**EXHIBIT10.13**

 

**[EMPLOYEE]**

 

 

**INTERNET SECURITY SYSTEMS, INC.**

**2005 STOCK INCENTIVE PLAN**

 

**INCENTIVE STOCK OPTION AGREEMENT**

 

**THIS OPTION AGREEMENT** (the “**Agreement**”) isentered into as of the date set forth in the accompanying Notice of Grant (“**Grant Notice**”), by and between**INTERNET SECURITY SYSTEMS, INC.**, a Delaware corporation (the “**Company**”),and the employee designated in the Grant Notice (the “**Optionee**”).

 

**WITNESSETH:**

 

***WHEREAS*****,**the Internet Security Systems, Inc. 2005 Stock Incentive Plan (the “**Plan**”) was approved by the shareholders of the Company,effective May 24, 2005; and

 

***WHEREAS*****,**as of the date hereof, the Committee responsible for administration of the Plangranted the Option as provided herein;

 

***NOW, THEREFORE*****,**the parties agree as follows:

 

# **1.**                                      Grant of Option.

 

## **1.1         **Option.  An option to purchase shares of the Company’sCommon Stock (the “**Shares**”) ishereby granted to the Optionee (the “**Option**”).

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## **1.2         **Number of Shares.  The number of Shares that the Optionee canpurchase upon exercise of the Option and the dates upon which the Option canfirst be exercised are set forth in the Grant Notice.

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## **1.3         **Option Exercise Price.  The price the Optionee must pay to exercisethe Option (the “**Option Exercise Price**”) is setforth in the Grant Notice.

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## **1.4         **Date of Grant.  The date the Option is granted (the “**Grant Date**”) is set forth in the Grant Notice.

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## **1.5         **Type of Option.  The Option is intended to qualify as anIncentive Stock Option within the meaning of Section 422 of the InternalRevenue Code of 1986, as amended from time to time, or any successor provisionthereto, and shall be so construed; provided, however, that nothing in thisAgreement shall be interpreted as a representation, guarantee or otherundertaking on the part of the Company that the Option is or will be determinedto be an Incentive Stock Option within the meaning of Section 422 of theCode.  To the extent this Option does notqualify and is not treated as an Incentive Stock Option, it will be treated asa Nonqualified Stock Option.

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## **1.6         **Construction.  This Agreement shall be construed inaccordance and consistent with, and subject to, the provisions of the Plan (theprovisions of which are incorporated herein by reference) and, except asotherwise expressly set forth herein, the capitalized terms used in thisAgreement shall have the same definitions as set forth in the Plan.

 

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## **1.7         **Condition.  The Option is conditioned on the Optionee’sexecution of the Grant Notice.  If theGrant Notice is not executed by the Optionee, the Option may be canceled by theCommittee.

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# **2.**                                      Duration.

# ** **

TheOption shall be exercisable to the extent vested as provided below and in themanner provided herein for a period of               (        ) years from the Grant Date(the “**Exercise Term**”); provided,however, that the Option may be earlier terminated as provided in **Section 1.7** and **Section 5**.

 

# **3.**                                      Vesting.

# ** **

TheOption shall vest, and may be exercised, with respect to the Shares, on orafter the dates set forth in the Grant Notice, subject to earlier vesting ofthe Option as provided in **Section 5** andsubject to earlier termination of the Option as provided in **Section 1.7** and **Section 5** or inthe Plan.  The right to purchase theShares as they become vested shall be cumulative and shall continue during theExercise Term unless sooner terminated as provided herein.  Notwithstanding the foregoing, if theOptionee is a non-exempt employee for purposes of the Fair Labor Standards Actof 1938 (“**FLSA**”), the Optionee maynot exercise any Option (even if the Option is otherwise vested) prior to thedate that is six (6) months after the Grant Date unless the Optionee’semployment has terminated due to death, Disability, Retirement or unless aChange in Control has occurred after the Grant Date.

 

# **4.**                                      Manner of Exercise and Payment.

# ** **

## **4.1         **Delivery.  To exercise the Option, the Optionee mustdeliver a completed copy of the **Option Exercise Form**,attached hereto as **Exhibit A**, tothe address indicated on such Form or such other address designated by theCompany from time to time.  The Optionmay be exercised in whole or in part with respect to the vested Shares;provided, however, the Committee may establish a minimum number of Shares(e.g., 100) for which an Option may be exercised at a particular time.  Within thirty (30) days of delivery of theOption Exercise Form, the Company shall deliver certificates evidencing theShares to the Optionee, duly endorsed for transfer to the Optionee, free and clearof all liens, security interests, pledges or other claims or charges.  Contemporaneously with the delivery of theOption Exercise Form, Optionee shall tender the Option Exercise Price to theCompany, by cash, check, wire transfer or such other method of payment (e.g.,delivery of, or attestation to, Shares already owned) as may be providedpursuant to the Plan.

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## **4.2         **No Rights as Stockholder.  The Optionee shall not be deemed to be theholder of, or to have any of the rights of a holder with respect to any Sharessubject to the Option until (i) the Option shall have been exercised pursuantto the terms of this Agreement and the Optionee shall have paid the fullpurchase price for the number of Shares in respect of which the Option wasexercised, (ii) the Company shall have issued and delivered the Shares to theOptionee, and (iii) the Optionee’s name shall have been entered as astockholder of record of the Shares, whereupon the Optionee shall have fullvoting and other ownership rights with respect to such Shares.

 

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# **5.**                                      Termination of Employment.

# ** **

## **5.1         **Termination by Death.  In the event the Optionee dies while activelyemployed by the Company, all outstanding unvested Options shall expire, and anyOptions vested as of his date of termination shall remain exercisable at anytime prior to the end of the Exercise Term, or for one (1) year after the dateof death, whichever period is shorter, by such person(s) as shall have beennamed as the Optionee’s beneficiary, or in the absence of a designated beneficiary,by the executor or representative of the Optionee’s estate.

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## **5.2         **Termination by Disability.  If the Optionee’s employment with the Companyis terminated by reason of Disability, all outstanding unvested Options shallexpire as of the date the Committee determines the definition of Disability tohave been satisfied by the Optionee, and any Options vested as of his date oftermination shall remain exercisable at any time prior to the end of theExercise Term, or for one (1) year after the date that the Committee determinesthe definition of Disability to have been satisfied, whichever period isshorter.

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## **5.3         **Termination for Retirement.  If the Optionee’s employment with the Companyis terminated by reason of Retirement, all outstanding unvested Options shallexpire, and any Options vested as of his date of termination shall remainexercisable at any time prior to the end of the Exercise Term, or for one (1)year after the date of Retirement, whichever period is shorter.

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## **5.4         **Termination for Cause.  If the Optionee’s employment with the Companyis terminated by the Company for Cause, all outstanding unvested Optionsgranted to the Optionee shall expire immediately, and the Optionee’s right toexercise any then outstanding Options (whether or not vested) shall terminateimmediately upon the date that the Committee determines is the Optionee’s dateof termination of employment.

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## **5.5         **Termination of Employment for OtherReasons.  If the Optionee’semployment is terminated by the Company without Cause, or the Optioneevoluntarily terminates his employment, all outstanding unvested Options shallexpire, and any Options vested as of his date of termination shall remainexercisable at any time prior to the end of the Exercise Term or for three (3)months after his date of termination of employment, whichever period isshorter.

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## **5.6         **Employment with a Subsidiary.  For purposes of this Section and **Section 10**, employment with the Company includes employmentwith any subsidiary of the Company.  Achange of employment between the Company and any subsidiary or betweensubsidiaries is not a termination of employment under this Agreement.

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# **6.**                                      Nontransferability.

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TheOption shall not be transferable other than by will or by the laws of descentand distribution, and during the lifetime of the Optionee, the Option shall beexercisable only by the Optionee.

 

# **7.**                                      Securities Law Restrictions.

# ** **

TheOption may not be exercised at any time unless, in the opinion of counsel forthe Company, the issuance and sale of the Shares issued upon such exercise isexempt from

 

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registration under the Securities Act of 1933, asamended, or any other applicable federal, state or foreign securities law, ruleor regulation, or the Shares have been duly registered under such laws.  The Company intends to register the Sharesissuable upon the exercise of the Option; however, until the Shares have been registered under allapplicable laws, the Optionee shall represent, warrant and agree, as acondition to the exercise of the Option, that the Shares are being purchasedfor investment only and without a view to any sale or distribution of suchShares and that such Shares shall not be transferred or disposed of in anymanner without registration under such laws, unless it is the opinion ofcounsel for the Company that such a disposition is exempt from suchregistration.  The Optionee acknowledgesthat an appropriate legend giving notice of the foregoing restrictions shallappear conspicuously on all certificates evidencing the Shares issued upon theexercise of the Option.

 

# **8.**                                      Limitation or Cancellation of Award.

# ** **

If theOptionee engages in “**Detrimental Activity**”(as defined in the Plan), the Committee may, notwithstanding any otherprovision in this Agreement to the contrary, cancel, rescind, suspend, withholdor otherwise restrict or limit any unexpired or unexercised Option as of thefirst date the Optionee engages in the Detrimental Activity, unless soonerterminated by operation of another term of this Agreement, the Plan or anyother agreement.

 

# **9.**                                      Effect of Change in Control.

# ** **

## **9.1         **Vesting.  Except as hereinafter provided, upon theoccurrence of a Change in Control, all outstanding unvested Options shallbecome immediately and fully exercisable, and shall remain exercisable asotherwise provided in this Agreement. However, notwithstanding the forgoing sentence, the vesting of anoutstanding unvested Option shall not so accelerate if and to the extent: (i)such Option is, in connection with a Corporate Transaction (as defined inSection 2.6(c) of the Plan and excluding Corporate Transactions which do notconstitute a Change in Control), either to be assumed by the successorcorporation (or parent thereof) or to be replaced with a comparable option topurchase shares of the capital stock of the successor corporation (or parentthereof), (ii) such Option is to be replaced with a cash incentive program ofthe successor corporation which preserves the spread existing on the unvestedOption shares at the time of the Corporate Transaction and provides forsubsequent payout in accordance with the same vesting schedule applicable tosuch Option, or (iii) the acceleration of such Option is subject to otherlimitations imposed by the Committee at the time of the Option grant. Thedetermination of option comparability under clause (i) above shall be made bythe Committee as constituted prior to the Change in Control, and itsdetermination shall be final, binding and conclusive.  Ifthe successor company (or parent thereof) assumes the outstanding Option inconnection with a Corporate Transaction, and at the time of or within                followingsuch Corporate Transaction: (i) the Optionee is offered a Lesser Position (ashereinafter defined) in replacement of the position held by him immediatelyprior to the Corporate Transaction; or (ii) the Optionee’s service terminatesby reason of an Involuntary Termination (as hereinafter defined), then,effective as of the date on which such Lesser Position is offered to the Optioneeor the effective date of such Involuntary Termination, respectively, thevesting of the Option shall automatically accelerate in part so that, inaddition to the number of vested shares of Common Stock for which the Option isexercisable at such time, the Option shall become exercisable with respect to                                     ,but not exceeding the unvested portion of such Option grant. Following suchacceleration, to the extent the Optionee continues in service, the vestingschedule for the Option shall continue under the original

 

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## vesting plan, except for                                         .  In the event that both the offer of a LesserPosition and a subsequent Involuntary Termination of an Optionee’s Serviceoccur within                     following a Corporate Transaction, then acceleration shall occur only inconnection with the offer of such Lesser Position and no additionalacceleration shall occur in connection with such subsequent InvoluntaryTermination.  Following an InvoluntaryTermination that occurs within                     following a Corporate Transaction, the Option shall remain exercisable for anyor all of the vested Shares until the earlier of: (i) the expiration of theExercise Term; or (ii) the expiration of the                     period measured from the effective date of the Involuntary Termination.

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“**Involuntary Termination**” shall mean thetermination of the Service of any individual which occurs by reason of: (i)such individual’s involuntary dismissal or discharge by the Company for reasonsother than Cause, or (ii) such individual’s voluntary resignation following theoffer to such individual of a Lesser Position in replacement of the positionheld by him immediately prior to the Corporate Transaction.

 

“**Lesser Position**” for an Optionee shall meana new position or a change in the Optionee’s position which, compared with suchindividual’s position with the Company immediately prior to the Corporate Transaction,(i) offers a lower level of compensation (including base salary, fringebenefits and target bonuses under any corporate-performance based bonus orincentive programs), (ii) materially reduces such individual’s duties or levelof responsibility, or (iii)includes assignment to an office more than        miles from the Company’s office at which the employee serves prior to theCorporate Transaction.

 

## **9.2         **Termination of Options.  The Committee, in its discretion, mayterminate the Option upon a Change in Control; provided, however, that at least           prior to theChange in Control (or, if not feasible to provide          notice, within a reasonable period prior to the Change in Control), theCommittee notifies the Optionee that the Option will be terminated and providesthe Optionee, either, at the election of the Committee, (i) a cash paymentequal to the difference between the Fair Market Value of the vested Options(including Options that would become vested upon the Change in Control in accordancewith **Section 9.1** above) and the ExercisePrice for such Options, computed as of the date of the Change in Control and tobe paid no later than 3 business days after the Change in Control, or (ii) theright to exercise all vested Options (including Options that would becomevested upon the Change in Control in accordance with **Section 9.1**above) immediately prior to the Change in Control.

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**9.3**          Liquidation/Dissolution.  Upon the effective date of the liquidation ordissolution of the Company without a successor, the Option shall terminate;provided that the Optionee shall, in such event, have the right immediatelyprior to such dissolution or liquidation, to exercise this Option in whole orin part whether or not previously vested.

 

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

# ** **

Nothingin this Agreement or the Plan shall be interpreted or construed to confer uponthe Optionee any right with respect to continuance of employment by the Companyor any subsidiary, nor shall this Agreement or the Plan interfere in any waywith the right of the Company or a subsidiary to terminate the Optionee’semployment at any time.

 

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# **11.**                               Adjustments.

# ** **

In theevent of a change in capitalization, the Committee may make appropriate adjustmentsto the number and class of Shares or other stock or securities subject to theOption and the purchase price for such Shares or other stock orsecurities.  The Committee’s adjustmentshall be made in accordance with the provisions of **Section 4.3**of the Plan and shall be effective and final, binding and conclusive for allpurposes of the Plan and this Agreement.

 

# **12.**                               Withholding of Taxes.

# ** **

If theOptionee is entitled to receive Shares upon exercise of the Option, theOptionee shall pay an amount equal to the federal, state, local and foreignincome taxes and other amounts as may be required by law to be withheld (the “**Withholding Taxes**”), if any, to the Company in cash prior tothe issuance of such Shares.  Insatisfaction of the Withholding Taxes, the Optionee may make a written election(the “**Tax Election**”), to have withheld aportion of the Shares issuable to him or her upon exercise of the Option,having an aggregate Fair Market Value equal to the minimum required WithholdingTaxes, provided that, if the Optionee may be subject to liability under Section16(b) of the Exchange Act, the election must comply with the requirementsapplicable to Share transactions by such Optionee.

 

If theOptionee makes a disposition, within the meaning of Section 424(c) of the Codeand regulations promulgated thereunder, of any Share or Shares issued to himpursuant to his exercise of the Option within the two-year period commencing onthe day after the Grant Date or within the one-year period commencing on theday after the date of transfer of such Share or Shares to the Optionee pursuantto such exercise, the Optionee shall, within ten (10) days of such disposition,notify the Company thereof, by delivery of written notice to the Company at itsprincipal executive office, and immediately deliver to the Company the amountof Withholding Taxes.

 

# **13.**                               Modification of Agreement.

# ** **

Exceptas provided in **Section 9**, this Agreement may bemodified, amended, suspended or terminated, and any terms or conditions may bewaived, only by a written instrument executed by the parties hereto.

 

# **14.**                               Severability.

# ** **

Shouldany provision of this Agreement be held by a court of competent jurisdiction tobe unenforceable or invalid for any reason, the remaining provisions of thisAgreement shall not be affected by such holding and shall continue in fullforce in accordance with their terms.

 

# **15.**                               Governing Law.

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Thevalidity, interpretation, construction and performance of this Agreement shallbe governed by the laws of the State of Delaware without giving effect to theconflicts of laws principles thereof.

 

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# **16.**                               Successors in Interest.

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ThisAgreement shall inure to the benefit of and be binding upon each successorcorporation to the Company.  This Agreementshall inure to the benefit of the Optionee’s legal representatives.  All obligations imposed upon the Optionee andall rights granted to the Company under this Agreement shall be final, bindingand conclusive upon the Optionee’s heirs, executors, administrators andsuccessors.

 

# **17.**                               Resolution of Disputes.

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Anydispute or disagreement which may arise under, or as a result of, or in any wayrelate to, the interpretation, construction or application of this Agreementshall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusiveon the Optionee and the Company for all purposes.

 

# **18.**                               Exception From Code Section 409A.

# ** **

The Agreement is intended to satisfy the requirementsfor an exception from coverage under Code Section 409A.  The Agreement may be amended or interpretedby the Committee as it determines necessary or appropriate to satisfy suchexception from Code Section 409A.

 

[EXHIBIT FOLLOWS]

 

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**EXHIBIT A**

 

**OPTION EXERCISE FORM**

 

I,                                                           ,do hereby exercise the Option with a Grant Date of                                           granted to me pursuant to the Option Agreement and the Grant Notice.  The Shares being purchased and the TotalOption Exercise Price are set forth below:

 

 
| Number of  Shares:               |                                   Shares |
|----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |                                                                                                                                                                                                     |
| Option Exercise  Price Per Share | $                     per Share                                                                 |
|                             |                                                                                                                                                                                                     |
| Total Option  Exercise Price:    | =   $                         .                                   |

 

 

The Total Option ExercisePrice is included with this Form.

 

 
|      |   | Date:  |   |
|-----------|--------|--------|--------|
| Signature |   |   |

 

 

Send or deliver this Formwith an original signature to:

 

Internet Security Systems, Inc.

6303 Barfield RoadAtlanta, Georgia 30328Attn:                                              

 

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[EMPLOYEE]

 
| ** **                                                                                  | ** ** | **Internet  Security Systems, Inc.**  ID: 58-2362189  6303 Barfield Road  Atlanta, GA 30328 |
|---------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------|
| ** **                                                                                  | ** ** | ** **                                                                                  |
| **Notice  of Grant of Stock Options and****Option Agreement – Incentive Stock Option** | ** ** | **Plan:  2005****ID:**                                                                      |

 

 

Internet SecuritySystems, Inc. (ISS) has granted you the following incentive stock option topurchase shares of its Common Stock (“Shares”):

 
| **Optionee:**          |                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Grant  Date:**       | **                                                                      ** |
| **Exercise  Price:**   | **$                  Per Share**                                                                                                                                                                                                                                                                                                               |
| **Number  of Shares:** | **                                **                                                                                                                                                                                                                                     |
| **Expiration  Date:**  | **                                                                      ** |

 

VESTING SCHEDULE:  The Option shall vest and become exercisablein accordance with the following schedule:                                                                                                           .  In no event shall the Option become vestedfor Option Shares after Optionee’s cessation of Service.

 

OPTION TERM:  The term of the Option will expire on theExpiration Date, which is **        **years from Grant Date.  At the ExpirationDate all outstanding unexercised (vested or unvested) Options shall becancelled.

 

EMPLOYMENTRELATIONSHIP:  ISS is an at-willemployer.  Nothing in this Notice, theStock Option Agreement, or in the 2005 Stock Incentive Plan, shall confer uponyou any right to continued employment for any period of specific duration orinterfere with or otherwise restrict in any way the rights of ISS or you, whichrights are hereby expressly reserved by each, to terminate the employmentrelationship at any time for any reason, with or without cause.

 

DEFINITIONS:  All capitalized terms in this Notice shallhave the meaning assigned to them in this Notice or in the attached Stock OptionAgreement.

 

By your signature and thesignature on behalf of ISS below, you and ISS agree that this Option grant isgoverned by the terms and conditions of this Notice, ISS’ 2005 Stock IncentivePlan and the Stock Option Agreement.  The2005 Stock Incentive Plan, applicable prospectus and FAQ are available onlineathttp://                                                                                or from Human Resources.

 

 

 
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| Internet Security  Systems, Inc. |
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