<PAGE>

                                                                    Exhibit 10.5

                   Applied Language Technologies, Inc.
                              AMENDED AND RESTATED
                             1995 STOCK OPTION PLAN
<PAGE>

                       Applied Language Technologies, Inc.

                   AMENDED AND RESTATED 1995 STOCK OPTION PLAN

                                TABLE OF CONTENTS
                                                                      Page
                                                                      ----

1.    PURPOSE .......................................................... 1

2.    ADMINISTRATION OF THE PLAN ....................................... 1

3.    AVAILABLE SHARES ................................................. 2

4.    AUTHORITY TO GRANT STOCK RIGHTS .................................. 2

5.    WRITTEN AGREEMENT ................................................ 2

6.    ELIGIBILITY ...................................................... 2

7.    PURCHASE PRICE ................................................... 3

8.    DURATION OF OPTIONS .............................................. 4

9.    RESTRICTION ON EXERCISE OF OPTIONS ............................... 4

10.   EXERCISE OF STOCK RIGHTS ......................................... 4

11.   NONTRANSFERABILITY OF OPTIONS .................................... 5

12.   TERMINATION OF EMPLOYMENT OR INVOLVEMENT WITH THE COMPANY ........ 6

13.   REQUIREMENTS OF LAW .............................................. 6

14.   NO RIGHTS AS STOCKHOLDER ......................................... 7

15.   EMPLOYMENT OBLIGATION ............................................ 7

16.   FORFEITURE AS A RESULT OF TERMINATION FOR CAUSE .................. 8

17.   CHANGES IN THE COMPANY'S CAPITAL STRUCTURE ....................... 8

18.   AMENDMENT OR TERMINATION OF PLAN .................................10

19.   CERTAIN RIGHTS OF THE COMPANY ....................................10

20.   EFFECTIVE DATE AND DURATION OF THE PLAN ..........................11
<PAGE>

                       Applied language Technologies, Inc.

                   AMENDED AND RESTATED 1995 STOCK OPTION PLAN

1.    PURPOSE

      The purpose of this Amended and Restated 1995 Stock Option Plan (the
"Plan") is to encourage directors, consultants and key employees of Applied
Language Technologies, Inc., a Delaware corporation (the "Company") and its
Subsidiaries (as hereinafter defined) to continue their association with the
Company, by providing favorable opportunities for such persons to participate in
the ownership of the Company and in its future growth through (a) the granting
of stock options (the "Options") which may either be options designed to qualify
as "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") (an "ISO") or options not intended
to qualify for any special tax treatment under the Code (a "NQO"), or (b) the
granting of awards of stock in the Company ("Awards") which may either be
subject to conditional repurchase rights by the Company ("Restricted Awards") or
which may be free of such repurchase rights ("Unrestricted Awards"). Options and
Awards are sometimes collectively referred to herein as "Stock Rights." The term
"Subsidiary" as used in the Plan means a corporation of which the Company owns,
directly or indirectly through an unbroken chain of ownership, fifty percent
(50%) or more of the total combined voting power of all classes of stock.
Persons to whom an Option or Award has been granted pursuant to the Plan (each a
"Holder" and collectively the "Holders") are sometimes hereinafter referred to
as an "Optionee" or "Grantee," respectively.

      The Plan is a successor to the Applied Language Technologies, Inc. 1994
Stock Option Plan (the "1994 Plan") which was adopted by the Company's parent
corporation, Applied Language Technologies, Inc., a Massachusetts Corporation
("Applied Massachusetts"). Applied Massachusetts was subsequently merged with
and into the Company with the Company was the surviving corporation (the
"Merger"). The Plan is substantially the same as the 1994 Plan, but has been
modified (i) to provide for the grant of Awards and (ii) to provide for a larger
pool of option shares.

2.    ADMINISTRATION OF THE PLAN

      The Plan shall be administered by the Board of Directors, which shall have
the authority to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan. All questions of
interpretation and application of such rules and regulations, of the Plan or of
the Stock Rights granted thereunder shall be subject to the determination, which
shall be final and binding, of a majority of the Board of Directors. The Plan
shall be administered in such a manner as to permit those Options granted
hereunder and specially designated under Section 4 hereof to qualify as
"incentive stock options" as described in Section 422A of the Code.
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Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 2


3.    AVAILABLE SHARES

      The stock subject to Stock Rights under the Plan shall be shares of the
Company's common stock, par value $0.001 per share (the "Stock"). At no time
shall the number of shares of Stock with respect to which outstanding Stock
Rights have been granted plus the number of shares of Stock issued as a result
of the exercise of Stock Rights under the Plan and which are still outstanding
exceed in the aggregate 2,736,951 shares of Stock (the "Stock Pool"); provided
that such aggregate number of shares of Stock shall be subject to adjustment in
accordance with the provisions of Section 17. In the event that any outstanding
Stock Rights shall expire for any reason or shall terminate by reason of the
death or severance of employment of the Holder, the surrender of any such Stock
Right, or any other cause, the shares of Stock allocable to the unexercised
portion of such Stock Right may again be subject to an Option or Award under the
Plan. Should the Company repurchase any shares of Stock which were acquired
pursuant to the exercise of Stock Rights granted under the Plan, such shares may
be returned to the Stock Pool pursuant to a vote of the Board of Directors,
subject, however, to the Stock Pool size limitation set forth above.

4.    AUTHORITY TO GRANT STOCK RIGHTS

      The Board of Directors may grant from time to time, to such eligible
individuals as it shall from time to time determine, a Stock Right or Stock
Rights to buy a stated number of shares of Stock under the terms and conditions
of the Plan, any Option or Options of which shall be designated at the time of
grant as either an ISO or a NQO. Subject only to any applicable limitations set
forth elsewhere in the Plan, the number of shares of Stock to be covered by any
Stock Right shall be as determined by the Board of Directors.

5.    WRITTEN AGREEMENT

      Stock Rights granted hereunder shall be embodied in written agreements
(which need not be identical) in such forms as the Board of Directors may from
time to time approve (each an "Agreement"). Agreements shall be subject to the
terms and conditions prescribed herein and shall be signed by the Holder and by
the President or any Vice President of the Company for and in the name and on
behalf of the Company. An Option Agreement shall indicate whether the subject
Option has been designated an ISO or a NQO. The written Agreement may contain
such provisions not inconsistent with this Plan as the Board of Directors in its
discretion may deem advisable.

6.    ELIGIBILITY

      The individuals who shall be eligible for grant of Stock Rights under the
Plan shall be key employees (including officers who may be members of the
Board), directors who are not employees and other individuals who render
services of special importance to the management, operation, or development of
the Company or a Subsidiary, and who have contributed or may be expected to
contribute materially to the success of the Company or a Subsidiary. No Option
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 3


designated as an ISO shall be granted to any individual who is not an employee
of the Company or a Subsidiary.

      If required to insure compliance with Section 16 of the Securities
Exchange Act of 1934 (the " Exchange Act"), the selection of a director as a
participant and the number of shares for which a Stock Right or Stock Rights may
be granted to such director shall be determined either (i) by the Board of
Directors, (ii) by, or in accordance with, the recommendations of a committee of
two or more Non-Employee Directors (as such term is defined under Rule 16b-3
under the Exchange Act, or any successor rule), or (iii) in a transaction that
otherwise complies with Section 16(b) of the Exchange Act, and the Rules
promulgated thereunder, as then in effect.

7.    PURCHASE PRICE

      The price at which shares of Stock may be purchased pursuant to a Stock
Right shall be specified by the Board of Directors at the time the Stock Right
is granted, but shall in no event be less than the par value of such shares and,
in the case of an incentive stock option, except as set forth in the following
sentence, shall not be less than one hundred percent (100%) of the fair market
value of the shares of Stock on the date the ISO is granted.

      In the case of any employee who owns (or is considered under Section
424(d) of the Code as owning) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Subsidiary, the price at which shares of Stock may be so purchased pursuant to
an incentive stock option shall be not less than one hundred ten percent (110%)
of the fair market value of the Stock on the date the ISO is granted.

      For purposes of the Plan, the "fair market value" of a share of Stock on
any date specified herein shall mean (a) the last reported sales price, regular
way, or, in the event that no sale takes place on such day, the average of the
reported lowest closing bid and asked prices, regular way, in either case (i) as
reported on the New York Stock Exchange Composite Tape, or (ii) if the Stock is
not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such security is listed or
admitted to trading, or (iii) if not then listed or admitted to trading on any
national securities exchange, on the NASDAQ National Market System; or (b) if
the stock is not quoted on such National Market System, (i) the average of the
closing bid and asked prices on each such day in the over-the-counter market as
reported by NASDAQ, or (ii) if bid and asked prices for such security on each
such day shall not have been reported through NASDAQ, the average of the bid and
asked prices for such day as furnished by any New York Stock Exchange member
firm regularly making a market in such security selected for such purpose by the
Board of Directors; or (c) if the Stock is not then listed or admitted to
trading on any national exchange or quoted in the over-the-counter market, the
fair value thereof determined in good faith by the Board of Directors as of a
date which is within thirty (30) days of the date as of which the determination
is to be made; provided however that any method of determining fair market value
employed by the Board of Directors with respect to an ISO shall be consistent
with any applicable laws or regulations pertaining to "incentive stock options."
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 4


8.    DURATION OF OPTIONS

      The duration of any Option shall be specified by the Board of Directors in
the Option Agreement, but no ISO shall be exercisable after the expiration of
ten (10) years from the date such Option is granted. In the case of any employee
who owns (or is considered under Section 424(d) of the Code as owning) stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Subsidiary, no ISO shall be exercisable
after the expiration of five (5) years from the date such Option is granted. The
Board of Directors, in its sole and absolute discretion, may extend any Option
theretofore granted subject to the aforesaid limits and may provide that an
Option shall be exercisable during its entire duration or during any lesser
period of time.

9.    RESTRICTION ON EXERCISE OF OPTIONS

      Notwithstanding any other provision of the Plan, the aggregate fair market
value (determined as of the time the Option is granted) of the Stock with
respect to which ISOs may be exercisable for the first time by an Optionee
during any calendar year (under the Plan or any other incentive stock option
plan(s) of the Company or any Subsidiary) shall not exceed $100,000. Subject to
the foregoing, each Option may be exercised so long as it is valid and
outstanding from time to time, in part or as a whole, in such manner and subject
to such conditions as the Board of Directors, in its sole and absolute
discretion, may provide in the Option Agreement.

10.   EXERCISE OF STOCK RIGHTS

      Each Stock Right may be exercised from time to time in such amounts as is
provided in the Agreement by the delivery of written notice to the Company
setting forth the number of shares with respect to which the Stock Right is to
be exercised, accompanied by payment of the exercise price of such shares as
stated in the Agreement, which payment shall be made, subject to the alternative
provisions of this Section, in cash or by such cash equivalents, payable to the
order of the Company in an amount in United States dollars equal to the such
price, as the Board of Directors in its discretion shall consider acceptable.
Such notice shall be delivered in person to the Secretary of the Company or
shall be sent by registered mail, return receipt requested, to the Secretary of
the Company, in which case delivery shall be deemed made on the date such notice
is deposited in the mail.

      Alternatively, payment of the exercise price may be made, in whole or in
part, in shares of Stock owned by the Holder; provided, however, that the Holder
may not make payment in shares of Stock that he acquired upon the earlier
exercise of any ISO, unless he has held the shares until at least two (2) years
after the date the ISO was granted and at least one (1) year after the date the
ISO was exercised. If payment is made in whole or in part in shares of Stock,
then the Holder shall deliver to the Company in payment of the option price of
the shares with respect of which such Stock Right is exercised (i) certificates
registered in the name of such Holder representing a number of shares of Stock
legally and beneficially owned by such Holder, free of
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 5


all liens, claims and encumbrances of every kind and having a fair market value
on the date of delivery of such notice equal to the exercise price of the shares
with respect to which such Stock Right is to be exercised, such certificates to
be accompanied by stock powers duly endorsed in blank by the record holder of
the shares represented by such certificates; and (ii) if the exercise price of
the shares with respect to which such Stock Right is to be exercised exceeds
such fair market value, cash or such cash equivalents payable to the order to
the Company, in an amount in United States dollars equal to the amount of such
excess, as the Board of Directors in its discretion shall consider acceptable.
Notwithstanding the foregoing provisions of this Section, the Board of
Directors, in its sole discretion, may refuse to accept shares of Stock in
payment of the exercise price of the shares with respect to which such Stock
Right is to be exercised and, in that event, any certificates representing
shares of Stock which were delivered to the Company with such written notice
shall be returned to such Holder together with notice by the Company to such
Holder of the refusal of the Board of Directors to accept such shares of Stock.

      Alternatively, if the Agreement so specifies, payment of the exercise
price may be made in part by a promissory note executed by the Holder and
collaterally secured by the Stock obtained upon exercise of the Stock Right,
providing for repayment at such time or times as the Board of Directors shall
specify; provided, however, (a) that such promissory note shall provide for
repayment no later than five (5) years from the date of exercise and for
interest at a rate not less than the rate announced on the date of exercise by
The Wall Street Journal (Eastern Edition) as the "prime rate" or "base rate" of
corporate loans at large U.S. money center commercial banks, (b) that in any
event an amount not less than the par value of the shares of Stock with respect
to which the Holder is being exercised must be paid in cash, cash equivalents,
or shares of Stock in accordance with this Section and (c) the payment of such
exercise price by promissory note does not violate any applicable laws or
regulations, including, without limitation, margin lending rules. The decision
as to whether to permit partial payment by a promissory note for Stock to be
issued upon exercise of any Stock Right granted shall rest entirely in the
discretion of the Board of Directors.

      As promptly as practicable after the receipt by the Company of (i) written
notice from the Holder setting forth the number of shares with respect to which
such Stock Right is to be exercised and (ii) payment of the exercise price of
such shares in the form required by the foregoing provisions of this Section,
the Company shall cause to be delivered to such Holder certificates representing
the number of shares with respect to which such Stock Right has been so
exercised.

11.   NONTRANSFERABILITY OF OPTIONS

      No Stock Right shall be transferable by the Holder, either voluntarily or
by operation of law, except by will or pursuant to the laws of descent and
distribution. During the life of an Holder, a Stock Right shall be exercisable
only by such Holder.
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 6


12.   TERMINATION OF EMPLOYMENT OR INVOLVEMENT WITH THE COMPANY

      For purposes of this Section, employment by or involvement with (in the
case of an Holder who is not an employee) a Subsidiary shall be considered
employment by or involvement with the Company. NQOs, Restricted Awards and
Unrestricted Awards shall be exercisable following a Holder's termination of
employment or involvement with the Company to the extent provided below with
respect to ISOs unless otherwise set forth in the Agreement for such Stock
Rights. Except as may be otherwise expressly provided herein, ISO's shall be
exercisable after the Holder's termination of employment with the Company only
within the period of three (3) months after the date the Holder ceases to be in
the employ of the Company, and only to the extent to which the Holder was
entitled to exercise the ISO immediately prior to the termination of his or her
employment. If, before the date of expiration of the Stock Right, the Holder
shall be retired in good standing from the employ of the Company for reasons of
age under the then established rules of the Company, the Stock Right shall
terminate on the earlier of such date of expiration or three (3) months after
the date of such retirement. In the event of the death of the Holder before the
date of expiration of such Stock Right and while in the employ of the Company or
during the three (3) month period described in the preceding sentence, or in the
event of the retirement of the Holder for reasons of disability (within the
meaning of Section 22(e)(3) of the Code), such Stock Right shall terminate on
the earlier of such date of expiration or one (1) year following the date of
such death or retirement. After the death of the Holder, his or her executors,
administrators or any persons to whom his or her Stock Right may be transferred
by will or by the laws of descent and distribution shall have the right at any
time prior to such termination to exercise the Stock Right to the extent to
which the Holder was entitled to exercise the Stock Right on the date of his or
her death.

      Authorized leave of absence or absence on military or government service
shall not constitute severance of the employment relationship between the
Company and the Holder for purposes of the Plan, provided that either (i) such
absence is for a period of no more than ninety (90) days or (ii) the Holder's
right to re-employment after such absence is guaranteed either by statute or by
contract.

13.   REQUIREMENTS OF LAW

      The Company shall not be required to sell or issue any shares of Stock
upon the exercise of any Stock Right if the issuance of such shares shall
constitute or result in a violation by the Holder or the Company of any
provisions of any law, statute or regulation of any governmental authority.
Specifically, in connection with the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable state securities or "blue sky" law (a
"Blue Sky Law"), upon exercise of any Stock Right the Company shall not be
required to issue such shares unless the Board of Directors has received
evidence satisfactory to it to the effect that the Holder of such Stock Right
will not transfer such shares except pursuant to a registration statement in
effect under the Securities Act and Blue Sky Laws or unless an opinion of
counsel satisfactory to the Company has been received by the Company to the
effect that such registration and compliance is not required. Any determination
in this connection by the Board of Directors shall be final,
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 7


binding and conclusive. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of a Stock Right or the
issuance of shares of Stock pursuant thereto to comply with any law or
regulations of any governmental authority, including, without limitation, the
Securities Act or applicable Blue Sky laws.

      Notwithstanding any other provision of the Plan to the contrary, the
Company may refuse to permit transfer of shares of Stock if in the opinion of
its legal counsel such transfer would violate federal or state securities laws
or subject the Company to liability thereunder. Any sale, assignment, transfer,
pledge or other disposition of shares of Stock received upon exercise of any
Stock Right (or any other shares or securities derived therefrom) which is not
in accordance with the provisions of this section shall be void and of no effect
and shall not be recognized by the Company.

       The Company shall not be required to sell or issue any Stock upon the
exercise of any Stock Right if the Board of Directors is advised by counsel that
the issuance of such Stock would result in the termination of any then effective
election of the Company to be taxed as a Subchapter S corporation pursuant to
the Code.

       Legend on Certificates. The Board of Directors may cause any certificate
representing shares of Stock acquired upon exercise of a Stock Right (and any
other shares or securities derived therefrom) to bear a legend to the effect
that the securities represented by such certificate have not been registered
under the Securities Act or any applicable state securities laws, and may not be
sold, assigned, transferred, pledged or otherwise disposed of except in
accordance with the Plan and applicable agreements binding the holder and the
Company or any of its stockholders.

14.   NO RIGHTS AS STOCKHOLDER

       No Holder shall have rights as a stockholder with respect to shares
covered by his or her Stock Rights until the date of issuance of a stock
certificate for such shares. Except as otherwise provided in Section 17 no
adjustment for dividends or other rights shall be made if the record date
therefor is prior to the date of issuance of such certificate.

15.   EMPLOYMENT OBLIGATION

      Nothing in this Plan nor the granting of any Stock Right under this Plan
shall (i) impose upon the Company or any Subsidiary any obligation to employ or
continue to employ any Holder, or to engage or retain the services of any
person, (ii) diminish or affect the right of the Company or any Subsidiary to
terminate the employment or services of any person or (iii) affect the ability
of the Company to increase or decrease the compensation of any person. The
existence of any Stock Right shall not be taken into account in determining any
damages relating to termination of employment for any reason.
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 8


16.   FORFEITURE AS A RESULT OF TERMINATION FOR CAUSE

      Notwithstanding anything to the contrary in the Plan, if the Board of
Directors determines, after full consideration of the facts presented on behalf
of both the Company and a Holder, that

      a. the Holder has been engaged in fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his or her employment by or
involvement with the Company or a Subsidiary, which damaged the Company or a
Subsidiary, or has made unauthorized disclosure of trade secrets or other
proprietary information of the Company or a Subsidiary or of a third party who
has entrusted such information to the Company or a Subsidiary, or

      b. the Holder's employment or involvement was otherwise terminated for
"cause," as defined in any employment agreement with the Holder, if applicable,
or if there is no such agreement, as determined by the Board of Directors, which
may determine that "cause" includes among other matters the failure or inability
of the Holder to carry out his or her assigned duties diligently and in a manner
satisfactory to the Company,

then the Holder's right to exercise a Stock Right shall terminate as of the date
of such act (in the case of (a)) or such termination (in the case of (b)) and
the Holder shall forfeit all unexercised Stock Rights. If a Holder whose
behavior the Company asserts falls within the provisions of (a) or (b) above has
exercised or attempts to exercise a Stock Right prior to a decision of the Board
of Directors, the Company shall not be required to recognize such exercise until
the Board of Directors has made its decision and, in the event of any exercise
shall have taken place, it shall be of no force and effect (and void ab initio)
if the Board of Directors makes an adverse determination; provided, however, if
the Board of Directors finds in favor of the Holder then the Holder will be
deemed to have exercised such Stock Rights retroactively as of the date he or
she originally gave written notice of his or her attempt to exercise or actual
exercise, as the case may be. The decision of the Board of Directors as to the
cause of an Holder's discharge and the damage done to the Company or a
Subsidiary shall be final, binding and conclusive. No decision of the Board of
Directors, however, shall affect in any manner the finality of the discharge of
such Holder by the Company or a Subsidiary.

17.   CHANGES IN THE COMPANY'S CAPITAL STRUCTURE

      The existence of outstanding Stock Rights shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business or any merger or consolidation of
the Company or any issue of bonds, debentures, preferred or preference stock,
whether or not convertible into the Stock or other securities, ranking prior to
the Stock or affecting the rights thereof, or warrants, rights or options to
acquire the same, or the dissolution or liquidation of the Company or any sale
or transfer of all or any part of its assets or business or any other corporate
act or proceeding, whether of a similar character or otherwise.
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 9


      The number of shares of Stock in the Stock Pool (less the number of shares
theretofore delivered upon exercise of Stock Rights) and the number of shares of
Stock covered by any outstanding Stock Rights and the price per share payable
upon exercise thereof (provided that in no event shall the option price be less
than the par value of such shares) shall be proportionately adjusted for any
increase or decrease in the number of issued and outstanding shares of Stock
resulting from the subdivision, split, combination or consolidation of shares of
Stock or any other capital adjustment, the payment of a Stock dividend or any
other increase in such shares effected without receipt of consideration by the
Company or any other decrease therein effected without a distribution of cash or
property in connection therewith, provided, however, that no adjustment shall be
made that would constitute a modification as defined in Section 424(h)(3) of the
Code.

      In the event the Company merges or consolidates with a wholly-owned
subsidiary for the purpose of reincorporating itself under the laws of another
jurisdiction, the Holders will be entitled to acquire shares of the common stock
of the reincorporated Company upon the same terms and conditions as were in
effect immediately prior to such reincorporation (unless such reincorporation
involves a change in the number of shares, in which case proportional
adjustments shall be made as provided above) and the Plan, unless otherwise
rescinded by the Board, will remain the Plan of the reincorporated Company.

      Except as otherwise provided in the preceding paragraph, if the Company is
merged or consolidated with another corporation, whether or not the Company is
the surviving entity, or if the Company is liquidated or sells or otherwise
disposes of all or substantially all of its assets to another entity while
unexercised Stock Rights remain outstanding under the Plan, or in other
circumstances in which the Board in its sole and absolute discretion deems it
appropriate for the provisions of this paragraph to apply, (a) subject to the
provisions of clause (c) below, after the effective date of such merger,
consolidation, liquidation, sale or other event (in each case, an "Applicable
Event," as the case may be, each holder of an outstanding Stock Right shall be
entitled, upon exercise of such Stock Right, to receive in lieu of shares of
Stock, such stock or other securities or property as he or she would have
received had he exercised such Stock Right immediately prior to the Applicable
Event; (b) the Board may, in its sole and absolute discretion, waive, generally
or in more specific cases, any limitations imposed pursuant to Section 9 (even
if the effect of such waiver is to disqualify the Stock Right as an ISO) or
Section 19 so that some or all Stock Rights from and after a date prior to the
effective date of such Applicable Event specified by the Board, in its sole and
absolute discretion, shall be exercisable in full; and (c) all outstanding and
unexercised Stock Rights may, in its sole and absolute discretion, be canceled
by the Board as of the effective date of any such Applicable Event; provided,
however, notice of any such cancellation shall be given to each Holder not less
than thirty (30) days preceding the effective date of such Applicable Event; and
provided further, however, that the Board may in its sole and absolute
discretion, waive, generally or in one or more specific instances, any
limitations imposed pursuant to Section 9 (even if the effect of such waiver is
to disqualify the Stock Right as an ISO) or Section 19 with respect to any Stock
Right so that such Stock Right shall be exercisable in full or in part, as the
Board may, in its sole and absolute discretion, determine, during such thirty
(30) day period.
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 10


      Except as expressly provided herein, the issue by the Company of shares of
Stock or other securities of any class or securities convertible into or
exchangeable or exercisable for shares of Stock or other securities of any class
for cash or property or for labor or services either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number, class or price of shares of Stock then subject to
outstanding Stock Rights.

18.   AMENDMENT OR TERMINATION OF PLAN

      The Board may, in its sole and absolute discretion, modify, revise or
terminate the Plan at any time and from time to time; provided, however, that
without the further approval of the holders of at least a majority of the
outstanding shares of Stock, the Board may not (a) materially increase the
benefits accruing to Holders under the Plan or make any "modifications" as that
term is defined under Section 424(h)(3) (or its successor) of the Code if such
increase in benefits or modifications would adversely affect (i) the
availability to the Plan of the protections of Section 16(b) of the Securities
Exchange Act, if applicable to the Company, or (ii) the qualification of the
Plan or any Options for "incentive stock option" treatment under Section 422 of
the Code; (b) change the aggregate number of shares of Stock which may be issued
under Stock Rights pursuant to the provisions of the Plan; (c) reduce the
exercise price at which ISOs may be granted to an amount less than the fair
market value per share, or 110% of fair market value as the case may be, at the
time the Option is granted; or (d) change the class of persons eligible to
receive ISOs. Notwithstanding the preceding sentence, the Board shall in all
events have the power and authority to make such changes in the Plan and in the
regulations and administrative provisions hereunder or in any outstanding Option
as, in the opinion of counsel for the Company, may be necessary or appropriate
from time to time to enable any Option granted pursuant to the Plan to qualify
as an ISO or such other stock option as may be defined under the Code, as
amended from time to time, so as to receive preferential federal income tax
treatment. The termination or any modification or amendment of the Plan shall
not, without the consent of a Holder, affect his or her rights under an Stock
Right previously granted to him or her. With the consent of the Holder affected,
the Board may amend outstanding Agreements in a manner not inconsistent with the
Plan.

19.   CERTAIN RIGHTS OF THE COMPANY

      Unless an Agreement specifically provides to the contrary, or a Holder has
entered into an employment, stockholder or other agreement with the Company
which provides for the repurchase of options or stock in the event such Holder's
employment or involvement with the Company terminates, the provisions of this
Section 19 shall apply to each Stock Right granted under the Plan and to the
shares of Stock acquired on exercise thereof.

      a. Voluntary or Involuntary Transfers of Stock. Shares of Stock acquired
by an Holder pursuant to the exercise of a Stock Right or Stock Rights granted
under the Plan shall not be voluntarily transferred by the Holder without the
written consent of the Board which consent
<PAGE>

Applied Language Technologies, Inc.
Amended and Restated 1995 Stock Option Plan
Page 11


may be withheld or conditioned as the Board in its sole discretion determines.
If such Stock is subject to an involuntary transfer, including by reason of
death, a divorce settlement or judicial proceeding, the Company shall have the
right to repurchase all or any shares of such Stock (including any Stock
subsequently acquired by the Holder upon exercise of a Stock Right if the Stock
so acquired is subject to such involuntary transfer) at a price equal to the
Repurchase Price at the time of the involuntary transfer event. The Company may
exercise its repurchase right no later than 180 days following the later of (a)
the date of such involuntary transfer of such shares of Stock, (b) the date of
any such subsequent acquisition of Stock upon exercise of a Stock Right and (c)
the Board of Director's receipt of written notice of the occurrence of such
transfer event. Any such shares of Stock as to which the Company does not
exercise its repurchase rights within such period shall thereafter be free of
the restrictions of this Section 19.

      Repurchase Price. As used herein the term "Repurchase Price" shall mean
the fair market value of a share of Stock as determined in good faith by a
majority of the disinterested members of the Board of Directors of the Company.
In making their determination of fair market value of a share of Stock the
Directors will not take into account that the Stock may be illiquid or may
constitute a minority interest in the Company.

      b. Securities Laws; Transfers In Violation of Plan. Notwithstanding any
other provision of this Plan the Company may refuse to permit transfer of shares
of Stock if in the opinion of its legal counsel such transfer would violate
securities laws or subject the Company to liability thereunder. Any sale,
transfer, pledge or other disposition of shares of Stock which is not in
accordance with the provisions of this Section 19 shall be void and of no effect
and shall not be recognized by the Company.

20.   EFFECTIVE DATE AND DURATION OF THE PLAN

      The Plan shall become effective and shall be deemed to have been adopted
on August 1, 1995 subject only to ratification by the holders of at least a
majority of the outstanding shares of Stock within twelve (12) months after such
date. Unless the Plan shall have terminated earlier, the Plan shall terminate on
the tenth (10th) anniversary of its effective date, and no Stock Right shall be
granted pursuant to the Plan after the day preceding the tenth (10th)
anniversary of its effective date.
<PAGE>

================================================================================

                         Exhibit 1 to Stock Option Plan
                   Form of Incentive Stock Option Certificate

                       Applied Language Technologies, Inc.

                        Incentive Stock Option Agreement
                   Option Certificate Number: ________________

Specific Terms of the Option

      Subject to the terms and conditions hereinafter set forth and the terms
and conditions of the Applied Language Technologies, Inc. 1995 Stock Option Plan
(the "Plan"), Applied Language Technologies, Inc., a Delaware corporation (the
"Company") hereby grants the following option to purchase Common Stock, par
value $0.001 per share (the "Stock") of the Company:

1.    Name of Person to Whom the Option is granted (the "Optionee"):

2.    Date of Grant of Option: _______.

3.    An Option for _______ shares of Common Stock.

4.    Option Exercise Price (per share): $_____.

5.    Term of Option: Subject to Section 9 below, this Option expires at 5:00 pm
      Eastern Time on _____________.

6. Exercise Schedule: Provided that on the dates set forth below the Optionee is
still employed by the Company or, if the Optionee is not employed by the Company
the Optionee is still actively involved in the Company (as determined by the
Board of Directors) the Option will become exercisable as follows and as
provided in Section 9 below:

                                 The Option will              Cumulative
      On This                  Become Exercisable as           Number
       Date                  To This Number of Shares         Exercisable
      -------                ------------------------         -----------

___________________            ___________________        ___________________

___________________            ___________________        ___________________

___________________            ___________________        ___________________

___________________            ___________________        ___________________

___________________            ___________________        ___________________

___________________            ___________________        ___________________


      Does Section 19 of the Plan apply to Stock covered by this Option?
Yes  X   No    .
    ---     ---

================================================================================
<PAGE>

================================================================================

APPLIED LANGUAGE TECHNOLOGIES, INC.


By:                                            X
Title:                                          (Signature of Optionee)
                                               Date:
Optionee's Address:





================================================================================
<PAGE>

Applied Language Technologies, Inc.
Form of Incentive Stock Option Certificate
Page 3


OTHER TERMS OF THE OPTION

      WHEREAS, the Board of Directors (the "Board") has authorized the grant of
stock options upon certain terms and conditions set forth herein; and

      WHEREAS, the Board has authorized the grant of this stock option pursuant
and subject to the terms of the Plan, a copy of which is available from the
Company and is hereby incorporated herein;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Company and the Optionee agree as set forth
above and as follows:

      7. Grant. Pursuant and subject to the Plan, the Company does hereby grant
to the Optionee a stock option (the "Option") to purchase from the Company the
number of shares of its Common Stock set forth in Section 3 upon the terms and
conditions set forth in the Plan and upon the additional terms and conditions
contained herein. This Option is intended to qualify for special federal income
tax treatment as an "incentive stock option" pursuant to Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code").

      8. Option Price. This Option may be exercised at the option price per
share of Stock set forth in Section 4 hereof, subject to adjustment as provided
herein and in the Plan.

      9. Term and Exercisability of Option. This Option shall expire on the date
determined pursuant to Section 5 hereof and shall be exercisable prior to that
date in accordance with and subject to the conditions set forth in the Plan and
those conditions, if any, set forth in Section 6 hereof. In addition in the
event that before this Option has been exercised in full, the Optionee ceases to
be an employee of the Company for any reason other than death or a termination
for dishonesty or other "cause" as provided in Section 16 of the Plan, the
Optionee may exercise this Option to the extent that he or she might have
exercised it on the date of termination of his or her employment, during the
period ending on the earlier of (i) the date on which the Option expires in
accordance with Section 5 of this Agreement or (ii) three months after the date
of termination of the Optionee's employment by the Company. In the event of the
death of the Optionee before this Option has been exercised in full, the
personal representative of the Optionee may exercise this Option to the extent
that the Optionee might have exercised it on the date of his or her death,
during the period ending on the earlier of (i) the date on which the Option
expires in accordance with Section 5 of this Agreement or (ii) the first
anniversary of the date of the Optionee's death.

      10. Method of Exercise. To the extent that the right to purchase shares of
Stock has accrued hereunder, this Option may be exercised from time to time by
written notice to the Company substantially in the form attached hereto as
Exhibit A, stating the number of shares with respect to which this Option is
being exercised, and accompanied by payment in full of the option price for the
number of shares to be delivered, by means of payment acceptable to the
<PAGE>

Applied Language Technologies, Inc.
Form of Incentive Stock Option Certificate
Page 4


Company in accordance with Section 10 of the Plan. As soon as practicable after
its receipt of such notice, the Company shall, without transfer or issue tax to
the Optionee (or other person entitled to exercise this Option), deliver to the
Optionee (or other person entitled to exercise this Option), at the principal
executive offices of the Company or such other place as shall be mutually
acceptable, a certificate or certificates for such shares out of theretofore
authorized but unissued shares or reacquired shares of its Stock as the Company
may elect; provided, however, that the time of such delivery may be postponed by
the Company for such period as may be required for it with reasonable diligence
to comply with any applicable requirements of law. Payment of the option price
may be made in cash or cash equivalents, [or, in accordance with the terms and
conditions of Section 10 of the Plan, (a) in whole or in part in shares of
Common Stock of the Company, or (b) in part by promissory note of the Optionee
in the form attached hereto as Exhibit B; provided, however, that the Board
reserves the right upon receipt of any written notice of exercise from the
Optionee to require payment in cash with respect to the shares contemplated in
such notice](1). If the Optionee (or other person entitled to exercise this
Option) fails to pay for and accept delivery of all of the shares specified in
such notice upon tender of delivery thereof, his or her right to exercise this
Option with respect to such shares not paid for may be terminated by the
Company.

      11. Non-assignability of Option Rights. This Option shall not be
assignable or transferable by the Optionee except by will or by the laws of
descent and distribution. During the life of the Optionee, this Option shall be
exercisable only by him or her.

      12. Compliance with Securities Act. The Company shall not be obligated to
sell or issue any shares of Stock or other securities pursuant to the exercise
of this Option unless the shares of Stock or other securities with respect to
which this Option is being exercised are at that time effectively registered or
exempt from registration under the Securities Act of 1933, as amended, and
applicable state securities laws. In the event shares or other securities shall
be issued which shall not be so registered, the Optionee hereby represents,
warrants and agrees that he or she will receive such shares or other securities
for investment and not with a view to their resale or distribution, and will
execute an appropriate investment letter satisfactory to the Company and its
counsel.

      13. Legends. The Optionee hereby acknowledges that the stock certificate
or certificates evidencing shares of Stock or other securities issued pursuant
to any exercise of this Option will bear a legend setting forth the restrictions
on their transferability described in Section 12 hereof and, if applicable to
this Option, in Section 19 of the Plan.

      14. Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to any shares of Stock or other securities covered by
this Option until the date of issuance of a certificate to him or her for such
shares or other securities. No adjustment shall

----------

      (1)   Review.
<PAGE>

Applied Language Technologies, Inc.
Form of Incentive Stock Option Certificate
Page 5


be made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued.

      15. Notice to Company of Disqualifying Disposition. The Optionee hereby
agrees that he or she will promptly give notice to the Company in the event that
he or she sells, transfers, exchanges or otherwise disposes of any shares of
Stock or other securities obtained pursuant to any exercise of this Option
before the day after the later of (a) the second anniversary of the date of
grant set forth at the conclusion of this Agreement and (b) the first
anniversary of the date on which the shares of Stock or other securities were
transferred to him or her pursuant to his or her exercise of this Option.

      16. Termination or Amendment of Plan. The Board may in its sole and
absolute discretion at any time terminate or from time to time modify and amend
the Plan, but no such termination or amendment will affect rights and
obligations under this Option.

      17. Effect Upon Employment. Nothing in this Option or the Plan shall be
construed to impose any obligation upon the Company to employ the Optionee or to
retain the Optionee in its employ, or continue its involvement with, the
Optionee.

      18. Time for Acceptance. Unless the Optionee shall evidence his acceptance
of this Option by execution of this Agreement within seven (7) days after its
delivery to him or her, the Option and this Agreement shall be null and void.

      19. General Provisions.

      a. Amendment; Waivers. This Agreement, including the Plan, contains the
full and complete understanding and agreement of the parties hereto as to the
subject matter hereof and may not be modified or amended, nor may any provision
hereof be waived, except by a further written agreement duly signed by each of
the parties. The waiver by either of the parties hereto of any provision hereof
in any instance shall not operate as a waiver of any other provision hereof or
in any other instance.

      b. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.

      c. Construction. This Agreement is to be construed in accordance with the
terms of the Plan. In case of any conflict between the Plan and this Agreement,
the Plan shall control. The titles of the sections of this Agreement and of the
Plan are included for convenience only and shall not be construed as modifying
or affecting their provisions. The masculine gender shall include both sexes;
the singular shall include the plural and the plural the singular unless the
context otherwise requires.
<PAGE>

Applied Language Technologies, Inc.
Form of Incentive Stock Option Certificate
Page 6


      d. Notices. Any notice in connection with this Agreement shall be deemed
to have been properly delivered if it is in writing and is delivered in hand or
sent by registered mail to the party addressed as follows, unless another
address has been substituted by notice so given:

To the Optionee:             To his or her address as listed on the books of the
                             Company.

To the Company:              Applied Language Technologies, Inc.
                             695 Atlantic Avenue, 3rd Floor
                             Boston, Massachusetts 02111

                             Copy to:
                             Sullivan & Worcester LLP
                             One Post Office Square
                             Boston, MA 02109
                             Attention: John A. Piccione, Esq.
<PAGE>

Applied Language Technologies, Inc.
Form of Incentive Stock Option Certificate
Page 7


                                             EXHIBIT A to Incentive Stock Option

                 [FORM FOR EXERCISE OF INCENTIVE STOCK OPTION]

Applied Language Technologies, Inc.
215 First Street
Cambridge, Massachusetts 02142

RE:   Exercise of Incentive Stock Option under Applied Language Technologies,
      Inc. 1995 Stock Option Plan


Gentlemen:

      Please take notice that the undersigned hereby elects to exercise the
stock option granted to _____________ on _______, 199_ by and to the extent of
purchasing ________ shares of the Common Stock of Applied Language Technologies,
Inc. for the option price of $_________ per share, subject to the terms and
conditions of the Incentive Stock Option Agreement between ______________ and
Applied Language Technologies, Inc. dated as of __________ 199_.

      The undersigned encloses herewith payment, in cash or in such other
property as is permitted under the Plan, of the purchase price for said shares.
If the undersigned is making payment of any part of the purchase price by
delivery of shares of Common Stock of Applied Language Technologies. Inc., he or
she hereby confirms that he or she has investigated and considered the possible
income tax consequences to him or her of making such payments in that form.

      The undersigned hereby specifically confirms to Applied Language
Technologies, Inc. that he or she is acquiring said shares for investment and
not with a view to their sale or distribution, and that said shares shall be
held subject to all of the terms and conditions of said Incentive Stock Option
Agreement.

                                        Very truly yours,


Date                                    (Signed by ____________ or other party
                                        duly exercising option)