**EXHIBIT 10.16**

 

**[EMPLOYEES]**

 

**RESTRICTED STOCK UNIT AWARD AGREEMENT**

*under the*

**INTERNET SECURITY SYSTEMS, INC.**

**2005 STOCK INCENTIVE PLAN**

 

THIS AGREEMENT, made and entered into as ofthe            day of               ,20    , by and between Internet Security Systems, Inc.(“the “Company”) and                       (“Grantee”).

 

**WITNESSETH THAT:**

 

WHEREAS, the Company maintains the InternetSecurity Systems, Inc. 2005 Stock Incentive Plan (the “Plan”), and the Granteehas been selected by the Committee to receive a Restricted Stock Unit Awardunder the Plan;

 

NOW, THEREFORE, IT IS AGREED, by and betweenthe Company and the Grantee, as follows:

 

# **1.**             Award of Restricted Stock Units

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## 1.1           TheCompany hereby grants to the Grantee an award of                   restricted stock units (“RSUs”), subject to, and in accordance with, therestrictions, terms and conditions set forth in this Agreement.  This award of RSUs represents the right toreceive a Share for each RSU, subject to satisfying the vesting and otherconditions set forth in this Agreement. The grant date of this award of RSUs is                                   (“GrantDate”).

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## 1.2           ThisAgreement shall be construed in accordance and consistent with, and subject to,the provisions of the Plan (the provisions of which are incorporated herein byreference) and, except as otherwise expressly set forth herein, the capitalizedterms used in this Agreement shall have the same definitions as set forth inthe Plan.

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# **2.**             Restrictions

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## 2.1           Subjectto Section 2.2 below, if the Grantee remains employed by the Company or aSubsidiary, the Grantee shall become vested in the RSUs as follows:            %of the RSUs shall vest on each                     of the Grant Date (each such date shall be a “Vesting Date”) such that on                         (the “Final Vesting Date”) all of the RSUs shall be fully vested.  On each Vesting Date,  the Vested Shares shall be issued andregistered in the Grantee’s name, and Grantee shall own the Vested Shares freeand clear of all restrictions imposed by this Agreement (except those imposedby Section 3.3 below).  In the event,prior to the Final Vesting Date, Grantee’s employment is terminated by theCompany or Grantee terminates employment (for any reason, including death orDisability), the RSUs shall cease to vest further and Grantee shall only beentitled to the Shares that are vested as of Grantee’s date oftermination.  For purposes of

 

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## this Agreement, employment with anySubsidiary of the Company, or service as a Director of the Company or anySubsidiary of the Company, shall be considered employment with the Company, andreferences to employment by the Company or termination of employment by or withthe Company, shall include such employment by a Subsidiary or service as a Director.

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## 2.2           Exceptas hereinafter provided, upon the occurrence of a Change in Control prior tothe Grantee’s Final Vesting Date, all outstanding unvested RSUs shall becomeimmediately and fully vested and nonforfeitable as of the date of the Change inControl and the Company shall deliver to Grantee a certificate(s) for suchShares, free and clear of any restriction imposed by this Agreement.  However, notwithstanding the forgoingsentence, the vesting of outstanding unvested RSUs shall not so accelerate ifand to the extent: (i) such RSUs are, in connection with a CorporateTransaction (as defined in Section 2.6(c) of the Plan and excluding CorporateTransactions which do not constitute a Change in Control), either to be assumedby the successor corporation (or parent thereof) or to be replaced with acomparable award of RSUs of the capital stock of the successor corporation (orparent thereof), (ii) such award of RSUs is to be replaced with a cashincentive program of the successor corporation which preserves the value of theunvested RSUs at the time of the Corporate Transaction and provides forsubsequent vesting in accordance with the same vesting schedule applicable tosuch RSUs, or (iii) the acceleration of the vesting of such RSUs is subject toother limitations imposed by the Committee at the time of the RSU grant.  The determination of comparability underclause (i) above shall be made by the Committee as constituted prior to theChange in Control, and its determination shall be final, binding and conclusive.  If the successor company (or parent thereof)assumes the outstanding award of RSUs in connection with a CorporateTransaction, and at the time of or within                     following such Corporate Transaction: (i) the Grantee is offered a LesserPosition (as hereinafter defined) in replacement of the position held by himimmediately prior to the Corporate Transaction; or (ii) the Grantee’s serviceterminates by reason of an Involuntary Termination (as hereinafter defined),then, effective as of the date on which such Lesser Position is offered to theGrantee or the effective date of such Involuntary Termination, respectively,the vesting of the RSUs shall automatically accelerate in part so that, inaddition to the number of RSUs which have vested at such time, the forfeiturerights respecting the RSUs shall expire with respect to                                             of the unvested RSUs but not exceeding the unvested portion of such grant.  Following such acceleration, to the extent theGrantee continues in service, the vesting schedule for the RSUs shall continueunder the original vesting schedule, except for the                                                 .  In the event that both the offer of a LesserPosition and a subsequent Involuntary Termination of a Grantee’s Service occurwithin                     following a Corporate Transaction, then acceleration of vesting shall occuronly in connection with the offer of such Lesser Position and no additionalacceleration shall occur in connection with such subsequent InvoluntaryTermination.

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The followingdefinitions shall apply for purposes of this Agreement:

 

“Involuntary Termination”  shall mean the termination of Grantee’sservice which occurs by reason of: (i) Grantee’s involuntary dismissal ordischarge by the Company for reasons other than Cause, or (ii) Grantee’svoluntary resignation following the offer to Grantee of a Lesser Position inreplacement of the position held by Grantee immediately prior to the CorporateTransaction.

 

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“Lesser Position” for Grantee shall mean anew position or a change to Grantee’s position which, compared with Grantee’sposition with the Company immediately prior to the Corporate Transaction, (i)offers a lower level of compensation (including base salary, fringe benefitsand target bonuses under any corporate-performance based bonus or incentiveprograms), or (ii) materially reduces Grantee’s duties or level ofresponsibility, or (iii) assigns Grantee to an office more than   miles from the Company’s office at which Grantee served prior to the CorporateTransaction.

 

## 2.3           TheRSUs may not be sold, assigned, transferred, pledged or otherwise encumberedprior to the date Grantee becomes vested in the RSUs.

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# **3.**             Rights As Shareholder

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## 3.1           Exceptas provided in Section 3.2, the Grantee shall not have voting or any otherrights as a shareholder of the Company with respect to the RSUs.  Upon settlement of the RSUs with the issuanceof Shares, the Grantee will obtain full voting and other rights as ashareholder of the Company.

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## 3.2           Inthe event of a change in capitalization as provided in Section 4.3 of the Plan,the number and class of RSUs and Shares or other securities that Grantee shallbe entitled to pursuant to this Agreement shall be appropriately adjusted orchanged to reflect the change in capitalization, provided that any suchadditional RSUs, Shares or additional or different shares or securities shallremain subject to the restrictions in this Agreement.

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## 3.3           TheGrantee represents and warrants that he is acquiring the Shares under thisAgreement for investment purposes only, and not with a view to distributionthereof.  The Grantee is aware that theShares may not be registered under the federal or any state securities laws andthat, in addition to the other restrictions on the Shares, the Shares will notbe able to be transferred unless an exemption from registration isavailable.  By making this award of RSUs,the Company is not undertaking any obligation to register the Shares under anyfederal or state securities laws.

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# **4.**             No Right to Continued Employment

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Nothing in this Agreement or the Plan shallbe interpreted or construed to confer upon the Grantee any right with respectto continuance of employment by the Company or a Subsidiary, nor shall thisAgreement or the Plan interfere in any way with the right of the Company or aSubsidiary to terminate the Grantee’s employment at any time, subject toGrantee’s rights under this Agreement.

 

# **5.**             Taxes and Withholding

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The Grantee shall be responsible for allfederal, state and local income taxes payable with respect to this award ofRSUs and any employment taxes payable by Grantee as an employee.  The Company shall have the right to retainand withhold from any payment of Shares the amount of taxes required by anygovernment to be withheld or otherwise deducted and paid with respect to suchpayment.  The Company may require Granteeto reimburse the Company for any such taxes required to be withheld and maywithhold any distribution in whole or in part until the

 

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Company is soreimbursed.  In lieu thereof, the Companyshall have the right to withhold from any other cash amounts due to Grantee anamount equal to such taxes required to be withheld or withhold and cancel (inwhole or in part) a number of Shares having a market value not less than theamount of such taxes.

 

# **6.**             Grantee Bound By The Plan

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The Grantee hereby acknowledges receipt of acopy of the Plan and agrees to be bound by all the terms and provisionsthereof.

 

# **7.**             Modification of Agreement

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This Agreement may be modified, amended,suspended or terminated, and any terms or conditions may be waived, but only bya written instrument executed by the parties hereto.

 

# **8.**             Severability

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Should any provision of this Agreement beheld by a court of competent jurisdiction to be unenforceable or invalid forany reason, the remaining provisions of this Agreement shall not be affected bysuch holding and shall continue in full force in accordance with their terms.

 

# **9.**             Governing Law

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The validity, interpretation, constructionand performance of this Agreement shall be governed by the laws of the State ofDelaware without giving effect to the conflicts of laws principles thereof.

 

# **10.**          Successors in Interest

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This Agreement shall inure to the benefit of,and be binding upon, the Company and its successors and assigns, and upon anyperson acquiring, whether by merger, consolidation, reorganization, purchase ofstock or assets, or otherwise, all or substantially all of the Company’s assetsand business.  This Agreement shall inureto the benefit of the Grantee’s legal representatives.  All obligations imposed upon the Grantee andall rights granted to the Company under this Agreement shall be final, bindingand conclusive upon the Grantee’s heirs, executors, administrators andsuccessors.

 

# **11.**          Resolution of Disputes

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Any dispute or disagreement which may ariseunder, or as a result of, or in any way relate to the interpretation,construction or application of this Agreement shall be determined by theCommittee.  Any determination madehereunder shall be final, binding and conclusive on the Grantee and the Companyfor all purposes.

 

# **12.**          Transfer of Data

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In order to effectively administer theCompany’s global compensation and benefit programs, the Company may transferpersonal data from your Company employment file to a

 

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centralizedrepository controlled by the Company in the United States of America.  Your personal data in the repository will beused solely for internal Company purposes. You may examine your employee information file should you wish to doso.  By signing this agreement, youprovide your consent to this transfer and use of this data.

 

IN WITNESS WHEREOF, the parties have executedthis Agreement as of the date first above written.

 

 
|   | INTERNET SECURITY SYSTEMS, INC. |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             |   |
|   |                            |   |
|   |                            |
|   | GRANTEE:                        |
|   |                            |
|   |                            |

 

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