UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 19, 2010
Cerner Corporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
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0-15386
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43-1196944
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(Commission File Number)
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(IRS Employer Identification No.)
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2800 Rockcreek Parkway, North Kansas City,
Missouri
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64117
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(Address of Principal Executive Offices)
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(Zip Code)
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(816) 221-1024
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (
see
General
Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On
January 19, 2010, Cerner Corporation (Cerner) entered into an Interparty Agreement (the
Interparty Agreement) with Kansas Unified Development, LLC (Developer) and OnGoal, LLC
(OnGoal). The Interparty Agreement was entered into in connection with Cerners intended
development of an office campus in the Village West development in Kansas City, Kansas (the Office
Campus), described in Item 8.01, below.
The Interparty Agreement provides that Developer and OnGoal will be responsible for the
repayment of:
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Amounts (Inducement Repayment Amount) required to be paid under the Workforce
Services Training Agreement (the Workforce Agreement) with the Kansas Department of
Commerce if the Unified Government of Wyandotte County/Kansas City, Kansas issues STAR
Bonds for any purpose related to the development and Cerner fails to request the grant
from the Kansas Department of Commerce under the Workforce Agreement for Office Campus
project costs on or prior to January 1, 2012, and
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Amounts (MPI Repayment Amount) required to be paid by Cerner under the Workforce
Agreement in the event Cerner fails to produce the required 4,500 new jobs within the
Office Campus on or before December 31, 2017.
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The Interparty Agreement further provides that Developer and OnGoal will indemnify and hold
Cerner harmless from and against any and all losses, costs, expenses, penalties and damages arising
as a result of (a) Developers failure to pay any sum that it has agreed to pay, or (b) Developers
breach of any agreement with Cerner which creates an obligation on the part of Cerner for which
Developer has agreed to be responsible.
In connection with the development, Developer has acquired the right to place soil on the real
property to be acquired by Cerner to be developed into the Office Campus. The Interparty Agreement
provides that Developer will assume responsibility for the deposit of soil on the property and will
indemnify and hold Cerner harmless for any environmental costs and liabilities resulting from
Developers use of the property or for the presence of hazardous substances on the property.
The Interparty Agreement further provides that within 30 days of the date that the terms and
conditions of the Workforce Agreement are satisfied, such that neither the Inducement Repayment
Amount nor the MPI Repayment Amount are due, Developer or OnGoal will pay Cerner a success fee of
$4.0 million with respect to construction of the Office Campus.
OnGoal is the owner of the Kansas City Wizards professional soccer club which intends to
utilize the Stadium Development described in Item 8.01, below. Developer is a wholly-owned
subsidiary of Kansas Stadium Partners, Inc. (Kansas Stadium Partners). OnGoal and Kansas Stadium
Partners are controlled by Neal Patterson, Chairman of the Board and Chief Executive Officer of
Cerner, and Cliff Illig, Vice Chairman of Cerner.
The above description is qualified in its entirety by reference to the Interparty Agreement
which is filed with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by
reference.
Item 8.01. Other Events.
On January 19, 2010, Cerner entered into an agreement with the Unified Government of Wyandotte
County/Kansas City, Kansas to accept the transfer of a parcel of land intended to be the site of
the development of an office campus in the Village West development in Kansas City, Kansas. The
purchase price for the land will be paid by Developer. On January 20, 2010, Cerner entered into a
Workforce Agreement with the Kansas Department of Commerce, which contains incentives, as well as
certain
repayment obligations, some of which are described above in
Item 1.01. On January 19,
2010, Cerner entered into the Interparty Agreement described above in Item 1.01. These
transactions are the first step in a series of transactions which are expected to involve both the
development of the Office Campus and an 18,000 seat, multi-sport stadium and related recreational
athletic complex (the Stadium Development).
Item 9.01. Financial Statements and Exhibits
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99.1
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Interparty Agreement dated January 19, 2010.
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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, hereunto duly authorized.
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Date: January 22, 2010
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CERNER CORPORATION
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By:
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/s/ Marc G. Naughton
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Marc G. Naughton, Senior Vice President
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and Chief Financial Officer
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Exhibit 99.1
INTERPARTY AGREEMENT
THIS INTERPARTY AGREEMENT (the
Agreement
) is entered into as of January 19, 2010 by and
between
Kansas Unified Development, LLC
, a Kansas limited liability company (
Developer
), OnGoal,
LLC, a Kansas limited liability company (
OnGoal
) and
Cerner Corporation
, a Delaware corporation
(
Cerner
).
RECITALS
WHEREAS, Developer, the Unified Government of Wyandotte County/Kansas City, Kansas, a
municipal corporation (the
UG
), and Zimmer Real Estate Services, Inc., a Missouri corporation
(
Zimmer
), have entered into that certain Multi-Sport Stadium Specific Stadium SVA, dated January
19, 2010 (the
SVA
), pursuant to which Developer is to develop, among other things, a multi-sport
stadium (the
Stadium
) and youth soccer fields in the City of Kansas City, Wyandotte County,
Kansas (the
Development
), a diagram of which Development is attached hereto as
Exhibit A
;
WHEREAS, a certain portion of the Development is to be developed as an office campus, which is
located as specifically described on
Exhibit B
, attached hereto (the
Property
), which the
Developer arranged to be transferred to Cerner (the
Office Campus
);
WHEREAS, the SVA, and that certain the Land Transfer and Specific Venture Agreement dated
January 19, 2010 between Developer, Cerner, UG and Zimmer (the
Transfer Agreement
), each contain
certain requirements to provide full time equivalent employment positions (
FTEs
) within the
Office Campus, upon a schedule set forth therein (the
FTE Requirements
);
WHEREAS, Cerner has entered into that certain Workforce Services Training Agreement, dated
January 20, 2010, by and between the Kansas Department of Commerce (the
State
) and Cerner (the
Workforce Agreement
);
WHEREAS, the Workforce Agreement contains incentives, as well as three distinct repayment
obligations that may arise as a result of a failure to meet certain job and payroll thresholds;
WHEREAS, pursuant to the Workforce Agreement, if the UG issues STAR Bonds (as defined in the
SVA) for any purpose relating to the Development, and Cerner fails to request any MPI Payments (as
defined in the Workforce Agreement) on or prior to January 1, 2012, Cerner shall be required to pay
to the State an Inducement Repayment Amount (as defined in the Workforce Agreement);
WHEREAS, the Workforce Agreement contains provisions by which Cerner is required to create
4,500 New Jobs (as defined in the Workforce Agreement) within the Office Campus on or before the
Job Commitment Date (as defined in the Workforce Agreement), and the consequence for failing to
produce the required number of New Jobs on or before the Job Commitment Date is that Cerner shall
pay to the State an MPI Repayment Amount (as defined in the Workforce Agreement);
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WHEREAS, the Workforce Agreement provides that if, by the Expiration Date (as defined in
Workforce Agreement), Cerner fails to create Kansas state income tax withholdings within the Office
Campus (the
Withholdings
) in the amount of the Gross Funded Cost (approximately $64,864,554),
then Cerner shall be required to pay to the State the Withholding Tax Repayment Amount (as defined
in the Workforce Agreement). The Withholding Tax Repayment Amount, the Inducement Repayment Amount,
and the MPI Repayment Amount shall be referred to herein collectively as the
Repayment Amounts
);
WHEREAS, the enforcement and payment of the MPI Repayment Amount and the Withholding Tax
Penalty are cumulative pursuant to the terms of the Workforce Agreement;
WHEREAS, Cerner and Developer desire to set forth the terms herein pursuant to which the
parties shall agree on the payment of the Penalties, as well as any other terms and provisions in
connection therewith.
NOW THEREFORE, for and in consideration of the Premises, Cerners agreement to enter into the
Land Transfer Agreement and construct the Office Campus, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1.
Obligations for Penalties
. Cerner and Developer shall be responsible for the
payment of Repayment Amounts as set forth below:
a.
Inducement Repayment Amount
. In the event that any Inducement Repayment
Amount is incurred, it shall be the obligation of Developer to pay such Inducement Repayment
Amount on behalf of Cerner, as and when such amount is due pursuant to the terms of the
Workforce Agreement.
b.
MPI Repayment Amount
. In the event that any MPI Repayment Amount is
incurred, it shall be the obligation of Developer to pay such MPI Repayment Amount on behalf
of Cerner, as and when such amount is due pursuant to the terms of the Workforce Agreement.
c.
Withholding Tax Penalty
. In the event that any Withholding Tax Repayment
Amount is incurred, it shall be the obligation of Cerner to pay such Withholding Tax
Repayment Amount.
d.
OnGoal Obligation
. In the event that Developer does not pay the Inducement
Repayment Amount or the MPI Repayment Amount, as and when due, it shall be the obligation of
OnGoal to pay such amount on behalf of Developer.
2.
Hold Harmless
. Developer and OnGoal hereby agree to indemnify and hold Cerner
harmless from and against any and all losses, costs, expenses, penalties, and damages arising as a
result of: (a) Developers failure to pay any sum that is the responsibility of Cerner, or is
attributable to Cerners construction of the Office Campus or employment of FTEs, but for which
Developer has agreed to be responsible, either hereunder or pursuant to the SVA, Transfer
Agreement, Workforce Agreement, or otherwise; or, (b) Developers breach of any agreement to which
Cerner, Developer or OnGoal is a party (including this Agreement) and which breach
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creates an obligation on the part of Cerner, at law, equity or otherwise, to make any payment
or become liable for any amount, for which Developer has agreed to be responsible, either hereunder
or pursuant to the SVA, Transfer Agreement, Workforce Agreement, or otherwise.
3.
Soil Placement Right
. Pursuant to that certain License Agreement, dated January
20, 2010, by and between Developer and the UG, Developer has the right to place soil on the
Property, pursuant to the terms thereof. Developer hereby agrees that by depositing soil on the
Property, Developer shall assume responsibility for the costs of any remediation of any
environmental conditions upon the Property. Further, Developer shall not store, locate, generate,
produce, process, treat, transport, incorporate, discharge, emit, release, deposit or dispose of
any Hazardous Substance in, upon, under, over or from the Property in violation of any
Environmental Regulation; shall not permit any Hazardous Substance to be stored, located,
generated, produced, processed, treated, transported, incorporated, discharged, emitted, released,
deposited, disposed of or to escape therein, thereupon, thereunder, thereover or therefrom in
violation of any Environmental Regulations; shall cause all Hazardous Substances to be properly
removed therefrom and properly disposed of in accordance with all applicable Environmental
Regulations; shall not install or permit to be installed any underground storage tank therein or
thereunder in violation of any Environmental Regulation; and shall comply with all other
Environmental Regulations. Developer and OnGoal shall indemnify Cerner against, shall hold Cerner
harmless from, and shall reimburse Cerner for, any and all claims, demands, judgments, penalties,
fines, liabilities, costs, damages and expenses, including court costs and attorneys fees incurred
by Cerner (prior to trial, at trial and on appeal) in any action against or involving Cerner,
resulting from any breach of the foregoing covenants or from the discovery of any Hazardous
Substance, in, upon, under or over, or emanating from, the Property, whether or not Developer is
responsible therefor, it being the intent of the parties hereto that Cerner shall have no liability
or responsibility for damage or injury to human health, the environment or natural resources caused
by, for abatement and/or clean-up of, or otherwise with respect to, Hazardous Substances. The
foregoing covenants contained in this Section shall be deemed continuing covenants, representations
and warranties for the benefit of Cerner and any successors and assigns of Cerner, and shall
survive the termination, satisfaction or release of this Agreement, or any other instrument.
For purposes of this Section 4 the following terms shall be defined as follows:
(a)
Environmental Regulation
means any and all present and future laws,
statutes, ordinances, rules, regulations and orders of any governmental authority having
jurisdiction over the parties hereto or any portion of the Site or the Site and pertaining
to the protection of human health, hazardous substances, pollution, or the environment,
including, without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, and as the same may be further amended from time to time (hereinafter collectively
called CERCLA).
(b)
Hazardous Substance
means any substance that is defined or listed as a hazardous
or toxic substance and which is regulated as such or may form the basis of liability under
any present or future Environmental Regulation, or that is otherwise
prohibited or subject to investigation or remediation under any present or future
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Environmental Regulation because of its hazardous, toxic, or dangerous properties,
including, without limitation, (i) any substance that is a hazardous substance under
CERCLA, and (ii) petroleum, natural gas, natural gas liquids, liquefied natural gas, and
synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas), only to
the extent that the constituents of such synthetic gas are released or threatened to be
released into the environment.
4.
Site Board
. Pursuant to that certain Correction Master Declaration of Operation
and Easements, Covenants, Conditions, and Restrictions, dated November 1, 2001, as amended (the
Declaration
), the owner of the Property possesses certain rights in connection with electing and
removing a Site Board Member, as the same is described in the Declaration, which Site Board Members
(as comprising the Site Board) have certain approval rights in connection with the Declaration and
the development of property within the Village West development. As part of any disposition of the
Property by Cerner, Cerner shall use good faith efforts to include in any sale contract, a
provision requiring the transferee of the Property to delegate to Developer all of said
transferees rights under the Declaration, as the owner of the Property, for the election and
removal of the Site Board Member in connection with the Property.
5.
Success Fee
. Within thirty (30) days of the date that the terms and conditions of
the Workforce Agreement are satisfied, such that neither the Inducement Repayment Amount nor the
MPI Repayment Amount are due pursuant to the terms of the Workforce Agreement, Developer or OnGoal
shall pay to Cerner the sum of Four Million and No/100 Dollars ($4,000,000) as additional
consideration for Cerners construction of the Office Campus on the Property (or the Swap Property,
as the case may be).
6.
Counterpart Signatures
. This Agreement may be executed in several counterparts,
each of which shall be fully effective as an original and all of which together shall constitute
one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto hereby execute this Term Sheet as of the date
first set forth above.
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Kansas Unified Development, LLC
, a Kansas limited
liability company
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By:
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/s/ Robb Heineman
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Name:
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Robb Heineman
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Title:
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Manager
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OnGoal, LLC,
a Kansas limited liability company
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By:
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/s/ Robb Heineman
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Name:
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Robb Heineman
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Title:
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Chief Executive Officer
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Cerner Corporation
, a Delaware corporation
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By:
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/s/ Marc G. Naughton
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Name:
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Marc G. Naughton
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Title:
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Chief Financial Officer
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EXHIBIT A
Depiction of Development
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EXHIBIT B
Legal Description of Property
All that part of Lot 1A, Block C, Tourism District, a subdivision of record, in the City of Kansas
City, Wyandotte County, Kansas, being more particularly described as follows: beginning at the
northeast corner of said Lot 1A, thence South 02 degrees 22 minutes 38 seconds East, with the east
line of said Lot 1A, and with the west right-of-way line of Interstate 435, a distance of 1282.56
feet; thence South 35 degrees 40 minutes 27 seconds West, continuing with the east line of said Lot
1A and the west right-of-way line of Interstate 435, a distance of 739.95 feet; thence North 69
degrees 45 minutes 46 seconds West, and no longer with the east line of said Lot 1A and the east
right-of-way line of Interstate 435, a distance of 580.05 feet to the northeasterly corner of Lot
1B, Block C, Tourism District; thence North 54 degrees 30 minutes 03 seconds West, with the
northerly line of said Lot 1B, a distance of 607.48 feet to the northwesterly corner of said Lot
1B, said point being on the west line of said Lot 1A; thence North 02 degrees 20 minutes 45 seconds
West, with the west line of said Lot 1A, a distance of 1314.28 feet to the northwest corner of said
Lot 1A, said point being on the south right-of-way line of State Avenue; thence North 52 degrees 46
minutes 06 seconds East, with the north line of said Lot 1A, and with the south right-of-way line
of State Avenue, a distance of 178.52 feet; thence North 87 degrees 42 minutes 44 seconds East,
continuing with the north line of said Lot 1A and the south right-of-way line of State Avenue, a
distance of 187.79 feet; thence North 02 degrees 17 minutes 16 seconds West, continuing with the
north line of said Lot 1A and the south right-of-way line of State Avenue, a distance of 20.00
feet; thence North 87 degrees 42 minutes 44 seconds East, continuing with the north line of said
Lot 1A and the south right-of-way line of State Avenue, a distance of 759.94 feet; thence South 68
degrees 36 minutes 43 seconds East, continuing with the north line of said Lot 1A and the south
right-of-way line of State Avenue, a distance of 410.89 feet to the point of beginning. The above
described tract contains 2,553,516 square feet, or 58.62 acres.
The above description and land area are for informational purposes and should be verified with a
proper field survey at the time of land transaction.
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