<PAGE>
 
                                                                      Exhibit 10

                             1995 STOCK OPTION PLAN

[Adopted by the Board of Directors on November 29, 1994, as amended through
December 10, 1997]


                                     PART I
                     DEFINITIONS AND ADMINISTRATIVE MATTERS
                     --------------------------------------

SECTION 1.  PURPOSE; DEFINITIONS

     The purpose of the Information Systems Acquisition Corporation 1995 Stock
Option Plan (the "Plan") is to enable employees, officers, directors and
independent contractors of Information Systems Acquisition Corporation ("the
Company") to (i) own shares of stock in the Company, (ii) participate in the
stockholder value which has been created, (iii) have a mutuality of interest
with other stockholders and (iv) enable the Company to attract, retain and
motivate employees, officers, directors and independent contractors of
particular merit.

     For the purposes of the Plan, the following terms shall be defined as set
forth below:

     (a) "Board" means the Board of Directors of the Company.
          -----                                              

     (b) "Code" means the Internal Revenue Code of 1986, as amended from time to
          ----                                                                  
time, and any successor thereto.

     (c) "Committee" means the Committee designated by the Board to administer
          ---------                                                           
the Plan.

     (d) "Company" means Information Systems Acquisition Corporation, its
          -------                                                        
Subsidiaries or any successor organization.
 
     (e) "Disability" means permanent and total disability within the meaning of
          ----------                                                            
Section 22(e)(3) of the Code.

     (f) "Disinterested Person" shall have the meaning set forth in the Rules.
          --------------------                                                

     (g) "Eligible Independent Contractor" means an independent contractor hired
          -------------------------------                                       
by the Company who is neither an Employee of the Company nor a Non-Employee
Director.

     (h) "Employee" means any person, including a director, who is employed by
          --------                                                            
the Company and is compensated for such employment by a regular salary.

     (i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
          ------------                                                        

     (j) "Fair Market Value" means the per share value of the Stock as of any
          -----------------                                                  
given date, as determined by reference to the price of the last traded share of
Stock on the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") 
<PAGE>
 
System for such date or the next preceding date that Stock was traded on such
market, or, in the event the Stock is listed on a stock exchange, the closing
price per share of Stock as reported on such exchange for such date.

     (k) "Incentive Stock Option" means any Stock Option intended to be and
          ----------------------                                           
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.

     (l) "Insider" means a Participant who is subject to Section 16 of the
          -------                                                         
Exchange Act.

     (m) "Non-Employee Director" means any member of the Board who is not an
          ---------------------                                             
Employee of the Company and is not compensated for employment by a regular
salary.

     (n) "Non-Qualified Stock Option" means any Stock Option that is not an
          --------------------------                                       
Incentive Stock Option.

     (o) "Participant" means an Employee, officer, Non-Employee Director or
          -----------                                                      
Eligible Independent Contractor to whom an award is granted pursuant to the
Plan.

     (p) "Plan" means the Information Systems Acquisition Corporation 1995 Stock
          ----                                                                  
Option Plan, as hereinafter amended from time to time.

     (q) "Rules" means Rule 16(b)(3) and any successor provisions promulgated by
          -----                                                                 
the Securities and Exchange Commission under Section 16 of the Exchange Act.

     (r) "Securities Act" shall mean the Securities Act of 1933, as amended.
          --------------                                                    

     (s) "Securities Broker" means the registered securities broker acceptable
          -----------------                                                   
to the Company who agrees to effect the cashless exercise of an Option pursuant
to Section 5(d) hereof.

     (t) "Stock" means the Common Stock of the Company, par value $.01 per
          -----                                                           
share.

     (u) "Stock Option" or "Option" means any option to purchase shares of Stock
          ------------      ------                                              
(including Restricted Stock, if the Committee so determines) granted pursuant to
Section 5 below.

     (v) "Subsidiary" means any corporation owned, in whole or in part, by the
          ----------                                                          
Company.

SECTION 2.  ADMINISTRATION

     2.1  The portion of the Plan with respect to the grant of Options pursuant
to Part II shall be administered by a Committee of not less than three Directors
who shall be Disinterested Persons appointed by the Board and who shall serve at
the pleasure of the Board; provided further, however, that, notwithstanding the
foregoing, Part II of the Plan shall be administered by such number of
Disinterested Persons as and to the extent required by the Rules.

     The Committee shall have the authority to grant pursuant to the terms of
the Plan:  Stock Options to Employees (including directors who are Employees)
and officers of the Company, and Eligible Independent Contractors.  In
particular, the Committee shall, subject to the limitations and terms of the
Plan, have the authority:

                                      -2-
<PAGE>
 
          (i) to select the officers, directors (who are Employees) and other
Employees of the Company, and the Eligible Independent Contractors to whom Stock
Options may from time to time be granted hereunder;
 
         (ii) to determine whether and to what extent incentive Stock Options
are to be granted hereunder;

        (iii) to determine the number of shares to be covered by each such
award granted hereunder;

         (iv) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder, including the option or
exercise price and any restrictions or limitations, based upon such factors as
the Committee shall determine, in its sole discretion;

          (v) to determine whether and under what circumstances a Stock Option
may be exercised and settled in cash or Stock or without a payment of cash;

         (vi) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this Plan shall
be deferred either automatically or at the election of the Participant; and

        (vii) to amend the terms of any outstanding award (with the consent of
the Participant) to reflect terms not otherwise inconsistent with the Plan,
including amendments concerning exercise price changes, vesting acceleration or
forfeiture waiver regarding any award or the extension of a Participant's right
with respect to awards granted under the Plan, as a result of termination of
employment or service or otherwise, based on such factors as the Committee shall
determine, in its sole discretion.

     The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan, provided that the
Committee may delegate to the Chief Executive Officer of the Company, or such
other officer as may be designated by the Committee, the authority, subject to
guidelines prescribed by the Committee, to grant Options to Employees and
Eligible Independent Contractors who are not then subject to the provisions of
Section 16 of the Exchange Act, and to determine the number of shares to be
covered by any such Option, and the Committee may authorize any one or more of
such persons to execute and deliver documents on behalf of the Committee,
provided that no such delegation may be made that would cause grants of Options
to persons subject to Section 16 of the Exchange Act to fail to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
Determinations, interpretations or other actions made or taken by the Committee
pursuant to the provisions of the Plan shall be final and binding and conclusive
for all purposes and upon all persons.

     No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Option
granted under it.  Nothing herein shall be deemed to expand the personal
liability of a member of the Board or Committee beyond that which may arise
under any applicable standards set forth in the Company's by-laws and Delaware
law, nor shall anything herein limit any rights to indemnification or
advancement of expenses to which any member of the Board or the 

                                      -3-
<PAGE>
 
Committee may be entitled under any by-law, agreement, vote of the stockholders
or directors, or otherwise.

     2.2  The portion of the Plan with respect to the grant of Options pursuant
to Part III shall be administered by the Board.  Grants of Stock Options under
Part III of the Plan and the amount, price and timing of the awards to be
granted will be automatic, as described in Part III hereof.  All questions of
interpretation of the Plan with respect to the grant of Options pursuant to Part
III will be determined by the Board, and such determination shall, unless
otherwise determined by the Board, be final and conclusive on all persons having
any interest hereunder.

SECTION 3.  STOCK SUBJECT TO THE PLAN

     3.1  The aggregate number of shares of Stock that may be issued or
transferred under the Plan is 1,500,000, subject to adjustment pursuant to
Section 3.2 below.  Such shares may be authorized but unissued shares or
reacquired shares.  If the number of shares of Stock issued under the Plan and
the number of shares of Stock subject to outstanding awards (taking into account
the share counting requirements established under the Rules) equals the maximum
number of shares of Stock authorized under the Plan, no further awards shall be
made unless the Plan is amended in accordance with the Rules or additional
shares of Stock become available for further awards under the Plan.  If and to
the extent that Options granted under the Plan terminate, expire or are canceled
without having been exercised, such shares shall again be available for
subsequent awards under the Plan.

     3.2  If any change is made to the Stock (whether by reason of merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination of shares, or exchange of shares or any other change in capital
structure made without receipt of consideration), then unless such event or
change results in the termination of all outstanding awards under the Plan, the
Board or the Committee shall preserve the value of the outstanding awards by
adjusting the maximum number and class of shares issuable under the Plan to
reflect the effect of such event or change in the Company's capital structure,
and by making appropriate adjustments to the number and class of shares subject
to an outstanding award and/or the option price of each outstanding Option,
except that any fractional shares resulting from such adjustments shall be
eliminated by rounding any portion of a share equal to .500 or greater up, and
any portion of a share equal to less than .500 down, in each case to the nearest
whole number.

     3.3  In any fiscal year of the Company, the maximum number of shares of
Common Stock with respect to which Options may be granted to any optionee shall
not exceed 5% of the Common Stock outstanding, as adjusted for stock splits,
stock dividends or other similar changes affecting the Common Stock.

SECTION 4.  DESIGNATION OF OPTIONEES

          4.1  Optionees under Part II of the Plan shall be selected, from time
to time, by the Committee from among those Employees and Eligible Independent
Contractors who, in the opinion of the Committee, occupy responsible positions
and who have the capacity to contribute materially to the continued growth,
development and long-term success of the Company and its Subsidiaries.

          4.2  All Non-Employee Directors on the date of grant shall be eligible
to receive Options under Part III of the Plan.

                                      -4-
<PAGE>
 
                                    PART II
            GRANTS TO EMPLOYEES AND ELIGIBLE INDEPENDENT CONTRACTORS
            --------------------------------------------------------

SECTION 5.  STOCK OPTIONS

     Any Stock Option granted under Part II of the Plan shall be in such form as
the Committee may from time to time approve.  Stock Options granted under Part
II of the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-
Qualified Stock Options.

     The Committee shall have the authority to grant Incentive Stock Options,
Non-Qualified Stock Options or both types of Stock Options.  To the extent that
any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a Non-Qualified Stock Option.

     Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code, or, without the consent
of the optionee(s) affected, to disqualify any Incentive Stock Option under
Section 422.

     Options granted hereunder shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem
appropriate:

     5.1  OPTION PRICE.  The option price per share of Stock purchasable under a
          ------------                                                          
Stock Option shall be determined by the Committee at the time of grant;
provided, however, that the option price per share for any Stock Option shall be
not less than 100% of the Fair Market Value of the Stock on the date of grant.

          Any Incentive Stock Option granted to any optionee who, at the time
the Option is granted, owns more than 10% of the voting power of all classes of
stock of the Company or of a Parent or Subsidiary corporation (within the
meaning of Section 424 of the Code), shall have an exercise price no less than
110% of Fair Market Value per share on the date of the grant.

     5.2  OPTION TERM.  The term of each Stock Option shall be fixed by the
          -----------                                                      
Committee, but no Stock Option shall be exercisable more than ten years after
the date the Stock Option is granted.  However, any Incentive Stock Option
granted to any optionee who, at the time the Option is granted, owns more than
10% of the voting power of all classes of stock of the Company or of a Parent or
Subsidiary corporation may not have a term of more than five years.  No Option
may be exercised by any person after expiration of the term of the Option.

     5.3  EXERCISABILITY.  Stock Options shall be exercisable at such time or
          --------------                                                     
times and subject to such terms and conditions as shall be determined by the
Committee at or after grant.  If the Committee provides, in its discretion, that
any Stock Option is exercisable only in installments, the Committee may waive
such installment exercise provisions at any time at or after grant in whole or
in part, based on such factors as the Committee shall determine, in its sole
discretion.

     5.4  METHOD OF EXERCISE.  Subject to whatever installment exercise
          ------------------                                           
provisions apply under Section 53, Stock Options may be exercised in whole or in
part at any time and from time to time during the Option period, by giving
written notice of exercise to the Company specifying the number of shares 

                                      -5-
<PAGE>
 
to be purchased. Such notice shall be accompanied by payment in full of the
purchase price, either by cash, check, or such other instrument as the Committee
may accept. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of unrestricted
Stock already owned by the optionee (based upon the Fair Market Value of a share
of Stock on the business date preceding tender if received prior to the close of
the stock market and at the Fair Market Value on the date of tender if received
after the stock market closes); provided, however, that, (i) in the case of an
Incentive Stock Option, the right to make a payment in the form of unrestricted
Stock already owned by the optionee may be authorized only at the time the
Option is granted and (ii) the Company may require that the Stock has been owned
by the Participant for a minimum period of time specified by the Committee. In
addition, if such unrestricted Stock was acquired through exercise of an
Incentive Stock Option, such Stock shall have been held by the optionee for a
period of not less than the holding period described in Section 422(a)(1) of the
Code on the date of exercise, or if such Stock was acquired through exercise of
a Non-Qualified Stock Option or of an option under a similar plan of the
Company, such Stock shall have been held by the optionee for a period of more
than one year on the date of exercise, and further provided that the optionee
shall not have tendered Stock in payment of the exercise price of any other
Option under the Plan or any other stock option plan of the Company within six
calendar months of the date of exercise.

          To the extent permitted under the applicable laws and regulations, at
the request of the Participant, and with the consent of the Committee, the
Company shall permit payment to be made by means of a "cashless exercise" of an
Option.  Payment by means of a cashless exercise shall be effected by the
Participant delivering to the Securities Broker irrevocable instructions to sell
a sufficient number of shares of Stock to cover the cost and expenses associated
therewith and to deliver such amount to the Company.

          No shares of Stock shall be issued until full payment therefor has
been made.  An optionee shall not have any right to dividends or other rights of
a stockholder with respect to shares subject to the Option until such time as
Stock is issued in the name of the optionee following exercise of the Option in
accordance with the Plan.

     5.5  STOCK OPTION AGREEMENT.  Each Option granted under this Plan shall be
          ----------------------                                               
evidenced by an appropriate Stock Option agreement, which agreement shall
expressly specify whether such Option is an Incentive Stock Option or a Non-
Qualified Stock Option and shall be executed by the Company and the optionee.
The agreement shall contain such terms and provisions, not inconsistent with the
Plan, as shall be determined by the Committee.  Such terms and provisions may
vary between optionees or as to the same optionee to whom more than one Option
may be granted.

     5.6  REPLACEMENT OPTIONS.  If an Option granted pursuant to the Plan may be
          -------------------                                                   
exercised by an optionee by means of a stock-for-stock swap method of exercise
as provided in 54 above, then the Committee may, in its sole discretion and at
the time of the original Option grant, authorize the Participant to
automatically receive a replacement Option pursuant to this part of the Plan.
This replacement Option shall cover a number of shares determined by the
Committee, but in no event more than the number of shares equal to the
difference between the number of shares of the original Option exercised and the
net shares received by the Participant from such exercise.  The per share
exercise price of the replacement Option shall equal the then current Fair
Market Value of a share of Stock, and shall have a term extending to the
expiration date of the original Option.

                                      -6-
<PAGE>
 
          The Committee shall have the right, in its sole discretion and at any
time, to discontinue the automatic grant of replacement Options if it determines
the continuance of such grants to no longer be in the best interest of the
Company.

     5.7  NON-TRANSFERABILITY OF OPTIONS.  No Stock Option shall be transferable
          ------------------------------                                        
by the optionee other than by will, by the laws of descent and distribution,
pursuant to a qualified domestic relations order, or as permitted under the
Rules, and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee.  Notwithstanding the foregoing, the Committee
may grant non-qualified Options that are transferable, without payment of
consideration, to immediate family members (i.e., spouses, children and
grandchildren) of the Optionee or to trusts for, or partnerships whose only
partners are, such family members.  The Committee may also amend outstanding
non-qualified Options to provide for such transferability.

     5.8  TERMINATION OF EMPLOYMENT BY REASON OF DEATH.  Unless otherwise
          --------------------------------------------                   
determined by the Committee at or after grant, if any optionee dies during the
optionee's period of employment by the Company, or during the periods referred
to in Sections 5.9, 5.10 or 5.11, any Stock Option held by such optionee may
thereafter be exercised, to the extent then exercisable or on such accelerated
basis as the Committee may determine at or after grant, by the legal
representative of the estate or by the legatee of the optionee under the will of
the optionee, for a period of one year (or such shorter period as the Committee
may specify at grant) from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is shorter.

     5.9  TERMINATION OF EMPLOYMENT BY REASON OF DISABILITY.  Unless otherwise
          -------------------------------------------------                   
determined by the Committee at or after grant, if an optionee's employment by
the Company terminates by reason of Disability, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination, or on such accelerated basis as the
Committee may determine at or after grant, for a period of one year (or such
shorter period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is shorter.  In the event of termination of
employment by reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified
Stock Option.

    5.10  TERMINATION OF EMPLOYMENT UPON RETIREMENT.  Unless otherwise
          -----------------------------------------                   
determined by the Committee at or after grant, if an optionee's employment
terminates due to retirement (as hereinafter defined), any Stock Option held by
such optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the date of retirement, or on such accelerated basis as the
Committee may specify at grant, for a period of one-year (or such shorter period
as the Committee may specify at grant) from the date of such retirement or until
the expiration of the stated term of such Stock Option, whichever period is
shorter.  For purposes of this Section 5.10, "Retirement" shall mean any
Employee retirement under the Company's retirement policy.

    5.11  OTHER TERMINATION OF EMPLOYMENT.  Unless otherwise determined by the
          -------------------------------                                     
Committee at or after grant, in the event of termination of employment
(voluntary or involuntary) for any reason other than death, Disability or
retirement, or if an Employee is terminated for cause, any Stock Option held by
such optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of such termination or on such accelerated basis as the
Committee may determine at or after grant, for a period of three months (or such
shorter period as the Committee may specify at grant) from the date of


                                      -7-
<PAGE>
 
such termination of employment or the expiration of the stated term of such
Stock Option, whichever period is shorter. If an Employee is terminated for
cause, any Stock Option held by such Optionee shall terminate immediately.

    5.12  INCENTIVE STOCK OPTION LIMITATION.  The aggregate Fair Market Value
          ---------------------------------                                  
(determined as of the time of grant) of the Stock with respect to which
Incentive Stock Options are exercisable for the first time by the optionee
during any calendar year under the Plan and/or any other stock option plan of
the Company shall not exceed $100,000.

    5.13  TERMINATION OF ELIGIBLE INDEPENDENT CONTRACTORS OPTIONS.  The
          -------------------------------------------------------      
termination provisions of Options granted to Eligible Independent Contractors
shall be determined by the Committee in its sole discretion.

    5.14  WITHHOLDING AND USE OF SHARES TO SATISFY TAX OBLIGATIONS.  The
          --------------------------------------------------------      
obligation of the Company to deliver Stock upon the exercise of any Option shall
be subject to applicable federal, state and local tax withholding requirements.

          If the exercise of any Option is subject to the withholding
requirements of applicable federal tax laws, the Committee, in its discretion
(and subject to such withholding rules ("Withholding Rules") as shall be adopted
by the Committee), may permit the optionee to satisfy the federal withholding
tax, in whole or in part, by electing to have the Company withhold (or by
delivering to the Company) shares of Stock, which Stock shall be valued, for
this purpose, at their Fair Market Value on the date the amount of tax required
to be withheld is determined (the "Determination Date").  Such election must be
made in compliance with and subject to the Withholding Rules, and the Committee
may not withhold shares of Stock in excess of the number necessary to satisfy
the minimum federal income tax withholding requirements.  If Stock acquired
under the exercise of an Incentive Stock Option is used to satisfy such
withholding requirement, such Stock must have been held by the optionee for a
period of not less than the holding period described in Section 422(a)(1) of the
Code on the Determination Date.  If Stock acquired through the exercise of a
Non-Qualified Stock Option or of an option under a similar plan is delivered by
the optionee to the Company to satisfy such withholding requirement, such Stock
must have been held by the optionee for a period of more than one year on the
Determination Date.  For Optionees subject to Section 16 of the Exchange Act, to
the extent required by Section 16, the election to have Stock withheld by the
Corporation hereunder must be either (a) an irrevocable election made six months
before the Determination Date; or (b) an irrevocable election where both the
election and the Determination Date occur during one of the ten-day periods
beginning on the third business day following the date of release of the
Company's quarterly or annual summary financial data and ending on the twelfth
business day following such release.

    5.15  ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES ACTS.  Within a
          ------------------------------------------------------           
reasonable time after exercise of an Option, the Company shall cause to be
delivered to the optionee a certificate for the Stock purchased pursuant to the
exercise of the Option.  At the time of any exercise of any Option, the Company
may, if it shall deem it necessary and desirable for any reason connected with
any law or regulation of any governmental authority relative to the regulation
of securities, require the optionee to represent in writing to the Company that
it is his or her then intention to acquire the Stock for investment and not with
a view to distribution thereof and that such optionee will not dispose of such
Stock in any manner that would involve a violation of applicable securities
laws.  In such event, no Stock shall be issued to such holder unless and until
the Company is satisfied with such representation.  Certificates for shares of
Stock issued pursuant to the exercise of Options may bear an appropriate
securities law legend.

                                      -8-
<PAGE>
 
                                    PART III
                        GRANTS TO NON-EMPLOYEE DIRECTORS
                        --------------------------------

SECTION 6.     GRANT OF OPTIONS

     Options to purchase 10,000 shares of Common Stock, subject to adjustment as
provided in Section 3.2 (the "Initial Options") and options to purchase 5,000
shares, subject to adjustments as provided in Section 3.2, (the "Annual
Options"), shall be granted to Non-Employee Directors as follows:

          (a) Each Non-Employee Director on the 30th day after the stockholders
of the Company have approved the Plan shall be granted an Initial Option.

          (b) Each Non-Employee Director who is not granted an Initial Option
pursuant to Section 6(a), shall be granted an Initial Option on the first
business day immediately following the date that such person is first elected or
appointed to serve as a Non-Employee Director.

          (c) Each year on January 1, each Non-Employee Director on such date
shall be granted an Annual Option.

SECTION 7.     TYPES OF OPTIONS

     All options granted under Part III of the Plan shall be non-qualified Stock
Options for purposes of the Code.

SECTION 8.     OPTION PRICE

     The purchase price of each share of Stock issuable upon exercise of an
Option will be equal to the Fair Market Value of the Stock on the date of grant.

SECTION 9.     OPTION TERM AND RIGHTS TO EXERCISE

     9.1  PERIOD OF OPTION AND RIGHTS TO EXERCISE.  Except as set forth herein,
          ---------------------------------------                              
each Non-Employee Director who receives options under this Plan must continue to
hold office as a Non-Employee Director of the Company for six months from the
date that the Initial Option is granted and six months from the date each Annual
Option is granted before he can exercise any part thereof. Thereafter, subject
to the provisions of the Plan, options will vest and be exercisable as follows:

          (a)  Initial Options.
               --------------- 

               (i) Each Initial Option will vest and be exercisable in full six
     months from the date of grant.

               (ii) The right to exercise an Initial Option will expire on the
     fifth anniversary of the date on which the option was granted.

               (iii)  Once an Initial Option has become exercisable, such option
     may be exercised in whole at any time or in part from time to time until
     the expiration of the 

                                      -9-
<PAGE>
 
     option, whether or not any option granted previously to the optionee
     remains outstanding at the time of such exercise.

          (b)  Annual Options.
               -------------- 

               (i) Each Annual Option will vest and be exercisable on a
     cumulative basis as to 2,500 shares beginning six months from the date of
     grant and 2,500 additional shares beginning on the first anniversary of the
     date of grant.

              (ii) The right to exercise an Annual Option will expire on the
     fifth anniversary of the date on which the option was granted.

             (iii)  Once each installment of an Annual Option has become
     exercisable, it may be exercised in whole at any time or in part from time
     to time until the expiration of the option, whether or not an option
     granted previously to the optionee remains outstanding at the time of such
     exercise.

SECTION 10.  PAYMENT OF OPTION PRICE

     Payment or provision for payment of the purchase price shall be made as
follows:  (i) in cash or check; (ii by exchange of Stock valued at its Fair
Market Value on the date of exercise; (ii  by means of a cashless exercise
procedure by the delivery to the Company of an exercise notice and irrevocable
instructions to the Securities Broker to sell a sufficient number of shares of
Stock to pay the purchase price of the shares of Common Stock as to which such
exercise relates and to deliver promptly such amount to the Company; or (iv by
any combination of the foregoing.

Where payment of the purchase price is to be made with shares of Stock acquired
through exercise of a non-qualified Stock Option or of an option under a similar
plan of the Company, such Stock shall have been held by the optionee for a
period of more than one year on the date of exercise, and further provided that
the optionee shall not have tendered Stock in payment of the exercise price of
any other Option under the Plan or any other stock option plan of the Company
within six calendar months of the date of exercise.

SECTION 11.  TERMINATION OF SERVICE

     Upon cessation of service as a Non-Employee Director (for reasons other
than retirement or death), including cessation of service due to physical or
mental disability that prevents such person from rendering further services as a
Non-Employee Director, only those options exercisable at the date of cessation
of service shall be exercisable by the Non-Employee Director.  Such options
shall be exercisable for a period of three months from cessation of service of
the Non-Employee Director or the expiration of the Option, whichever period is
shorter.

     Upon the retirement or death of a Non-Employee Director, options shall be
exercisable as follows:

          (a) Retirement.  Upon retirement as a Non-Employee Director after the
              ----------                                                       
Non-Employee Director has served for at least six consecutive years as a
director, all Options shall continue to be exercisable during their terms as if
such person had remained a Non-Employee Director.

                                      -10-
<PAGE>
 
          (b) Death.  In the event of the death of a Non-Employee Director while
              -----                                                             
a member of the Board, or within the period after termination of service
referred to in the first paragraph of Section 11, the Options granted to him
shall be exercisable, to the extent then exercisable, for a period of one year
from the date of the Non-Employee Director's death, or until the expiration of
the Option, whichever period is shorter.

SECTION 12.  NO GUARANTEED TERM OF OFFICE

     Nothing in this Plan or any modification thereof, and no grant of an
option, or any term thereof, shall be deemed an agreement or condition
guaranteeing to any Non-Employee Director any particular term of office or
limiting the right  of the Company, the Board or the stockholders to terminate
the term of office of any Non-Employee Director under the circumstances set
forth in the Company's Certificate of Incorporation or Bylaws, or as otherwise
provided by law.

SECTION 13.  OTHER RESTRICTIONS

     Sections 5.5, 5.7 and 5.15 of the Plan shall apply to options granted
pursuant to Part III of the Plan.


                                    PART IV
                                 MISCELLANEOUS
                                 -------------

SECTION 14.  CHANGE IN CONTROL

     A "Change in Control" for purposes of this Plan shall mean any one of the
events described below:

         14.1  at any time during a period of two (2) consecutive years, at
least a majority of the Board shall not consist of Continuing Directors.
"Continuing Directors" shall mean directors of the Company at the beginning of
such two-year period and directors who subsequently became such and whose
selection or nomination for election by the Company's shareholders was approved
by a majority of the then Continuing Directors; or

         14.2  any person or "group" (as determined for purposes of Regulation
13D-G promulgated by the Commission under the Exchange Act or under any
successor regulation), but excluding any majority-owned subsidiary or any
employee benefit plan sponsored by the Company or any subsidiary or any trust or
investment manager for the account of such a plan, shall have acquired
"beneficial ownership" (as determined for purposes of such regulation) of the
Company's securities representing fifty percent (50%) or more of the combined
voting power of the Company's then outstanding securities unless such
acquisition is approved in advance by a majority of the directors of the Company
who were in office immediately preceding such acquisition and any individual
selected to fill any vacancy created by reason of the death or disability of any
such director; or

         14.3  the Company becomes a party to a merger, consolidation or share
exchange in which either (i) the Company will not be the surviving corporation
or (ii) the Company will be the surviving corporation and any outstanding shares
of Common Stock will be converted into shares of any other company (other than a
reincorporation or the establishment of a holding company involving no change in
ownership of the Company or other securities or cash or other property
(excluding payments made solely for fractional shares); or

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<PAGE>
 
         14.4  the Company's shareholders (i) approve any plan or proposal for
the disposition or other transfer of all, or substantially all, of the assets of
the Company, whether by means of a merger, reorganization, liquidation or
dissolution or otherwise or (ii) dispose of, or become obligated to dispose of,
50% or more of the outstanding capital stock of the Company by tender offer or
otherwise.

          If a Change in Control has occurred, all outstanding options granted
under the Plan shall be immediately exercisable by the holder of the option for
the total remaining number of Shares covered by the option and shall survive any
such event.

SECTION 15.  AMENDMENTS AND TERMINATION

     The Board may amend, alter or discontinue the Plan at any time and from
time to time, but no amendment, alteration or discontinuation shall be made
which would impair the rights of an optionee or Participant under a Stock Option
award theretofore granted, without the optionee's or Participant's consent, or
which, without the approval of the Company's stockholders, would require
stockholder approval under the Rules.

     Except for awards made pursuant to Part III, the Committee may amend the
terms of any Stock Option theretofore granted, prospectively or retroactively,
but no such amendment shall impair the rights of any holder without the holder's
consent.  Except for awards made to Non-Employee Directors pursuant to Part III,
the Committee may also substitute new Stock Options for previously granted Stock
Options, including previously granted Stock Options having higher option prices.
Subject to the above provisions, the Board shall have broad authority to amend
the Plan to take into account changes in applicable tax laws, securities laws
and accounting rules, as well as other developments.

SECTION 16.  UNFUNDED STATUS OF PLAN

     The Plan is intended to constitute an "unfunded" plan of incentive and
deferred compensation. With respect to any payments not yet made to a
Participant or optionee by the Company, nothing contained herein shall give any
such Participant or optionee any rights that are greater than those of a general
creditor of the Company.  In its sole discretion, the Committee may authorize
the creation of trusts or other arrangements to meet the obligations created
under the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that, unless the Committee otherwise determines
with the consent of the affected Participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.

SECTION 17.  GENERAL PROVISIONS

    17.1  All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities Act, the Exchange Act, any stock
exchange or over-the-counter market upon which the Stock is then listed, and any
applicable federal or state securities law, and the Committee or the Board may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

    17.2  Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required, and such arrangements may be either generally
applicable or applicable only in specific cases.



                                      -12-
<PAGE>
 
    17.3  The adoption of the Plan shall not confer upon any Participant any
right to continued employment with the Company nor shall it interfere in any way
with the right of the Company to terminate its relationship with any of its
Employees, directors or Independent Contractors at any time.
 
    17.4  No later than the date as of which an amount first becomes includable
in the gross income of the Participant for federal income tax purposes with
respect to any award under the Plan, the Participant who is an Employee of the
Company shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any federal, state, or local taxes of any
kind required by law to be withheld with respect to such amount.  To the extent
permitted by the Committee, in its sole discretion, the minimum required
withholding obligations may be settled with Stock, including Stock that is part
of the award that gives rise to the withholding requirement.  The obligations of
the Company under the Plan shall be conditional on such payment or arrangements
and the Company shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Participant.

    17.5  The Committee shall establish such procedures as it deems appropriate
for a Participant to designate a beneficiary to whom any amounts payable in the
event of the Participant's death are to be paid.

    17.6  The Plan shall be governed by and subject to all applicable laws and
to the approvals by any governmental or regulatory agency as may be required.

SECTION 18.  EFFECTIVE DATE AND TERM OF PLAN

     The Plan shall be effective as of the effective date of the merger of Human
Designed Systems, Inc. with and into ISAC Acquisition Co., a wholly-owned
subsidiary of the Company (the "Effective Date"), subject to the consent or
approval of the Company's stockholders as provided below.  No Stock Option award
shall be granted pursuant to the Plan on or after ten years from the Effective
Date, but Stock Options granted prior to such tenth anniversary may be exercised
after such date.  If the Plan is not approved by a majority of the votes cast at
a duly held meeting at which a quorum representing a majority of all outstanding
voting stock of the Company is, either in person or by proxy, present and voting
on the Plan, within 12 months after such effective date, any Incentive Stock
Options that have been granted shall automatically become Non-Qualified Stock
Options.

SECTION 19.  INTERPRETATION

      A determination of the Committee as to any question which may arise with
respect to the interpretation of the provisions of this Plan or any Options
shall be final and conclusive, and nothing in this Plan, or in any regulation
hereunder, shall be deemed to give any Participant, his legal representatives,
assigns or any other person any right to participate herein except to such
extent, if any, as the Committee may have determined or approved pursuant to
this Plan.  The Committee may consult with legal counsel who may be counsel to
the Company and shall not incur any liability for any action taken in good faith
in reliance upon the advice of such counsel.

SECTION 20.  GOVERNING LAW

     With respect to any Incentive Stock Options granted pursuant to the Plan
and the agreements thereunder, the Plan, such agreements and any Incentive Stock
Options granted pursuant thereto shall be governed by the applicable Code
provisions to the maximum extent possible.  Otherwise, the laws of the 

                                      -13-
<PAGE>
 
State of Delaware shall govern the operation of, and the rights of Participants
under, the Plan, the agreements and any Options granted thereunder.

SECTION 21.  COMPLIANCE WITH THE RULES

    21.1  Unless an Insider could otherwise transfer shares of Stock issued
hereunder without incurring liability under Section 16(b) of the Exchange Act,
at least six months must elapse from the date of grant of an Option to the date
of disposition of the Stock issued upon exercise of such Option.

    21.2  It is the intent of the Company that this Plan comply in all respects
with the Rules in connection with any grant of Options to, or other transaction
by, an Insider.  Accordingly, if any provision of this Plan or any agreement
relating to an Option does not comply with the Rules as then applicable to any
such Insider, such provision will be construed or deemed amended to the extent
necessary to conform to such requirements with respect to such person.  In
addition, the Committee shall have no authority to make any amendment,
alteration, suspension, discontinuation, or termination of the Plan or any
agreement hereunder, or take other action if such authority would cause an
Insider's transactions under the Plan not to be exempt under the Rules.

    21.3  Certain restrictive provisions of the Plan have been implemented to
facilitate the Company's and Insiders' compliance with the Rules.  The
Committee, in its discretion, may waive certain of these restrictions, provided
the waiver does not relate in any way to an Insider and, provided further, such
waiver or amendment is carried out in accordance with Section 6 hereof.

SECTION 22.  SUBSTITUTION OF OPTIONS IN A MERGER, CONSOLIDATION OR SHARE
EXCHANGE

     In the event that the Company becomes a party to a merger, consolidation or
share exchange (a "Business Combination") and in connection therewith
substitutes options under the Plan for options of another party to such Business
Combination, notwithstanding the provisions of the Plan, the terms of such
substituted options may have the same terms and conditions (provided that the
number of shares issuable and the exercise prices are adjusted in accordance
with the terms of the Business Combination) as the former options of such other
party to the Business Combination, provided, however, that the exercise price of
the Options to be granted under the Plan shall be lawful consideration as
determined by the Committee.

                                      -14-