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. |
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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. |
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| B. |
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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. |
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| C. |
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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. |
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| 1. |
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EMPLOYMENT RELATIONSHIP . |
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A. |
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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. |
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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. |
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C. |
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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. |
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D. |
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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. |
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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. |
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E. |
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Severance Payments . |
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1. |
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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. |
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a. |
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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: |
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(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. |
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(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
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(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.
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(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. |
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(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. |
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2. |
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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. |
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a. |
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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. |
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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. |
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c. |
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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. |
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d. |
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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. |
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e. |
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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. |
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3. |
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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. |
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4. |
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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. |
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5. |
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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. |
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AGREEMENT NOT TO DISCLOSE OR TO USE CONFIDENTIAL
INFORMATION . |
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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. |
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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. |
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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. |
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NEW SOLUTIONS AND IDEAS . |
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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. |
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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. |
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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. |
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| 4. |
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NON-COMPETITION AND NON-SOLICITATION . |
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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): |
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A. |
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You will tell any prospective new employer, prior to accepting
employment that this Agreement exists. |
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B. |
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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 a |
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