Document:

Q3 2001 KLH Loan Agreement

Exhibit 10.02 - Relocation Loan Agreement between Rational Software Corporation and Kevin J. Haar, dated October 5, 2000

RATIONAL SOFTWARE CORPORATION

RELOCATION  LOAN  AGREEMENT

This Relocation Loan 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 Loan.

(a)  Relocation Loan.  Upon the Effective Date, Employee shall receive a relocation loan of $1,500,000 (the "Relocation
Loan").  Interest will be assessed at a rate of 6% per year.  Repayment of the loan will be made according to the following
schedule:

       

	
Scheduled Payment Dates
	
Principal Payment Amount
	
Interest Amount
	 
	 	 	 	 
	
October 30, 2001
	
$375,000
	
$96,650
	
(from Oct. 5, 2000)

	
October 30, 2002
	
$375,000
	
$67,500
	 
	
October 30, 2003
	
$375,000
	
$45,000
	 
	
October 30, 2004
	
$375,000
	
$22,500
	 

     

       (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 be immediately obligated to repay to the Company the
remaining principal and interest due on the Relocation Loan. 

(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)Q3 2001 KLH Pledge Agreement

Exhibit 10.03 - Pledge Agreement between Rational Software Corporation and Kevin J. Haar

PLEDGE AGREEMENT

This PLEDGE AGREEMENT, dated as of _____________, 2000 (this "Pledge Agreement"), is executed by
KEVIN J. HAAR ("Employee"), in favor of Rational Software Corporation, a Delaware corporation (the
"Company"). 

RECITALS

A.Employee has entered into a relocation loan agreement (the "Loan") in favor of the Company.

B.In order to induce the Company to extend the credit evidenced by the Loan, Employee has agreed to enter into this Pledge
Agreement and to pledge and grant to the Company the security interest in the Pledged Collateral described below.

AGREEMENT

NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Employee hereby agrees with the Company as follows:

1.Definitions and Interpretation.  Unless otherwise defined herein, all other capitalized terms used herein and defined
in the Loan shall have the respective meanings given to those terms in the Loan, and all terms defined in the Massachusetts Uniform
Commercial Code (the "UCC") shall have the respective meanings given to those terms in the UCC.

2.The Pledge.  To secure the Obligations as defined in Section 3 hereof, Employee hereby pledges and assigns to
the Company, and grants to the Company a security interest in, all of Employee's right, title and interest, whether now existing or
hereafter arising in all instruments, certificated and uncertificated securities, money and general intangibles of, relating to or
arising from the following property (the "Pledged Collateral"):

(a)The shares of stock of the Company more particularly described on Schedule A attached hereto (the
"Shares") and any additional shares of stock of the Company hereafter acquired by Employee (collectively with the
Shares, the "Pledged Shares");

(b)All dividends (including cash dividends), other distributions (including stock redemption proceeds), or other property,
securities or instruments in respect of or in exchange for the Pledged Shares, whether by way of dividends, stock dividends,
recapitalizations, mergers, consolidations, split-ups, combinations or exchanges of shares or otherwise;

(c)The real property more particularly described on Schedules B attached hereto (the "Real Property");

(d)All proceeds of the foregoing ("Proceeds"); and

(e)Any other property in which the undersigned has an interest and that is otherwise at any time in the possession or under the
control or recorded on the books of or has been transferred to the Company, or any third party(ies) acting in its behalf or
designated by it, whether expressly as collateral or for safekeeping or for any other or different purpose, including (without
limitation) any property which may be in transit by mail or carrier for any purpose, or covered or affected by any documents in the
Company's possession, or in possession of any such third party(ies), and in any and all property in which the undersigned at any time
has rights and in which at any time a security interest has been transferred to the Company.

In addition, if the aggregate market value of the aforesaid property should at any time in the opinion of the Company or any of
its officers suffer any decline or should any such property be deemed by the Company or any of its officers to be unsatisfactory or
inadequate, or should any such property fail to conform to legal requirements, then and in any such event the undersigned will (to
the satisfaction of the Company) deliver or transfer to the Company additional property or a security interest therein to be subject
to the terms and provisions hereof or make payments to it on account of the Obligations.  Stock dividends and the distributions on
account of any stock or other securities subject to the terms and provisions hereof shall be deemed an increment thereto and if not
received directly by the Company shall be delivered immediately to it by the undersigned in form for transfer.

3. Security for Obligations.  The obligations secured by this Pledge Agreement (the "Obligations")
shall mean and include all loans, advances, debts, liabilities and obligations, howsoever arising, owed by Employee to Company of
every kind and description (whether or not evidenced by any Loan or instrument and whether or not for the payment of money), now
existing or hereafter arising under or pursuant to the terms of the Loan, including, all interest, fees, charges, expenses,
attorneys' fees and costs and accountants' fees and costs chargeable to and payable by Employee hereunder and thereunder, in each
case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of
a proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as amended from time to time
(including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.

4.Delivery of Pledged Collateral.  At the request of the Company, all certificates, deeds or other instruments
representing or evidencing the Pledged Collateral shall be delivered to the Company and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Company.

5. Representations and Warranties.  Employee hereby represents and warrants as follows:

(a)Issuance of Pledged Shares, Absence of Liens, Etc.  The Pledged Shares have been duly authorized and are validly
issued and are fully paid and non-assessable. The Pledged Shares and Real Property are owned by Employee free and clear of any and
all liens, pledges, encumbrances or charges, and Employee has not optioned or otherwise agreed to sell, hypothecate, pledge, or
otherwise encumber or dispose of the Pledged Shares or Real Property.

(b)Security Interest.  The pledge of the Pledged Collateral creates a valid security interest in the Pledged
Collateral, which security interest is a perfected and first priority security interest, securing the payment of the Obligations and
the obligations hereunder.

(c)Restatement of Representations and Warranties.  On and as of the date any property becomes Pledged Collateral, the
foregoing representations and warranties shall apply to such additional Pledged Collateral.

6.Further Assurances.  Employee agrees that at any time and from time to time, at Employee's expense, Employee will
promptly execute and deliver all instruments and documents, including without limitation all Pledged Shares, and take all further
action, that may be necessary or desirable, or that the Company may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Company to exercise and enforce its rights and remedies hereunder
with respect to any Pledged Collateral.

7.Voting Rights; Dividends; Etc.

(a)Rights Prior to an Event of Default.  So long as no Event of Default shall have occurred and be continuing:

(i)Employee shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Shares
or any part thereof for any purpose not inconsistent with the terms of this Pledge Agreement.

(ii)Employee shall be entitled to receive and retain free and clear of the security interest of the Company hereunder any
and all dividends and interest paid in respect of the Pledged Shares, provided, however, that any and all (A) dividends and
interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for any Pledged Shares, (B) dividends and other distributions paid or payable in cash
in respect of any Pledged Shares in connection with a partial or total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in-surplus, and (C) cash paid, payable or otherwise distributed in respect of principal of,
or in redemption of, or in exchange for, any Pledged Shares, shall be, and shall be forthwith delivered to the Company to hold as,
Pledged Collateral and shall, if received by Employee, be received in trust for the benefit of the Company, be segregated from the
other property or funds of Employee and be forthwith delivered to the Company as Pledged Collateral in the same form as so received
(with any necessary endorsement) to be held as part of the Pledged Collateral.

(b)Rights Following an Event of Default.  Upon the occurrence and during the continuance of an Event of Default:

(i)All rights of Employee to exercise the voting and other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 7(a)(i) and to receive the dividends and interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 7(a)(ii) shall cease and all such rights shall thereupon become vested in the Company which
shall thereupon have the sole right, but not the obligation, to exercise such voting and other consensual rights and to receive and
hold as Pledged Collateral such dividends and interest payments.

(ii)All dividends and interest payments which are received by Employee contrary to the provisions of subparagraph (i)
of this Section 7(b) shall be received in trust for the benefit of the Company, shall be segregated from other funds of Employee and
shall be forthwith delivered to the Company as Pledged Collateral in the same form as so received (with any necessary
endorsement).

8. Events of Default.

(a)Event of Default.  An Event of Default shall be deemed to have occurred under this Pledge Agreement upon the
occurrence and during the continuance of an Event of Default under the Loan.

(b)Rights Under the UCC.  In addition to all other rights granted hereby, and by law, the Company shall have, with
respect to the Pledged Collateral, the rights and obligations of a creditor under the UCC.

(c)Sale of Pledged Collateral.  Employee acknowledges and recognizes that the Company may be unable to effect a public
sale of all or a part of the Pledged Shares and may be compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the Pledged Shares for their own account, for investment
and not with a view to the distribution or resale thereof.  Employee acknowledges that any such private sales may be at prices and on
terms less favorable to the Company than those of public sales, and agrees that so long as such sales are made in good faith such
private sales shall be deemed to have been made in a commercially reasonable manner and that the Company has no obligation to delay
sale of any Pledged Shares to permit the issuer thereof to register it for public sale under the Securities Act of 1933, as amended
or under any state securities law. Employee further acknowledges and recognizes that the market for the Real Property may be illiquid
and that there is no guarantee the Company will be able to obtain at least the same price or terms on a sale of the Real Property
that the Employee or any another seller would be able to obtain in the same or other conditions.

(d)Notice, Etc. In any case where notice of sale is required, ten (10) days' notice shall be deemed reasonable notice.
The Company may have resort to the Pledged Collateral or any portion thereof with no requirement on the part of the Company to
proceed first against any other Person or property.

(e)Other Remedies.  Upon the occurrence and during the continuance of an Event of Default, (i) at the request of
the Company, Employee shall assemble and make available to the Company all records relating to the Pledged Collateral at any place or
places specified by the Company, together with such other information as the Company shall request concerning Employee's ownership of
the Pledged Collateral and relationship to the Company; and (ii) the Company or its nominee shall have the right, but shall not be
obligated, to vote or give consent with respect to the Pledged Shares or any part thereof.

9. Lender Appointed Attorney-in-Fact.

Employee hereby appoints the Company as Employee's attorney-in-fact, with full authority in the place and stead of Employee and in
the name of Employee or otherwise, from time to time in the Company's discretion and to the full extent permitted by law to take any
action and to execute any instrument which the Company may deem reasonably necessary or advisable to accomplish the purposes of this
Pledge Agreement in accordance with the terms and provisions hereof, including without limitation, to receive, endorse and collect
all instruments made payable to Employee representing any dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same.

Employee hereby ratifies all reasonable actions that said attorney shall lawfully do or cause to be done by virtue hereof.  This
power of attorney is a power coupled with an interest and shall be irrevocable.  The powers conferred on the Company hereunder are
solely to protect its interests in the Pledged Collateral and shall not impose any duty upon the Company to exercise any such powers.
The Company shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and in no
event shall the Company or any of its officers, directors, employees or agents be responsible to Employee for any act or failure to
act, except for gross negligence or willful misconduct.

10. Miscellaneous.

(a) Notices.  Except as otherwise provided herein, all notices, requests, demands, consents, instructions or other
communications to or upon the Company or Employee under this Agreement or the Loan shall be in writing and telecopied, mailed or
delivered to each party at its telecopier number or address set forth on the signature page hereto (or to such other telecopier
number or address for any party as indicated in any notice given by that party to the other party).  All such notices and
communications shall be effective (a) when sent by Federal Express or other overnight service of recognized standing, on the
Business Day following the deposit with such service; (b) when mailed by registered or certified mail, first class postage
prepaid and addressed as aforesaid through the United States Postal Service, upon receipt; (c) when delivered by hand, upon
delivery; and (d) when telecopied, upon confirmation of receipt.

(b)Nonwaiver.  No failure or delay on the Company's part in exercising any right hereunder shall operate as a waiver
thereof or of any other right nor shall any single or partial exercise of any such right preclude any other further exercise thereof
or of any other right.

(c)Amendments and Waivers.  This Pledge Agreement may not be amended or modified, nor may any of its terms be waived,
except by written instruments signed by Employee and the Company.  Each waiver or consent under any provision hereof shall be
effective only in the specific instances for the purpose for which given.

(d)Assignments.  This Pledge Agreement shall be binding upon and inure to the benefit of the Company and Employee and
their respective successors and assigns; provided, however, that the Company may sell, assign and delegate its rights
and obligations to any affiliate or successor entity of the Company.

(e)Cumulative Rights, etc.  The rights, powers and remedies of the Company under this Pledge Agreement shall be in
addition to all rights, powers and remedies given to the Company by virtue of any applicable law, rule or regulation of any
governmental authority, or any other agreement, all of which rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing the Company's rights hereunder.  Employee waives any right to require the Company to
proceed against any Person or to exhaust any Pledged Collateral or to pursue any remedy in the Company's power.

(f)Payments Free of Taxes, Etc. All payments made by Employee under this Pledge Agreement shall be made by Employee
free and clear of and without deduction for any and all present and future taxes, levies, charges, deductions and withholdings.  In
addition, Employee shall pay upon demand any stamp or other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this Pledge Agreement.  Upon request by the Company, Employee shall
furnish evidence satisfactory to the Company or such the Company that all requisite authorizations and approvals by, and notices to
and filings with, governmental authorities and regulatory bodies have been obtained and made and that all requisite taxes, levies and
charges have been paid.

(g)Partial Invalidity.  If any time any provision of this Pledge Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law or any jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Pledge Agreement nor the legality, validity or enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.

(h)Expenses.  Each of Employee and the Company shall bear its own costs in connection with the preparation, execution
and delivery of, and the exercise of its duties under, this Pledge Agreement and the Loan.  Employee shall pay on demand all
reasonable fees and expenses, including reasonable attorneys' fees and expenses, incurred by the Company with respect to any
amendments or waivers hereof requested by Employee or in the enforcement or attempted enforcement of any of the Obligations or in
preserving any of the Company's rights and remedies (including, without limitation, all such fees and expenses incurred in connection
with any "workout" or restructuring affecting the Loan or any bankruptcy or similar proceeding involving Employee or any of
its Subsidiaries).  As used herein, the term "reasonable attorneys' fees" shall include, without limitation, allocable
costs of the Company's in-house legal counsel and staff.

(i)Governing Law.  This Pledge Agreement shall be governed by and construed in accordance with the laws of the State of
Massachusetts without reference to conflicts of law rules (except to the extent governed by the UCC).

(j)Jury Trial.  EACH OF EMPLOYEE AND THE COMPANY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS PLEDGE AGREEMENT.

* * * * *

IN WITNESS WHEREOF, Employee has caused this Pledge Agreement to be executed as of the day and year first above written.

/s/ Kevin J. Haar

Kevin J. Haar

/s/ Pamela Haar

Pamela Haar

Address:

3144 SUNRISE LANE

St. Louis, MO 63129

Tel.: 314-892-1529

Fax: 314-892-5216

 

ACKNOWLEDGED:

RATIONAL SOFTWARE CORPORATION

By: /s/ Timothy A. Brennan

Name:Timothy A. Brennan

Title: Senior Vice President, Chief Financial Officer, Secretary

18880 Homestead Road

Cupertino, CA  95014

Tel.:  (408) 863-9900

SCHEDULE A

SHARES

	
Certificate

Number
	
Certificate

Date
	
Registered Holder
	
Number of Shares

	
RSC 08607
	
9/22/00
	
KEVIN HAAR & PAMELA HAAR, JT TEN
	
18,532

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

 

 

 

 

SCHEDULE A

REAL PROPERTY

 

 
Residence located at: 3144 SUNRISE LANE  

                      St. Louis, MO 63129

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