EXHIBIT 10
RATIONAL SOFTWARE CORPORATION
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RELOCATION BONUS AGREEMENT
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This Relocation Bonus Agreement (the "Agreement") is entered into effective
as of September 10, 1997 (the "Effective Date"), by and between Rational
Software Corporation, a Delaware corporation (the "Company"), and Xxxxx X.
Xxxxxxxxx (the "Employee").
1. Nature of Employment. The Company agrees to employ Employee as
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Senior Vice President, Products. The Company and Employee agree that Employee's
employment with the Company is and shall continue to be "at-will" and may be
terminated at any time with or without cause or notice by either the Company or
Employee.
2. Terms of Relocation Bonus.
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(a) Relocation Bonus. Upon the Effective Date, Employee shall
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receive a relocation bonus of $1,000,000 (the "Relocation Bonus"). The Employee
shall also receive (i) a payment from the Company sufficient to pay Employee's
federal and state income taxes arising from the Relocation Bonus (the "Tax
Payment"), and (ii) an additional payment from the Company sufficient to pay
federal and state income taxes arising from the Tax Payment (the Tax Payment and
this additional payment shall be collectively referred to as the "Gross-Up
Payment"). It is the intention of the parties that the net economic effect of
the payments to the Employee under this subparagraph 2(a), on an after tax
basis, be as if state and federal income taxes did not apply to the Relocation
Bonus.
(b) Voluntary Termination: Termination for Cause. If (i) Employee
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voluntarily terminates his employment with the Company, or (ii) the Company
terminates Employee for Cause, Employee shall be obligated to repay to the
Company all or a portion of the Relocation Bonus and/or the Gross-Up Payment in
accordance with the following schedule:
Portion of Portion of
Relocation Gross-Up
Termination Bonus Payment
Occurs During to be Repaid to be Repaid
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Year 1 $1,000,000 $859,000
Year 2 $1,000,000 $200,000
Year 3 $ 600,000 $ -0-
Year 4 $ 100,000 $ -0-
(c) Other Termination. If Employee's employment is terminated by the
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Company other than for Cause, Employee shall be under no obligation to repay any
portion of the Relocation Bonus or the Gross-Up payment. A reduction in
Employee's base compensation by more than fifteen percent (15%) shall be deemed
a termination by the Company under this section (c). In addition, Employee shall
not be obligated to repay any portion of the Relocation Bonus, or "Gross-Up
Payment" if Employee's employment terminates by reason of Employee's death or
disability.
3. Definition.
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(a) Year. For purposes of this Agreement, the term "Year" shall mean
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the year-long period following the Effective Date, or the year-long period
following the last day of immediately preceding Year, as applicable.
(b) Cause. For purposes of this Agreement, the term "Cause" shall
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mean (i) Employee's conviction by, or entry of a plea of guilty or nolo
contendere in, a court of competent and final, jurisdiction for any intentional
crime which constitutes a felony in the jurisdiction involved; or (ii)
Employee's conviction of an act of fraud or misappropriation of material
property, subsequent to the date hereof, upon the Company, or any of its
respective affiliates.
(c) Disability. The inability of the Employee, due to physical or
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mental impairment to perform the usual and customary duties of his employment.
4. Right to Advice of Counsel. Employee acknowledges that he has had
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the right to consult with counsel and is fully aware of his rights and
obligations under this Agreement.
5. Arbitration and Equitable Relief.
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(a) Except as provided in Section 5(c) below, the Company and
Employee agree that any dispute or controversy arising out of, relating to, or
in connection with this Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof shall be settled by
arbitration to be held in Massachusetts in accordance with the National Rules
for the Resolution of Employment Disputes then in effect of the American
Arbitration Association (the "Rules"). The arbitrator may grant injuctions or
other relief in such dispute or controversy. The decision of the arbitrator
shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.
(b) The Company shall pay all costs and expenses of such arbitration.
(c) The parties may apply to any court of competent jurisdiction for
a temporary restraining order, preliminary injunction or other interim or
conservatory relief as necessary, without breach of this arbitration agreement
and without abridgment of the powers of the arbitrator.
(d) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION 5, WHICH DISCUSSES
ARBITRATION. EMPLOYEE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE
AGREES, EXCEPT AS PROVIDED IN SECTION 5 (c), TO SUBMIT ANY FUTURE CLAIMS ARISING
OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION
THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A
WAIVER OF EMPLOYEE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF
ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP.
6. Reimbursement/Relocation.
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(a) In the event that the Company relocates the Employee, or the
Company terminates the Employee (other than for Cause), the Company will
reimburse Employee for any loss sustained by Employee as a result of Employee's
sale of Employee's home at 00 Xxxxxx Xxxx, Xxxxxxx XX if such sale occurs within
five (5) years of the Effective Date. The amount of the reimbursement to be
paid by Company to Employee shall be the difference between the price Employee
paid to purchase said property and the sales price of said property realized at
said sale.
(b) In the event that the Company relocates the Employee, or the
Company terminates the Employee (other than for Cause), the Company will
reimburse Employee, under the Company's standard relocation policy, for all of
Employee's costs to relocate Employee's family to California if such relocation
occurs within five (5) years of the Effective Date. These costs shall include:
1. The cost of selling Employee's home, including brokerage commission
2. The cost of relocating Employee's family to California
3. The cost of temporary living quarters for Employee's family in
California until Employee obtains permanent housing.
The Company's reimbursement of said costs to Employee under this
subparagraph (b) shall be "grossed-up" at Employee's tax rate, currently
estimated at forty-six percent (46%).
RATIONAL SOFTWARE CORPORATION (Company)
BY:
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XXXXX X. XXXXXXXXX (Employee)
