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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

Employee Retention Agreement

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT | Document Parties: CERNER CORP /MO/ | Cerner Corporation You are currently viewing:
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CERNER CORP /MO/ | Cerner Corporation

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Title: AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: Missouri     Date: 2/27/2008
Industry: Computer Networks     Sector: Technology

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT, Parties: cerner corp /mo/ , cerner corporation
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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 a

 
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