Document:

EXHIBIT
10.14

 

[EMPLOYEE]

 

INTERNET SECURITY SYSTEMS, INC.

2005 STOCK INCENTIVE PLAN

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

THIS OPTION AGREEMENT (the “Agreement”) is
entered 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”).

 

W  I  T  N  E
S  S  E  T  H:

 

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 Plan
granted 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’s
Common Stock (the “Shares”) is
hereby granted to the Optionee (the “Option”).

 

1.2          Number of Shares.  The number of Shares that the Optionee can
purchase upon exercise of the Option and the dates upon which the Option can
first be exercised are set forth in the Grant Notice.

 

1.3          Option Exercise Price.  The price the Optionee must pay to exercise
the Option (the “Option Exercise Price”) is set
forth in the Grant Notice.

 

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

 

1.5          Type of Option.  The Option is intended to be a Nonqualified
Stock Option.  It is not intended to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended from time to time, or any successor
provision thereto.

 

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

 

1.7          Condition.  The Option is conditioned on the Optionee’s
execution of the Grant Notice.  If the
Grant Notice is not executed by the Optionee, the Option may be canceled by the
Committee.

 

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2.                                      Duration.

 

The
Option shall be exercisable to the extent vested as provided below and in the
manner 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.

 

The
Option shall vest, and may be exercised, with respect to the Shares, on or
after the dates set forth in the Grant Notice, subject to earlier vesting of
the Option as provided in Section 5 and
subject to earlier termination of the Option as provided in Section 1.7 and Section 5 or in
the Plan.  The right to purchase the
Shares as they become vested shall be cumulative and shall continue during the
Exercise Term unless sooner terminated as provided herein.  Notwithstanding the foregoing, if the
Optionee is a non-exempt employee for purposes of the Fair Labor Standards Act
of 1938 (“FLSA”), the Optionee may
not exercise any Option (even if the Option is otherwise vested) prior to the
date that is six (6) months after the Grant Date unless the Optionee’s
employment has terminated due to death, Disability, Retirement or unless a
Change in Control has occurred after the Grant Date.

 

4.                                      Manner of Exercise and Payment.

 

4.1          Delivery.  To exercise the Option, the Optionee must
deliver a completed copy of the Option Exercise Form,
attached hereto as Exhibit A, to
the address indicated on such Form or such other address designated by the
Company from time to time.  The Option
may 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 the
Option Exercise Form, the Company shall deliver certificates evidencing the
Shares to the Optionee, duly endorsed for transfer to the Optionee, free and
clear of all liens, security interests, pledges or other claims or
charges.  Contemporaneously with the
delivery of the Option Exercise Form, Optionee shall tender the Option Exercise
Price to the Company, by cash, check, wire transfer or such other method of
payment (e.g., delivery of, or attestation to, Shares already owned) as may be
provided pursuant to the Plan.

 

4.2          No Rights as Stockholder.  The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with respect to any Shares
subject to the Option until (i) the Option shall have been exercised pursuant
to the terms of this Agreement and the Optionee shall have paid the full purchase
price for the number of Shares in respect of which the Option was exercised,
(ii) the Company shall have issued and delivered the Shares to the Optionee,
and (iii) the Optionee’s name shall have been entered as a stockholder of
record of the Shares, whereupon the Optionee shall have full voting and other
ownership rights with respect to such Shares.

 

5.                                      Termination of Employment.

 

5.1          Termination by Death.  In the event the Optionee dies while actively
employed by the Company, all outstanding unvested Options shall expire, and any
Options vested as of his date

 

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of termination shall remain exercisable at any time
prior to the end of the Exercise Term, or for one (1) year after the date of
death, whichever period is shorter, by such person(s) as shall have been named
as the Optionee’s beneficiary, or in the absence of a designated beneficiary,
by the executor or representative of the Optionee’s estate.

 

5.2          Termination by Disability.  If the Optionee’s employment with the Company
is terminated by reason of Disability, all outstanding unvested Options shall
expire as of the date the Committee determines the definition of Disability to
have been satisfied by the Optionee, and any Options vested as of his date of termination
shall remain exercisable at any time prior to the end of the Exercise Term, or
for one (1) year after the date that the Committee determines the definition of
Disability to have been satisfied, whichever period is shorter.

 

5.3          Termination for Retirement.  If the Optionee’s employment with the Company
is terminated by reason of Retirement, all outstanding unvested Options shall
expire, and any Options vested as of his date of termination shall remain
exercisable 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.

 

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

 

5.5          Termination of Employment for Other
Reasons.  If the Optionee’s
employment is terminated by the Company without Cause, or the Optionee
voluntarily terminates his employment, all outstanding unvested Options shall
expire, and any Options vested as of his date of termination shall remain
exercisable 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 is
shorter.

 

5.6          Employment with a Subsidiary.  For purposes of this Section and Section 10, employment with the Company includes employment
with any subsidiary of the Company.  A
change of employment between the Company and any subsidiary or between
subsidiaries is not a termination of employment under this Agreement.

 

6.                                      Nontransferability.

 

The
Option shall not be transferable other than by will or by the laws of descent
and distribution, and during the lifetime of the Optionee, the Option shall be
exercisable only by the Optionee. 
Notwithstanding the foregoing, any portion or all of the Option which is
vested may be transferred, in whole or in part, without consideration, to a
Permitted Transferee.  Appropriate
evidence of any such transfer to the Permitted Transferees shall be delivered
to the Company on such forms as the Committee or Company shall prescribe and
shall comply with and indicate the Optionee’s (if during the lifetime of the
Optionee) and the Permitted Transferee’s agreement to abide by the Company’s
then current stock option transfer guidelines. 
If all or part of the Option is transferred to a Permitted Transferee,
the Permitted Transferee shall remain subject to all terms and conditions
applicable to such Option prior to the transfer.

 

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7.                                      Securities Law Restrictions.

 

The
Option may not be exercised at any time unless, in the opinion of counsel for
the Company, the issuance and sale of the Shares issued upon such exercise is
exempt from registration under the Securities Act of 1933, as amended, or any
other applicable federal, state or foreign securities law, rule or regulation,
or the Shares have been duly registered under such laws.  The Company intends to register the Shares
issuable upon the exercise of the Option; however, until the Shares have been registered under all
applicable laws, the Optionee shall represent, warrant and agree, as a
condition to the exercise of the Option, that the Shares are being purchased
for investment only and without a view to any sale or distribution of such
Shares and that such Shares shall not be transferred or disposed of in any
manner without registration under such laws, unless it is the opinion of
counsel for the Company that such a disposition is exempt from such
registration.  The Optionee acknowledges
that an appropriate legend giving notice of the foregoing restrictions shall
appear conspicuously on all certificates evidencing the Shares issued upon the
exercise of the Option.

 

8.                                      Limitation or Cancellation of Award.

 

If the
Optionee engages in “Detrimental Activity” (as defined in the Plan), the
Committee may, notwithstanding any other provision in this Agreement to the
contrary, cancel, rescind, suspend, withhold or otherwise restrict or limit any
unexpired or unexercised Option as of the first date the Optionee engages in
the Detrimental Activity, unless sooner terminated by operation of another term
of this Agreement, the Plan or any other agreement.

 

9.                                      Effect of Change in Control.

 

9.1          Vesting.  Except as hereinafter provided, upon the
occurrence of a Change in Control, all outstanding unvested Options shall
become immediately and fully exercisable, and shall remain exercisable as
otherwise provided in this Agreement. 
However, notwithstanding the forgoing sentence, the vesting of an
outstanding unvested Option shall not so accelerate if and to the extent: (i)
such Option is, in connection with a Corporate Transaction (as defined in
Section 2.6(c) of the Plan and excluding Corporate Transactions which do not
constitute a Change in Control), either to be assumed by the successor
corporation (or parent thereof) or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation (or parent
thereof), (ii) such Option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing on the unvested
Option shares at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such Option, or (iii) the acceleration of such Option is subject to other
limitations imposed by the Committee at the time of the Option grant. The
determination of option comparability under clause (i) above shall be made by
the Committee as constituted prior to the Change in Control, and its determination
shall be final, binding and conclusive. 
If the successor company (or
parent thereof) assumes the outstanding Option in connection with a Corporate
Transaction, and at the time of or within                     
following such Corporate Transaction: (i) the Optionee is offered a Lesser
Position (as hereinafter defined) in replacement of the position held by him
immediately prior to the Corporate Transaction; or (ii) the Optionee’s service
terminates by reason of an Involuntary Termination (as hereinafter defined),
then, effective as of the date on which such Lesser Position is offered to the
Optionee or the effective date of such Involuntary Termination, respectively,
the vesting of the Option shall automatically accelerate in part so that, in

 

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addition to the number of
vested shares of Common Stock for which the Option is exercisable at such time,
the Option shall become exercisable with respect to                                         ,
but not exceeding the unvested portion of such Option grant. Following such
acceleration, to the extent the Optionee continues in service, the vesting
schedule for the Option shall continue under the original vesting plan, except
for the                                         .  In the event that both the offer of a Lesser
Position and a subsequent Involuntary Termination of an Optionee’s Service
occur within                     
following a Corporate Transaction, then acceleration shall occur only in
connection with the offer of such Lesser Position and no additional
acceleration shall occur in connection with such subsequent Involuntary
Termination.  Following an Involuntary
Termination that occurs within                     
following a Corporate Transaction, the Option shall remain exercisable for any
or all of the vested Shares until the earlier of: (i) the expiration of the
Exercise Term; or (ii) the expiration of the                     
period measured from the effective date of the Involuntary Termination.

 

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

 

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

 

9.2          Termination of Options.  The Committee, in its discretion, may
terminate the Option upon a Change in Control; provided, however, that at least
            
prior to the Change in Control (or, if not feasible to provide            
notice, within a reasonable period prior to the Change in Control), the
Committee notifies the Optionee that the Option will be terminated and provides
the Optionee, either, at the election of the Committee, (i) a cash payment
equal to the difference between the Fair Market Value of the vested Options
(including Options that would become vested upon the Change in Control in
accordance with Section 9.1 above) and the
Exercise Price for such Options, computed as of the date of the Change in
Control and to be paid no later than 3 business days after the Change in
Control, or (ii) the right to exercise all vested Options (including Options
that would become vested upon the Change in Control in accordance with Section 9.1 above) immediately prior to the Change in
Control.

 

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

 

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10.                               No Right to Continued Employment.

 

Nothing
in this Agreement or the Plan shall be interpreted or construed to confer upon
the Optionee any right with respect to continuance of employment by the Company
or any subsidiary, nor shall this Agreement or the Plan interfere in any way
with the right of the Company or a subsidiary to terminate the Optionee’s
employment at any time.

 

11.                               Adjustments.

 

In the
event of a change in capitalization, the Committee may make appropriate
adjustments to the number and class of Shares or other stock or securities
subject to the Option and the purchase price for such Shares or other stock or
securities.  The Committee’s adjustment
shall be made in accordance with the provisions of Section 4.3
of the Plan and shall be effective and final, binding and conclusive for all
purposes of the Plan and this Agreement.

 

12.                               Withholding of Taxes.

 

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

 

13.                               Modification of Agreement.

 

Except
as provided in Section 9, this Agreement may be
modified, amended, suspended or terminated, and any terms or conditions may be
waived, only by a written instrument executed by the parties hereto.

 

14.                               Severability.

 

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

 

15.                               Governing Law.

 

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

 

16.                               Successors in Interest.

 

This
Agreement shall inure to the benefit of and be binding upon each successor
corporation to the Company.  This
Agreement shall inure to the benefit of the Optionee’s legal

 

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representatives. 
All obligations imposed upon the Optionee and all rights granted to the
Company under this Agreement shall be final, binding and conclusive upon the
Optionee’s heirs, executors, administrators and successors.

 

17.                               Resolution of Disputes.

 

Any
dispute or disagreement which may arise under, or as a result of, or in any way
relate to, the interpretation, construction or application of this Agreement
shall be determined by the Committee. 
Any determination made hereunder shall be final, binding and conclusive
on the Optionee and the Company for all purposes.

 

18.                               Exception From Code Section 409A.

 

The Agreement is intended to satisfy the requirements
for an exception from coverage under Code Section 409A.  The Agreement may be amended or interpreted
by the Committee as it determines necessary or appropriate to satisfy such
exception from Code Section 409A.

 

[EXHIBIT FOLLOWS]

 

7

 

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 Total Option
Exercise Price are set forth below:

 

 

	
  Number of
  Shares:

  	
                                  
  Shares

  
	
   

  	
   

  
	
  Option Exercise
  Price Per Share

  	
  $                     per Share

  
	
   

  	
   

  
	
  Total Option
  Exercise Price:

  	
  =   $                         .

  

 

 

The Total Option Exercise
Price is included with this Form.

 

 

	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  

 

 

Send or deliver this Form
with an original signature to:

 

Internet Security Systems, Inc.

6303 Barfield Road

Atlanta, Georgia 30328

Attn:                                              

 

 

[EMPLOYEE]

 

	
   

  	
   

  	
  Internet
  Security Systems, Inc.

  ID: 58-2362189

  6303 Barfield Road

  Atlanta, GA 30328

  
	
   

  	
   

  	
   

  
	
  Notice
  of Grant of Stock Options and

  Option Agreement – Non-Qualified

  	
   

  	
  Plan:
  2005

  ID:

  

 

 

Internet Security
Systems, Inc. (ISS) has granted you the following non-qualified option to
purchase 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 exercisable
in accordance with the following schedule: 
                                                                                                          .  In no event shall the Option become vested
for Option Shares after Optionee’s cessation of Service.

 

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

 

EMPLOYMENT
RELATIONSHIP:  ISS is an at-will
employer.  Nothing in this Notice, the
Stock Option Agreement, or in the 2005 Stock Incentive Plan, shall confer upon
you any right to continued employment for any period of specific duration or
interfere with or otherwise restrict in any way the rights of ISS or you, which
rights are hereby expressly reserved by each, to terminate the employment
relationship at any time for any reason, with or without cause.

 

DEFINITIONS:  All capitalized terms in this Notice shall
have the meaning assigned to them in this Notice or in the attached Stock
Option Agreement.

 

By your signature and the
signature on behalf of ISS below, you and ISS agree that this Option grant is
governed by the terms and conditions of this Notice, ISS’ 2005 Stock Incentive
Plan and the Stock Option Agreement.  The
2005 Stock Incentive Plan, applicable prospectus and FAQ are available online
at
http://                                                  or
from Human Resources.

 

	
   

  	
   

  
	
  Internet Security
  Systems, Inc.

  
	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
  DateEXHIBIT 10.15

 

[EMPLOYEES]

 

RESTRICTED STOCK AWARD AGREEMENT

under the

INTERNET SECURITY SYSTEMS, INC.

2005 STOCK INCENTIVE PLAN

 

THIS AGREEMENT, made and entered into as of
the            day of               ,
2005, by and between Internet Security Systems, Inc. (“the “Company”) and                       
(“Grantee”).

 

WITNESSETH THAT:

 

WHEREAS, the Company maintains the Internet
Security Systems, Inc. 2005 Stock Incentive Plan (the “Plan”), and the Grantee
has been selected by the Committee to receive a Restricted Stock Award under
the Plan;

 

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

 

1.             Award of Restricted Stock

 

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

 

1.2           This
Agreement shall be construed in accordance and consistent with, and subject to,
the provisions of the Plan (the provisions of which are incorporated herein by
reference) and, except as otherwise expressly set forth herein, the capitalized
terms used in this Agreement shall have the same definitions as set forth in
the Plan.

 

2.             Restrictions

 

2.1           Subject
to Section 2.2 below, if the Grantee remains employed by the Company or a
Subsidiary, the Grantee shall become vested in the Restricted Stock as
follows:            %
of the shares of Restricted Stock 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 shares of Restricted Stock shall be fully
vested.  On each Vesting Date, Grantee
shall own the Vested Shares of Restricted Stock free and clear of all
restrictions imposed by this Agreement (except those imposed by Section 3.4
below).  In the event, prior to the Final
Vesting Date, Grantee’s employment is terminated by the Company or Grantee
terminates employment (for any reason, including death or Disability), the
Restricted Stock shall cease to vest further and Grantee shall only be entitled
to the Restricted Stock that is vested as of Grantee’s date of
termination.  For purposes of this
Agreement, employment with any Subsidiary of the Company, or service as a
Director of the Company or any Subsidiary of the Company, shall be considered
employment with the Company, and references to employment by the Company or
termination

 

 

of employment by or with the Company, shall
include such employment by a Subsidiary or service as a Director.

 

2.2           Except
as hereinafter provided, upon the occurrence of a Change in Control prior to
the Grantee’s Final Vesting Date, all outstanding unvested shares of Restricted
Stock shall become immediately and fully vested and nonforfeitable as of the
date of the Change in Control and the Company shall deliver to Grantee a
certificate(s) for such Restricted Stock, free and clear of any restriction
imposed by this Agreement.  However,
notwithstanding the forgoing sentence, the vesting of outstanding unvested
shares of Restricted Stock shall not so accelerate if and to the extent: (i) such
Restricted Stock is, in connection with a Corporate Transaction (as defined in
Section 2.6(c) of the Plan and excluding Corporate Transactions which do not
constitute a Change in Control), either to be assumed by the successor
corporation (or parent thereof) or to be replaced with a comparable award of
restricted shares of the capital stock of the successor corporation (or parent
thereof), (ii) such award of shares of Restricted Stock is to be replaced with
a cash incentive program of the successor corporation which preserves the value
of the unvested shares of Restricted Stock at the time of the Corporate
Transaction and provides for subsequent vesting in accordance with the same
vesting schedule applicable to such shares of Restricted Stock, or (iii) the
acceleration of the vesting of such shares of Restricted Stock is subject to
other limitations imposed by the Committee at the time of the Restricted Stock
grant.  The determination of
comparability under clause (i) above shall be made by the Committee as
constituted prior to the Change in Control, and its determination shall be
final, binding and conclusive.  If the
successor company (or parent thereof) assumes the outstanding award of
Restricted Stock in connection with a Corporate Transaction, and at the time of
or within                     
following such Corporate Transaction: (i) the Grantee is offered a Lesser
Position (as hereinafter defined) in replacement of the position held by him
immediately prior to the Corporate Transaction; or (ii) the Grantee’s service
terminates by reason of an Involuntary Termination (as hereinafter defined),
then, effective as of the date on which such Lesser Position is offered to the
Grantee or the effective date of such Involuntary Termination, respectively,
the vesting of the shares of Restricted Stock shall automatically accelerate in
part so that, in addition to the number of shares of Restricted Stock which
have vested at such time, the forfeiture rights respecting the shares of
Restricted Stock shall expire with respect to                                   of
the unvested shares of Restricted Stock but not exceeding the unvested portion
of such grant.  Following such
acceleration, to the extent the Grantee continues in service, the vesting
schedule for the shares of Restricted Stock shall continue under the original
vesting schedule, except for the                                               .  In the event that both the offer of a Lesser
Position and a subsequent Involuntary Termination of a Grantee’s Service occur
within                     
following a Corporate Transaction, then acceleration of vesting shall occur
only in connection with the offer of such Lesser Position and no additional
acceleration shall occur in connection with such subsequent Involuntary
Termination.

 

The following
definitions shall apply for purposes of this Agreement:

 

“Involuntary Termination”  shall mean the termination of Grantee’s
service which occurs by reason of: (i) Grantee’s involuntary dismissal or
discharge by the Company for reasons other than Cause, or (ii) Grantee’s
voluntary resignation following the offer to Grantee of a Lesser Position in
replacement of the position held by Grantee immediately prior to the Corporate
Transaction.

 

2

 

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

 

2.3           Except
for a Permitted Transfer, the Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date Grantee becomes
vested in the Restricted Stock.  For
purposes of this Agreement, a Permitted Transfer means (i) a gratuitous
transfer of the Restricted Stock, provided and only if Grantee obtains the
Company’s prior written consent to such transfer, (ii) a transfer of title to
the Restricted Stock effected pursuant to Grantee’s will or the laws of
interstate succession following Grantee’s death, or (iii) a transfer to the
Company in pledge as security for any purchase-money indebtedness incurred by
Grantee in connection with the acquisition of the Restricted Stock.

 

3.             Stock; Dividends; Voting

 

3.1           Upon
delivery to the Company of the executed Stock Powers attached hereto, the
Company shall register on the Company books stock certificate(s) evidencing the
shares of Restricted Stock in the name of the Grantee.  Physical possession or custody of such stock
certificate(s) shall be retained by the Company until such time as the shares
of Restricted Stock are fully vested in accordance with Section 2.  While in its possession, the Company reserves
the right to place a legend on the stock certificate(s) restricting the
transferability of such certificates and referring to the terms and conditions
(including forfeiture) of this Agreement and the Plan.  Upon forfeiture of all or a portion of the
shares of Restricted Stock, the stock certificate(s) held on behalf of the
Grantee for such forfeited Restricted Stock shall be transferred to the Company
pursuant to the executed Stock Power described above.

 

3.2           During
the period the Restricted Stock is not vested (and has not been forfeited), the
Grantee shall be entitled to receive dividends and/or other distributions
declared on such Restricted Stock and Grantee shall be entitled to vote such
Restricted Stock.

 

3.3           In
the event of a change in capitalization, the number and class of shares of
Restricted Stock or other securities that Grantee shall be entitled to, and
shall hold, pursuant to this Agreement shall be appropriately adjusted or
changed to reflect the change in capitalization, provided that any such
additional shares of Restricted Stock or additional or different shares or
securities shall remain subject to the restrictions in this Agreement.  If additional shares of common stock of the
Company or another corporation, or other consideration is issued in connection
with the Restricted Stock at a time at which the restrictions specified in this
Agreement have not lapsed, the Grantee shall execute and deliver to the
Committee additional Stock Power(s) with respect to any such shares of stock,
deliver to the Committee the stock certificates representing such shares, and
forward to the Committee any such other consideration.  Such stock certificates and/or other
consideration shall be retained by the Company and shall be credited to the
account of the Grantee and shall be distributed to the Grantee, subject to
forfeiture

 

3

 

and the other terms and conditions of this
Agreement and the Plan, at the same time as the shares of Restricted Stock are
to be distributed free of all restrictions.

 

3.4           The
Grantee represents and warrants that he is acquiring the Restricted Stock for
investment purposes only, and not with a view to distribution thereof.  The Grantee is aware that the Restricted
Stock may not be registered under the federal or any state securities laws and
that, in addition to the other restrictions on the Restricted Stock, the shares
will not be able to be transferred unless an exemption from registration is
available.  By making this award of
Restricted Stock, the Company is not undertaking any obligation to register the
Restricted Stock under any federal or state securities laws.

 

4.             No Right to Continued Employment

 

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

 

5.             Taxes and Withholding

 

The Grantee shall be responsible for all
federal, state and local income taxes payable with respect to this award of
Restricted Stock and any employment taxes payable by Grantee as an
employee.  The Grantee shall have 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 Grantee
acknowledges and agrees that it is Grantee’s responsibility, and not the
Company’s, to prepare and timely file any election under Section 83(b) (even if
Grantee requests the Company to do such filing).  The Company and Grantee agree to report the
value of the Restricted Stock in a consistent manner for federal income tax
purposes.  The Company shall have the
right to retain and withhold from any payment of Restricted Stock the amount of
taxes required by any government to be withheld or otherwise deducted and paid
with respect to such payment.  The
Company may require Grantee to reimburse the Company for any such taxes
required to be withheld and may withhold any distribution in whole or in part
until the Company is so reimbursed.  In
lieu thereof, the Company shall have the right to withhold from any other cash
amounts due to Grantee an amount equal to such taxes required to be withheld or
withhold and cancel (in whole or in part) a number of shares of Restricted
Stock having a market value not less than the amount of such taxes.

 

6.             Grantee Bound By The Plan

 

The Grantee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions
thereof.

 

7.             Modification of Agreement

 

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

 

4

 

8.             Severability

 

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

 

9.             Governing Law

 

The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Delaware 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 any
person acquiring, whether by merger, consolidation, reorganization, purchase of
stock or assets, or otherwise, all or substantially all of the Company’s assets
and business.  This Agreement shall inure
to the benefit of the Grantee’s legal representatives.  All obligations imposed upon the Grantee and
all rights granted to the Company under this Agreement shall be final, binding
and conclusive upon the Grantee’s heirs, executors, administrators and
successors.

 

11.          Resolution of Disputes

 

Any dispute or disagreement which may arise
under, or as a result of, or in any way relate to the interpretation,
construction or application of this Agreement shall be determined by the
Committee.  Any determination made
hereunder shall be final, binding and conclusive on the Grantee and the Company
for all purposes.

 

5

 

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

 

 

	
   

  	
  INTERNET SECURITY SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE:

  
	
   

  	
   

  
	
   

  	
   

  

 

6

 

STOCK POWER

 

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to                                                                                                                                         
(          ) shares of the
common stock of Internet Security Systems, Inc. (the “Company”) registered on
the books of the Company in the name of the undersigned (whether a certificate
has 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 of
substitution in the premises.

 

 

	
  DATED:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  

 

7

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