Q3 2001 KLH Bonus Agreement




Exhibit 10.01- Bonus Agreement between Rational Software Corporation and Kevin J. Haar, dated October 5, 2000



RATIONAL SOFTWARE CORPORATION


RELOCATION  BONUS  AGREEMENT



 
This Relocation Bonus Agreement (the "Agreement") is entered into effective as of October 5, 2000 (the
"Effective Date"), by and between Rational Software Corporation, a Delaware corporation (the "Company"), and
Kevin J. Haar (the " Employee").


1.    Nature of Employment.  The Company agrees to employ Employee as Senior Vice President, Worldwide Field
Operations.  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.





(a)  Relocation Bonus.  Conditioned only upon continued employment with the Company, Employee shall receive a relocation bonus
of $1,500,000 (the "Relocation Bonus") plus an amount equal to interest on the outstanding relocation loan, payable in
equal parts according to the following schedule:


	
Scheduled Payment Dates
	
Bonus Payment Amount
	
Relocation Loan Interest Amount
	
Total Payment

	 	 	 	 
	
October 30, 2001
	
$375,000
	
$96,650
	
$471,650

	
October 30, 2002
	
$375,000
	
$67,500
	
$442,000

	
October 30, 2003
	
$375,000
	
$45,000
	
$420,000

	
October 30, 2004
	
$375,000
	
$22,500
	
$397,500










  

       (b)  Voluntary Termination: Termination for Cause.  If (i) Employee voluntarily terminates his employment with
the Company, or (ii) the Company terminates Employee for "Cause", Employee shall not be eligible for any remaining unpaid
amounts under the Relocation Bonus Agreement.



(c)  Involuntary Termination; Other  Termination.  If the Company terminates Employee's employment without "cause",
or if Employee terminates his employment with "good reason", any outstanding bonus payments will be accelerated to the date
of termination.  In addition, Employee shall not be obligated to repay any portion of the Relocation Loan if Employee's employment
terminates by reason of Employee's death or disability.  


3.  Definition.  



(a)  Cause.  For purposes of this Agreement, the term "Cause" shall 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.




(b)  Good reason. For purposes of this Agreement, the term "good reason" for Employee to terminate his
employment shall consist of a reduction in base compensation; or any transfer demanded of Employee prior to October 30, 2002 that
would necessitate physical relocation of his Massachusetts residence of more than thirty miles.


(c)  Disability.  The inability of the Employee, due to physical or mental impairment to perform the usual and
customary duties of his employment.




4.    Right to Advice of Counsel.  Employee acknowledges that he has had the right to consult with counsel and is
fully aware of his rights and obligations under this Agreement.


5.     Arbitration and Equitable Relief.  


        (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 injunctions 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 THISAGREEMENT, 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 TRAIL AND RELATES TO THE
RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECETS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP.


 

RATIONAL SOFTWARE CORPORATION (Company)

BY:




/s/ Timothy A. Brennan



         

Accepted by:


/s/ Kevin J. Haar

Kevin J. Haar (Employee)