Exhibit 10(g)
CERNER CORPORATION
2004 LONG — TERM INCENTIVE PLAN G
The purpose of the Cerner Corporation
Long-Term Incentive Plan G (the “Plan”) is to encourage
designated key associates and non-employee directors of Cerner
Corporation (the “Company”) and its subsidiaries to
contribute materially to the growth of the Company, thereby
benefiting the Company’s shareholders by aligning the
economic interests of the participants with those of the
shareholders.
1. Administration
(a) Committee. The Plan shall be
administered and interpreted by the Compensation Committee of the
Board of Directors or such other committee as the Board of
Directors of the Company (the “Board”) may designate to
administer this Plan (the “Committee”). The Committee
shall consist of three or more members of the Board, all of whom
shall be: (i) “outside directors” as defined under
section 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”) and related Treasury regulations, (ii)
“non-employee directors” as defined under
Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and (iii) in the
judgment of the Board, qualified to administer the Plan and act as
a Member of the Committee pursuant to all applicable rules,
regulations and listing standards of the Nasdaq Stock Market (or
such other stock exchange on which the Stock is traded), including
any applicable standards for independence. Any member of the
Committee who does not satisfy the qualifications set out in the
preceding sentence may recuse himself or herself from any vote or
other action taken by the Committee. The Board may, at any time and
in its complete discretion, remove any member of the Committee and
may fill any vacancy in the Committee.
(b) Committee Authority. The
Committee shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan;
(ii) determine the type, size and terms of the grants to be
made to each such individual; (iii) determine the time when
the grants will be made and the duration of any applicable exercise
or restriction period, including the criteria for exercisability
and the acceleration of exercisability; (iv) amend the terms
(other than terms related to initial pricing of the shares) of any
previously issued Grant and (v) deal with any other matters
arising under the Plan.
(c) Delegation by the Committee.
The Committee, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or any part of its
authority and powers under this Plan to one or more Directors or
officers of the Company; provided, however, that the Committee may
not delegate its authority and powers (i) with respect to
Section 16 Persons, or (ii) in any way which would
jeopardize the Plan’s qualification under Section 162(m) of
the Code or Rule 16b-3.
(d) Committee Determinations.
The Committee shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt,
amend or rescind such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its
business as it deems necessary or advisable, in its sole
discretion. The Committee’s interpretations of the Plan and
all determinations made by the Committee pursuant to the powers
vested in it hereunder shall be conclusive and binding on all
persons having any interest in the Plan or in any awards granted
hereunder. All powers of the Committee shall be executed in its
sole discretion, in the best interest of the Company and in keeping
with the objectives of the Plan and need not be uniform as to
similarly situated individuals.
2. Grants
Awards under the Plan may consist of
grants of incentive stock options as described in Section 5
(“Incentive Stock Options”), nonqualified stock options
as described in Section 5 (“Nonqualified Stock
Options”) (Incentive Stock Options and Nonqualified Stock
Options are collectively referred to as “Options”),
restricted stock as described in Section 6 (“Restricted
Stock”), restricted stock units as described in
Section 6 (“Restricted Stock Units”), stock
appreciation rights as described in Section 7
(“SARs”), performance units as described in
Section 8 (“Performance Units”), performance
shares as
described in Section 8 (“Performance Shares”), and
phantom stock as described in Section 9 (“Phantom
Stock”) (hereinafter collectively referred to as
“Grants”). All Grants shall be subject to the terms and
conditions set forth herein and to such other terms and conditions
consistent with this Plan as the Committee deems appropriate and as
are specified in writing by the Committee to the individual in a
grant instrument (the “Grant Instrument”) or an
amendment to the Grant Instrument. The Committee shall approve the
form and provisions of each Grant Instrument. Grants under a
particular Section of the Plan need not be uniform as among the
Grantees. Grants, other than Options or SARs, shall vest as
follows: (a) time based Grants shall have a minimum three (3)
year vesting schedule; and, (b) performance based Grants shall
have a minimum one (1) year vesting schedule.
3. Shares Subject to the
Plan
(a) Shares Authorized. Subject
to the adjustment specified in Section 3(c) below, the aggregate
number of shares of common stock of the Company (“Company
Stock”) that may be issued or transferred under the Plan is
two million (2,000,000) shares. The shares may be authorized but
unissued shares of Company Stock or reacquired shares of Company
Stock, including treasury shares and shares purchased by the
Company on the open market for purposes of the Plan. If and to the
extent that shares of Company Stock subject to an outstanding Grant
are not issued by reason of the forfeiture, termination, surrender,
cancellation or expiration while unexercised of such Grant, or by
reason of tendering or withholding of shares (by either actual
delivery or by attestation) to pay all or a portion of the Exercise
Price or to satisfy all or a portion of any tax withholding
obligations relating to the Grant or the exercise of a Grant, or to
satisfy recovery of all or a portion of the fringe benefit tax or
similar taxes (the “Fringe Benefit Tax”), payable by
the Company and/or its subsidiaries relating to the Grant, vesting
and/or exercise of a Grant settled in such a manner such that some
or all of the shares covered by the Grant are not issued to a
participant, or being exchanged for a Grant under this Plan that
does not involve Company Stock, then such shares shall immediately
again be available for issuance under this Plan and credited back
to the 2,000,000 share limitation on Company Stock, as applicable.
The Committee may from time to time adopt and observe such
procedures concerning the counting of Shares against the Plan
maximum as it may deem appropriate.
(b) Individual Limit. During any
calendar year, no individual may be granted Options or other Grants
under the Plan that, in the aggregate, may be settled by delivery
of more than five hundred thousand (500,000) shares of Company
Stock, subject to adjustment as provided in Section 3(c). In
addition, with respect to Grants the value of which is based on the
Fair Market Value of Company Stock and that may be settled in cash
(in whole or in part), no individual may be paid during any
calendar year cash amounts relating to such Grants that exceed the
greater of the Fair Market Value (as defined in
Section 5(b)(iii)) of the number of shares of Company Stock
set forth in the preceding sentence either at the date of grant or
at the date of settlement. This provision sets forth two separate
limitations, so that Grants that may be settled solely by delivery
of Company Stock will not operate to reduce the amount or value of
cash-only Grants, and vice versa; nevertheless, Grants that may be
settled in Company Stock or cash must not exceed either
limitation.
With respect to Grants, the value of
which is not based on the Fair Market Value of Company Stock, no
individual may receive Grants pursuant to this Plan during any
calendar year involving a cash value plus shares of Company Stock
with a Fair Market Value at date of grant that, in the aggregate,
exceeds five million dollars ($5,000,000).
Grants to Non-Employee Directors will
be set by the Committee based on either a formula or a maximum
grant amount taking into consideration the recommendations of at
least one independent third party consultant to the Company’s
Board of Directors.
(c) Adjustments. If there is any
change in the number or kind of shares of Company Stock outstanding
(i) by reason of a stock dividend, spin-off, recapitalization,
stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the
Company is the surviving corporation, (iii) by reason of a
reclassification or change in par value, or (iv) by reason of
any other extraordinary or unusual event affecting the outstanding
Company Stock as a class without the
Company’s receipt of consideration, or if the value of
outstanding shares of Company Stock is substantially reduced as a
result of a spin-off or the Company’s payment of an
extraordinary dividend or distribution, the maximum number of
shares of Company Stock available for Grants, the maximum number of
shares of Company Stock that any individual participating in the
Plan may be granted in any year, the number of shares covered by
outstanding Grants, the kind of shares issued under the Plan, and
the price per share or the applicable market value of such Grants
may be appropriately adjusted by the Committee to reflect any
increase or decrease in the number of, or change in the kind or
value of, issued shares of Company Stock to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits
under such Grants; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. Any adjustments
determined by the Committee shall be final, binding and conclusive.
If and to the extent that any such change in the number or kind of
shares of Company Stock outstanding is effected solely by
application of a mathematical formula (e.g., a 2-for-1 stock
split), the adjustment described in this Section 3(c) shall be made
and shall occur automatically by application of such formula,
without further action by the Committee.
4. Eligibility for
Participation
(a) Eligible Persons. All key
associates of the Company and its subsidiaries
(“Associates”), including Associates who are officers
or members of the Board, shall be eligible to participate in the
Plan. Members of the Board who are not Associates
(“Non-Employee Directors”) shall be eligible to
participate in the Plan.
(b) Selection of Grantees. The
Committee shall select the Associates and Non-Employee Directors to
receive Grants and shall determine the number of shares of Company
Stock subject to a particular Grant, and/or shall establish such
other terms and conditions applicable to such Grant, in such manner
as the Committee determines. Associates and Non-Employee Directors
who receive Grants under this Plan shall hereinafter be referred to
as “Grantees.”
5. Granting of Options
(a) Number of Shares. The
Committee shall determine the number of shares of Company Stock
that will be subject to each Grant of Options to a Grantee.
(b) Type of Option and
Price.
(i) The Committee may grant
Incentive Stock Options that are intended to qualify as
“incentive stock options” within the meaning of section
422 of the Code or Nonqualified Stock Options that are not intended
to qualify or any combination of Incentive Stock Options and
Nonqualified Stock Options, all in accordance with the terms and
conditions set forth herein.
(ii) The purchase price (the
“Exercise Price”) of Company Stock subject to an Option
shall be determined by the Committee and shall be equal to or
greater than the Fair Market Value (as defined below) of a share of
Company Stock on the date the Option is granted; provided, however,
that an Incentive Stock Option may not be granted to an Associate
who, at the time of grant, owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company or any parent or subsidiary of the Company, unless the
Exercise Price per share is not less than 110% of the Fair Market
Value of Company Stock on the date of grant.
(iii) The Fair Market Value per
share as of any date shall be the closing reported sale prices of
the Stock on The Nasdaq Stock Market (or such other national
securities exchange in the event the Company stock is not then
traded on The Nasdaq Stock Market) as of that date, or if there is
no such reported sales price on the relevant date, then on the last
previous day on which a sale was reported.
(c) Option Term. The Committee
shall determine the term of each Option. The term of any Option
shall not exceed twelve years from the date of grant. However, an
Incentive Stock Option that is granted to an Associate who, at the
time of grant, owns stock possessing more than 10% of the
total
combined
voting power of all classes of stock of the Company, or any parent
or subsidiary of the Company, may not have a term that exceeds five
years from the date of grant.
(d) Exercisability of Options.
Options shall become exercisable in accordance with such terms and
conditions, consistent with the Plan, as may be determined by the
Committee and specified in the Grant Instrument or an amendment to
the Grant Instrument. The Committee may accelerate the
exercisability of any or all outstanding Options at any time for
any reason.
(e) Termination of Employment,
Disability or Death. Except as provided below, an Option may only
be exercised while the Grantee who is an Associate is employed by
the Company. In the event that such a Grantee ceases to be employed
for any reason other than a “disability”, death,
retirement, or a termination for the convenience of the Company,
any Option held by the Grantee shall terminate at the close of
business ninety days after the Grantee’s last day of
employment. In such case, and in all cases described below under
(i), (ii), (iii) and (iv) below, the Option may be
exercised only as to the shares of Company Stock as to which the
Option had become exercisable on or before the date the Grantee
ceases to be an Associate.
(i) In the event that the
Grantee ceases to be employed in a manner determined by the
Committee or Board, in its sole discretion, to constitute
retirement (which determination shall be communicated to the
Grantee within sixty days of such termination), the Option may be
exercised by the Grantee, or in the case of the Grantee’s
death, by the Grantee’s beneficiaries entitled to do so,
(A) if the Option is an Incentive Stock Option, within three
months following the Grantee’s retirement, or (B) if the
Option is a Nonqualified Stock Option, the Committee, in its
discretion, may provide that the Grantee’s Options shall be
exercisable for up to three years after the date of
retirement.
(ii) In the event the Grantee
dies while he or she is an Associate, within the period referred to
in clause (iv) below, or within the period described in
sub-clause (A) and (B) of clause (i), above, (A) if
the Option is an Incentive Stock Option, the Option may be
exercisable within one year following the Grantee’s date of
death, or (B) if the Option is a Nonqualified Stock Option,
the Committee, in its discretion, may provide that the
Grantee’s Options shall be exercisable for up to three years
after the date of death.
(iii) In the event the Grantee
ceases to be employed by the Company because the Grantee becomes
“disabled”, or if the Grantee becomes disabled within
the period referred to in clause (iv) below, (A) if the Option
is an Incentive Stock Option, the Option may be exercisable within
twelve months following the date Grantee’s employment has
ceased or the date the Grantee became disabled, whichever is later,
or (B) if the Option is a Nonqualified Stock Option, the
Committee, in its discretion, may provide that the Grantee’s
Options shall be exercisable for up to three years after the date
Grantee’s employment has ceased or the date the Grantee
became disabled, whichever is later.
(iv) In the event the Grantee
ceases to be employed by the Company because the Grantee is
terminated for the convenience of the Company (as determined by the
Committee or the Board in its sole discretion), any Incentive Stock
Option and/or Nonqualified Stock Option exercisable on the date of
termination of employment may be exercised by the Grantee within a
period determined by the Committee, in its discretion, commencing
on the date of termination of employment and continuing for up to
three years after the date Grantee’s employment has
ceased.
(v) For purposes of this Section
5(e) and Sections 6, 7 and 8:
(A) The term
“Company” shall mean the Company and its subsidiary
corporations.
(B) “Disability” or
“disabled” shall mean a Grantee’s becoming
disabled within the meaning of section 22(e)(3) of the Code.
(f) Exercise of Options. A
Grantee may exercise an Option that has become exercisable, in
whole or in part, by delivering a notice of exercise to the Company
with payment of the Exercise Price. The Grantee shall pay the
Exercise Price for an Option as specified by the Committee
(x) in cash, (y) with the
approval
of the Committee, by delivering shares of Company Stock owned by
the Grantee (including Company Stock acquired in connection with
the exercise of an Option, subject to such restrictions as the
Committee deems appropriate) and having an aggregate Fair Market
Value for such shares on the date of exercise equal to the
aggregate Exercise Price or (z) by such other method as the
Committee may approve, including attestation (on a form prescribed
by the Committee) to ownership of shares of Company Stock having a
Fair Market Value on the date of exercise equal to the Exercise
Price, or payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board. In
addition, the Committee may authorize loans by the Company to
Grantees in connection with the exercise of an Option, upon such
terms and conditions that the Committee, in its sole discretion
deems appropriate. However, the Committee may not authorize any
loans under this Plan to any of the Company’s Section 16
Officers as defined by the Securities Exchange Commission and
determined each year by the Company’s Board of Directors.
Shares of Company Stock used to exercise an Option shall have been
held by the Grantee for the requisite period of time to avoid
adverse accounting consequences to the Company with respect to the
Option. The Grantee shall pay the Exercise Price and the amount of
any withholding tax due and/or the amount of any Fringe Benefit Tax
due (pursuant to Section 10) at the time of exercise. Shares
of the Company Stock shall not be issued upon exercise of an Option
until the Exercise Price is fully paid and any required withholding
is made and/or the amount of any Fringe Benefit Tax is paid by or
recovered from the Grantee .
(g) Limits on Incentive Stock
Options. Each Incentive Stock Option shall provide that, if the
aggregate Fair Market Value of the stock on the date of grant with
respect to which Incentive Stock Options are exercisable for the
first time by a Grantee during any calendar year, under the Plan or
any other stock option plan of the Company or a parent or
subsidiary, exceeds one hundred thousand U.S. dollars ($100,000),
then the Option, as to the excess, shall be treated as a
Nonqualified Stock Option.
6. Restricted Stock and
Restricted Stock Units Grants
The Committee may issue or transfer
shares of Company Stock to a Grantee under a Grant of Restricted
Stock or Grant Restricted Stock Units, upon such terms as the
Committee deems appropriate. A Restricted Stock Unit shall mean any
unit granted under this Section 6 evidencing the right to
receive a share of Company Stock (or a cash payment equal to the
Fair Market Value of a share of Company Stock) at some future date.
The following provisions are applicable to Restricted Stock and
Restricted Stock Units:
(a) General Requirements. Shares
of Company Stock issued or transferred pursuant to Restricted Stock
and Restricted Stock Unit Grants may be issued or transferred for
consideration or for no consideration, as determined by the
Committee. The Committee may establish conditions under which
restrictions on shares of Restricted Stock and Restricted Stock
Units shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate including, without
limitation, restrictions based upon the achievement of specific
performance goals. The period of time during which the Restricted
Stock and Restricted Stock Units will remain subject to
restrictions will be designated in the Grant Instrument as the
“Restriction Period.” Each Restricted Stock or
Restricted Stock Unit shall provide for vesting not more rapidly
than ratably over a three year period unless the Restricted Stock
or Restricted Stock Unit is also subject to performance
restrictions, in which case the minimum Restriction Period shall be
one year.
(b) Number of Shares. The
Committee shall determine the number of shares of Company Stock to
be issued or transferred pursuant to a Restricted Stock Grant or
issuable or transferable pursuant to a Restricted Stock Unit Grant
and the restrictions applicable to such shares or Restricted Stock
Units.
(c) Requirement of Employment.
If the Grantee ceases to be employed by the Company during the
Restriction Period, or if other specified conditions are not met,
the Restricted Stock or Restricted Stock Unit Grant shall terminate
as to all shares covered by the Grant as to which the restrictions
have not lapsed at the close of business on the Grantee’s
last day of employment, and those shares of Company Stock must be
immediately returned to the Company. The Committee may, however,
accelerate the termination of the restrictions for all or a portion
of such Restricted Stock or Restricted Stock Unit as it deems
appropriate.
(d) Restrictions on Transfer and
Legend on Stock Certificate. During the Restriction Period, a
Grantee may not sell, assign, transfer, pledge or otherwise dispose
of the shares of
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