**EXHIBIT 10.2**

 

**Senior Officers**

 

**BORLAND SOFTWARE CORPORATION**

 

**INCENTIVE COMPENSATION PLAN**

 

**FOR SENIOR OFFICERS**

 

 

This Incentive Compensation Plan is intended to promote the interests of Borland Software Corporation, a Delaware corporation (the“Corporation”), by providing eligible individuals in the Corporation’s employ with the opportunity to participate in a cash bonus program tied to the attainment of personal and corporate performance objectives which will provide themwith a meaningful incentive to remain in the Corporation’s employ and contribute to the Corporation’s financial success. 

 

 

A. “Actual Bonus” shall mean the bonus actually earned by the Participant for one or more Fiscal Quarters in the Year and/or the fullYear, as applicable. 

 

B. “Base Salary” shallmean the annual rate of base salary in effect for the Participant at the start of each Year in which he or she participates in the Plan. For an individual who first becomes a Participant after the start of the Year, his or her Base Salary shall bethe annual rate of base salary in effect for him or her on the date of entry into the Plan. In the event a Participant’s Base Salary is increased or decreased during the Year, such adjusted salary shall be reflected in the Fiscal Quarterfollowing the Fiscal Quarter in which such adjustments took effect, for purposes of calculating the subsequent bonus entitlements of such Participant under the Plan. Base Salary shall be calculated before deduction of (i) any income or employmenttax withholdings, (ii) any contributions made by the Participant to any Code Section 401(k) salary deferral plan or Code Section 125 cafeteria benefit plan now or hereafter established by the Corporation, (iii) any contributions made by theParticipant to the Corporation’s Employee Stock Purchase Plan (“ESPP”), and (iv) any reduction to the Participant’s rate of base salary as a result of any salary reduction election for the Year made by such Participant pursuantto the Salary Investment Option Grant Program in effect under the Corporation’s 2002 Stock Incentive Plan. The following items of compensation shall **not** be included in Base Salary: (i) all overtime payments, bonuses, commissions,profit-sharing distributions and other incentive-type payments, including cash bonuses received under this Plan, (ii) the matching contributions or deferred profit-sharing contributions made by the Corporation under any Code Section 401(a) or 401(k)plan now or hereafter established and (iii) any and all other contributions (other than Internal Revenue Code Section 401(k) or Section 125 contributions) made on the Participant’s behalf by the Corporation under any employee benefit or welfareplan now or hereafter established. 

 

C. “Board”shall mean the Corporation’s Board of Directors. 

 

D.“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended from time to time. 

 

E. “Annual Bonus Component” shall mean the portion of the Target Bonus that iscontingent upon the Corporation’s attainment of Corporate Performance Objectives for the Year. 

 

F. “Corporate Performance Objectives” shall mean the financial or other performance milestones the Corporation must attain as a conditionto the Participant’s entitlement to his or her Target Bonus for the applicable period. Corporate Performance Objectives may be tied to operating income, revenue, earnings per share (on a GAAP or non-GAAP basis), net profit, return on equity,return on sales, capital or assets and other milestones established from time to time by the Plan Administrator. 

 

G. “Disability” shall mean the inability of the Participant to engage in any substantial gainful activity by reason of any medicallydeterminable physical or mental impairment expected to result in death or to continue for a period of twelve (12) consecutive months or more. 

 

H. “Earn-Out Date” shall mean, for the Quarterly Bonus Component (if applicable), the last business day of each Fiscal Quarter in theYear and shall be the date on which the Participant’s entitlement (if any) to a payout of his or her Actual Bonus for that Fiscal Quarter shall first accrue. “Earn-Out Date” shall mean, for the Annual Bonus Component, the lastbusiness day of the Year and shall be the date on which the Participant’s entitlement (if any) to a payout of his or her Actual Bonus for that Year shall first accrue. 

 

I. “Employee Status” shall mean the individual’s performance of services for the Corporation or anyParticipating Subsidiary as a regular full-time employee. 

 

J.“Executive Officer” shall mean each executive officer of the Corporation who is subject to the reporting and short-swing liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended. 

 

K. “Fiscal Quarter” shall mean each of the fiscal quarterswithin the Year in question under the Plan. 

 

L.“Participant” shall mean each Executive Officer of the Corporation, and each Senior Vice President of the Company who is not an Executive Officer of the Corporation, who participates in the Plan in accordance with the eligibilityprovisions of Article IV. 

 

M. “ParticipatingSubsidiary” shall mean any Subsidiary which has, with the written authorization of the Board, extended the benefits of the Plan to its eligible Participants. The Participating Subsidiaries are listed in the attached Schedule I, whichmay be amended from time to time by the Plan Administrator. 

 

N.“Personal Performance Objectives” shall mean the performance goals that the Participant must personally attain or the performance milestones which his or her business unit must attain as a condition to the Participant’sentitlement to the Quarterly Bonus Component of his or her Target Bonus for the applicable period. 

 

O. “Plan” shall mean this Borland Software Corporation Incentive Compensation Plan, as amended from time to time. 

 

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P. “Plan Administrator” shall mean the Compensation Committee of the Board in itscapacity as administrator of the Plan. 

 

Q. “QuarterlyBonus Component” shall mean the portion of the Target Bonus that is contingent upon (i) the Corporation’s attainment of Corporate Performance Objectives in effect for the Fiscal Quarter, and (ii) the Participant’sattainment of the Personal Performance Objectives in effect for the relevant Fiscal Quarter. 

 

R. “Subsidiary” shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each such corporation (other than the lastcorporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

 

S. “Target Bonus” shall mean the bonus opportunity providedeach Participant for each Year the Plan remains in effect. The Target Bonus shall be an amount equal to the percentage of the Participant’s Base Salary specified as a potential bonus in the Participant’s employment agreement, or otherwisespecified by the Plan Administrator. 

 

T.“Year” shall mean each fiscal year of the Corporation for which the Plan remains in effect. 

 
**III.****ADMINISTRATION OF THE PLAN**
 

A. The Compensation Committee as Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rulesand regulations as it may deem appropriate for proper plan administration and to make such determinations under, and issue such interpretations of, the Plan as it may deem advisable. Decisions of the Plan Administrator shall be final and binding onall parties with an interest in the Plan. 

 

B. The PlanAdministrator shall, during the course of the Year, have the discretionary authority to adjust the established Corporate Performance Objectives for the Year and for a particular Fiscal Quarter should the Plan Administrator determine, in its solediscretion, such adjustments are required in order to maintain the objectives and purposes of the Plan. For example, if the Plan Administrator determines that a merger or acquisition will affect the Corporation’s ability to achieve theCorporate Performance Objectives, the Plan Administrator shall have the discretionary authority to adjust the established Corporate Performance Objectives for the Year and for given Fiscal Quarters should the Plan Administrator determine, in itssole discretion, such adjustments are reasonable in light of the altered financial situation. 

 

C. The Plan Administrator shall have the sole and exclusive responsibility to administer all aspects of the Plan with respect to the Participants; provided, however, that the Plan Administrator may delegate any or allof those responsibilities to the Chairman of the Compensation Committee, in which event such Chairman shall have the authority to administer the Plan with respect to the delegated responsibilities. 

 

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**IV.****ELIGIBILITY**
 

Each individual who is an Executive Officer or Senior Vice President of the Corporation at the start of the Year or who is hired in such capacity withinthe first twenty-one (21) days of that Year shall qualify as a Participant for that Year. Any individual hired as an Executive Officer or Senior Vice President by the Corporation after the first twenty-one (21) days of the Year shall commenceparticipation in the Plan on the first day of the first Fiscal Quarter in that Year in which he or she is such an Executive Officer or Senior Vice President with at least twenty one (21) days of service in such capacity. 

 
**V.****DETERMINATION OF TARGET BONUS**
 

A. The Target Bonus shall be an amount equal to the percentage of the Participant’s Base Salary specified as a potential bonus in theParticipant’s employment agreement with the Corporation, or otherwise specified by the Plan Administrator. The Plan Administrator may change a Participant’s level of participation for a particular Year or Fiscal Quarter to take intoaccount any promotion, demotion or substantial change in job responsibilities. Any such change to a Participant’s level placement shall, at the Plan Administrator’s sole discretion, be made either retroactive to the start of the FiscalQuarter in which such change to Participant’s status occurs or prospective to the start of the next Fiscal Quarter. 

 

B. The Target Bonus shall be comprised of the Quarterly Bonus Component (Article VI) and the Annual Bonus Component (Article VII). The percentages of theQuarterly Bonus Component and the Annual Bonus Component shall be designated by the Plan Administrator. 

 
**VI.****DETERMINATION OF QUARTERLY BONUS COMPONENT**
 

A. If and as designated by the Plan Administrator, a Participant may earn a percentage of his or her Target Bonus on a quarterly basis. The percentage ofthe Target Bonus constituting the Quarterly Bonus Component shall be designated by the Plan Administrator. The Quarterly Performance Component shall be determined as follows: 

 

(i) Within thirty (30) days after the start of the Fiscal Quarter, the Plan Administrator shall establishthe Corporate Performance Objectives for the given Fiscal Quarter, and the Participant shall (in conjunction with his or her manager, which may include the Plan Administrator as applicable) establish Personal Performance Objectives. The Corporationmust achieve the Corporate Performance Objectives for the Fiscal Quarter in order for any quarterly bonus to be earned for that Fiscal Quarter. If the Corporation fails to achieve the Corporate Performance Objectives for the Fiscal Quarter, theParticipant shall not be entitled to the Quarterly Bonus Component for such Fiscal Quarter, regardless of the level of the Participant’s achievement of the Personal Performance Objectives. 

 

(ii) At the end of a Fiscal Quarter, the manager for eachParticipant shall assess the percentage attainment of the Personal Performance Objectives for the Fiscal Quarter. If the Corporation achieves its Corporate Performance Objectives for the Fiscal Quarter, then the Participant shall be entitled to abonus for the Fiscal Quarter equal to the percentage attainment 

 

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of the Personal Performance Objectives multiplied by the Target Bonus constituting the Quarterly Bonus Component for that Fiscal Quarter. 

 

B. In the event that the Corporation fails to achieve the CorporatePerformance Objectives for any Fiscal Quarter (such that the Quarterly Bonus Component is not paid for that quarter), but achieves the Corporate Performance Objectives for the Year, then a Participant shall receive a “make-up” payment ofan amount equal to the missed Quarterly Bonus Component(s). The “make-up” payment shall be paid at the same time as the Annual Bonus Component payment is made. 

 
**VII.****DETERMINATION OF ANNUAL BONUS COMPONENT**
 

If and as designated by the Plan Administrator, a Participant may earn a percentage of his or her Target Bonus on an Annual Basis. The percentage of theTarget Bonus constituting the Annual Bonus Component shall be designated by the Plan Administrator. The Annual Bonus Component shall only be earned if and to the extent the Corporate Performance Objectives for the Year are achieved by theCorporation. The Actual Bonus earned by a Participant under the Plan for a particular Year shall be determined as follows:****

 

A. Within sixty (60) days after the start of the Year, the Plan Administrator shall establish Corporate Performance Objectives for the Year and theformula for determining the percentage of the Target Bonus attainable based on achievement of the Corporation Performance Objectives for the Year. 

 

B. Once the Corporate Performance Objectives for the Year are established, the Participant shall be eligible for the Annual Bonus Component if, and to theextent that, a particular Corporate Performance Objective for the Year is achieved. If the minimum Corporate Performance Objective for the Year as established by the Plan Administrator is not achieved, the Participant shall not be entitled to anyportion of the Annual Bonus Component of the Target Bonus. 

 

C.If the individual becomes a Participant after the start of the Year, then the dollar amount of his or her Annual Bonus Component for that Year shall be pro-rated by multiplying such dollar amount by a fraction, the numerator of which is the numberof calendar months of Employee Status completed by the Participant individual in such Year (rounded to the nearest whole month), and the denominator is twelve (12). 

 
**VIII.****ELIGIBILITY FOR ACTUAL BONUS AND PAYOUT**
 

A. A Participant shall not earn or otherwise become entitled to any Actual Bonus for a particular Fiscal Quarter or Year unless such Participant continuesin Employee Status through the Earn-Out Date for that Fiscal Quarter or Year. However, should a Participant cease Employee Status before the Earn-Out Date in a particular Fiscal Quarter or Year by reason of death or Disability, then the Participant(or his or her estate) shall accordingly, receive a dollar amount, payable in accordance with the payment schedule set forth in Paragraph B below, equal to (i) the portion of the Actual Bonus (if any) such Participant would have otherwise earned forthat Fiscal Quarter based on his or her personal performance for the portion of the Fiscal Quarter 

 

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preceding his or her death or Disability, and (ii) a portion of the Actual Bonus he or she would have otherwise earned for such Year on the basis of theactual percentage attainment of the Corporate Performance Objectives for that Year, prorated from the beginning of that particular Year to the date in which the Participant ceases Employee Status. 

 

B. The Actual Bonus Payment to which each Participant becomes entitled underthe Plan shall be paid as follows: 

 

(i) TheQuarterly Bonus Component (if any) shall be paid within forty-five (45) days after the close of the Fiscal Quarter for which that portion of the Actual Bonus is earned. 

 

(ii) The Annual Bonus Component (if any) shall be paid in one payment within forty-five (45) days after theclose of the Year for which that portion of the Actual Bonus is earned. 

 

Each payment shall be subject to the collection by the Corporation (or the Participating Subsidiary) of all applicable federal, state and local income and employment taxes, and the Participant shall only be paid the amount which remainsafter the collection of those taxes. 

 
**IX.****PLAN DURATION AND AMENDMENT**
 

The Plan shall be in effect for the 2004 Year and for each subsequent fiscal year of the Corporation until the Plan Administrator by appropriateresolution terminates the Plan, or adopts a new Plan. No Participant shall accrue any rights to receive an Actual Bonus for a particular Fiscal Quarter or Year for which the Plan is outstanding until the Earn-Out Date for that Fiscal Quarter orYear. Accordingly, the Plan Administrator in its sole discretion may amend or terminate the Plan at any time prior to the Earn-Out Date in effect for a particular Fiscal Quarter or Year, and any such amendment or termination shall be applicable forthat Fiscal Quarter or Year and each subsequent Fiscal Quarter in that Year. 

 
**X.****NON-TRANSFERABILITY**
 

The right to receive an Actual Bonus under the Plan may not be transferred, assigned, pledged or encumbered. Should a Participant die before receipt ofany Actual Bonus to which he or she becomes entitled under the Plan, then that bonus shall be paid to the Participant’s estate. 

 
**XI.****OTHER INCENTIVE PLANS**
 

The Plan constitutes the full and entire understanding and agreement between the Corporation and each of the Participants with respect to the subjectmatter hereof, and it supersedes all prior or contemporaneous agreements and understandings, whether oral or written, relating to the subject matter of the Plan. 

 

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**XII.****COUNTERPARTS**
 

This Plan and acknowledgements thereof may be executed in any number of counterparts, each of which shall be an original, but all of which together shallconstitute one instrument. 

 
**XIII.****NO EMPLOYMENT RIGHTS**
 

Nothing in the Plan shall confer upon a Participant any right to continue in Executive or Employee Status for any period of specific duration or interferewith or otherwise restrict in any way the rights of the Corporation or any Participating Subsidiary or of the Participant, which rights are hereby expressly reserved by each, to terminate the Executive or Employee Status of the Participant at anytime for any reason, with or without cause. 

 
**XIV.****GOVERNING LAW**
 

The provisions of the Plan shall be governed by and construed in accordance with the laws of the State of California without resort to theconflict-of-laws rules thereof or of any other jurisdiction. 

 

**IN WITNESS WHEREOF,**Borland Software Corporation has caused this instrument to be executed on by its behalf by it duly-authorized officer as of the              dayof                     , 2004. 

 
**BORLAND SOFTWARE CORPORATION**
By:
      
Name: Timothy J. Stevens

Title:   Senior Vice President and General

            Counsel

 

**AGREED AND ACCEPTED**

 

________________________________ 

 

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**Senior Officers**

 

**SCHEDULE I**

 

**LIST OF PARTICIPATING SUBSIDIARIES**

 

**None**