**Exhibit 10.2**

 

**PHASEFORWARD INCORPORATED**

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**NON-EMPLOYEE DIRECTORS’DEFERRED COMPENSATION PROGRAM**

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# **I.**              INTRODUCTION

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

 

# **II.**            ADMINISTRATION

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The Program shallbe administered by the Compensation Committee of the Board of Directors of theCompany (the “Committee”).  The Committeeshall have complete discretion and authority with respect to the Program andits application, except as expressly limited by the Program.

 

# **III.**           ELIGIBILITY

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All Non-EmployeeDirectors are eligible to participate in the Program.

 

# **IV.**           DEFERRAL OF SETTLEMENT OF RESTRICTED STOCK UNITS

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

 

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## Treasury Regulation Section 1.409A-1(h)).  To make an election to defer such settlementof RSUs, the Non-Employee Director must execute and deliver to the Committee anelection form indicating his intent to defer the receipt of shares ofStock.  Except with respect to (x) anewly elected or appointed Non-Employee Director or (y) in connection withthe establishment of this Program, any election under this paragraph shallapply only to RSUs that are granted with respect to services to be performedbeginning on or after the start of the next calendar year after such receiptand acceptance.  A Non-Employee Directorwho is serving as a director on the Effective Date may, within 30 days of theEffective Date, file a deferral election which shall apply to RSUs granted withrespect to services performed subsequent to the election.  A newly elected or appointed Non-EmployeeDirector, may, prior to becoming a Non-Employee Director, file a deferralelection which shall apply only to RSUs granted with respect to services to beperformed subsequent to the election.  Anelection shall remain in effect from year to year, until a new election becomeseffective with respect to RSUs payable in the next calendar year.  A Non-Employee Director may revoke hisdeferral election with respect to RSUs that are granted to the Non-EmployeeDirector in the calendar year beginning after receipt and acceptance by theCompany of his written revocation.

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

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

 

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## with a number of whole and fractional stock unitsdetermined by multiplying the dividend value per share by the stock unitbalance of the Account on the record date and dividing the result by the fairmarket value of a share of Stock on the dividend payment date.

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## D.            Designation of Beneficiary. A Non-Employee Director may designate one or more beneficiaries toreceive payments from his Account in the event of his death.  A designation of beneficiary shall apply to aspecified percentage of a Non-Employee Director’s entire interest in hisAccount.  Such designation, or any changetherein, must be in writing and shall be effective upon receipt by theCompany.  If there is no effectivedesignation of beneficiary, or if no beneficiary survives the Non-EmployeeDirector, the estate of the Non-Employee Director shall be deemed to be thebeneficiary.  All payments to abeneficiary or estate shall be made in a lump sum in shares of Stock, with anyfractional share paid in cash.

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

 

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# **V.**            ADJUSTMENTS

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

 

# **VI.**           AMENDMENT OR TERMINATION OF PROGRAM

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

 

# **VII.**         MISCELLANEOUS PROVISIONS

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

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## B.            Nontransferability of Rights. During a Non-Employee Director’s lifetime, any payment under the Programshall be made only to him.  No sum orother interest under the Program shall be subject in any manner toanticipation, alienation, sale, transfer, assignment, pledge, encumbrance orcharge, and any attempt by a Non-Employee Director or any beneficiary under theProgram to do so shall be void.  Nointerest 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 beneficiaryentitled thereto.

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## C.            Company’s Obligations to Be Unfunded and Unsecured. The Accounts maintained under the Program shall at all times be entirelyunfunded, and no provision shall at any time be made with respect tosegregating assets of the Company (including Stock) for payment of any amountshereunder.  No Non-Employee Director orother 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 ageneral unsecured creditor of the Company with respect to any rights under theProgram.

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## D.            Section 409A.  This Programis intended to be a deferred compensation plan that complies with therequirements of  Section 409A of theCode and should be construed as such.

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

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

 

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