EXHIBIT 10.02
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT, dated as of the _____ day of _____________,
1996, by and between Rational Software Corp., a Delaware corporation
("Rational"), SQA, Inc., a Delaware corporation ("SQA") (Rational and SQA may be
referred to herein collectively as the "Company") and the undersigned employee
(the "Employee") of SQA.
Recitals
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A. The Employee is an employee of SQA; and
B. Rational and SQA, along with a wholly-owned subsidiary of Rational
("Sub") have entered into an Agreement and Plan of Reorganization dated as of
November 12, 1996 (the "Merger Agreement"), which requires, among other things,
SQA to use its best efforts to cause the Employee to enter into this Employment
Agreement in connection with the merger of Sub with and into SQA (the "Merger"),
as described in the Merger Agreement. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Merger Agreement;
NOW, THEREFORE, IT IS HEREBY AGREED by and between the parties hereto as
follows:
1. Effectiveness of Agreement; Employment.
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(a) Effectiveness of Agreement. This Agreement shall become effective
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as of the Effective Time. In the event that the Merger Agreement is terminated,
this Agreement shall be null and void.
(b) Duties. SQA agrees to employ the Employee as __________________
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and the Employee agrees to perform such reasonable responsibilities and duties
as may be required of him by SQA; provided, however, that the SQA Board of
Directors (the "SQA Board") shall have the right to revise such responsibilities
from time to time as the SQA Board may deem appropriate. The Employee shall
carry out his duties and responsibilities hereunder in a diligent and competent
manner and shall devote his full business time, attention and energy thereto.
(c) Employment At-Will. The Company and the Employee acknowledge and
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agree agree that the Employee's employment is at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided in Section 3 of this Agreement, or as may
otherwise be available in accordance with the Company's established employee
plans and policies at the time of termination.
2. Compensation and Benefits.
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(a) Base Compensation. SQA shall pay the Employee as compensation for
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his services a base salary at the annualized rate of $____________. Such salary
shall be subject to applicable tax withholding and shall be paid periodically in
accordance with normal SQA payroll. The annual compensation specified in this
Section 2, together with any increases in such compensation that the SQA Board
may grant from time to time, is referred to in this Agreement as "Base
Compensation."
(b) Employee Benefits. The Employee shall be eligible to participate
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in the employee benefit plans and arrangements which are available or which
become available, in the discretion of Rational's Board of Directors, to other
employees of the Company, subject in each case to the generally applicable terms
and conditions of the plan or program in question and to the determination of
any committee administering such plan or program.
(c) Options. Any options to purchase SQA stock held by the Employee
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immediately prior to the merger ("SQA Options") shall convert into options to
purchase Rational stock pursuant to the Merger Agreement and the applicable SQA
option plans under which the SQA Options were granted. Upon termination of
Employee's employment for any reason, the Employee shall have the right to
exercise all or any portion of the Employee's SQA Option in accordance with the
applicable SQA Stock Option Plan and related option agreements; provided,
however, that if the Employee's employment terminates as a result of Involuntary
Termination, the Employee's SQA Option shall become vested and exercisable, as
of the date of such Termination, as though the Employee had remained employed by
SQA through the Anniversary Date. Notwithstanding the foregoing, if the
Employee is a party to a prior written agreement with SQA that includes
specific provisions relating to the exercisability of the Employee's SQA Options
following a merger and such provisions are more favorable to the Employee than
those provided herein, then the provisions of that prior agreement shall govern.
3. Severance Payments.
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(a) Involuntary Termination. If prior to expiration of the second
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anniversary of the Effective Time ("Anniversary Date"), the Employee's
employment terminates as a result of Involuntary Termination, then, subject to
the Employee's continuing obligations under Section 4, the Employee shall
continue to receive his Base Compensation until the Anniversary Date.
(b) Voluntary Resignation; Termination for Cause. If the Employee's
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employment terminates by reason of Employee's voluntary resignation, or if the
Employee is terminated for Cause, the Employee shall not be entitled to receive
severance or other benefits except for those (if any) as may then be established
under the Company's then-existing severance and benefits plans and policies at
the time of such termination.
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(c) Death or Disability. If the Employee's employment terminates as a
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result of his death or disability, no compensation or payments will be made to
the Employee other than those to which he is entitled under the Company's
existing benefit plans and policies at the time of such termination.
4. Covenants Not to Compete and Not to Solicit.
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(a) Until the Anniversary Date, or such later date as may be provided
under any prior written agreement with SQA, upon the termination of the
Employee's employment with the Company for any reason, the Employee agrees that
he shall not, on his own behalf, or as owner, manager, advisor, principal,
agent, partner, consultant, director, officer, shareholder or employee of any
business entity, or otherwise participate in the development or provision of
goods or services which are directly or indirectly competitive with goods or
services provided (or proposed to be provided) by SQA without the express
written authorization of SQA. The foregoing covenant shall not be deemed to
prohibit Employee from acquiring an investment not more than one percent of the
capital stock of a competing business, whose stock is traded on a national
securities exchange or through the automated quotation system of a registered
securities association.
(b) Until the Anniversary Date, or such later date as may be provided
under any prior written agreement with SQA, upon the termination of employment
with SQA for any reason, the Employee agrees that he shall not solicit, induce,
attempt to hire, or hire any employee of the Company.
(c) The Employee represents that he (i) is familiar with the
foregoing covenants not to compete and not to solicit, and (ii) is fully aware
of his obligations hereunder, including, without limitation, the reasonableness
of the length of time, scope and geographic coverage of these covenants.
5. Definitions. As used herein, the terms
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(a) Cause. "Cause" means the Employee's termination only upon:
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(i) The substantial and continuing failure to render
services to the Company in accordance with the Employee's assigned duties, which
materially and adversely affects or could materially and adversely affect the
business prospects, financial condition, operations, property or affairs of the
Company if such failure to render services to the Company remains uncured for a
period of 30 days following delivery of notice to Employee of such failure;
(ii) The conviction of a felony, either in connection with
the performance of the Employee's obligations to the Company or which shall
adversely affect the Employee's ability to perform such obligations;
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(iii) Gross negligence, dishonesty, breach of fiduciary duty
or material breach of the terms of any confidentiality, non-competition or
developments agreement or any other agreement in favor of the Company;
(iv) The commission of an act of fraud or embezzlement
which results in loss, damage or injury to the Company, whether directly or
indirectly; or
(v) The commission of an act which constitutes unfair
competition with the Company or which induces any customer of the Company to
break a contract with the Company.
(b) Involuntary Termination. "Involuntary Termination" shall mean (i)
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a reduction by the Company in the Employee's Base Compensation as in effect
immediately prior to such reduction; (ii) the relocation of the Employee to a
facility located more than 35 miles from Burlington, Massachusetts, without the
Employee's express written consent; or (iii) any purported termination of the
Employee by the Company which is not effected for disability or for Cause.
6. Notices. Any notice, report or other communication required or
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permitted to be given hereunder shall be in writing to both parties and shall be
deemed given on the date of delivery, if delivered, or three days after mailing,
if mailed first-class mail, postage prepaid, to the following addresses:
If to the Employee, at the address set forth below the Employee's
signature at the end hereof.
If to the Company:
SQA, Inc.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: President
or to such other address as any party hereto may designate by notice given as
herein provided.
7. Governing Law. This Employment Agreement shall be governed by and
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construed and enforced in accordance with the internal substantive laws, and not
the choice of law rules of the Commonwealth of Massachusetts.
8. Amendments. This Employment Agreement shall not be changed or modified
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in whole or in part except by an instrument in writing signed by each party
hereto.
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9. Severability. The invalidity or unenforceability of any provision or
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provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
10. Successors.
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(a) Company's Successors. Any successor to the Company (whether
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direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
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of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successor, heirs, distributees, devisees or legatees.
11. Entire Agreement. Except with respect to specific provisions of any
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prior written agreement between the Employee and SQA relating to (i) the
granting of SQA Options to Employee or the exercisability of SQA Options
following a merger of SQA and (ii) the Employee's agreement not to compete with
SQA or solicit SQA's employees, this Agreement shall supersede and replace all
prior agreements or understandings relating to the subject matter hereof, and no
agreement, representations or understandings (whether oral or written or whether
express or implied) which are not expressly set forth in this Agreement have
been made or entered into by either party with respect to the relevant matter
hereof.
12. Counterparts. This Employment Agreement may be executed in several
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counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
13. Effect of Headings. The section headings herein are for convenience
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only and shall not affect the construction or interpretation of this Employment
Agreement.
14. Definitions. All capitalized terms used herein shall have the meaning
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defined in the Merger Agreement, unless otherwise defined herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
RATIONAL SOFTWARE CORP.
By: ________________________________
SQA, INC.
By: ________________________________
EMPLOYEE
____________________________________
(Signature)
____________________________________
(Print Name)
____________________________________
____________________________________
(Print Address)
____________________________________
(Print Telephone Number)
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