SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1996
-------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to______________
Commission File Number 0-15386
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CERNER CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1196944
- ---------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
2800 Rockcreek Parkway
Kansas City, Missouri 64117
(816) 221-1024
------------------------------------------------------------
(Address of Principal Executive Offices, including zip code;
registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) with the Commission, and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No _____
There were 32,684,200 shares of Common Stock, $.01 par
value, outstanding at June 29, 1996.
<PAGE>
CERNER CORPORATION AND SUBSIDIARIES
I N D E X
Part I. Financial Information:
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 29, 1996
and December 30, 1995 (unaudited)
Consolidated Statements of Earnings for the
three months and six months ended June 29, 1996
and July 1, 1995 (unaudited)
Consolidated Statements of Cash Flows
for the six months ended June 29, 1996
and July 1, 1995 (unaudited)
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
CERNER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 29, December 30,
1996 1995
--------- -------------
(In thousands)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 8,640 $ 8,640
Short-term investments 101,578 103,478
Receivables 99,503 98,154
Inventory 3,718 2,246
Prepaid expenses and other 2,707 4,393
-------- --------
Total current assets 216,146 216,911
Property and equipment, net 59,702 53,693
Software development costs, net 26,206 22,885
Intangible assets, net 4,238 4,414
Noncurrent receivables 4,086 4,097
Other assets 2,154 1,945
-------- --------
$ 312,532 $ 303,945
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 14,255 $ 14,932
Current installments of long-term debt 135 130
Advanced billings 6,971 6,162
Accrued income taxes 14,766 13,946
Accrued payroll and tax withholdings 5,333 5,112
Other accrued expenses 3,580 2,565
-------- --------
Total Current Liabilities 45,040 42,847
-------- --------
Long-term debt, net 30,035 30,104
Deferred income taxes 9,618 9,620
Stockholders' Equity:
Common stock, $.01 par value,
150,000,000 shares authorized,
33,197,218 shares issued in 1996
and 33,001,973 issued in 1995 332 330
Additional paid-in capital 144,279 143,876
Retained earnings 88,787 82,874
Treasury stock, at cost
(513,018 shares in 1996 and 1995) (5,693) (5,693)
Foreign currency translation adjustment 134 (13)
--------- ---------
Total stockholders' equity 227,839 221,374
--------- ---------
$ 312,532 $ 303,945
========= =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CERNER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 29, July 1, June 29, July 1,
------------------------- -------------------------
(In thousands, except per share data)
1996 1995 1996 1995
---------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
Revenues:
System sales $ 29,841 $ 35,335 $ 67,008 $ 65,322
Support and maintenance 14,142 11,715 27,721 23,362
Other 2,726 1,917 4,562 3,474
------- ------- ------- ------
Total revenues 46,709 48,967 99,291 92,158
------- ------- ------- ------
Costs and expenses:
Cost of revenues 13,879 14,219 31,164 26,286
Sales and client service 17,032 12,815 32,654 23,991
Software development 8,703 7,432 17,243 15,053
General and administrative 4,860 3,737 9,710 7,779
------- ------- ------- -------
Total costs and expenses 44,474 38,203 90,771 73,109
------- ------- ------- -------
Operating earnings 2,235 10,764 8,520 19,049
Interest income (expense), net 593 (493) 1,263 (961)
------- -------- ------- --------
Earnings before income taxes 2,828 10,271 9,783 18,088
Income Taxes 1,139 4,087 3,872 7,363
------- -------- ------- --------
Net earnings $ 1,689 $ 6,184 $ 5,911 $ 10,725
======= ======== ======= ========
Earnings per share $ .05 $ .21 $ .18 $ .36
======= ======== ======= ========
Weighted average
shares outstanding 33,684 29,941 33,700 29,920
------- -------- -------- -------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CERNER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 29, July 1,
------------- ------------
(In thousands)
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 5,911 $ 10,725
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 7,267 6,148
Issuance of stock as compensation -- 5
Provision for deferred income taxes 819 4,925
Loss on disposal of capital equipment 14 10
Provision for uncollectable accounts 20 --
Changes in assets and liabilities:
Receivables (1,357) (10,995)
Inventory (1,471) (321)
Prepaid expenses and other 1,065 (761)
Accounts payable (678) 416
Accrued income taxes -- 2,000
Other accrued liabilities 2,044 1,412
-------- --------
Total adjustments 7,723 2,839
-------- --------
Net cash provided by operating activities 13,634 13,564
-------- --------
Cash flows from investing activities:
Purchase of capital equipment (9,452) (5,110)
Purchase of land, building and improvements (280) (3,712)
Capitalized software development costs (6,286) (4,633)
-------- ---------
Net cash used in investing activities (16,018) (13,455)
-------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 5 3,626
Repayment of long-term debt (69) (1,115)
Proceeds from exercise of options 401 706
-------- ---------
Net cash provided by financing activities 337 3,217
-------- ---------
Foreign currency translation adjustment 147 (100)
-------- ---------
Net increase (decrease) in cash, cash equivalents,
and short-term investments (1,900) 3,226
Cash, cash equivalents, and short-term investments
at beginning of period 112,118 15,305
-------- ---------
Cash, cash equivalents, and short-term investments
at end of period $ 110,218 $ 18,531
========= =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CERNER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Interim Statement Presentation
The consolidated financial statements included herein have
been prepared by the Company without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and the notes thereto included
in the Company's latest annual report on Form 10-K.
In the opinion of management, the accompanying unaudited
consolidated financial statements include all adjustments
(consisting of only normal recurring accruals) necessary to
present fairly the financial position at June 29, 1996 and
December 30, 1995 and the results of operations and cash flows
for the periods presented. The results of the three-month and
six-month periods are not necessarily indicative of the operating
results for the entire year.
(2) Earnings Per Share
Net earnings per share for the three months and six months
ended June 29, 1996 and July 1, 1995 is based on the weighted
average number of common shares and common share equivalents
outstanding during those periods. Common share equivalents
consist of shares issuable upon exercise of stock options using
the treasury stock method.
(3) Stock Dividend
On July 17, 1995, the Company's Board of Directors declared a
two-for-one stock split in the form of a one hundred percent
(100%) stock dividend payable on August 4, 1995, to stockholders
of record July 24, 1995. All share and per share data have been
restated for all periods presented herein to reflect the stock
split.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Three Months Ended June 29, 1996 Compared to Three Months Ended
July 1, 1995
The Company's revenues decreased 5% from $48,967,000 for the
three-month period ended July 1, 1995 to $46,709,000 for the
three-month period ended June 29, 1996. Net earnings decreased
73% from $6,184,000 in the 1995 period to $1,689,000 for the 1996
period.
In the 1996 period, revenues decreased due to a decrease in
system sales. System revenues decreased 16% from $35,335,000
for the three-month period ended July 1, 1995 to $29,841,000 for
the corresponding period in 1996. HNA contracts comprised 34% of
system revenue in the second quarter of 1996 compared to 41% for
the same period in 1995. An HNA contract is an initial contract
that includes the Company's CareNet Order Management product and
at least two other clinical systems, or a contract that brings an
existing client to this level. The revenue from additional
hardware and software products to the installed client base
increased 9% in the second quarter of 1996 over the same period
in 1995.
At June 29, 1996, the Company had $96,702,000 in contract
backlog and $101,379,000 in support and maintenance backlog,
compared to $58,806,000 in contract backlog and $85,544,000 in
support backlog at July 1, 1995.
Support and maintenance revenues increased 21% from
$11,715,000 during the second quarter of 1995 to $14,142,000
during the same period in 1996. This increase was due primarily
to the increase in the Company's installed and converted client
base.
Other revenues increased 42% from $1,917,000 in the second
quarter of 1995 to $2,726,000 in the same period of 1996. This
increase was due primarily to an increase in services performed
above the contracted requirements for existing clients.
The cost of revenues includes the cost of computer hardware
and sublicensed software purchased from computer and software
manufacturers for delivery to clients. It also includes the cost
of hardware maintenance and sublicensed software support
subcontracted to manufacturers. The cost of revenue was 30% of
total revenues in the second quarter of 1996 and 29% of total
revenues in the comparable period in 1995. Such costs, as a
percent of revenues, typically have varied as the mix of revenue
(software, hardware, maintenance, and support) components
carrying different margin rates changes from period to period.
The decrease in margin is due to equipment being a larger
component of system sales in the second quarter of 1996 compared
to the second quarter of 1995.
Sales and client service expenses include salaries of client
service personnel, communications expenses and travel expenses.
Also included are sales and marketing salaries, trade show costs
and advertising costs. These expenses as a percent of total
revenues were 36% and 26% in the second quarter of 1996 and 1995,
respectively. The increase in total sales and client service
expenses from $12,815,000 in 1995 to $17,032,000 in 1996 was
attributable to personnel and operating expenses associated with
the larger regional sales and service organization and certain
marketing initiatives.
Software development expenses include salaries, documentation
and other direct expenses incurred in product development, as
well as amortization of software development costs previously
capitalized. Total expenditures for software development,
including both capitalized and noncapitalized portions, for the
second quarter of 1996 and 1995 were $10,540,000 and $8,373,000,
respectively. These amounts exclude amortization of previously
capitalized expenditures. Capitalized software costs were
$3,320,000 and $2,265,000 for the second quarter of 1996 and
1995, respectively. The increase in aggregate expenditures for
software development in 1996 was due to Health Network
Architecture Version 500 (HNA 500) and development of community
care products.
General and administrative expenses include salaries for
corporate, financial, and administrative staffs, utilities,
communications expenses, and professional fees. These expenses
as a percent of total revenues were 10% and 8% in the second
quarter of 1996 and 1995, respectively. Total general and
administrative expenses for the second quarter of 1996 and 1995
were $4,860,000 and $3,737,000, respectively.
Net interest income increased 220% in the second quarter of
1996 than in the same period in 1995. This increase in interest
income was due primarily to interest income from the investment
of the proceeds from the sale of 3,716,000 new shares of common
stock from the August 1995 public offering.
The Company's effective tax rates was 40% for the second
quarter of 1996 and 1995.
The Company's quarterly revenues and net earnings have
historically been variable and cyclical. The variability is
attributable primarily to the number and size of project
milestone events in any fiscal quarter. The Company expects
fluctuations in quarterly results to continue.
Six Months Ended June 29, 1996 Compared to Six Months Ended July 1, 1995
The Company's revenues increased 8% from $92,158,000 for the
six-month period ended July 1, 1995 to $99,291,000 for the six-
month period ended June 29, 1996. Net earnings decreased 45%
from $10,725,000 in the 1995 period to $5,911,000 for the 1996
period.
In the 1996 period, revenues increased due to an increase in
system sales and support of installed systems. System revenues
increased 3% from $65,322,000 for the six-month period ended July
1, 1995 to $67,008,000 for the corresponding period in 1996.
This increase in system revenues resulted principally from an
increase in the sale of additional hardware and software products
to the installed client base. Sale of additional hardware and
software products to the installed client base increased 27% in
the first six months of 1996 over the same period in 1995.
At June 29, 1996, the Company had $96,702,000 in contract
backlog and $101,379,000 in support and maintenance backlog,
compared to $58,806,000 in contract backlog and $85,544,000 in
support backlog at July 1, 1995.
Support and maintenance revenues increased 19% from
$23,362,000 during the first six months of 1995 to $27,721,000
during the same period in 1996. This increase was due primarily
to the increase in the Company's installed and converted client
base.
Other revenues increased 31% from $3,474,000 in the first
half of 1995 to $4,562,000 in the same period of 1996. This
increase was due primarily to an increase in services performed
above the contracted requirements for existing clients.
The cost of revenues includes the cost of computer hardware
and sublicensed software purchased from computer and software
manufacturers for delivery to clients. It also includes the cost
of hardware maintenance and sublicensed software support
subcontracted to manufacturers. The cost of revenue was 31% of
total revenues in the first six months of 1996 and 29% of total
revenues in the comparable period in 1995. Such costs, as a
percent of revenues, typically have varied as the mix of revenue
(software, hardware, maintenance, and support) components
carrying different margin rates changes from period to period.
The decrease in margin is due to equipment being a larger
component of system sales in the first six months of 1996
compared to the first six months of 1995.
Sales and client service expenses include salaries of client
service personnel, communications expenses and travel expenses.
Also included are sales and marketing salaries, trade show costs
and advertising costs. These expenses as a percent of total
revenues were 33% and 26% in the first half of 1996 and 1995,
respectively. The increase in total sales and client service
expenses from $23,991,000 in 1995 to $32,654,000 in 1996 was
attributable to personnel and operating expenses associated with
the larger regional sales and service organization and certain
marketing initiatives.
Software development expenses include salaries, documentation
and other direct expenses incurred in product development, as
well as amortization of software development costs previously
capitalized. Total expenditures for software development,
including both capitalized and noncapitalized portions, for the
first half of 1996 and 1995 were $20,590,000 and $16,717,000,
respectively. These amounts exclude amortization of previously
capitalized expenditures. Capitalized software costs were
$6,286,000 and $4,633,000 for the first six months of 1996 and
1995, respectively. The increase in aggregate expenditures for
software development in 1996 was due to Health Network
Architecture Version 500 (HNA 500) and development of community
care products.
General and administrative expenses include salaries for
corporate, financial, and administrative staffs, utilities,
communications expenses, and professional fees. These expenses
as a percent of total revenues were 10% and 8% in the first six
months of 1996 and 1995, respectively. Total general and
administrative expenses for the first six months of 1996 and 1995
were $9,710,000 and $7,779,000, respectively.
Net interest income was 231% higher in the first half of 1996
than in the same period in 1995. This increase was due primarily
to interest income from investment of the proceeds from the sale
of 3,716,000 new shares of common stock from the August 1995
public offering.
The Company's effective tax rates were 40% and 41% for the
first six months of 1996 and 1995, respectively.
Capital Resources and Liquidity
The Company's liquidity position remains strong with total
cash and cash equivalents of $8,640,000 and short term
investments of $101,578,000 at June 29, 1996 and working capital
of $171,106,000. The Company generated net cash from operations
of $13,634,000 and $13,564,000 during the six month periods ended
June 29, 1996 and July 1, 1995, respectively. During August 1995,
the Company sold 3,716,000 shares of common stock. The proceeds
of this sale, net of underwriting discounts and commissions and
expenses, were $108,287,000. Prior to the public offering the
Company financed it operations, capital expenditures (other that
the purchase of the Kansas City headquarters complex and its
anticipated capital improvements), and working capital from the
internally generated funds and bank borrowings. The Company has
$18,000,000 of long-term, revolving credit from banks, all of
which was available as of June 29, 1996.
Revenues provided under the Company's support and maintenance
agreements represent recurring cash flows. The Company's revenue
backlog at June 29, 1996 included $101,379,000 representing
twelve months of equipment maintenance and software support
associated with signed contracts.
The Company believes its present cash, cash equivalents and
short-term investment position, together with cash generated from
operations and available under its current bank borrowing
facility, will be sufficient to meet anticipated cash
requirements during the next twelve months.
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's annual shareholders meeting held on May 14,
1996, Neal L. Patterson was reelected as a Class I Director, for
a three year term expiring at the 1999 annual meeting of
shareholders. Charles S. Runnion, III was reelected as a Class
II Directors, for a one year term expiring at the 1997 annual
meeting of shareholders. Thomas A. McDonnell and John C.
Danforth were elected as a new members to the Board of Directors
as a Class I Directors, for a three year term expiring at the
1999 annual meeting of shareholders. Clifford W. Illig, Thomas
C. Tinstman, M.D., Gerald E. Bisbee, Jr. and Micheal E. Herman
continued as directors after the meeting.
<TABLE>
Abstention
and Broker
For Withheld Non-Votes
------- ---------- ----------
<S> <C> <C> <C>
Neal L. Patterson 29,287,308 0 164,425
Charles S. Runnion, III 29,099,150 0 352,582
Thomas A. McDonnell 29,268,710 0 183,022
John C. Danforth 29,257,072 0 194,660
</TABLE>
The shareholders approved an amendment to the Certificate of
Incorporation of the Company to increase the total number of
authorized shares of stock from 51,000,000 to 151,000,000 and to
increase the number of authorized shares of the Common Stock, par
value $.01 per share, of the Company from 50,000,000 to
150,000,000. Shares voted in favor were 23,867,896, shares
against 5,498,015 and shares abstained or were broker non-votes
92,479.
The shareholders also ratified the selection by the Board of
Directors of KPMG Peat Marwick LLP as the Company's independent
certified public accountants for the fiscal year ending December
28, 1996. Shares voted in favor were 29,244,171 shares against
161,835 and shares abstained or were broker non-votes 52,384.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 3 (i) Certificate of Incorporation of the
Registrant
Exhibit 10 (i)a Indemnification Agreement between
Michael E. Herman and Registrant.
Exhibit 10 (i)b Indemnification Agreement between
John C. Danforth, and Registrant.
Exhibit 10 (i)c Indemnification Agreement between
Thomas A. McDonnell and Registrant.
Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the quarter ended June 29, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CERNER CORPORATION
------------------
Registrant
August 12, 1996 By:\s\ Marc G. Naughton
- --------------- --------------------
Date Marc G. Naughton
Chief Financial Officer
RESTATED
CERTIFICATE OF INCORPORATION
OF
CERNER CORPORATION
This is to certify that the Certificate of
Incorporation of Cerner Corporation originally filed with the
Secretary of State of Delaware on October 6, 1986, is hereby
amended and restated in its entirety, and has been adopted in
accordance with Sections 242 and 245 of the Delaware General
Corporation Law to read as follows:
FIRST. The name of the corporation is:
CERNER CORPORATION
SECOND. The address of its registered office in the State
of Delaware is The Corporation Trust Company, 1209 Orange Street,
Wilmington, County of New Castle, Delaware 19801. The name of
its registered agent at such address is The Corporation Trust
Company.
THIRD. The nature of the business or purposes to be
conducted promoted by the corporation is to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
In addition to the powers and privileges conferred upon the
corporation by law and those incidental thereto, the corporation
shall possess and may exercise all the powers and privileges
which are necessary or convenient to the conduct, promotion or
attainment of the business or purposes of the corporation.
FOURTH. The total number of shares of stock which the
corporation shall have authority to issue is twenty-one million
(151,000,000) shares, consisting of:
(1) 150,000,000 shares of Common Stock, par value $.01 per
share (the "Common Stock"); and
(2) 1,000,000 shares of Preferred Stock, par value $.01 per
share (the "Preferred Stock").
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions of the shares of each
class of stock are as follows:
1. Preferred Stock
The Preferred Stock may be issued from time to time by the
board of directors as shares of one or more series. Subject to
the provisions hereof and the limitations prescribed by law, the
board of directors is expressly authorized, prior to issuance, by
adopting resolutions providing for the issuance of, or providing
for a change in the number of, shares of any particular series
and, if and to the extent from time to time required by law, by
filing a certificate pursuant to the General Corporation Law of
Delaware (or other law hereafter in effect relating to the same
or substantially similar subject matter), to establish or change
the number of shares to be included in each such series and to
fix the voting powers and the designations and relative powers,
preferences and rights and the qualifications and limitations or
restrictions thereof relating to the shares of each such series.
The authority of the board of directors with respect to each
series shall include, but not be limited to, determination of the
following:
(a) the distinctive serial designation of such series and
the number of shares constituting such series, which number may
be increased or decreased (but not below the number of then
outstanding shares thereof) from time to time by like action of
the board of directors;
(b) the rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable on
any other class or classes, or series of the same or other
classes of stock, whether such dividends shall be cumulative or
non-cumulative, and, if so, from which date or dates;
(c) whether the shares of such series shall be redeemable
and, if so, the terms and conditions of such redemption,
including the date or dates upon and after which such shares
shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and
at different redemption dates;
(d) the obligation, if any, of the corporation to retire
shares of such series, including the price or prices which the
corporation shall be obligated to pay therefor, and the terms of
the sinking fund or redemption or purchase account, if any, to be
provided for the shares of such series;
(e) whether shares of such series shall be convertible into,
or exchangeable for, shares of stock of any other class or
classes and, if so, the terms and conditions of such conversion
or exchange, including the price or prices or the rate or rates
of conversion or exchange and the terms of adjustment, if any;
(f) whether the shares of such series shall have voting
rights, in addition to the voting rights provided by law, and, if
so, the terms of such voting rights (which voting rights may,
without limiting the generality of the foregoing, include the
right, voting as a series or by itself or together with other
series of Preferred Stock as a class, to elect one or more
directors of the corporation or to have one or more votes per
share on any or all matters as to which a stockholder vote is
required or permitted);
(g) the rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up
of the corporation, or in the event of a merger, distribution or
sale of assets; and
(h) any other relative rights, powers, preferences,
qualifications, limitations or restrictions thereof relating to
such series.
The shares of Preferred Stock of any one series shall be
identical with each other in all respects except as to the date
from and after which dividends thereon shall cumulate, if
cumulative.
The number of authorized shares of Preferred Stock may be
increased or decreased by the affirmative vote of the holders of
the percentage of the Total Voting Power of the then outstanding
shares of Voting Stock, considered for this purpose as one class
and without the separate vote of holders of Preferred Stock as a
class, required by paragraph FIFTEENTH for an amendment to this
paragraph FOURTH.
The relative powers, preferences and rights of each series
of Preferred Stock in relation to the powers, preferences and
rights of each other series of Preferred Stock shall, in each
case, be as fixed from time to time by the board of directors in
the resolution or resolutions adopted pursuant to authority
granted under this paragraph FOURTH, and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the board of directors of any other
series of Preferred Stock whether or not the powers, preferences
and rights of such other series shall be fixed by the board of
directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of
them, provided, however, that the board of directors may provide
in the resolution or resolutions as to any series of Preferred
Stock adopted pursuant to this paragraph FOURTH that the consent
of the holders of a majority (or such greater proportion as shall
be therein fixed) of the issuance of any or all other series of
Preferred Stock.
Subject to the provisions of the foregoing paragraph, shares
of any series of Preferred Stock may be issued from time to time
as the board of directors of the corporation shall determine and
on such terms and for such consideration as shall be fixed by the
board of directors.
2. Common Stock
Except as may otherwise be required by law, each holder of
Common Stock shall have one vote in respect of each share of
Common Stock held by him on all matters voted upon by the
stockholders.
After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of this paragraph FOURTH), if any, shall have been met
and after the corporation shall have complied with all the
requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of this paragraph FOURTH), and
subject further to any other conditions which may be fixed in
accordance with the provisions of this paragraph FOURTH, then and
not otherwise the holders of Common Stock shall be entitled to
receive such dividends as may be declared from time to time by
the board of directors.
After distribution in full of the preferential amount, if
any (fixed in accordance with the provisions of this paragraph
FOURTH), to be distributed to the holders of Preferred Stock in
the event of voluntary or involuntary liquidation, distribution
or sale of assets, dissolution or winding-up, of the corporation,
the holders of the Common Stock shall be entitled to receive all
of the remaining assets of the corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively.
Shares of Common Stock may be issued from time to time as
the board of directors of the corporation shall determine and on
such terms and for such consideration as shall be fixed by the
board of directors.
3. All Shares Nonassessable. All shares of stock of the
corporation of any class shall be nonassessable.
4. No Preemptive Rights. No holder of any shares of stock
of the corporation of any class shall be entitled as such, as a
matter of right, to purchase or subscribe for any shares of stock
of the corporation of any class, whether now or hereafter
authorized and whether issued for cash, property or services or
as a dividend or otherwise, or to purchase or subscribe for any
obligations, bonds, notes, debentures, other securities or stock
convertible into shares of stock of the corporation of any class
or carrying or evidencing any right to purchase shares of stock
of any class.
FIFTH. The name and mailing address of the incorporator is
as follows:
Name Address
John V. Donner Stinson, Mag & Fizzell
7500 West 110th Street
Overland Park, Kansas 66210
SIXTH. (a) The property, business and affairs of the
corporation shall be managed and controlled by the board of
directors. The number of directors of the corporation shall be
fixed by, or in the manner provided in, the bylaws. The names
and mailing addresses of the persons who are to serve as the
initial directors of the corporation and their class designations
are as follows:
Name and Address Class
Neal L. Patterson I
2800 Rockcreek Parkway
Suite 601
North Kansas City, MO 64117
Paul N. Gorup II
2800 Rockcreek Parkway
Suite 601
North Kansas City, MO 64117
Clifford W. Illig III
2800 Rockcreek Parkway
Suite 601
North Kansas City, MO 64117
Henry Crist, M.D. II
246 Parker Street
Carlyle, Pennsylvania 17013
Paul Finnegan I
Suite 1330
Three First National Plaza
Chicago, IL 60670
James A. Jackson III
9606 Alden
Lenexa, Kansas 66215
(b) A majority of the whole board of directors shall
constitute a quorum for the transaction of business, and, except
as otherwise provided in this Certificate of Incorporation or the
bylaws, the vote of a majority of the directors present at a
meeting at which a quorum is then present shall be the act of the
board of directors. As used in this Certificate of
Incorporation, the term "whole board of directors" is hereby
exclusively defined to mean the total number of directors which
the corporation would have if there were no vacancies.
(c) The members of the board of directors other than those
who may be elected by the holders of any Preferred Stock, or
series thereof, shall be divided into three classes (to be
designated as class I, class II and class III), as nearly equal
in number as the then total number of directors constituting the
whole board of directors permits, with the terms of office of one
class expiring each year. Class I directors shall hold office
until the annual meeting of stockholders of the corporation in
1987 and until their respective successors shall have been duly
elected and qualified or until their respective earlier
resignation or removal, class II directors shall hold office
until the annual meeting of stockholders of the corporation in
1988 and until their respective successors shall have been duly
elected and qualified or until their respective earlier
resignation or removal, and class III directors shall hold office
until the annual meeting of stockholders of the corporation in
1989 and until their respective successors shall have been duly
elected and qualified or until their respective earlier
resignation or removal. Notwithstanding the foregoing, and
except as otherwise required by law, whenever the holders of any
one or more series of Preferred Stock shall have the right,
voting separately as a class, to elect one or more directors of
the corporation, the terms of the director of directors elected
by such holders shall expire at the next succeeding annual
meeting of stockholders. Subject to the foregoing, at each
annual meeting of stockholders the successors to the class of
directors whose term shall then expire shall be elected and
qualified or until their respective earlier resignation or
removal.
(d) Except for directorships created pursuant to paragraph
FOURTH hereof relating to the rights of holders of Preferred
Stock or any series thereof, and except for vacancies in such
directorships, any vacancies in the board of directors for any
reason, and any newly created directorships resulting from any
increase in the number of directors, may be filled by the board
of directors, acting by a majority of the directors then in
office, although less than a quorum, or by a sole remaining
director, and any directors so chosen shall hold office until the
next election of the class for which such directors shall have
been chosen and until their respective successors are duly
elected and qualified or until their earlier resignation or
removal. No decrease in the number of directors shall shorten
the term of any incumbent director.
(e) Notwithstanding any other provisions of this
Certificate of Incorporation or the bylaws of the corporation
(and notwithstanding the fact that some lesser percentage may be
specified by law, this Certificate of Incorporation or the bylaws
of the corporation), any director or the entire board of
directors of the corporation may be removed at any time, but only
for cause and only by the affirmative vote of the holders of
eighty percent (80%) or more of the Total Voting Power of the
then outstanding shares of Voting Stock, considered for this
purpose as one class (for purposes of this paragraph SIXTH,
section (e), each share of the Voting Stock shall have the number
of votes granted to it pursuant to paragraph FOURTH of this
Certificate of Incorporation). For purposes of this paragraph
SIXTH, section (e): (i) the term "Total Voting Power" shall mean
the aggregate of all votes of all outstanding shares of Voting
Stock; and (ii) the term "Voting Stock" shall mean the shares of
all classes of capital stock of the corporation entitled to vote
on removal of any director or the entire board of directors in
the manner provided in this paragraph SIXTH, section (e) (except
that if the next succeeding sentence is operative, then the
outstanding shares of Preferred Stock shall not be considered
"Voting Stock" for purposes of this paragraph SIXTH, section
(e)). Notwithstanding the foregoing, and except as otherwise
required by law, whenever the holders of any one or more series
of Preferred Stock shall have the right, voting separately as a
class, to elect one or more directors of the corporation, the
provisions of this paragraph SIXTH shall not apply with respect
to the director or directors elected by such holders of Preferred
Stock.
(f) As used in this Certificate of Incorporation, the term
"for cause" is hereby exclusively defined and limited to mean
conviction of a felony by a court of competent jurisdiction where
such conviction is no longer subject to direct appeal, or an
adjudication by a court of competent jurisdiction of liability
for negligence, or misconduct, in the performance of the
director's duty to the corporation in a matter of substantial
importance to the corporation, where such adjudication is no
longer subject to direct appeal.
(g) There shall be no qualifications for election as
directors of the corporation, except that no person shall be
eligible to stand for election as a director if he has been
convicted of a felony by a court of competent jurisdiction where
such conviction is no longer subject to direct appeal.
(h) Subject to the rights of holders of Preferred Stock,
nominations for the election of directors may be made by the
board of directors or a proxy committee appointed by the board of
directors or by any stockholder entitled to vote in the election
of directors generally. However, any stockholder entitled to
vote in the election of directors generally may nominate one or
more persons for election as directors at a meeting only if
written notice of such stockholder's intent to make such
nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the
secretary of the corporation not later than (i) with respect to
an election to be held at an annual meeting of stockholders, one
hundred twenty (120) days in advance of the date of such meeting
(as set forth in the corporation's bylaws), and (ii) with respect
to an election to be held at a special meeting of stockholders
for the election to be held at a special meeting of stockholders
for the election of directors, the close of business on the
seventh day following the date on which notice of such meeting is
first given to stockholders. Each such notice shall set forth:
(a) the name and address of the stockholder who intends to make
the nomination and of the person or persons to be nominated; (b)
a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) the
name and address, as they appear on the corporation's books, of
such stockholder; (d) the class and number of shares beneficially
owned (as defined in paragraph NINTH of this Certificate of
Incorporation) by such nominating stockholder and each nominee
proposed by such stockholder; (e) a description of all
arrangements or understandings between the nominating stockholder
and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (f) such other
information regarding each nominee proposed by such stockholder
as would have been required to be included in a proxy statement
filed pursuant to Regulation 14A (17 CFR 240.14a-1 et seq.) as
then in effect under the Securities Exchange Act of 1934, as
amended, had the nominee been nominated, or intended to be
nominated, by the board of directors; and (g) the consent of each
nominee to serve as a director of the corporation if so elected.
The chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the
foregoing procedure.
(i) Except as may be otherwise specifically provided in
this paragraph SIXTH, the term of office and voting power of each
director of the corporation shall not be greater than nor less
than that of any other director or class of directors of the
corporation.
SEVENTH. Elections of directors need not be by ballot
unless the bylaws of the corporation shall so provide.
EIGHTH. The original bylaws of the corporation shall be
adopted in any manner provided by law. In furtherance, and not
in limitation of, the powers conferred by statute, the board of
directors is expressly authorized to make, adopt, alter, amend or
repeal by bylaws of the corporation. Notwithstanding any other
provisions in this Certificate of Incorporation or the bylaws of
the corporation and notwithstanding the fact that some lesser
percentage may be specified by law, the stockholders of the
corporation shall have the power to make, adopt, alter, amend or
repeal the bylaws of the corporation only upon the affirmative
vote of eighty percent (80%) or more of the Total Voting Power of
the then outstanding shares of Voting Stock, considered for this
purpose as one class (for purposes of this paragraph EIGHTH, each
share of the Voting Stock shall have the number of votes granted
to it pursuant to paragraph FOURTH of this Certificate of
Incorporation). For purposes of this paragraph EIGHTH: (i) the
term "Total Voting Power" shall mean the aggregate of all votes
of all outstanding shares of Voting Stock; and (ii) the term
"Voting Stock" shall mean the shares of all classes of capital
stock of the corporation entitled to vote on making, adopting,
altering, amending or repealing the bylaws of the corporation.
NINTH. (a) The provisions of this paragraph NINTH shall be
applicable to certain Business Combinations (as hereinafter
defined) and shall supersede any other provision of this
Certificate of Incorporation or the Bylaws of the corporation or
of law inconsistent therewith.
(b) In addition to any affirmative vote required by law or
this Certificate of Incorporation (including, without limitation,
any requirement that Business Combinations be approved by the
holders of a specified percentage of Preferred Stock voting
separately as a class) and except as otherwise expressly provided
in section (c) of this paragraph NINTH, any Business Combination
shall require the affirmative vote of the holders of at least
eighty percent (80%) or more of the Total Voting Power of the
then outstanding shares of Voting Stock considered for this
purpose as one class (for purposes of this paragraph NINTH, each
share of the Voting Stock shall have the number of votes granted
to it pursuant to paragraph FOURTH of this Certificate of
Incorporation). Such affirmative vote shall be required
notwithstanding the fact that no vote may be required by law, or
that a lesser percentage may be specified by law or in any
agreement with any national securities exchange or otherwise.
(c) The provisions of section (b) of this paragraph NINTH
shall not be applicable to any particular Business Combination,
and such Business Combination shall require only such affirmative
vote as is required by law and any other provision of this
Certificate of Incorporation, if the Business Combination shall
have been approved by a majority of the Disinterested Directors
(as hereinafter defined).
(d) For the purposes of this paragraph NINTH and for the
purposes of such other paragraphs of this Certificate of
Incorporation as is specified:
A. A "Business Combination" shall mean:
(i) any merger or consolidation of the corporation or
any Subsidiary (as hereinafter defined) with (a) any
Interested Stockholder (as hereinafter defined); or (b) any
other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions) or to with any Interested
Stockholder or any Affiliate of any Interested Stockholder
of any assets of the corporation or any Subsidiary heaving
an aggregate Fair Market Value (as hereinafter defined) of
$500,000 or more; or
(iii) the issuance or transfer by the corporation or
any Subsidiary (in one transaction or a series of
transactions) of any securities of the corporation or any
Subsidiary to any Interested Stockholder in exchange for
cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of $500,000
or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or
on behalf of any Interested Stockholder or any Affiliate of
any Interested Stockholder; or
(v) any reclassification of securities (including any
reverse stock split), or recapitalization of the
corporation, or any merger or consolidation of the
corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving any Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of Equity
Security (as hereinafter defined) of the corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder or any Affiliate of any Interested
Stockholder.
B. A "person" shall mean any individual, firm, corporation
or other entity.
C. "Interested Stockholder" shall mean any person (other
than the corporation or any Subsidiary) who or which, as of the
record date for the determination of stockholders entitled to
notice of and to vote on the issue in question, or immediately
prior to the effectiveness of the action to be effected as a
result of the vote:
(i) is the beneficial owner, directly or indirectly,
of 5% or more of the Total Voting Power of the Outstanding
Voting Stock, considered for this purpose as one class; or
(ii) is an Affiliate of the corporation and at any
time within the two-year period immediately prior to either
the record date for the determination of stockholders
entitled to notice of and to vote on the issue in question
or the effectiveness of the action to be effected as a
result of the vote, was the beneficial owner, directly or
indirectly, of 5% or more of the Total Voting Power of the
then outstanding Voting Stock, considered for this purpose
as one class; or
(iii) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two year period immediately prior to either the record date
for the determination of stockholders entitled to notice of
and to vote on the issue in question or the effectiveness of
the action to be effected as a result of the vote,
beneficially owned by any Interested Stockholder, if such
assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933.
D. A person shall be a "beneficial owner" of any Voting
Stock:
(i) which such person or any of its Affiliates or
Associates (as hereinafter defined), directly or indirectly,
through any contract, arrangement, understanding or
relationship, owns or has or shares the power to vote or to
direct the voting of, or the power to dispose or to direct
the disposition of, shares of such stock, or owns, has or
shares the right to receive or the power to direct the
receipt of dividends from or the proceeds from the sale of
such stock; or
(ii) with respect to which such person or any of its
Affiliates or Associates has the right to acquire, directly
or indirectly, through any contract, arrangement,
understanding or relationship, owns or has or shares the
power to vote or to direct the voting of, or the power to
dispose or to direct the disposition of, shares of such
stock, or owns, has or shares the right to receive or the
power to direct the receipt of dividends from the proceeds
from the sale of such stock (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise or conversion rights, exchange rights,
warrants or options, or otherwise; or
(iii) which are beneficially owned (as defined in (i)
or (ii) above), directly or directly, by any other person
with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing
of any shares of Voting Stock.
E. For the purpose of determining whether a person is an
Interested Stockholder pursuant to paragraph C of this section
(d), the number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned through application
of paragraph D of this section (d) but shall not include any
other shares of Voting Stock which may be issuable pursuant to
any agreement, arrangement or options, or otherwise.
F. "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as in effect on January 1, 1987.
G. "Subsidiary" means any corporation of which a majority
of any class of Equity Security is owned, directly or indirectly,
by the corporation; provided, however, that for the purposes of
the definition of Interested Stockholder set forth in paragraph C
of this section (d), the term "Subsidiary" shall mean only a
corporation of which a majority of each class of Equity Security
is owned, directly or indirectly, by the corporation.
H. "Disinterested Director" means any member of the board
of directors who is not an Interested Stockholder or an Affiliate
of an Interested Stockholder and was a member of the board of
directors prior to the time that the Interested Stockholder
involved in the Business Combination became an Interested
Stockholder, and any successor of a Disinterested Director who is
not an Interested Stockholder or an Affiliate of an Interested
Stockholder and is recommended to succeed a Disinterested
Director by a majority of the Disinterested Directors then on the
board of directors; provided, however, that Clifford W. Illig,
Neal L. Patterson, Paul N . Gorup, Henry S. Crist, Paul J.
Finnegan and James A. Jackson, and any successor of any such
person who is recommended by a majority of such persons or any
such successors, are hereby deemed to be "Disinterested
Directors."
I. "Fair Market Value" means: (i) in the case of stock,
the highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such
stock on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or, if such stock is not listed
on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed or, if such stock is not listed on any
such exchange, the highest closing bid quotation with respect to
a share of such stock during the 30-day period preceding the date
in question on the National Association of Securities Dealers,
Inc. Automated Quotations System or any system then in use, or if
no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by the
board of directors in good faith; and (ii) in the case of
property other than cash or stock, the fair market value of such
property on the date in question as determined by the board of
directors in good faith.
J. "Equity Security" shall have the meaning ascribed to
such term in Section 3(a) (11) of the Securities Exchange Act of
1934, as in effect on January 1, 1987.
K. "Voting Stock" shall mean the shares of all classes of
capital stock of the corporation entitled to vote on the issue
(for purposes of this paragraph NINTH, a Business Combination) in
question.
L. "Total Voting Power" shall mean the aggregate of all
votes of all outstanding shares of Voting Stock.
(e) A majority of the Disinterested Directors shall have
the power and duty to determine for the purposes of this
paragraph NINTH, on the basis of information known to them after
reasonable inquiry, (A) whether a person is an Interested
Stockholder, (B) the number of shares of Voting Stock
beneficially owned by any person, (C) whether a person is an
Affiliate or Associate of another, and (D) whether the assets
which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of
securities by the corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $500,000 or
more. A majority of the Disinterested Directors shall have the
further power to interpret all of the terms and provisions of
this paragraph NINTH and any interpretation approved by a
majority of the Disinterested Directors shall be final and
conclusive.
(f) Nothing contained in this paragraph NINTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
TENTH. The corporation may agree to the terms and
conditions upon which any director, officer, employee or agent
accepts his office or position and in its bylaws, by contract or
in any other manner may agree to indemnify and protect any
director, officer, employee or agent of the corporation, or any
person who serves at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, to the
fullest extent permitted by the laws of the State of Delaware;
provided, however, that the only limitation upon the power
granted to the corporation by this paragraph shall be a
prohibition against indemnification of any person from or on
account of such person's conduct which was finally adjudged to
have been knowingly fraudulent, deliberately dishonest or willful
misconduct.
Without limiting the generality of the foregoing provisions
of this paragraph TENTH, to the fullest extent permitted or
authorized by the laws of the State of Delaware, including
without limitation the provisions of subsection (b) (7) of
Section 102, Title 8 of the Delaware Code as now in effect and as
it may from time to time hereafter be amended, no director of the
corporation shall be personally liable to the corporation or to
its stockholders for monetary damages for breach of fiduciary
duty as a director.
ELEVENTH. Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them
and/or between this corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this
corporation under the provisions of section 291 of Title 8 of the
Delaware Code on the application of trustees in dissolution or of
any receiver or receivers appointed for this corporation under
the provisions of section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as
the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders
or class of stockholders of this corporation, as the case may be,
and also on this corporation.
TWELFTH. Except as may be otherwise provided by statute,
the corporation shall be entitled to treat the registered holder
of any shares of the corporation as the owner of such shares and
of all rights derived from such shares for all purposes, and the
corporation shall not be obligated to recognize any equitable or
other claim to or interest in such shares or rights on the part
of any other person, including, but without limiting the
generality of the term "person", a purchaser, pledgee, assignee
or transferee of such shares or rights, unless and until such
person becomes the registered holder of such shares. The
foregoing shall apply whether or not the corporation shall have
either actual or constructive notice of the interest of such
person.
THIRTEENTH. The books of the corporation may be kept
(subject to any provision contained in the statutes of Delaware)
outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the
bylaws of the corporation.
FOURTEENTH. The corporation reserves the right to amend,
alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation and subject to
paragraph FIFTEENTH of this Certificate of Incorporation.
FIFTEENTH. None of the provisions of paragraphs FOURTH,
SIXTH, EIGHTH, NINTH, FOURTEENTH, SIXTEENTH or this paragraph
FIFTEENTH may be amended, altered, changed or repealed except
upon the affirmative vote at any annual or special meeting of the
stockholders, of the holders of at least eighty percent (80%) or
more of the Total Voting Power of the then outstanding shares of
Voting Stock, considered for this purpose as one class (for the
purpose of this paragraph FIFTEENTH, each share of Voting Stock
shall have the number of votes granted to it pursuant to
paragraph FOURTH of this Certificate of Incorporation), nor shall
new provisions to this Certificate of Incorporation be adopted or
existing provisions to this Certificate of Incorporation be
adopted or existing provisions to this Certificate of
Incorporation be amended, altered or repealed which in either
instance are in conflict or inconsistent with paragraphs FOURTH,
SIXTH, EIGHTH, NINTH, FOURTEENTH, SIXTEENTH or this paragraph
FIFTEENTH except upon the affirmative vote at any annual or
special meeting of the stockholders of the holders of at least
eighty percent (80%) or more of the Total Voting Power of the
then outstanding shares of Voting Stock, considered for this
purpose as one class. Notwithstanding the foregoing, paragraph
FOURTH may be amended, altered, changed or repealed or new
provisions to this Certificate of Incorporation may be adopted or
existing provisions of this Certificate of Incorporation may be
amended, altered or repealed which in either instance are in
conflict or inconsistent with paragraph FOURTH by such
affirmative vote as is required by law if such amendment,
alteration, repeal or addition shall have been approved by a
majority of the Disinterested Directors (as defined in paragraph
NINTH of this Certificate of Incorporation). Any inconsistency
developing between the provisions of a bylaw and any provisions
of this Certificate of Incorporation shall be controlled by this
Certificate of Incorporation. For the purposes of this paragraph
FIFTEENTH, (i) the term "Total Power" shall mean the aggregate of
all votes of all outstanding shares of Voting Stock; and (ii) the
term "Voting Stock" shall mean the shares of all classes of
capital stock of the corporation entitled to vote on the issue in
question.
SIXTEENTH. (a) No action required or permitted to be taken
at any annual or special meeting of stockholders of the
corporation may be taken without a meeting, and the power of
stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied.
(b) Except as otherwise required by law and subject to the
rights, if any, of the holders of Preferred Stock or any series
thereof, special meetings of the stockholders of the corporation
may be called only by the chairman of the board of directors, the
president of the corporation or the board of directors pursuant
to a resolution approved by a majority of the whole board of
directors.
IN WITNESS WHEREOF, this Restated Certificate of
Incorporation has been executed on behalf of the corporation on
this 21st day of April 1987, by its executive vice president and
attested by its secretary, and each of them does hereby affirm
and acknowledge that this Restated Certificate of Incorporation
is the act and deed of the corporation.
CERNER CORPORATION
By \s\Clifford W. Illig
--------------------
Clifford W. Illig,
Executive Vice President
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made and entered into this 16th day
of May, 1995, between Cerner Corporation, a Delaware corporation
("Corporation"), and Michael E. Herman ("Indemnitee").
WITNESSETH:
WHEREAS, Indemnitee is a member of the board of
directors of the Corporation and as such is performing a valuable
service for the Corporation; and
WHEREAS, although Indemnitee has certain rights to
indemnification under the Bylaws and Certificate of Incorporation
of the Corporation, such Bylaws and Certificate of Incorporation
specifically provide that they are not exclusive and thereby
contemplate that the Corporation may enter into agreements with
its officers and directors; and
WHEREAS, the Corporation and Indemnitee desire to enter
into this Agreement to provide to Indemnitee additional rights to
indemnification in consideration of Indemnitee's continued
service to the Corporation as a director;
NOW, THEREFORE, in consideration of Indemnitee's
continued service as a director of the Corporation after the date
hereof and for and in consideration of the premises and the
covenants contained herein, the Corporation and Indemnitee do
hereby promise and agree as follows:
1. Indemnification. The Corporation hereby agrees to
hold harmless and indemnify Indemnitee to the fullest extent
permitted by Section 145, Title 8 of the Delaware Code, as in
effect on the date of the execution of this Agreement and as it
may hereafter be amended, or any other statutory provision
permitting or authorizing such indemnification which is adopted
subsequent to the execution of this Agreement.
2. Maintenance of Insurance. So long as Indemnitee
shall continue to serve as a director of the Corporation (or
shall continue at the request of the Corporation or on behalf of
the Corporation to serve as a director, officer, employee or
agent of any Other Enterprise) and thereafter so long as
Indemnitee shall be subject to any possible claim or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or appellate by reason of the fact
that Indemnitee is or was a director of the Corporation (or is or
was serving in any of said other capacities at the request of the
Corporation), the Corporation may maintain director liability
insurance if such insurance becomes reasonably available and if,
in the business judgment of the board of directors of the
Corporation as it may exist from time to time, both (i) the
premium cost for such insurance is reasonable, and (ii) the
coverage provided by such insurance is not so limited by
exclusions that there is insufficient benefit provided by such
director liability insurance.
3. Additional Indemnification. Subject only to the
provisions in Sections 4, 5, 6 and 7 of this Agreement, the
Corporation hereby further agrees to hold harmless and indemnify
Indemnitee:
(a) Against any and all liabilities and expenses,
including without limitation, judgments, amounts paid
in settlement (provided that such settlement and all
amounts paid in connection therewith are approved in
advance by the Corporation, which approval shall not be
unreasonably withheld), attorneys' fees, ERISA excise
taxes or penalties, fines and other expenses actually
and reasonably incurred by Indemnitee in connection
with any threatened, pending or completed action, suit
or proceeding (including without limitation the
investigation, defense, settlement or appeal of such
action, suit or proceeding), whether civil, criminal,
administrative, investigative or appellate (including
an action by or in the right of the Corporation) to
which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason
of the fact that Indemnitee is, was or at any time
becomes a director of the Corporation, or is or was
serving at the request of the Corporation as a
director, officer, agent or employee of any Other
Enterprise; and
(b) Otherwise to the fullest extent as may be
provided to Indemnitee by the Corporation pursuant to
the non-exclusivity provisions of paragraph 28 of the
Corporation's Bylaws and subsection (f) of Section 145,
Title 8 of the Delaware Code relating to
indemnification.
4. Limitations on Additional Indemnification. (a) The
Corporation will not hold Indemnitee harmless or provide
indemnification pursuant to Section 3 hereof:
(1) except to the extent that the aggregate
amount of losses to be indemnified thereunder exceeds
the amount of such losses for which Indemnitee is
indemnified either pursuant to (i) the Corporation's
Certificate of Incorporation, Bylaws, vote of
stockholders or disinterested directors or other
agreement, (ii) Sections 1 or 2 hereof, (iii) pursuant
to any director liability insurance purchased and
maintained on behalf of Indemnitee by the Corporation,
or (iv) otherwise than pursuant to this Agreement;
(2) in respect of remuneration paid to Indemnitee
if it shall be determined by a final judgment or other
final adjudication that such remuneration was in
violation of law;
(3) on account of any suit for an accounting of
profits made from the purchase or sale by Indemnitee of
securities of the Corporation pursuant to Section 16(b)
of the Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any federal, state or
local law;
(4) on account of Indemnitee's conduct which is
finally adjudged by a court to have been knowingly
fraudulent, deliberately dishonest or willful
misconduct; or
(5) if a final adjudication by a court having
jurisdiction in the matter shall determine that such
indemnification is not lawful.
(b) Notwithstanding any other provisions of this
Agreement, if the Indemnitee is or was serving as a director of
the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of any
Other Enterprise, and has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in Section 3 of this Agreement (including the dismissal of any
such action, suit or proceeding without prejudice), or in defense
of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith to the extent
he has not been fully indemnified therefor otherwise than
pursuant to this Agreement.
5. Advancement of Expenses. Expenses (including
attorneys' fees) actually and reasonably incurred by an
Indemnitee who may be entitled to indemnification hereunder in
defending an action, suit or proceeding, whether civil, criminal,
administrative, investigative or appellate, shall be paid by the
Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such Indemnitee to repay such amount if it shall ultimately be
determined that the Indemnitee is not entitled to indemnification
by the Corporation. Notwithstanding the foregoing, no advance
shall be made by the Corporation if a determination is reasonably
and promptly made by (i) the board of directors by a majority
vote of a quorum consisting of directors who were not parties to
the action, suit or proceeding from which the advancement is
requested, or (ii) if a quorum is not obtainable, or even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the
stockholders, that, based upon the facts known to the board,
counsel or stockholders at the time such determination is made,
such Indemnitee acted in bad faith and in a manner that such
Indemnitee did not believe to be in or not opposed to the best
interest of the Corporation, or, with respect to any criminal
proceeding, that such Indemnitee believed or had reasonable cause
to believe his conduct was unlawful. In no event shall any
advance be made in instances where the board, stockholders or
independent legal counsel reasonably determines that such
Indemnitee deliberately breached his duty to the Corporation or
its stockholders.
6. Notification and Defense of Claim. Promptly after
receipt by Indemnitee of notice of the commencement of any
action, suit or proceeding, Indemnitee will, if a claim in
respect thereof is to be made against the Corporation under this
Agreement, notify the Corporation of the commencement thereof;
but the omission so to notify the Corporation will not relieve it
from any liability which it may have to Indemnitee otherwise than
under this Agreement. With respect to any such action, suit or
proceeding as to which Indemnitee notifies the Corporation of the
commencement thereof:
(a) The Corporation will be entitled to
participate therein at its own expense;
(b) Except as otherwise provided below, to the
extent that it may wish, the Corporation jointly with
any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel
satisfactory to Indemnitee. After notice from the
Corporation to Indemnitee of its election so to assume
the defense thereof, the Corporation will not be liable
to Indemnitee under this Agreement for any legal or
other expenses subsequently incurred by Indemnitee in
connection with the defense thereof other than
reasonable costs of investigation or as otherwise
provided below. Indemnitee shall have the right to
employ its own counsel in such action, suit or
proceeding but the fees and expenses of such counsel
incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of
counsel by Indemnitee has been authorized by the
Corporation, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest
between the Corporation and Indemnitee in the conduct
of the defense of such action, or (iii) the Corporation
shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees
and expenses of counsel shall be at the expense of the
Corporation. The Corporation shall not be entitled to
assume the defense of any action, suit or proceeding
brought by or on behalf of the Corporation or as to
which Indemnitee shall have made the conclusion
provided for in (ii) above; and
(c) The Corporation shall not be liable to
indemnify Indemnitee under this Agreement for any
amounts paid in settlement of any action or claim
effected without its prior written consent. The
Corporation shall not settle any action or claim in any
manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent.
Neither the Corporation nor Indemnitee will
unreasonably withhold their consent to any proposed
settlement.
7. Determination of Right to Indemnification. Prior
to indemnifying an Indemnitee pursuant to this Agreement, unless
ordered by a court, the Corporation shall determine that such
Indemnitee is entitled thereto under the terms of this Agreement.
Any determination that a person shall or shall not be indemnified
under this Agreement shall be made by the board of directors by a
majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding, or if such quorum is
not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion or by the stockholders, and such
determination shall be final and binding upon the Corporation;
provided, however, that in the event such determination is
adverse to the Indemnitee, such Indemnitee shall have the right
to maintain an action in any court of competent jurisdiction
against the Corporation to determine whether or not such
Indemnitee is entitled to such indemnification hereunder. If
such court action is successful and the Indemnitee is determined
to be entitled to such indemnification, such Indemnitee shall be
reimbursed by the Corporation for all fees and expenses
(including attorneys' fees) actually and reasonably incurred in
connection with any such action (including without limitation the
investigation, defense, settlement or appeal of such action).
This Agreement shall be applicable to any claim asserted after
the date hereof whether such claim arises from acts or omissions
occurring before or after the date hereof.
8. Certain Definitions. For purposes of this
Agreement, references to "Other Enterprise" shall include without
limitation any other corporation, partnership, joint venture,
trust or employee benefit plan; references to "fine" or "fines"
shall include any excise taxes assessed on Indemnitee with
respect to any employee benefit plan; references to "defense"
shall include investigations of any action, suit or proceeding as
well as appeals in any threatened, pending or completed action,
suit or proceeding and shall also include any defensive assertion
of a cross claim or counterclaim; and references to "serving at
the request of the Corporation" shall include any service as a
director of the Corporation which imposes duties on, or involves
services by, Indemnitee with respect to an employee benefit plan,
its participants or beneficiaries; and if Indemnitee acted in
good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan he shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to
in this Agreement. For the purpose of this Agreement, unless the
board of directors of the Corporation shall determine otherwise,
any Indemnitee who shall serve as an officer or director of any
Other Enterprise of which the Corporation, directly or
indirectly, is a stockholder or creditor, or in which the
Corporation is in any way interested, shall be presumed to be
serving as such director or officer at the request of the
Corporation. In all other instances where any Indemnitee shall
serve as a director, officer, employee or agent of an Other
Enterprise, if it is not otherwise established that such
Indemnitee is or was serving as such director, officer, employee
or agent at the request of the Corporation, the board of
directors of the Corporation shall determine whether such
Indemnitee is or was serving at the request of the Corporation,
and it shall not be necessary to show any actual or prior request
for such service, which determination shall be final and binding
on the Corporation and the Indemnitee seeking indemnification.
9. Continuation and Enforcement of Indemnification.
(a) The Corporation expressly confirms and agrees that
it has entered into this Agreement and assumes the obligations
imposed on the Corporation hereby in order to induce Indemnitee
to continue as a director of the Corporation and acknowledges
that Indemnitee is relying upon this Agreement in continuing in
such capacity. The rights to indemnification and advancement of
expenses created by or provided pursuant to this Agreement are
bargained-for conditions of Indemnitee's acceptance and/or
maintenance of his election or appointment as a director of the
Corporation and such rights shall continue after Indemnitee has
ceased to be a director of the Corporation or a director,
officer, employee or agent of any Other Enterprise and shall
inure to the benefit of Indemnitee's heirs, executors,
administrators and estate.
(b) Indemnitee expressly confirms and agrees that
under no circumstances shall the language or any of the promises
and covenants contained in this Agreement be construed or
interpreted as creating a contract of employment.
(c) To the fullest extent permitted by the laws of the
State of Delaware, Indemnitee shall have the right to maintain an
action in any court of competent jurisdiction to enforce and/or
recover damages for breach of the rights to indemnification
created by or provided pursuant to the terms of this Agreement.
If such court action is successful, Indemnitee shall be reim
bursed by the Corporation for all fees and expenses (including
attorneys' fees) actually and reasonably incurred in connection
with such action (including without limitation the investigation,
defense, settlement or appeal of such action).
10. Non-Exclusivity. The right to indemnification
pursuant to this Agreement shall not be deemed exclusive of any
other rights of indemnification to which Indemnitee may be
entitled under any statute, other agreement, the Certificate of
Incorporation, Bylaws, pursuant to a vote of stockholders or
disinterested directors, insurance policy or otherwise, both as
to actions in his official capacity and as to action in another
capacity while holding his directorship, and shall not limit in
any way any right the Corporation may have to create additional
or independent or supplementary obligations to indemnify
Indemnitee.
11. Severability. Each of the provisions of this
Agreement is a separate and distinct agreement independent of the
others, and if any provision of this Agreement or the application
of any provision hereof to any person or circumstance is held
invalid, illegal or unenforceable by a court for any reason
whatsoever, the remaining provisions of this Agreement and the
application of such provision to other persons or circumstances
shall not be affected thereby. The parties hereto expressly
agree that any provision hereof held invalid, illegal or
unenforceable shall be construed and modified by the court
finding such provision invalid, illegal or unenforceable to the
extent necessary so as to render such provision valid and
enforceable as against all persons or entities and to provide the
maximum possible protection to the person subject to
indemnification hereunder within the bounds of validity, legality
and enforceability. Without limiting the generality of the
foregoing, if the Indemnitee is entitled to indemnification under
this Agreement by the Corporation for some or a portion of the
judgments, amounts paid in settlement, attorneys' fees, ERISA
excise taxes or penalties, fines or other expenses actually and
reasonably incurred by the Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding
(including without limitation, the investigation, defense,
settlement or appeal of such action, suit or proceeding), whether
civil, criminal, administrative, investigative or appellate, but
not, however, for all of the total amount thereof, the
Corporation shall nevertheless indemnify the Indemnitee for the
portion thereof to which such person is entitled.
12. Governing Law. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the
State of Delaware without regard to any of its conflict of law
rules.
13. Modification; Survival. This Agreement
constitutes the entire agreement of the parties relating to the
subject matter hereof and no amendment, modification, termination
or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto. The provisions of this
Agreement shall survive the termination of Indemnitee's service
as a director and/or officer of the Corporation with respect to
actions, suits or proceedings brought or instituted in respect of
any action taken or the failure to take any action occurring
prior to such termination of service.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement and affixed their signatures hereto as of
the date first above written.
\s\ Michael E. Herman
-----------------------------
Michael E. Herman, Indemnitee
CERNER CORPORATION, a Delaware
Corporation
By \s\ Clifford W. Illig
------------------------
Clifford W. Illig, President
[SEAL]
ATTEST:
/s/John V. Donner
- -----------------
Asst Secretary
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made and entered into this 14th day
of May, 1996, between Cerner Corporation, a Delaware corporation
("Corporation"), and John C. Danforth ("Indemnitee").
WITNESSETH:
WHEREAS, Indemnitee is a member of the board of
directors of the Corporation and as such is performing a valuable
service for the Corporation; and
WHEREAS, although Indemnitee has certain rights to
indemnification under the Bylaws and Certificate of Incorporation
of the Corporation, such Bylaws and Certificate of Incorporation
specifically provide that they are not exclusive and thereby
contemplate that the Corporation may enter into agreements with
its officers and directors; and
WHEREAS, the Corporation and Indemnitee desire to enter
into this Agreement to provide to Indemnitee additional rights to
indemnification in consideration of Indemnitee's continued
service to the Corporation as a director;
NOW, THEREFORE, in consideration of Indemnitee's
continued service as a director of the Corporation after the date
hereof and for and in consideration of the premises and the
covenants contained herein, the Corporation and Indemnitee do
hereby promise and agree as follows:
1. Indemnification. The Corporation hereby agrees to
hold harmless and indemnify Indemnitee to the fullest extent
permitted by Section 145, Title 8 of the Delaware Code, as in
effect on the date of the execution of this Agreement and as it
may hereafter be amended, or any other statutory provision
permitting or authorizing such indemnification which is adopted
subsequent to the execution of this Agreement.
2. Maintenance of Insurance. So long as Indemnitee
shall continue to serve as a director of the Corporation (or
shall continue at the request of the Corporation or on behalf of
the Corporation to serve as a director, officer, employee or
agent of any Other Enterprise) and thereafter so long as
Indemnitee shall be subject to any possible claim or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or appellate by reason of the fact
that Indemnitee is or was a director of the Corporation (or is or
was serving in any of said other capacities at the request of the
Corporation), the Corporation may maintain director liability
insurance if such insurance becomes reasonably available and if,
in the business judgment of the board of directors of the
Corporation as it may exist from time to time, both (i) the
premium cost for such insurance is reasonable, and (ii) the
coverage provided by such insurance is not so limited by
exclusions that there is insufficient benefit provided by such
director liability insurance.
3. Additional Indemnification. Subject only to the
provisions in Sections 4, 5, 6 and 7 of this Agreement, the
Corporation hereby further agrees to hold harmless and indemnify
Indemnitee:
(a) Against any and all liabilities and expenses,
including without limitation, judgments, amounts paid
in settlement (provided that such settlement and all
amounts paid in connection therewith are approved in
advance by the Corporation, which approval shall not be
unreasonably withheld), attorneys' fees, ERISA excise
taxes or penalties, fines and other expenses actually
and reasonably incurred by Indemnitee in connection
with any threatened, pending or completed action, suit
or proceeding (including without limitation the
investigation, defense, settlement or appeal of such
action, suit or proceeding), whether civil, criminal,
administrative, investigative or appellate (including
an action by or in the right of the Corporation) to
which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason
of the fact that Indemnitee is, was or at any time
becomes a director of the Corporation, or is or was
serving at the request of the Corporation as a
director, officer, agent or employee of any Other
Enterprise; and
(b) Otherwise to the fullest extent as may be
provided to Indemnitee by the Corporation pursuant to
the non-exclusivity provisions of paragraph 28 of the
Corporation's Bylaws and subsection (f) of Section 145,
Title 8 of the Delaware Code relating to
indemnification.
4. Limitations on Additional Indemnification. (a) The
Corporation will not hold Indemnitee harmless or provide
indemnification pursuant to Section 3 hereof:
(1) except to the extent that the aggregate
amount of losses to be indemnified thereunder exceeds
the amount of such losses for which Indemnitee is
indemnified either pursuant to (i) the Corporation's
Certificate of Incorporation, Bylaws, vote of
stockholders or disinterested directors or other
agreement, (ii) Sections 1 or 2 hereof, (iii) pursuant
to any director liability insurance purchased and
maintained on behalf of Indemnitee by the Corporation,
or (iv) otherwise than pursuant to this Agreement;
(2) in respect of remuneration paid to Indemnitee
if it shall be determined by a final judgment or other
final adjudication that such remuneration was in
violation of law;
(3) on account of any suit for an accounting of
profits made from the purchase or sale by Indemnitee of
securities of the Corporation pursuant to Section 16(b)
of the Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any federal, state or
local law;
(4) on account of Indemnitee's conduct which is
finally adjudged by a court to have been knowingly
fraudulent, deliberately dishonest or willful
misconduct; or
(5) if a final adjudication by a court having
jurisdiction in the matter shall determine that such
indemnification is not lawful.
(b) Notwithstanding any other provisions of this
Agreement, if the Indemnitee is or was serving as a director of
the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of any
Other Enterprise, and has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in Section 3 of this Agreement (including the dismissal of any
such action, suit or proceeding without prejudice), or in defense
of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith to the extent
he has not been fully indemnified therefor otherwise than
pursuant to this Agreement.
5. Advancement of Expenses. Expenses (including
attorneys' fees) actually and reasonably incurred by an
Indemnitee who may be entitled to indemnification hereunder in
defending an action, suit or proceeding, whether civil, criminal,
administrative, investigative or appellate, shall be paid by the
Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such Indemnitee to repay such amount if it shall ultimately be
determined that the Indemnitee is not entitled to indemnification
by the Corporation. Notwithstanding the foregoing, no advance
shall be made by the Corporation if a determination is reasonably
and promptly made by (i) the board of directors by a majority
vote of a quorum consisting of directors who were not parties to
the action, suit or proceeding from which the advancement is
requested, or (ii) if a quorum is not obtainable, or even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the
stockholders, that, based upon the facts known to the board,
counsel or stockholders at the time such determination is made,
such Indemnitee acted in bad faith and in a manner that such
Indemnitee did not believe to be in or not opposed to the best
interest of the Corporation, or, with respect to any criminal
proceeding, that such Indemnitee believed or had reasonable cause
to believe his conduct was unlawful. In no event shall any
advance be made in instances where the board, stockholders or
independent legal counsel reasonably determines that such
Indemnitee deliberately breached his duty to the Corporation or
its stockholders.
6. Notification and Defense of Claim. Promptly after
receipt by Indemnitee of notice of the commencement of any
action, suit or proceeding, Indemnitee will, if a claim in
respect thereof is to be made against the Corporation under this
Agreement, notify the Corporation of the commencement thereof;
but the omission so to notify the Corporation will not relieve it
from any liability which it may have to Indemnitee otherwise than
under this Agreement. With respect to any such action, suit or
proceeding as to which Indemnitee notifies the Corporation of the
commencement thereof:
(a) The Corporation will be entitled to
participate therein at its own expense;
(b) Except as otherwise provided below, to the
extent that it may wish, the Corporation jointly with
any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel
satisfactory to Indemnitee. After notice from the
Corporation to Indemnitee of its election so to assume
the defense thereof, the Corporation will not be liable
to Indemnitee under this Agreement for any legal or
other expenses subsequently incurred by Indemnitee in
connection with the defense thereof other than
reasonable costs of investigation or as otherwise
provided below. Indemnitee shall have the right to
employ its own counsel in such action, suit or
proceeding but the fees and expenses of such counsel
incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of
counsel by Indemnitee has been authorized by the
Corporation, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest
between the Corporation and Indemnitee in the conduct
of the defense of such action, or (iii) the Corporation
shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees
and expenses of counsel shall be at the expense of the
Corporation. The Corporation shall not be entitled to
assume the defense of any action, suit or proceeding
brought by or on behalf of the Corporation or as to
which Indemnitee shall have made the conclusion
provided for in (ii) above; and
(c) The Corporation shall not be liable to
indemnify Indemnitee under this Agreement for any
amounts paid in settlement of any action or claim
effected without its prior written consent. The
Corporation shall not settle any action or claim in any
manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent.
Neither the Corporation nor Indemnitee will
unreasonably withhold their consent to any proposed
settlement.
7. Determination of Right to Indemnification. Prior
to indemnifying an Indemnitee pursuant to this Agreement, unless
ordered by a court, the Corporation shall determine that such
Indemnitee is entitled thereto under the terms of this Agreement.
Any determination that a person shall or shall not be indemnified
under this Agreement shall be made by the board of directors by a
majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding, or if such quorum is
not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion or by the stockholders, and such
determination shall be final and binding upon the Corporation;
provided, however, that in the event such determination is
adverse to the Indemnitee, such Indemnitee shall have the right
to maintain an action in any court of competent jurisdiction
against the Corporation to determine whether or not such
Indemnitee is entitled to such indemnification hereunder. If
such court action is successful and the Indemnitee is determined
to be entitled to such indemnification, such Indemnitee shall be
reimbursed by the Corporation for all fees and expenses
(including attorneys' fees) actually and reasonably incurred in
connection with any such action (including without limitation the
investigation, defense, settlement or appeal of such action).
This Agreement shall be applicable to any claim asserted after
the date hereof whether such claim arises from acts or omissions
occurring before or after the date hereof.
8. Certain Definitions. For purposes of this
Agreement, references to "Other Enterprise" shall include without
limitation any other corporation, partnership, joint venture,
trust or employee benefit plan; references to "fine" or "fines"
shall include any excise taxes assessed on Indemnitee with
respect to any employee benefit plan; references to "defense"
shall include investigations of any action, suit or proceeding as
well as appeals in any threatened, pending or completed action,
suit or proceeding and shall also include any defensive assertion
of a cross claim or counterclaim; and references to "serving at
the request of the Corporation" shall include any service as a
director of the Corporation which imposes duties on, or involves
services by, Indemnitee with respect to an employee benefit plan,
its participants or beneficiaries; and if Indemnitee acted in
good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan he shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to
in this Agreement. For the purpose of this Agreement, unless the
board of directors of the Corporation shall determine otherwise,
any Indemnitee who shall serve as an officer or director of any
Other Enterprise of which the Corporation, directly or
indirectly, is a stockholder or creditor, or in which the
Corporation is in any way interested, shall be presumed to be
serving as such director or officer at the request of the
Corporation. In all other instances where any Indemnitee shall
serve as a director, officer, employee or agent of an Other
Enterprise, if it is not otherwise established that such
Indemnitee is or was serving as such director, officer, employee
or agent at the request of the Corporation, the board of
directors of the Corporation shall determine whether such
Indemnitee is or was serving at the request of the Corporation,
and it shall not be necessary to show any actual or prior request
for such service, which determination shall be final and binding
on the Corporation and the Indemnitee seeking indemnification.
9. Continuation and Enforcement of Indemnification.
(a) The Corporation expressly confirms and agrees that
it has entered into this Agreement and assumes the obligations
imposed on the Corporation hereby in order to induce Indemnitee
to continue as a director of the Corporation and acknowledges
that Indemnitee is relying upon this Agreement in continuing in
such capacity. The rights to indemnification and advancement of
expenses created by or provided pursuant to this Agreement are
bargained-for conditions of Indemnitee's acceptance and/or
maintenance of his election or appointment as a director of the
Corporation and such rights shall continue after Indemnitee has
ceased to be a director of the Corporation or a director,
officer, employee or agent of any Other Enterprise and shall
inure to the benefit of Indemnitee's heirs, executors,
administrators and estate.
(b) Indemnitee expressly confirms and agrees that
under no circumstances shall the language or any of the promises
and covenants contained in this Agreement be construed or
interpreted as creating a contract of employment.
(c) To the fullest extent permitted by the laws of the
State of Delaware, Indemnitee shall have the right to maintain an
action in any court of competent jurisdiction to enforce and/or
recover damages for breach of the rights to indemnification
created by or provided pursuant to the terms of this Agreement.
If such court action is successful, Indemnitee shall be reim
bursed by the Corporation for all fees and expenses (including
attorneys' fees) actually and reasonably incurred in connection
with such action (including without limitation the investigation,
defense, settlement or appeal of such action).
10. Non-Exclusivity. The right to indemnification
pursuant to this Agreement shall not be deemed exclusive of any
other rights of indemnification to which Indemnitee may be
entitled under any statute, other agreement, the Certificate of
Incorporation, Bylaws, pursuant to a vote of stockholders or
disinterested directors, insurance policy or otherwise, both as
to actions in his official capacity and as to action in another
capacity while holding his directorship, and shall not limit in
any way any right the Corporation may have to create additional
or independent or supplementary obligations to indemnify
Indemnitee.
11. Severability. Each of the provisions of this
Agreement is a separate and distinct agreement independent of the
others, and if any provision of this Agreement or the application
of any provision hereof to any person or circumstance is held
invalid, illegal or unenforceable by a court for any reason
whatsoever, the remaining provisions of this Agreement and the
application of such provision to other persons or circumstances
shall not be affected thereby. The parties hereto expressly
agree that any provision hereof held invalid, illegal or
unenforceable shall be construed and modified by the court
finding such provision invalid, illegal or unenforceable to the
extent necessary so as to render such provision valid and
enforceable as against all persons or entities and to provide the
maximum possible protection to the person subject to
indemnification hereunder within the bounds of validity, legality
and enforceability. Without limiting the generality of the
foregoing, if the Indemnitee is entitled to indemnification under
this Agreement by the Corporation for some or a portion of the
judgments, amounts paid in settlement, attorneys' fees, ERISA
excise taxes or penalties, fines or other expenses actually and
reasonably incurred by the Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding
(including without limitation, the investigation, defense,
settlement or appeal of such action, suit or proceeding), whether
civil, criminal, administrative, investigative or appellate, but
not, however, for all of the total amount thereof, the
Corporation shall nevertheless indemnify the Indemnitee for the
portion thereof to which such person is entitled.
12. Governing Law. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the
State of Delaware without regard to any of its conflict of law
rules.
13. Modification; Survival. This Agreement
constitutes the entire agreement of the parties relating to the
subject matter hereof and no amendment, modification, termination
or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto. The provisions of this
Agreement shall survive the termination of Indemnitee's service
as a director and/or officer of the Corporation with respect to
actions, suits or proceedings brought or instituted in respect of
any action taken or the failure to take any action occurring
prior to such termination of service.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement and affixed their signatures hereto as of
the date first above written.
\s\John C. Danforth
----------------------------
John C. Danforth, Indemnitee
CERNER CORPORATION, a Delaware
Corporation
By/s/ Clifford W. Illig
--------------------------
Clifford W. Illig, President
[SEAL]
ATTEST:
/s/John V. Donner
- -------------------------------
Asst Secretary
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made and entered into this 14th day
of May, 1996, between Cerner Corporation, a Delaware corporation
("Corporation"), and Thomas A. McDonnell ("Indemnitee").
WITNESSETH:
WHEREAS, Indemnitee is a member of the board of
directors of the Corporation and as such is performing a valuable
service for the Corporation; and
WHEREAS, although Indemnitee has certain rights to
indemnification under the Bylaws and Certificate of Incorporation
of the Corporation, such Bylaws and Certificate of Incorporation
specifically provide that they are not exclusive and thereby
contemplate that the Corporation may enter into agreements with
its officers and directors; and
WHEREAS, the Corporation and Indemnitee desire to enter
into this Agreement to provide to Indemnitee additional rights to
indemnification in consideration of Indemnitee's continued
service to the Corporation as a director;
NOW, THEREFORE, in consideration of Indemnitee's
continued service as a director of the Corporation after the date
hereof and for and in consideration of the premises and the
covenants contained herein, the Corporation and Indemnitee do
hereby promise and agree as follows:
1. Indemnification. The Corporation hereby agrees to
hold harmless and indemnify Indemnitee to the fullest extent
permitted by Section 145, Title 8 of the Delaware Code, as in
effect on the date of the execution of this Agreement and as it
may hereafter be amended, or any other statutory provision
permitting or authorizing such indemnification which is adopted
subsequent to the execution of this Agreement.
2. Maintenance of Insurance. So long as Indemnitee
shall continue to serve as a director of the Corporation (or
shall continue at the request of the Corporation or on behalf of
the Corporation to serve as a director, officer, employee or
agent of any Other Enterprise) and thereafter so long as
Indemnitee shall be subject to any possible claim or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or appellate by reason of the fact
that Indemnitee is or was a director of the Corporation (or is or
was serving in any of said other capacities at the request of the
Corporation), the Corporation may maintain director liability
insurance if such insurance becomes reasonably available and if,
in the business judgment of the board of directors of the
Corporation as it may exist from time to time, both (i) the
premium cost for such insurance is reasonable, and (ii) the
coverage provided by such insurance is not so limited by
exclusions that there is insufficient benefit provided by such
director liability insurance.
3. Additional Indemnification. Subject only to the
provisions in Sections 4, 5, 6 and 7 of this Agreement, the
Corporation hereby further agrees to hold harmless and indemnify
Indemnitee:
(a) Against any and all liabilities and expenses,
including without limitation, judgments, amounts paid
in settlement (provided that such settlement and all
amounts paid in connection therewith are approved in
advance by the Corporation, which approval shall not be
unreasonably withheld), attorneys' fees, ERISA excise
taxes or penalties, fines and other expenses actually
and reasonably incurred by Indemnitee in connection
with any threatened, pending or completed action, suit
or proceeding (including without limitation the
investigation, defense, settlement or appeal of such
action, suit or proceeding), whether civil, criminal,
administrative, investigative or appellate (including
an action by or in the right of the Corporation) to
which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason
of the fact that Indemnitee is, was or at any time
becomes a director of the Corporation, or is or was
serving at the request of the Corporation as a
director, officer, agent or employee of any Other
Enterprise; and
(b) Otherwise to the fullest extent as may be
provided to Indemnitee by the Corporation pursuant to
the non-exclusivity provisions of paragraph 28 of the
Corporation's Bylaws and subsection (f) of Section 145,
Title 8 of the Delaware Code relating to
indemnification.
4. Limitations on Additional Indemnification. (a) The
Corporation will not hold Indemnitee harmless or provide
indemnification pursuant to Section 3 hereof:
(1) except to the extent that the aggregate
amount of losses to be indemnified thereunder exceeds
the amount of such losses for which Indemnitee is
indemnified either pursuant to (i) the Corporation's
Certificate of Incorporation, Bylaws, vote of
stockholders or disinterested directors or other
agreement, (ii) Sections 1 or 2 hereof, (iii) pursuant
to any director liability insurance purchased and
maintained on behalf of Indemnitee by the Corporation,
or (iv) otherwise than pursuant to this Agreement;
(2) in respect of remuneration paid to Indemnitee
if it shall be determined by a final judgment or other
final adjudication that such remuneration was in
violation of law;
(3) on account of any suit for an accounting of
profits made from the purchase or sale by Indemnitee of
securities of the Corporation pursuant to Section 16(b)
of the Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any federal, state or
local law;
(4) on account of Indemnitee's conduct which is
finally adjudged by a court to have been knowingly
fraudulent, deliberately dishonest or willful
misconduct; or
(5) if a final adjudication by a court having
jurisdiction in the matter shall determine that such
indemnification is not lawful.
(b) Notwithstanding any other provisions of this
Agreement, if the Indemnitee is or was serving as a director of
the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of any
Other Enterprise, and has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in Section 3 of this Agreement (including the dismissal of any
such action, suit or proceeding without prejudice), or in defense
of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith to the extent
he has not been fully indemnified therefor otherwise than
pursuant to this Agreement.
5. Advancement of Expenses. Expenses (including
attorneys' fees) actually and reasonably incurred by an
Indemnitee who may be entitled to indemnification hereunder in
defending an action, suit or proceeding, whether civil, criminal,
administrative, investigative or appellate, shall be paid by the
Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such Indemnitee to repay such amount if it shall ultimately be
determined that the Indemnitee is not entitled to indemnification
by the Corporation. Notwithstanding the foregoing, no advance
shall be made by the Corporation if a determination is reasonably
and promptly made by (i) the board of directors by a majority
vote of a quorum consisting of directors who were not parties to
the action, suit or proceeding from which the advancement is
requested, or (ii) if a quorum is not obtainable, or even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the
stockholders, that, based upon the facts known to the board,
counsel or stockholders at the time such determination is made,
such Indemnitee acted in bad faith and in a manner that such
Indemnitee did not believe to be in or not opposed to the best
interest of the Corporation, or, with respect to any criminal
proceeding, that such Indemnitee believed or had reasonable cause
to believe his conduct was unlawful. In no event shall any
advance be made in instances where the board, stockholders or
independent legal counsel reasonably determines that such
Indemnitee deliberately breached his duty to the Corporation or
its stockholders.
6. Notification and Defense of Claim. Promptly after
receipt by Indemnitee of notice of the commencement of any
action, suit or proceeding, Indemnitee will, if a claim in
respect thereof is to be made against the Corporation under this
Agreement, notify the Corporation of the commencement thereof;
but the omission so to notify the Corporation will not relieve it
from any liability which it may have to Indemnitee otherwise than
under this Agreement. With respect to any such action, suit or
proceeding as to which Indemnitee notifies the Corporation of the
commencement thereof:
(a) The Corporation will be entitled to
participate therein at its own expense;
(b) Except as otherwise provided below, to the
extent that it may wish, the Corporation jointly with
any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel
satisfactory to Indemnitee. After notice from the
Corporation to Indemnitee of its election so to assume
the defense thereof, the Corporation will not be liable
to Indemnitee under this Agreement for any legal or
other expenses subsequently incurred by Indemnitee in
connection with the defense thereof other than
reasonable costs of investigation or as otherwise
provided below. Indemnitee shall have the right to
employ its own counsel in such action, suit or
proceeding but the fees and expenses of such counsel
incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of
counsel by Indemnitee has been authorized by the
Corporation, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest
between the Corporation and Indemnitee in the conduct
of the defense of such action, or (iii) the Corporation
shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees
and expenses of counsel shall be at the expense of the
Corporation. The Corporation shall not be entitled to
assume the defense of any action, suit or proceeding
brought by or on behalf of the Corporation or as to
which Indemnitee shall have made the conclusion
provided for in (ii) above; and
(c) The Corporation shall not be liable to
indemnify Indemnitee under this Agreement for any
amounts paid in settlement of any action or claim
effected without its prior written consent. The
Corporation shall not settle any action or claim in any
manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent.
Neither the Corporation nor Indemnitee will
unreasonably withhold their consent to any proposed
settlement.
7. Determination of Right to Indemnification. Prior
to indemnifying an Indemnitee pursuant to this Agreement, unless
ordered by a court, the Corporation shall determine that such
Indemnitee is entitled thereto under the terms of this Agreement.
Any determination that a person shall or shall not be indemnified
under this Agreement shall be made by the board of directors by a
majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding, or if such quorum is
not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion or by the stockholders, and such
determination shall be final and binding upon the Corporation;
provided, however, that in the event such determination is
adverse to the Indemnitee, such Indemnitee shall have the right
to maintain an action in any court of competent jurisdiction
against the Corporation to determine whether or not such
Indemnitee is entitled to such indemnification hereunder. If
such court action is successful and the Indemnitee is determined
to be entitled to such indemnification, such Indemnitee shall be
reimbursed by the Corporation for all fees and expenses
(including attorneys' fees) actually and reasonably incurred in
connection with any such action (including without limitation the
investigation, defense, settlement or appeal of such action).
This Agreement shall be applicable to any claim asserted after
the date hereof whether such claim arises from acts or omissions
occurring before or after the date hereof.
8. Certain Definitions. For purposes of this
Agreement, references to "Other Enterprise" shall include without
limitation any other corporation, partnership, joint venture,
trust or employee benefit plan; references to "fine" or "fines"
shall include any excise taxes assessed on Indemnitee with
respect to any employee benefit plan; references to "defense"
shall include investigations of any action, suit or proceeding as
well as appeals in any threatened, pending or completed action,
suit or proceeding and shall also include any defensive assertion
of a cross claim or counterclaim; and references to "serving at
the request of the Corporation" shall include any service as a
director of the Corporation which imposes duties on, or involves
services by, Indemnitee with respect to an employee benefit plan,
its participants or beneficiaries; and if Indemnitee acted in
good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan he shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to
in this Agreement. For the purpose of this Agreement, unless the
board of directors of the Corporation shall determine otherwise,
any Indemnitee who shall serve as an officer or director of any
Other Enterprise of which the Corporation, directly or
indirectly, is a stockholder or creditor, or in which the
Corporation is in any way interested, shall be presumed to be
serving as such director or officer at the request of the
Corporation. In all other instances where any Indemnitee shall
serve as a director, officer, employee or agent of an Other
Enterprise, if it is not otherwise established that such
Indemnitee is or was serving as such director, officer, employee
or agent at the request of the Corporation, the board of
directors of the Corporation shall determine whether such
Indemnitee is or was serving at the request of the Corporation,
and it shall not be necessary to show any actual or prior request
for such service, which determination shall be final and binding
on the Corporation and the Indemnitee seeking indemnification.
9. Continuation and Enforcement of Indemnification.
(a) The Corporation expressly confirms and agrees that
it has entered into this Agreement and assumes the obligations
imposed on the Corporation hereby in order to induce Indemnitee
to continue as a director of the Corporation and acknowledges
that Indemnitee is relying upon this Agreement in continuing in
such capacity. The rights to indemnification and advancement of
expenses created by or provided pursuant to this Agreement are
bargained-for conditions of Indemnitee's acceptance and/or
maintenance of his election or appointment as a director of the
Corporation and such rights shall continue after Indemnitee has
ceased to be a director of the Corporation or a director,
officer, employee or agent of any Other Enterprise and shall
inure to the benefit of Indemnitee's heirs, executors,
administrators and estate.
(b) Indemnitee expressly confirms and agrees that
under no circumstances shall the language or any of the promises
and covenants contained in this Agreement be construed or
interpreted as creating a contract of employment.
(c) To the fullest extent permitted by the laws of the
State of Delaware, Indemnitee shall have the right to maintain an
action in any court of competent jurisdiction to enforce and/or
recover damages for breach of the rights to indemnification
created by or provided pursuant to the terms of this Agreement.
If such court action is successful, Indemnitee shall be reim
bursed by the Corporation for all fees and expenses (including
attorneys' fees) actually and reasonably incurred in connection
with such action (including without limitation the investigation,
defense, settlement or appeal of such action).
10. Non-Exclusivity. The right to indemnification
pursuant to this Agreement shall not be deemed exclusive of any
other rights of indemnification to which Indemnitee may be
entitled under any statute, other agreement, the Certificate of
Incorporation, Bylaws, pursuant to a vote of stockholders or
disinterested directors, insurance policy or otherwise, both as
to actions in his official capacity and as to action in another
capacity while holding his directorship, and shall not limit in
any way any right the Corporation may have to create additional
or independent or supplementary obligations to indemnify
Indemnitee.
11. Severability. Each of the provisions of this
Agreement is a separate and distinct agreement independent of the
others, and if any provision of this Agreement or the application
of any provision hereof to any person or circumstance is held
invalid, illegal or unenforceable by a court for any reason
whatsoever, the remaining provisions of this Agreement and the
application of such provision to other persons or circumstances
shall not be affected thereby. The parties hereto expressly
agree that any provision hereof held invalid, illegal or
unenforceable shall be construed and modified by the court
finding such provision invalid, illegal or unenforceable to the
extent necessary so as to render such provision valid and
enforceable as against all persons or entities and to provide the
maximum possible protection to the person subject to
indemnification hereunder within the bounds of validity, legality
and enforceability. Without limiting the generality of the
foregoing, if the Indemnitee is entitled to indemnification under
this Agreement by the Corporation for some or a portion of the
judgments, amounts paid in settlement, attorneys' fees, ERISA
excise taxes or penalties, fines or other expenses actually and
reasonably incurred by the Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding
(including without limitation, the investigation, defense,
settlement or appeal of such action, suit or proceeding), whether
civil, criminal, administrative, investigative or appellate, but
not, however, for all of the total amount thereof, the
Corporation shall nevertheless indemnify the Indemnitee for the
portion thereof to which such person is entitled.
12. Governing Law. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the
State of Delaware without regard to any of its conflict of law
rules.
13. Modification; Survival. This Agreement
constitutes the entire agreement of the parties relating to the
subject matter hereof and no amendment, modification, termination
or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto. The provisions of this
Agreement shall survive the termination of Indemnitee's service
as a director and/or officer of the Corporation with respect to
actions, suits or proceedings brought or instituted in respect of
any action taken or the failure to take any action occurring
prior to such termination of service.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement and affixed their signatures hereto as of
the date first above written.
\s\ Thomas A. McDonnell
-------------------------------
Thomas A. McDonnell, Indemnitee
CERNER CORPORATION, a Delaware
Corporation
By /s/ Clifford W. Illig
--------------------------
Clifford W. Illig, President
[SEAL]
ATTEST:
\s\John V. Donner
- -------------------------------
Asst Secretary
Exhibit 11
<TABLE>
CERNER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Three Months Ended Six Months Ended
June 29, 1996 July 1, 1995 June 29, 1996 July 1, 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net earnings: $ 1,689,000 $ 6,184,000 $ 5,911,000 $ 10,725,000
Weighted average
number of common
and common stock
equivalent shares:
Weighted average
number of outstanding
common shares 32,644,112 28,336,198 32,596,248 28,233,494
Dilutive effect (excess
of number of shares
issuable over number
of shares assumed to be
repurchased with the
proceeds of exercised
options based on
the average market
price during the
period) 1,040,074 1,605,054 1,103,911 1,686,008
---------- ---------- ---------- ----------
33,684,186 29,941,252 33,700,159 29,919,502
Earnings per common and
common stock
equivalent shares: $ .05 $ .21 $ .36 $ .18
----------- ----------- ---------- -----------
Weighted average number
of common and common
stock equivalent shares,
assuming full dilution:
Additional dilutive
effect (reduction in
number of shares
assumed to be
repurchased with the
proceeds of exercised
stock options and
converted warrants
based on the end of the
period market price of
the stock, if higher
than the average price) -- 40,770 -- 69,290
----------- ---------- ---------- ----------
33,684,186 29,982,022 33,700,159 29,988,792
Earnings per common and
common stock equivalent
shares assuming full
dilution: $ .05 $ .21 $ .18 $ .36
----------- ---------- ---------- ----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000804753
<NAME> CERNER CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 8,640,000
<SECURITIES> 101,578,000
<RECEIVABLES> 100,624,000
<ALLOWANCES> 1,121,000
<INVENTORY> 3,718,000
<CURRENT-ASSETS> 312,532,000
<PP&E> 84,770,000
<DEPRECIATION> 25,068,000
<TOTAL-ASSETS> 312,532,000
<CURRENT-LIABILITIES> 45,040,000
<BONDS> 0
0
0
<COMMON> 332,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 312,532,000
<SALES> 99,291,000
<TOTAL-REVENUES> 99,291,000
<CGS> 13,879,000
<TOTAL-COSTS> 59,607,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,263,000)
<INCOME-PRETAX> 9,783,000
<INCOME-TAX> 3,872,000
<INCOME-CONTINUING> 5,911,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,911,000
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
