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
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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
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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 satisfa
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