under the Employee Retirement Income Security Act of 1974 ("ERISA"). It is the responsibility of the Plan Administrator to ensure that the Plan is administered in accordance with its terms. It is also the responsibility of the Plan Administrator to explain any rights and benefits that an Eligible Associate may have under the Plan and to answer any questions which an Eligible Associate may have. The Plan Administrator maintains all documents which comprise the Plan and annual filings, if any, which are prepared for the Plan. If you have any questions regarding the Plan, you should review these available documents. The Plan Administrator may, but is not required to, adopt rules and regulations of uniform applicability in its interpretation and implementation of the Plan. The Plan Administrator may require each Eligible Associate to submit, in such form as it shall deem reasonable and acceptable, proof of any information which the Plan Administrator finds necessary or desirable for the proper administration of the Plan.

(b)    Exclusive Discretion. The Plan Administrator has full and complete discretionary authority to determine eligibility for benefits under the Plan and to construe and interpret the terms of the Plan. In making any decision or resolving any disputes, the Plan Administrator shall have full and complete discretionary authority to (i) construe and interpret the provisions of the Plan and to determine the right of any person to any interest in or eligibility for any benefit under the Plan, and (ii) make any and all factual determinations necessary to determine the right of any person to any interest in or eligibility for any benefit under the Plan; and, no person shall be entitled to any benefit or interest under this Plan if the Plan Administrator decides in its discretion that there is no entitlement to that benefit or interest. Decisions of the Plan Administrator shall be final, binding and conclusive upon all parties.

SECTION 8.    AMENDMENT OR TERMINATION

Cerner, acting through its Chief Executive Officer, Chief Financial Officer, Chief Legal Officer or Chief People Officer, has the right, in its nonfiduciary capacity, to amend the Plan or to terminate it at any time, prospectively or retroactively, for any reason or no reason, without

 

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notice, including discontinuing or eliminating benefits; provided, however, that no such amendment or termination shall affect the right to any unpaid benefit of any Eligible Associate whose termination date has occurred prior to such amendment or termination of the Plan and provided further that no amendment or termination shall occur with respect to the CIC Severance Benefits after the occurrence of a Change in Control. Accordingly, no Associate has a “legally binding right” (as that term is used in Treasury Regulations § 1.409A-1(b)(1)) to any benefit or amount pursuant to this Plan until, if at all, the first to occur of an Associate’s Non-CIC Severance or a Change in Control and only then is the Associate entitled to those Severance Benefits, if any, as are provided for in the Plan at such time.

SECTION 9.    CLAIMS AND APPEAL PROCEDURE

(a)    Initial Claim. If benefits under this Plan become due, the Plan Administrator will notify you as to the amount of benefits you are entitled to, the duration of such benefit, the time the benefit is to commence and other pertinent information concerning your benefit. If you have been denied a benefit under the Plan, or if you feel that the benefit which has been given to you is not accurate, you may file a claim with the Plan Administrator. If a claim for benefit is denied by the Plan Administrator, the Plan Administrator shall provide you with written or electronic notification of any adverse benefit determination within ninety (90) days after receipt of the claim unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written or electronic notice indicating the special circumstances and the date by which a final decision is expected to be rendered shall be furnished to you. In no event shall the period of extension exceed one hundred eighty (180) days after receipt of the claim. The notice of denial of the claim shall set forth:

(i)    The specific reason or reasons for the adverse determination;

(ii)    Reference to the specific plan provisions on which the determination is based;

(iii)    A description of any additional material or information necessary for you to perfect the claim, and an explanation of why such material or information is necessary; and

(iv)    A description of the Plan's review procedures and the time limits applicable to such procedures, including a statement of your right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

You (or your duly authorized representative) may review pertinent documents and submit issues and comments in writing to the Plan Administrator. If you fail to appeal such action to the Plan Administrator in writing within the prescribed period of time described in the next section, the Plan Administrator's adverse determination shall be final, binding and conclusive.

(b)    Appeal. In the event of an adverse benefit determination, you may appeal the adverse determination by giving written notice to the Plan Administrator within sixty (60) days after receipt of the notice of adverse benefit determination. The Plan Administrator may hold a

 

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hearing or otherwise ascertain such facts as it deems necessary and shall render a decision which shall be binding upon both parties. The appeal procedure shall:

(i)    Provide you at least 60 days following receipt of a notification of an adverse benefit determination within which to appeal the determination;

(ii)    Provide you the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits;

(iii)    Provide that you shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits; and

(iv)    Provide for a review that takes into account all comments, documents, records, and other information submitted by you relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

The decision of the Plan Administrator shall be made within sixty (60) days after the receipt by the Plan Administrator of the notice of appeal, unless special circumstances require an extension of time for processing, in which case a decision of Cerner shall be rendered as soon as possible but not later than one hundred twenty (120) days after receipt of the request for review. If such an extension of time is required, written or electronic notice of the extension shall be furnished to you prior to the commencement of the extension. The decision of the Plan Administrator shall be provided in written or electronic form to you and shall include the following:

(i)    The specific reason or reasons for the adverse determination;

(ii)    Reference to the specific plan provisions on which the benefit determination is based;

(iii)    A statement that you are entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by reference to DOL Regulation Section 2560.503-1 (m)(8); and

(iv)    A statement describing any voluntary appeal procedures offered by the Plan and your right to obtain the information about such procedures, and a statement of your right to bring an action under ERISA section 502(a).

SECTION 10.    STATEMENT OF ERISA RIGHTS

The following statement is required by federal statute. Certain portions of this statement may not apply to your particular situation or to this Plan.

(a)    Information About This Plan and Your Benefits. If you become a participant in the Cerner Corporation Enhanced Severance Pay Plan you are entitled to certain rights and

 

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protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan participants shall be entitled to:

(i)    Examine, without charge, at the Plan Administrator's office and at other specified locations, the Plan documents and, if any, copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual reports and plan descriptions.

(ii)    Obtain copies of all Plan documents and other plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies.

(iii)    Receive a summary of the Plan's annual financial report, if one is required to be prepared. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report if an annual report is required to be filed with the Department of Labor.

(b)    Prudent Actions by Plan Fiduciaries. In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called "fiduciaries" of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

(c)    Enforce Your Rights. If your claim for a Plan benefit is denied in whole or in part you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that plan fiduciaries misuse the plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

(d)    Assistance with Your Questions. If you have any questions about this Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Employee Benefits and Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits and Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

 

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SECTION 11.    ADDITIONAL INFORMATION

(a)    Name and Address of Plan Sponsor and Plan Administrator. The name and address of the Plan Sponsor and the Plan Administrator is:

 

 

Cerner Corporation

2800 Rockcreek Parkway

North Kansas City, MO 64117

EIN: 43-1196944

Telephone: (816) 201-1024

 

(b)    Type of Administration. The Plan is administered by Cerner Corporation.

(c)    Plan Number. The Plan number is 513.

(d)    Plan Year. The Plan Year ends on December 31.

(e)    Agent For Service of Legal Process. Service of legal process may be made upon the Plan Sponsor (which is also the Plan Administrator) at the above address.

(f)    Plan Costs. Plan costs are paid by Cerner. The Plan is funded out of Cerner's general assets.

(g)    Insurance. Benefits provided by this Plan are not insured by the Pension Benefit Guaranty Corporation under Title IV of ERISA because the insurance provisions under ERISA are not applicable to the Plan.

SECTION 12.    GOVERNING LAW.

This Plan is an "employee welfare benefit plan" within the meaning of Section 3(1) of ERISA and it shall be interpreted, administered, and enforced in accordance with that law. To the extent that state law is applicable, the statutes and common law of the State of Missouri, excluding any that mandate the use of another jurisdiction's laws, shall apply. Without limiting the generality of this Section 12, it is intended that the Plan comply with Section 409A of the Code, and, in the event that this Plan is determined to be a "deferred compensation plan" within the meaning of Section 409A(d)(1) of the Code, Cerner shall, as necessary, adopt such conforming amendments as are necessary to comply with Section 409A of the Code.  

 

SECTION 13.    BASIS OF PAYMENTS TO AND FROM THE PLAN

The Plan shall be unfunded, and all cash payments under the Plan shall be paid only from the general assets of Cerner.

 

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SECTION 14.    LIMITATION ON IRC SECTION 280G PARACHUTE PAYMENTS

In the event that any Severance Benefit payment to be made under this Plan would cause an Eligible Associate to be liable for any excise tax under Code section 4999(a), the aggregate amount of such Severance Benefit shall be reduced by the minimal amount necessary such that the Eligible Associate is no longer subject to such excise tax.   Any determination or calculation made by Cerner relating to this Section 14, including, but not limited to, any calculation of an Eligible Associate's "base amount" as defined in Code section 280G(b)(3), or an Eligible Associate's anticipated "parachute payment," as defined in Code section 280G(b)(2), shall be final, conclusive and binding on the Eligible Associate.

SECTION 15.    CONSTRUCTION.

Where the context so indicates, the singular will include the plural and vice versa. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan. Unless the context clearly indicates to the contrary, a reference to a statute or document shall be construed as referring to any subsequently enacted, adopted, or executed counterpart.

 

 

 

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