Document:

exv10w2

EXHIBIT 10.2

PROGRESS SOFTWARE CORPORATION

1994

STOCK INCENTIVE PLAN

SECTION 1. General Purpose of the Plan; Definitions

     The name of the plan is the Progress Software Corporation 1994 Stock Incentive Plan
(the “Plan”). The purpose of the Plan is to encourage and enable the officers, employees and
directors of, and other persons providing services to, Progress Software Corporation (the
“Company”) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary interest in the
Company. It is anticipated that providing such persons with a direct stake in the Company’s
welfare will assure a closer identification of their interests with those of the Company,
thereby stimulating their efforts on the Company’s behalf and strengthening their desire to
remain with the Company.

     The following terms shall be defined as set forth below:

     “Act” means the Securities Exchange Act of 1934, as amended.

     “Award” or “Awards”, except where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Conditioned Stock
Awards, Unrestricted Stock Awards, Performance Share Awards and Stock Appreciation Rights.

     “Board” means the Board of Directors of the Company.

     “Cause” means (i) any material breach by the participant of any agreement to which the
participant and the Company are both parties, (ii) any act or omission to act by the
participant which may have a material and adverse effect on the Company’s business or on the
participant’s ability to perform services for the Company, including, without limitation, the
commission of any crime (other than ordinary traffic violations), or (iii) any material
misconduct or material neglect of duties by the participant in connection with the business or
affairs of the Company or any affiliate of the Company.

     “Change of Control” shall have the meaning set forth in Section 15.

     “Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and
related rules, regulations and interpretations.

     “Conditioned Stock Award” means an Award granted pursuant to Section 6.

     “Committee” shall have the meaning set forth in Section 2.

     “Disability” means disability as set forth in Section 22(e)(3) of the Code.

     “Effective Date” means the date on which the Plan is approved by stockholders as set forth in
Section 17.

     “Eligible Person” shall have the meaning set forth in Section 4.

     “Fair Market Value” on any given date means the closing price per share of the Stock on
such date as reported by a nationally recognized stock exchange, or, if the Stock is not
listed on such an exchange, as reported by NASDAQ, or, if the Stock is not quoted on NASDAQ,
the fair market value of the Stock as determined by the Committee.

     “Incentive Stock Option” means any Stock Option designated and qualified as an “incentive
stock option” as defined in Section 422 of the Code.

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     “Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

     “Normal Retirement” means retirement from active employment with the Company and its
Subsidiaries in accordance with the retirement policies of the Company and its Subsidiaries then in
effect.

     “Outside Director” means any director who (i) is not an employee of the Company or of any
“affiliated group,” as such term is defined in Section 1504(a) of the Code, which includes the
Company (an “Affiliate”), (ii) is not a former employee of the Company or any Affiliate who is
receiving compensation for prior services (other than benefits under a tax-qualified retirement
plan) during the Company’s or any Affiliate’s taxable year, (iii) has not been an officer of the
Company or any Affiliate and (iv) does not receive remuneration from the Company or any Affiliate,
either directly or indirectly, in any capacity other than as a director.

     “Option” or “Stock Option” means any option to purchase shares of Stock granted pursuant to
Section 5.

     “Performance Share Award” means an Award granted pursuant to Section 8.

     “Stock” means the Common Stock. $.01 par value per share, of the Company, subject to
adjustments pursuant to Section 3.

     “Stock Appreciation Right” means an Award granted pursuant to Section
9.

     “Subsidiary” means a subsidiary as set forth in Section 424 of the
Code.

     “Unrestricted Stock Award” means Awards granted pursuant to
Section 7.

			
	SECTION 2.	 	Administration of Plan; Committee Authority to Select Participants and Determine
Awards.

     (a) Committee. The Plan shall be administered by a Committee (the “Committee”) consisting
of at least two Outside Directors. None of the members of the Committee shall have been granted any
Award under this Plan (other than pursuant to Section 7(c)) or any other stock option plan of the
Company (other than the Company’s 1994 Directors’ Stock Option Plan) within one year prior to
service on the Committee. It is the intention of the Company that the Plan shall be administered by
“disinterested persons” within the meaning of Rule 16b-3 under the Act, but the authority and
validity of any act taken or not taken by the Committee shall not be affected if any person
administering the Plan is not a disinterested person. Except as specifically reserved to the Board
under the terms of the Plan, the Committee shall have full and final authority to operate, manage
and administer the Plan on behalf of the Company. Action by the Committee shall require the
affirmative vote of a majority of all members thereof.

     (b) Powers of Committee. The Committee shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and authority:

     (i) to select the officers and other employees of, and persons providing services to, the
Company and its Subsidiaries to whom Awards may from time to time be granted;

     (ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock
Options, Non-Qualified Stock Options, Conditioned Slock, Unrestricted Stock, Performance
Shares and Stock
Appreciation Rights, or any combination of the foregoing, granted to any one or more
participants;

     (iii) to determine the number of shares to be covered by any Award;

     (iv) to determine and modify the terms and conditions, including restrictions, not
inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ
among individual Awards and participants, and to approve the form of written instruments
evidencing the Awards;

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     (v) to accelerate the exercisability or vesting of all or any portion of any Award;

     (vi) subject to the provisions of Section 5(a)(ii), to extend the period in which any
outstanding Stock Option or Stock Appreciation Right may be exercised:

     (vii) to reduce the per-share exercise price of any outstanding Stock Option or Stock
Appreciation Right (but not to less than 85% of Fair Market Value on the date the reduction is
made);

     (viii) to determine whether, to what extent, and under what circumstances Stock and other
amounts payable with respect to an Award shall be deferred either automatically or at the
election of the participant and whether and to what extent the Company shall pay or credit
amounts equal to interest (at rates determined by the Committee) or dividends or deemed
dividends on such deferrals; and

     (ix) to adopt, alter and repeal such rules, guidelines and practices for administration
of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the
terms and provisions of the Plan and any Award (including related written instruments); to
make all determinations it deems advisable for the administration of the Plan; to decide all
disputes arising in connection with the Plan; and to otherwise supervise the administration of
the Plan.

     All decisions and interpretations of the Committee shall be binding on all persons, including
the Company and Plan participants.

SECTION 3. Shares Issuable under the Plan; Mergers; Substitution.

     (a) Shares Issuable. The maximum number of shares of Stock with respect to which Awards
(including Stock Appreciation Rights) may be granted under the Plan shall be 1,000,000. For
purposes of this limitation, the shares of Stock underlying any Awards which are forfeited,
cancelled, reacquired by the Company or otherwise terminated (other than by exercise) shall be
added back to the shares of Stock with respect to which Awards may be granted under the Plan so
long as the participants to whom such Awards had been previously granted received no benefits of
ownership of the underlying shares of Stock to which the Award related. Subject to such overall
limitation, any type or types of Award may be granted with respect to shares, including Incentive
Stock Options. Shares issued under the Plan may be authorized but unissued shares or shares
reacquired by the Company.

     (b) Limitation on Awards. In no event may any Plan participant be granted Awards (including
Stock Appreciation Rights) with respect to more than 100,000 shares of Slock in any calendar year.
The number of shares of Stock relating to an Award granted to a Plan participant in a calendar
year that is subsequently forfeited, cancelled or otherwise terminated shall continue to count
toward the foregoing limitation in such calendar year. In addition, if the exercise price of an
Award is subsequently reduced, the transaction shall be deemed a cancellation of the original
Award and the grant of a new one so that both transactions shall count toward the maximum shares
issuable in the calendar year of each respective transaction.

     (c) Stock Dividends, Mergers, etc. In the event that after approval of the Plan by the
stockholders of the Company in accordance with Section 17, the Company effects a stock dividend,
stock split or similar change in capitalization affecting the Stock, the Committee shall make
appropriate adjustments in (i) the number and kind of shares of stock or securities with respect
to which Awards may thereafter be granted (including without limitation the limitations set forth
in Sections 3(a) and (b) above), (ii) the number and kind of shares remaining subject to
outstanding Awards, and (iii) the option or purchase price in respect of
such shares. In the event of any merger, consolidation, dissolution or liquidation of the
Company, the Committee in its sole discretion may, as to any outstanding Awards, make such
substitution or adjustment in the aggregate number of shares reserved for issuance under the Plan
and in the number and purchase price (if any) of shares subject to such Awards as it may determine
and as may be permitted by the terms of such

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transaction, or accelerate, amend or terminate such Awards upon such terms and conditions as it
shall provide (which, in the case of the termination of the vested portion of any Award, shall
require payment or other consideration which the Committee deems equitable in the circumstances),
subject, however, to the provisions of Section 1 5.

     (d) Substitute Awards. The Committee may grant Awards under the Plan in substitution for
stock and stock based awards held by employees of another corporation who concurrently become
employees of the Company or a Subsidiary as the result of a merger or consolidation of the
employing corporation with the Company or a Subsidiary or the acquisition by the Company or a
Subsidiary of property or stock of the employing corporation. The Committee may direct that the
substitute awards be granted on such terms and conditions as the Committee considers appropriate
in the circumstances. The shares which may be delivered under such substitute awards shall be in
addition to the maximum number of shares provided for in Section 3(a) only to the extent that the
substitute Awards are both (i) granted to persons whose relationship to the Company does not make
(and is not expected to make) them subject to Section 16(b) of the Act; and (ii) granted in
substitution for awards issued under a plan approved, to the extent then required under Rule 16b-3
(or any successor rule under the Act), by the stockholders of the entity which issued such
predecessor awards.

SECTION 4. Eligibility.

     Awards may be granted to officers or other key employees of the Company or its Subsidiaries,
and to members of the Board and consultants or other persons who render services to the Company,
regardless of whether they are also employees (“Eligible Persons”), provided, however, that
members of the Committee at the time of grant, except for the purposes of Section 7(c), shall not
constitute Eligible Persons.

SECTION 5. Stock Options.

     Any Stock Option granted under the Plan shall be in such form as the Committee may from time
to time approve.

     Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified
Stock Options. To the extent that any option does not qualify as an Incentive Stock Option, it
shall constitute a Non-Qualified Stock Option.

     No Incentive Stock Option shall be granted under the Plan after December 31, 2003.

     (a) Grant of Stock Options. The Committee in its discretion may grant Incentive Stock Options
only to employees of the Company or any Subsidiary. The Committee in its discretion may grant
Non-Qualified Stock Options to Eligible Persons. Stock Options granted pursuant to this Section 5
(a) shall be subject to the following terms and conditions and the terms and conditions of Section
13 and shall contain such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Committee shall deem desirable.

     (i) Exercise Price. The exercise priced per share for the Stock covered by a Stock Option
granted pursuant to this Section 5 (a) shall be determined by the Committee at the time of
grant but shall be, in the case of Incentive Stock Options, not less than 100% of Fair Market
Value on the date of grant. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d)
of the Code) more than 10% of the combined voting power of all classes of stock of the
Company or any-Subsidiary or parent corporation and an Incentive Stock Option is granted to
such employee, the option price shall be not less than 1 10% of Fair Market Value on the grant
date.

     (ii) Option Term. The term of each Stock Option shall be fixed by the Committee, but no
Incentive Stock Option shall be exercisable more than ten years after the date the option is
granted. If an

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employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the
term of such option shall be no more than live years from the date of grant.

     (iii) Exercisability; Rights of a Shareholder. Stock Options shall become vested and
exercisable at such lime or times, whether or not in installments, as shall be determined by the
Committee at or after the grant date. The Committee may at any lime accelerate the exercisability
of all or any portion of any Stock Option. An optionee shall have the rights of a shareholder only
as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.

     (iv) Method of Exercise. Stock Options may be exercised in whole or in part, by delivering
written notice of exercise to the Company, specifying the number of shares to be purchased.
Payment of the purchase price may be made by one or more of the following methods:

     (A) In cash, by certified or bank check or other instrument acceptable to the Committee;

     (B) In the form of shares of Stock that are not then subject to restrictions under any
Company plan, if permitted by the Committee, in its discretion. Such surrendered shares shall
be valued at Fair Market Value on the exercise date; or

     (C) By the optionee delivering to the Company a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the purchase price; provided that in the event the
optionee chooses to pay the purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and other agreements as
the Committee shall prescribe as a condition of such payment procedure. Payment instruments
will be received subject to collection.

The delivery of certificates representing shares of Stock to be purchased pursuant to the exercise
of a Stock Option will be contingent upon receipt from the Optionee (or a purchaser acting in his
stead in accordance with the provisions of the Stock Option) by the Company of the full purchase
price for such shares and the fulfillment of any other requirements contained in the Stock Option
or applicable provisions of laws.

     (v) Non-transferability of Options. No Stock Option shall be transferable other than by will
or by the laws of descent and distribution and all Stock Options shall be exercisable, during the
optionee’s lifetime, only by the optionee.

     (vi) Annual Limit on Incentive Stock Options. To the extent required lor “incentive stock
option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of
the time of grant) of the Stock with respect to which incentive stock options granted under this
Plan and any other plan of the Company or its Subsidiaries become exercisable for the first time by
an optionee during any calendar year shall not exceed $100,000.

     (vii) Repurchase Right. The Committee may in its discretion provide upon the grant of any
Stock Option hereunder that the Company shall have an option to repurchase upon such terms and
conditions as determined by the Committee all or any number of shares purchased upon exercise of
such Stock Option. The repurchase price per share payable by the Company shall be such amount or
be determined by such formula as is fixed by the Committee at the time the Option for the shares
subject to repurchase is granted. In the event the Committee shall grant Stock Options subject to
the Company’s repurchase

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option, the certificates representing the shares purchased pursuant to such Options shall carry
a legend satisfactory to counsel for the Company referring to the Company’s repurchase option.

     (viii) Form of Settlement. Shares of Stock issued upon exercise of a Stock Option
shall be free of all restrictions under the Plan, except as otherwise provided in this Plan.

     (b) Reload Options. At the discretion of the Committee, Options granted under Section 5(a)
may include a so-called “reload” feature pursuant to which an optionee exercising an option by the
delivery of a number of shares of Stock in accordance with Section 5 (a) (iv) ( B) hereof would
automatically be granted an additional Option (with an exercise price equal to the Fair Market
Value of the Stock on the date the additional Option is granted and with the same expiration date
as the original Option being exercised, and with such other terms as the Committee may provide) to
purchase that number of shares of Stock equal to the number delivered to exercise the original
Option.

SECTION 6. Conditioned Stock Awards.

     (a) Nature of Conditioned Stock Award. The Committee in its discretion may grant
Conditioned Stock Awards to any Eligible Person. A Conditioned Stock Award is an Award entitling
the recipient to acquire, at no cost or for a purchase price determined by the Committee, shares of
Stock subject to such restrictions and conditions as the Committee may determine at the time of
grant (“Conditioned Stock”). Conditions may be based on continuing employment and/or achievement of
pre-established performance goals and objectives. In addition, a Conditioned Stock Award may
be granted to an employee by the Committee in lieu of a cash bonus due to such employee pursuant
to any other plan of the Company.

     (b) Acceptance of Award. A participant who is granted a Conditioned Stock Award shall have
no rights with respect to such Award unless the participant shall have accepted the Award within 60
days (or such shorter date as the Committee may specify) following the award dale by making
payment to the Company, if required, by certified or bank cheek or other instrument or form of
payment acceptable to the Committee in an amount equal to the specified purchase price, if any, of
the shares covered by the Award and by executing and delivering to the Company a written instrument
that sets forth the terms and conditions of the Conditioned Stock in such form as the Committee
shall determine.

     (c) Rights as a Shareholder. Upon complying with Section 6(b) above, a participant shall
have all the rights of a shareholder with respect to the Conditioned Stock, including voting and
dividend rights, subject to non-transferability restrictions and Company repurchase or forfeiture
rights described in this Section 6 and subject to such other conditions contained in the written
instrument evidencing the Conditioned Award. Unless the Committee shall otherwise determine,
certificates evidencing shares of Conditioned Stock shall remain in the possession of the Company
until such shares are vested as provided in Section 6(e) below.

     (d) Restrictions. Shares of Conditioned Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided herein. In the event
of termination of employment by the Company and its Subsidiaries for any reason (including
death, Disability, Normal Retirement and for Cause), the Company shall have the right, at the
discretion of the Committee, to repurchase shares of Conditioned Stock with respect to which
conditions have not lapsed at their purchase price, or to require forfeiture of such shares to the
Company if acquired at no cost, from the participant or the participant’s legal representative. The
Company must exercise such right of repurchase or forfeiture not later than the ninetieth day
following such termination of employment (unless otherwise specified, in the written instrument
evidencing the Conditioned Award).

     (e) Vesting of Conditioned Stock. The Committee at the time of grant shall specify the date
or dates and/or the attainment of pre-established performance goals, objectives and other
conditions on which the

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non-transferability of the Conditioned Stock and the Company’s right of repurchase or forfeiture
shall lapse. Subsequent to such date or dates and/or the attainment of such preestablished
performance goals, objectives and other conditions, the shares on which all restrictions have
lapsed shall no longer be Conditioned Stock and shall be deemed “vested.” The Committee at any time
may accelerate such date or dates and otherwise waive or, subject to Section 13, amend any
conditions of the Award.

     (f) Waiver, Deferral and Reinvestment of Dividends. The written instrument evidencing the
Conditioned Stock Award may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.

SECTION 7. Unrestricted Stock Awards.

     (a) Grant or Sale of Unrestricted Stuck. The Committee in its discretion may grant or sell
at a purchase price determined by the Committee to any Eligible Person shares of Stock free of any
restrictions under the Plan (“Unrestricted Stock”). Shares of Unrestricted Stock may be granted or
sold as described in the preceding sentence in respect of past services or other valid
consideration.

     (b) Elections to Receive Unrestricted Stock In Lieu of Compensation. Upon the request of an
Eligible Person and with the consent of the Committee, each Eligible Person may, pursuant to an
irrevocable written election delivered to the Company no later than the date or dates specified by
the Committee, receive a portion of the cash compensation otherwise due to him in Unrestricted
Stock (valued at Fair Market Value on the date or dates the cash compensation would otherwise be
paid). Such Unrestricted Stock may be paid to the Eligible Person at the same time as the cash
compensation would otherwise be paid, or at a later time, as specified by the Eligible Person in
the written election.

     (c) Elections to Receive Unrestricted Stock in Lieu of Directors’ Fees. Each Outside
Director may, pursuant to an irrevocable written election delivered to the Company no later than
June 30 of any calendar year, receive all or a portion of the directors’ fees otherwise due to him
in the subsequent calendar year in Unrestricted Stock (valued at Fair Market Value on the date or
dates the directors’ fees would otherwise be paid). Such Unrestricted Stock may be paid to the
Non-Employee Director at the same lime the directors’ fees would otherwise have been paid, or at a
later time, as specified by the Non-Employee Director in the written election.

     (d) Restrictions on Transfers. The right to receive unrestricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent
and distribution.

SECTION 8. Performance Share Awards.

     (a) Nature of Performance Shares. A Performance Share Award is an award entitling the
recipient to acquire shares of Stock upon the attainment of specified performance goals. The
Committee may make Performance Share Awards independent of or in connection with the granting of
any other Award under the Plan. Performance Share Awards may be granted under the Plan to any
Eligible Person including those who qualify for awards under other performance plans of the
Company. The Committee in its discretion shall determine whether and to whom Performance Share
Awards shall be made, the performance goals applicable under each such Award, the periods during
which performance is to be measured, and all other limitations and conditions applicable to the
awarded Performance Shares; provided, however, that the Committee may rely on the performance goals
and other standards applicable to other performance-based plans of the Company in
setting the standards for Performance Share Awards under the Plan,

     (b) Restrictions on Transfer. Performance Share Awards and all rights with respect to such
Awards may not be sold, assigned, transferred, pledged or otherwise encumbered.

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     (c) Rights ax a Shareholder. A participant receiving a Performance Share Award shall have
the rights of a shareholder only as to shares actually received by the participant under the Plan
and not with respect to shares subject to the Award but not actually received by the participant. A
participant shall be entitled to receive a stock certificate evidencing the acquisition of shares
of Stock under a Performance Share Award only upon satisfaction of all conditions specified in
the written instrument evidencing the Performance Share Award (or in a performance plan adopted
by the Committee).

     (d) Termination. Except as may otherwise be provided by the Committee at any time
prior to termination of employment, a participant’s rights in all Performance Share Awards shall
automatically terminate upon the participant’s termination of employment by the Company and its
Subsidiaries for any reason (including death. Disability, Normal Retirement and for Cause).

     (e) Acceleration, Waiver, Etc. At any time prior to the participant’s termination of
employment by the Company and its Subsidiaries, the Committee may in its sole discretion
accelerate, waive or, subject to Section 13, amend any or all of the goals, restrictions or
conditions imposed under any Performance Share Award.

SECTION 9. Stock Appreciation Rights

     (a) The Committee in its discretion may grant Stock Appreciation Rights to any Eligible Person
(i) alone, (ii) simultaneously with the grant of a Stock Option and in conjunction therewith or in
the alternative thereto or (iii) subsequent to the grant of a Non-Qualified option and in
conjunction therewith or in the alternative thereto.

     (b) The exercise price per share of a Stock Appreciation Right granted alone shall be
determined by the Committee. A Stock Appreciation Right granted simultaneously with or subsequent
to the grant of a Stock Option and in conjunction therewith or in the alternative thereto shall
have the same exercise price as the related Stock Option, shall be transferable only upon the same
terms and conditions as the related Stock Option, and shall be exercisable only to the same extent
as the related Stock Option; provided, however, that a Stock Appreciation Right, by its terms,
shall he exercisable only when the Fair Market Value per share of Stock exceeds the exercise price
per share thereof.

     (c) Upon any exercise of a Stock Appreciation Right, the number of shares of Stock for which
any related Stock Option shall be exercisable shall be reduced by the number of shares for which
the Stock Appreciation Right shall have been exercised. The number of shares of Stock with respect
to which a Stock Appreciation Right shall be exercisable shall be reduced upon any exercise of any
related Stock Option by the number of shares for which such Option shall have been exercised. Any
Stock Appreciation Right shall be exercisable upon such additional terms and conditions as may from
time to time be prescribed by the Committee.

     (d) A Stock Appreciation Right shall entitle the participant upon exercise thereof to receive
from the Company, upon written request to the Company at its principal offices (the “Request”), a
number of shares of Stock (with or without restrictions as to substantial risk of forfeiture and
transferability, as determined by the Committee in its sole discretion), an amount of cash, or any
combination of Stock and cash, as specified in the Request (but subject to the approval of the
Committee in its sole discretion, at any time up to and including the time of payment, as to the
making of any cash payment), having an aggregate Fair Market Value equal to
the product of (i) the excess of Fair Market Value, on the date of such Request, over the
exercise price per share of Stock specified in such Stock Appreciation Right or its related Option,
multiplied by (ii) the number of shares of Stock for which such Stock Appreciation Right shall be
exercised. Notwithstanding the foregoing,

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the Committee may specify at the time of grant of any Stock Appreciation Right that such Stock
Appreciation Right may be exercisable solely for cash and not for Stock.

     (e) Within thirty (30) days of the receipt by the Company of a Request to receive cash in full
or partial settlement of a Stock Appreciation Right or to exercise such Stock Appreciation
Right for cash, the Committee shall, in its sole discretion, either consent to or disapprove, in
whole or in part, such Request. A Request to receive cash in full or partial settlement of a Stock
Appreciation Right or to exercise a Stock Appreciation Right for cash may provide that, in the
event the Committee shall disapprove such Request, such Request shall be deemed to be an exercise
of such Stock Appreciation Right for Stock.

     (f) If the Committee disapproves in whole or in part any election by a participant to receive
cash in full or partial settlement of a Stock Appreciation Right or to exercise such Stock
Appreciation Right for cash, such disapproval shall not affect such participant’s right to exercise
such Stock Appreciation Right at a later date, to the extent that such Stock Appreciation Right
shall be otherwise exercisable, or to elect the form of payment at a later date, provided that an
election to receive cash upon such later exercise shall be subject to the approval of the
Committee. Additionally, such disapproval shall not affect such participant’s right to exercise any
related Option.

     (g) A participant shall not be entitled to request or receive cash in full or partial payment
of a Stock Appreciation Right, if such Stock Appreciation Right or any related Option shall have
been exercised during the first six (6) months of its respective term; provided, however, that such
prohibition shall not apply in the event of the death or Disability of the participant prior to the
expiration of such six-month period, or if such participant is not a director or officer of the
Company or a beneficial owner of the Company who is described in Section 16(a) of the Act.

     (h) A Stock Appreciation Right shall be deemed exercised on the last day of its term, if not
otherwise exercised by the holder thereof, provided that the fair market value of the Stock
subject to the Stock Appreciation Right exceeds the exercise price thereof on such date.

     (i) No Stock Appreciation Right shall be transferable other than by will or by the laws of
descent and distribution and all Stock Appreciation Rights shall be exercisable, during the
holder’s lifetime, only by the holder.

SECTION 10. Termination of Stock Options and Stock Appreciation Rights.

     (a) Termination by Death. If any participant’s employment by or services to the Company and
its Subsidiaries terminates by reason of death, any Stock Option or Stock Appreciation Right owned
by such participant may thereafter be exercised to the extent exercisable at the
date of death, by the legal representative or legatee of the participant, for a period of two
years (or such longer period as the Committee shall specify at any time) from the dale of death, or
until the expiration of the stated term of the Option or Slock Appreciation Right, if earlier.

     (b) Termination by Reason of Disability or Normal Retirement.

     (i) Any Stock Option or Stock Appreciation Right held by a participant whose
employment by or services to the Company and its Subsidiaries has terminated by reason of
Disability may thereafter be exercised, to the extent it was exercisable at the time of such
termination, for a period of one year (or such longer period as the Committee shall specify at
any time) from the dale of such termination of employment or services, or until the expiration
of the stated term of the Option or Stock Appreciation Right, if earlier.

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     (ii) Any Stock Option or Stock Appreciation Right held by a participant whose employment
by or services to the Company and its Subsidiaries has terminated by reason of Normal
Retirement may thereafter be exercised, to the extent it was exercisable at the time of such
termination, for a period of 90 days (or such longer period as the Committee shall specify at
any time) from the date of such termination of employment or services, or until the expiration
of the stated term of the Option or Stock Appreciation Right, if earlier.

     (iii) The Committee shall have sole authority and discretion to determine whether a
participant’s employment or services has been terminated by reason of Disability or Normal
Retirement.

     (iv) Except as otherwise provided by the Committee at the time of grant, the death of a
participant during a period provided in this Section 10(b) for the exercise of a Stock Option
or Stock Appreciation Right, shall extend such period for two years from the date of death,
subject to termination on the expiration of the stated term of the Option or Stock
Appreciation Right, if earlier.

     (c) Termination for Cause. If any participant’s employment by or services to the Company and
its Subsidiaries has been terminated for Cause, any Stock Option or Stock Appreciation Right held
by such participant shall immediately terminate and be of no further force and effect; provided,
however, that the Committee may, in its sole discretion, provide that such Option or Stock
Appreciation Right can be exercised for a period of up to 30 days from the date of termination of
employment or services or until the expiration of the stated term of the Option or Stock
Appreciation Right, if earlier.

     (d) Other Termination. Unless otherwise determined by the Committee, if a participant’s
employment by or services to the Company and its Subsidiaries terminates for any reason other than
death, Disability, Normal Retirement or for Cause, any Stock Option or Stock Appreciation Right
held by such participant may thereafter be exercised, to the extent it was exercisable on the date
of termination of employment, for 90 days (or such longer period as the Committee shall specify at
any lime) from the date of termination of employment or services or until the expiration of the
stated term of the Option or Stock Appreciation Right, if earlier.

SECTION 11. Tax Withholding.

     (a) Payment by Participant. Each participant shall, no later than the dale as of which the
value of an Award or of any Stock or other amounts received thereunder first becomes includable in
the gross income of the participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of any Federal, state or local taxes
of any kind required by law to be withheld with respect to such income. The Company and its
Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from
any payment of any kind otherwise due to the participant.

     (b) Payment in Shares. Participant may elect to have such tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to
be issued pursuant to an Award a number of shares with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due with respect to
such Award, or (ii) transferring to the Company shares of Stock owned by the participant with an
aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due. With respect to any participant who is subject to Section 16 of the Act,
the following additional restrictions shall apply:

     (A) the election to satisfy tax withholding obligations relating to an Award in the
manner permitted by this Section 11 (b) shall be made either (1) during the period beginning
on the third business day-following the date of release of quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth business day
following such date, or (2) at least six months prior to

A-10

 

the date as of which the receipt of such an Award first becomes a taxable event for Federal
income lax purposes;

     (B) such election shall be irrevocable;

     (C) such election shall be subject to the consent or approval of the Committee; and

     (D) the Stock withheld to satisfy tax withholding, if granted at the discretion of the
Committee, must pertain to an Award which has been held by the participant for at least six
months from the date of grant of the Award.

SECTION 12. Transfer, Leave of Absence, Etc.

For purposes of the Plan, the following events shall not be deemed a termination of employment:

     (a) a transfer to the employment of the Company from a Subsidiary or from the Company to a
Subsidiary, or from one Subsidiary to another;

     (b) an approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the employee’s right to re-employment is guaranteed either
by a statute or by contract or under the policy pursuant to which the leave of absence was
granted or if the Committee otherwise so provides in writing.

SECTION 13. Amendments and Termination.

     The Board may at any time amend or discontinue the Plan and the Committee may at any time
amend or cancel any outstanding Award (or provide substitute Awards at the same or reduced
exercise or purchase price or with no exercise or purchase price, but such price, if any, must
satisfy the requirements which would apply-to the substitute or amended Award if it were then
initially granted under this Plan) for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights under any outstanding Award
without the holder’s consent. However, no such amendment, unless approved by the stockholders of
the Company, shall be effective if it would cause the Plan to fail to satisfy the incentive stock
option requirements of the Code, or cause transactions under the Plan to fail to satisfy the
requirements of Rule 16b-3 or any successor rule under the Act as in effect on the date of such
amendment, or to cause any member of the Committee to cease to be a disinterested person (within
the meaning of Rule 16b-3 under the Act) with respect to this Plan or any other plan of the
Company.

SECTION 14. Status of Plan.

     With respect to the portion of any Award which has not been exercised and any payments in
cash, Stock or other consideration not received by a participant, a participant shall have no
rights greater than those of a general creditor of the Company unless the Committee shall
otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet the Company’s
obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the
existence of such trusts or other arrangements is consistent with the provision of
the foregoing sentence.

SECTION 15. Change of Control Provisions.

     (a) Upon the occurrence of a Change of Control as defined in this Section 15:

     (i) subject to the provisions of clause (iii) below, after the effective date of such
Change of Control, each holder of an outstanding Stock Option, Conditional Stock Award,
Performance Share Award or Stock Appreciation Right shall be entitled, upon exercise of such
Award, to receive, in lieu of shares of

A-11

 

Stock (or consideration based upon the Fair Market Value of Stock), shares of such stock or other
securities, cash or property (or consideration based upon shares of such stock or other securities,
cash or property) as the holders of shares of Stock received in connection with the Change of
Control;

     (ii) the Committee may accelerate the time for exercise of, and waive all conditions and
restrictions on, each unexercised and unexpired Stock Option, Conditional Stock Award, Performance
Share Award and Stock Appreciation Right effective upon a dale prior or subsequent to the
effective date of such Change of Control, specified by the Committee; or

     (iii) each outstanding .Stock Option, Conditional Stock Award, Performance Share Award and
Stock Appreciation Right may be cancelled by the Committee as of the effective date of any such
Change of Control provided that (x) notice of such cancellation shall be given to each holder of
such an Award and (y) each holder of such an Award shall have the right to exercise such Award to
the extent that the same is then exercisable or, if the Committee shall have accelerated the lime
for exercise of all such unexercised and unexpired Awards, in full during the 30-day period
preceding the effective date of such Change of Control.

     (b) “Change of Control’’ shall mean the occurrence of any one of the following events:

     (i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Act) becomes a
“beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Act) (other than
the Company, any trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or any corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the Company), directly or
indirectly, of securities of the Company representing thirty-five percent (35%) or more of the
combined voting power of the Company’s then outstanding securities; or

     (ii) persons who, as of January 1, 1994, constituted the Company’s Board (the “Incumbent
Board”) cease for any reason, including without limitation as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority of the Board, provided
that any person becoming a director of the Company subsequent to January 1, 1994 whose election
was approved by, or who was nominated with the approval of, at least a majority of the directors
then comprising the Incumbent Board shall, for purposes of this Plan, be considered a member of
the Incumbent Board; or

     (iii) the stockholders of the Company approve a merger or consolidation of the Company with
any other corporation or other entity, other than (a) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 65% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or consolidation or (b)
a merger or consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no “person” (as hereinabove defined) acquires more than 50% of the combined
voting power of the Company’s then outstanding securities; or

     (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially all of the
Company’s assets.

A-12

 

SECTION 16. General Provisions.

     (a) No Distribution; Compliance with Legal Requirements. The Committee may require each
person acquiring shares pursuant to an Award to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to distribution thereof.

     No shares of Stock shall be issued pursuant to an Award until all applicable securities law
and other legal and stock exchange requirements have been satisfied. The Committee may require the
placing of such stop orders and restrictive legends on certificates for Stock and Awards as it
deems appropriate.

     (b) Delivery of Stock Certificates. Delivery of stock certificates to participants under
this Plan shall be deemed effected for all purposes when the Company or a stock transfer agent of
the Company shall have delivered such certificates in the United States mail, addressed to the
participant, at the participant’s last known address on file with the Company.

     (c) Other Compensation Arrangements: No Employment Rights. Nothing contained in this Plan
shall prevent the Board from adopting other or additional compensation arrangements, including
trusts, subject to stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption of the Plan or any
Award under the Plan does not confer upon any employee any right to continued employment with the
Company or any Subsidiary.

SECTION 17. Effective Date of Plan.

     The Plan shall become effective upon approval by the holders of a majority of the shares of
capital slock of the Company present or represented and entitled to vote at a meeting of
stockholders.

SECTION 18. Governing Law.

     This Plan shall be governed by, and construed and enforced in accordance with, the
substantive laws of The Commonwealth of Massachusetts without regard to its principles of
conflicts of laws.

A-13exv10w16w2

Exhibit 10.16.2

January 15, 2010

Barry N. Bycoff

The Ritz Carlton Tower

Boston Common

3 Avery Street, Unit 609

Boston, MA 02111-1005

			
	Re:	 	Extension of Term as Executive Chairman

Dear Barry:

Reference is made to your employment letter (the “Employment Letter”), dated as of May 12, 2009,
which sets forth the terms and conditions of your employment with Progress Software Corporation
(the “Company”) as Executive Chairman of the Board. As provided in the Employment Letter, you
currently serve as Executive Chairman for a one-year term (the “Term”) expiring at the annual
meeting of shareholders of the Company in fiscal 2010. The Board of Directors of the Company has
requested, and you have agreed, to extend the Term for an additional one-year.

The parties are entering into this letter agreement to memorialize their understanding that the
Term is hereby extended for an additional one year such that the Term shall expire at the annual
meeting of shareholders of the Company in fiscal 2011 (the “Extended Term”). During the Extended
Term, all terms and conditions of your Employment Letter shall continue to apply, except as
modified by the following paragraph.

In lieu of Paragraph 2 of the Employment Letter, on January 12, 2010, the Company issued you 25,789
restricted stock units, which will vest in two equal installments, with the first installment
vesting on the six month anniversary of the date of the annual meeting of shareholders of the
Company in fiscal 2010 and the second installment vesting six months thereafter, subject to your
continued service with the Company. The number of restricted stock units issued to you was
determined by dividing $760,000 by $29.47, which was the closing price of the Company’s stock price
on January 12, 2010.

Please confirm your agreement with the foregoing by signing this letter agreement in the space
indicated.

Sincerely,

	 	 	 	 	 
	 	By:  	/s/ Michael L. Mark 	 
	 	 	     Michael L. Mark 	 
	 	 	     Lead Independent Director, Board of Directors
     Progress Software Corporation 	 

 

 

	 	 	 	 	 

I agree to the terms of this letter agreement.

	 	 	 	 	 	 	 
	/s/ Barry N. Bycoff
 

Barry N. Bycoff

	 	 
	 	1/25/10
 

Date
	 	 

-2-

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