Exhibit 10.2


 


PHASE
FORWARD INCORPORATED


 


NON-EMPLOYEE DIRECTORS’

DEFERRED COMPENSATION PROGRAM


 


I.              INTRODUCTION


 


The Phase Forward
Incorporated Non-Employee Directors’ Deferred Compensation Program (the “Program”),
effective April 15, 2009, is established pursuant to the Phase Forward
Incorporated 2004 Stock Option and Incentive Plan (the “Plan”) and permits a
Director of Phase Forward Incorporated (the “Company”) who is not an employee
of the Company (a “Non-Employee Director”) to defer the receipt of shares of
the Company’s common stock, par value $0.01 per share (“Stock”), payable in
connection with the settlement of Restricted Stock Units (“RSUs”) granted to
him under the Plan.


 


II.            ADMINISTRATION


 


The Program shall
be administered by the Compensation Committee of the Board of Directors of the
Company (the “Committee”).  The Committee
shall have complete discretion and authority with respect to the Program and
its application, except as expressly limited by the Program.


 


III.           ELIGIBILITY


 


All Non-Employee
Directors are eligible to participate in the Program.


 


IV.           DEFERRAL OF SETTLEMENT OF RESTRICTED STOCK UNITS


 


A.            Election to Defer.  A Non-Employee
Director may elect in advance to defer the receipt of shares of Stock that are
payable upon settlement of his RSU grant until “separation from service” (as
such term is defined in Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) and as determined in accordance with the presumptions
set forth in 


 

















 


Treasury Regulation Section 1.409A-1(h)).  To make an election to defer such settlement
of RSUs, the Non-Employee Director must execute and deliver to the Committee an
election form indicating his intent to defer the receipt of shares of
Stock.  Except with respect to (x) a
newly elected or appointed Non-Employee Director or (y) in connection with
the establishment of this Program, any election under this paragraph shall
apply only to RSUs that are granted with respect to services to be performed
beginning on or after the start of the next calendar year after such receipt
and acceptance.  A Non-Employee Director
who is serving as a director on the Effective Date may, within 30 days of the
Effective Date, file a deferral election which shall apply to RSUs granted with
respect to services performed subsequent to the election.  A newly elected or appointed Non-Employee
Director, may, prior to becoming a Non-Employee Director, file a deferral
election which shall apply only to RSUs granted with respect to services to be
performed subsequent to the election.  An
election shall remain in effect from year to year, until a new election becomes
effective with respect to RSUs payable in the next calendar year.  A Non-Employee Director may revoke his
deferral election with respect to RSUs that are granted to the Non-Employee
Director in the calendar year beginning after receipt and acceptance by the
Company of his written revocation.


 


B.            Deferred Account.  As of the
date of settlement of a Non-Employee Director’s RSUs, in lieu of his receipt of
shares of Stock, a Non-Employee Director’s deferred account (“Account”) shall
be credited with a number of whole and fractional stock units equal to the
number shares of Stock payable to the Non-Employee Director upon settlement of
his grant of RSUs.


 


C.            Dividend Equivalent Amounts. 
Whenever dividends (other than dividends payable only in shares of
Stock) are paid with respect to Stock, each Account shall be credited 


 


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with a number of whole and fractional stock units
determined by multiplying the dividend value per share by the stock unit
balance of the Account on the record date and dividing the result by the fair
market value of a share of Stock on the dividend payment date.


 


D.            Designation of Beneficiary. 
A Non-Employee Director may designate one or more beneficiaries to
receive payments from his Account in the event of his death.  A designation of beneficiary shall apply to a
specified percentage of a Non-Employee Director’s entire interest in his
Account.  Such designation, or any change
therein, must be in writing and shall be effective upon receipt by the
Company.  If there is no effective
designation of beneficiary, or if no beneficiary survives the Non-Employee
Director, the estate of the Non-Employee Director shall be deemed to be the
beneficiary.  All payments to a
beneficiary or estate shall be made in a lump sum in shares of Stock, with any
fractional share paid in cash.


 


E.             Payment.  A Non-Employee
Director’s Account shall be paid in shares of Stock to the Non-Employee
Director, or his designated beneficiary (or beneficiaries) or estate, in a lump
sum; provided, however, that fractional shares shall be paid in cash.  Such payment shall be made as soon as
practicable after the Non-Employee Director’s “separation from service” (as
such term is defined in Section 409A of the Code and as determined in
accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h)).  Notwithstanding the foregoing, in the event
of an Acquisition (as defined in Section 7(e)(ii) of the Plan) which
also constitutes a change in the ownership or effective control of the Company
or a change in the ownership of a substantial portion of the assets of the
Company (as such terms are defined in Section 409A of the Code and the
regulations and guidance promulgated thereunder), all Accounts under the
Program shall become immediately payable in a lump-sum.


 


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V.            ADJUSTMENTS


 


In the event of a
stock dividend, stock split or similar change in capitalization affecting the
Stock, the Committee shall make appropriate adjustments in the number of stock
units credited to Non-Employee Directors’ Accounts.


 


VI.           AMENDMENT OR TERMINATION OF PROGRAM


 


The Company
reserves the right to amend or terminate the Program at any time, by action of
its Board of Directors, provided that no such action shall adversely affect a
Non-Employee Director’s right to receive compensation earned before the date of
such action or his rights under the Program with respect to amounts credited to
his Account before the date of such action. 
In no event shall the distribution of Accounts to Non-Employee Directors
be accelerated by virtue of any amendment or termination of the Program, except
to the extent permitted by Section 409A of the Code.


 


VII.         MISCELLANEOUS PROVISIONS


 


A.            Notices.  Any notice
required or permitted to be given by the Company or the Committee pursuant to
the Program shall be deemed given when personally delivered or deposited in the
United States mail, registered or certified, postage prepaid, addressed to the
Non-Employee Director at the last address shown for the Non-Employee Director
on the records of the Company.


 


B.            Nontransferability of Rights. 
During a Non-Employee Director’s lifetime, any payment under the Program
shall be made only to him.  No sum or
other interest under the Program shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt by a Non-Employee Director or any beneficiary under the
Program to do so shall be void.  No
interest under the Program shall in any manner be 


 


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liable for or subject to the debts, contracts,
liabilities, engagements or torts of a Non-Employee Director or beneficiary
entitled thereto.


 


C.            Company’s Obligations to Be Unfunded and Unsecured. 
The Accounts maintained under the Program shall at all times be entirely
unfunded, and no provision shall at any time be made with respect to
segregating assets of the Company (including Stock) for payment of any amounts
hereunder.  No Non-Employee Director or
other person shall have any interest in any particular assets of the Company
(including Stock) by reason of the right to receive payment under the Program,
and any Non-Employee Director or other person shall have only the rights of a
general unsecured creditor of the Company with respect to any rights under the
Program.


 


D.            Section 409A.  This Program
is intended to be a deferred compensation plan that complies with the
requirements of  Section 409A of the
Code and should be construed as such.


 


E.             Governing Law.  The terms of
the Program shall be governed, construed, administered and regulated in
accordance with the laws of the State of Delaware.  In the event any provision of this Program
shall be determined to be illegal or invalid for any reason, the other
provisions shall continue in full force and effect as if such illegal or
invalid provision had never been included herein.


 


F.             Effective Date of Program. 
The Program shall become effective as of April 15, 2009.


 


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