**EXHIBIT 10.18**

 

**[DIRECTORS]**

 

**NOTICE**

 

This Restricted Stock Award Agreement(“Agreement”) will be valid only if the Grantee executes and delivers thisAgreement and the attached Stock Power of Attorney to Internet SecuritySystems, Inc., Attn:                            ,on or before                       ,20    .

 

**RESTRICTED STOCK 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 Award underthe Plan;

 

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

 

# **1.**             Award of Restricted Stock

#  

## 1.1           TheCompany hereby grants to the Grantee an award of                         (              )Shares of restricted stock (“Restricted Stock”), subject to, and in accordancewith, the restrictions, terms and conditions set forth in this Agreement.  The grant date of this award of RestrictedStock is                ,20     (“Grant Date”).

##  

## 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.

##  

# **2.**             Restrictions

#  

## 2.1           Subjectto Sections 2.2, 2.3, and 2.4 below, if the Grantee continues to performservices as a director for the Company or a Subsidiary, the Grantee shallbecome vested in the Restricted Stock over the         -yearperiod from the Grant Date, as follows:  ***[***        of the shares of Restricted Stock shall vest at the end of each                             beginning                         after

 

----

 

## the Grant Date***] [***          of the shares of Restricted Stock shall vest on                                 ,           of the shares ofRestricted Stock shall vest on                                 ,and            of the shares of Restricted Stock shall vest on                                 ***]*** (each such dateshall be a “Vesting Date”) such that on                ,20     (the “Final Vesting Date”) all of the shares ofRestricted Stock shall be fully vested. On each Vesting Date, Grantee shall own the Vested Shares of RestrictedStock free and clear of all restrictions imposed by this Agreement (exceptthose imposed by Section 3.4 below).  Forpurposes of this Agreement, performance of services as a director for anySubsidiary of the Company, or service as an employee of the Company or anySubsidiary of the Company, shall be considered performing service as a directorfor the Company, and references to performing services as a director for theCompany or termination of services for or with the Company, shall includeservices as an employee of the Company or a Subsidiary.

##  

## 2.2           Inthe event prior to the Vesting Date, Grantee dies while performing services asa director of the Company, Grantee’s service as a director is terminated byreason of Disability or Grantee’s Retirement, the unvested Shares of RestrictedStock shall become fully vested and non-forfeitable as of the date of Grantee’sdeath, Disability or Retirement.  TheCompany shall transfer vested Shares of Restricted Stock, free and clear of anyrestrictions imposed by this Agreement (except for Section 3.4) to Grantee or,if applicable, to Grantee’s surviving spouse or, if none, to his estate, assoon as practical after his or her date of death, Disability or Retirement.

##  

## 2.3           Exceptfor death, Disability or Retirement as provided in Section 2.2, a Change inControl as provided in Section 2.4, or unless the Committee in its solediscretion determines otherwise with respect to all or any portion of theShares of Restricted Stock, if Grantee’s service as a director terminates priorto the Vesting Date, all unvested Shares of Restricted Stock shall beimmediately forfeited.

##  

## 2.4           Notwithstandingthe other provisions of this Agreement, in the event of a Change in Controlprior to Grantee’s Final Vesting Date, the unvested shares of Restricted Stockshall become fully vested and nonforfeitable as of the date of the Change inControl.  On the date of the Change inControl, the Company shall deliver to Grantee a certificate(s) for suchRestricted Stock, free and clear of any restrictions imposed by this Agreement.

##  

## 2.5           Exceptfor a Permitted Transfer, the Restricted Stock may not be sold, assigned,transferred, pledged or otherwise encumbered prior to the date Grantee becomesvested in the Restricted Stock.  Forpurposes of this Agreement, a Permitted Transfer means (i) a gratuitoustransfer of the Restricted Stock, provided and only if Grantee obtains theCompany’s prior written consent to such transfer, (ii) a transfer of title tothe Restricted Stock effected pursuant to Grantee’s will or the laws ofinterstate succession following Grantee’s death or, (iii) a transfer to theCompany in pledge as security for any purchase-money indebtedness incurred byGrantee in connection with the acquisition of the Restricted Stock.

##  

# **3.**             Stock; Dividends; Voting

#  

## 3.1           Upondelivery to the Company of the executed Stock Powers attached hereto, theCompany shall register on the Company books stock certificate(s) evidencing theshares of Restricted Stock in the name of the Grantee.  Physical possession or custody of such stock

 

2

----

 

## certificate(s) shall be retained by theCompany until such time as the shares of Restricted Stock are fully vested inaccordance with Section 2.  While in itspossession, the Company reserves the right to place a legend on the stockcertificate(s) restricting the transferability of such certificates andreferring to the terms and conditions (including forfeiture) of this Agreementand the Plan.  Upon forfeiture of all ora portion of the shares of Restricted Stock, the stock certificate(s) held onbehalf of the Grantee for such forfeited Restricted Stock shall be transferredto the Company pursuant to the executed Stock Power described above.

##  

## 3.2           Duringthe period the Restricted Stock is not vested (and has not been forfeited), theGrantee shall be entitled to receive dividends and/or other distributionsdeclared on such Restricted Stock and Grantee shall be entitled to vote suchRestricted Stock.

##  

## 3.3           Inthe event of a change in capitalization, the number and class of shares ofRestricted Stock or other securities that Grantee shall be entitled to, andshall hold, pursuant to this Agreement shall be appropriately adjusted orchanged to reflect the change in capitalization, provided that any suchadditional shares of Restricted Stock or additional or different shares orsecurities shall remain subject to the restrictions in this Agreement.  If additional shares of common stock of theCompany or another corporation, or other consideration is issued in connectionwith the Restricted Stock at a time at which the restrictions specified in thisAgreement have not lapsed, the Grantee shall execute and deliver to theCommittee additional Stock Power(s) with respect to any such shares of stock,deliver to the Committee the stock certificates representing such shares, andforward to the Committee any such other consideration.  Such stock certificates and/or other considerationshall be retained by the Company and shall be credited to the account of theGrantee and shall be distributed to the Grantee, subject to forfeiture and theother terms and conditions of this Agreement and the Plan, at the same time asthe shares of Restricted Stock are to be distributed free of all restrictions.

##  

## 3.4           TheGrantee represents and warrants that he is acquiring the Restricted Stock forinvestment purposes only, and not with a view to distribution thereof.  The Grantee is aware that the RestrictedStock may not be registered under the federal or any state securities laws andthat, in addition to the other restrictions on the Restricted Stock, the shareswill not be able to be transferred unless an exemption from registration isavailable.  By making this award ofRestricted Stock, the Company is not undertaking any obligation to register theRestricted Stock under any federal or state securities laws.

##  

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

#  

Nothing in this Agreement or the Plan shallbe interpreted or construed to confer upon the Grantee any right with respectto continuance of performance of services as a director for the Company or aSubsidiary, nor shall this Agreement or the Plan interfere in any way with theright of the Company or a Subsidiary to terminate the Grantee’s service as adirector at any time, subject to Grantee’s rights under this Agreement.

 

# **5.**             Taxes and Withholding

#  

The Grantee shall be responsible for allfederal, state and local income taxes payable with respect to this award ofRestricted Stock and any employment taxes payable by Grantee.  The

 

3

----

 

Grantee shallhave the right to make such elections under the Internal Revenue Code of 1986,as amended, as are available in connection with this award of Restricted Stock,including a Section 83(b) election, provided, however, that Granteeacknowledges and agrees that it is Grantee’s responsibility, and not theCompany’s, to prepare and timely file any election under Section 83(b) (even ifGrantee requests the Company to do such filing).  The Company and Grantee agree to report thevalue of the Restricted Stock in a consistent manner for federal income taxpurposes.  The Company shall have the rightto retain and withhold from any payment of Restricted Stock the amount of taxesrequired by any government to be withheld or otherwise deducted and paid withrespect to such payment.  The Company mayrequire Grantee to reimburse the Company for any such taxes required to bewithheld and may withhold any distribution in whole or in part until theCompany is so reimbursed.  In lieuthereof, the Company shall have the right to withhold from any other cashamounts due to Grantee an amount equal to such taxes required to be withheld orwithhold and cancel (in whole or in part) a number of shares of RestrictedStock having a market value not less than the amount of such taxes.

 

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

#  

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

#  

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

#  

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

#  

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

#  

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.

 

4

----

 

# **11.**          Resolution of Disputes

#  

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.

 

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

 

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

 

5

----

 

**STOCK POWER**

 

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to                                                                                                                                         (          ) shares of thecommon stock of Internet Security Systems, Inc. (the “Company”) registered onthe books of the Company in the name of the undersigned (whether a certificatehas been issued or not), and does hereby irrevocably constitute and appoint                                                                   attorney to transfer said stock on the books of the Company, with full power ofsubstitution in the premises.

 

 
| DATED: |   |   |   |
|--------|--------|--------|--------|
|   |   |   |
|   |   |   |
|   | Name:  |   |

 

6

----