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                                                                  EXHIBIT 10.11


                                ISS GROUP, INC.

                       RESTATED 1995 STOCK INCENTIVE PLAN

                (AMENDED AND RESTATED THROUGH JANUARY 18, 1999)

                                  ARTICLE ONE

                               GENERAL PROVISIONS

         I.       PURPOSE OF THE PLAN

                  This Restated 1995 Stock Incentive Plan is intended to
promote the interests of ISS Group, Inc., a Delaware corporation, by providing
eligible persons with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.

                  Capitalized terms herein shall have the meanings assigned to
such terms in the attached Appendix.

         II.      STRUCTURE OF THE PLAN

                  A.       The Plan shall be divided into three (3) separate
equity programs:

                           (i)      the Discretionary Option Grant Program
         under which eligible persons may, at the discretion of the Plan
         Administrator, be granted options to purchase shares of Common Stock,

                           (ii)     the Stock Issuance Program under which
         eligible persons may, at the discretion of the Plan Administrator, be
         issued shares of Common Stock directly, either through the immediate
         purchase of such shares or as a bonus for services rendered the
         Corporation (or any Parent or Subsidiary), and

                           (iii)    the Automatic Option Grant Program under
         which eligible non-employee Board members shall automatically receive
         options at periodic intervals to purchase shares of Common Stock.

                  B.       The provisions of Articles One and Five shall apply
to all equity programs under the Plan and shall accordingly govern the
interests of all persons under the Plan.

         III.     ADMINISTRATION OF THE PLAN

                  A.       Prior to the Section 12(g) Registration Date, the
Plan shall be administered by the Board.


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                  B.       Beginning with the Section 12(g) Registration Date,
the Board shall have the authority to administer the Discretionary Option Grant
and Stock Issuance Programs with respect to Section 16 Insiders but may
delegate such authority in whole or in part to the Primary Committee.
Administration of the Plan with respect to all other persons eligible to
participate may, at the Board's discretion, be vested in the Primary Committee
or a Secondary Committee, or the Board may retain the power to administer the
Plan with respect to all such persons.

                  C.       Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and
may be removed by the Board at any time. The Board may also at any time
terminate the functions of any Secondary Committee and reassume all powers and
authority previously delegated to such committee.

                  D.       Each Plan Administrator shall, within the scope of
its administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue
such interpretations of, the provisions of such Plan and any outstanding
options or stock issuances thereunder as it may deem necessary or advisable.
Decisions of the Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties who have an
interest in the Plan or any option or stock issuance thereunder.

                  E.       Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and members of each such
committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such committee. No member
of the Primary Committee or the Secondary Committee shall be liable for any act
or omission made in good faith with respect to the Plan or any option grants or
stock issuances under the Plan.

                  F.       Administration of the Automatic Option Grant Program
shall be self-executing in accordance with the terms of such program.

         IV.      ELIGIBILITY

                  A.       Prior to the Section 12(g) Registration Date, only
Employees shall be eligible to participate in the Plan.

                  B.       Beginning with the Section 12(g) Registration Date,
the persons eligible to participate in the Discretionary Option Grant and Stock
issuance Programs shall be as follows:

                           (i)      Employees,

                           (ii)     non-employee members of the Board or the
         board of directors of any Parent or Subsidiary, and

                           (iii)    consultants and other independent advisors
         who provide services to the Corporation (or any Parent or Subsidiary).

                  C.       Only non-employee Board members shall be eligible to
participate in the Automatic Option Grant Program.


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                  D.       Each Plan Administrator shall, within the scope of
its administrative jurisdiction under the Plan, have full authority (subject to
the provisions of the Plan) to determine, (i) with respect to the option grants
under the Discretionary Option Grant Program, which eligible persons are to
receive option grants, the time or times when such option grants are to be
made, the number of shares to be covered by each such grant, the status of the
granted option as either an Incentive Option or a Non-Statutory Option, the
time or times at which each option is to become exercisable, the vesting
schedule (if any) applicable to the option shares and the maximum term for
which the option is to remain outstanding and (ii) with respect to stock
issuances under the Stock Issuance Program, which eligible persons are to
receive stock issuances, the time or times when such issuances are to be made,
the number of shares to be issued to each Participant, the vesting schedule (if
any) applicable to the issued shares and the consideration to be paid for such
shares.

                  E.       The Plan Administrator shall have the absolute
discretion either to grant options in accordance with the Discretionary Option
Grant Program or to effect stock issuances in accordance with the Stock
Issuance Program.

         V.       STOCK SUBJECT TO THE PLAN

                  A.       The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. The maximum number of
shares of Common Stock which may be issued over the term of the Plan shall not
exceed 3,000,000 shares.

                  B.       The number of shares of Common Stock available for
issuance under the Plan shall automatically increase on the first trading day
of each calendar year, beginning with the 1999 calendar year, by an amount
equal to three percent (3.0%) of the total number of shares of Common Stock
outstanding on the last trading day of the immediately preceding calendar year.
No Incentive Options may be granted on the basis of the additional shares of
Common Stock resulting from such annual increases.

                  C.       No one person participating in the Plan may receive
options, separately exercisable stock appreciation rights and direct stock
issuances for more than 300,000 shares of Common Stock per calendar year
beginning with the calendar year in which the Section 12(g) Registration Date
occurs.

                  D.       Shares of Common Stock subject to outstanding
options shall be available for subsequent issuance under the Plan to the extent
(i) the options expire or terminate for any reason prior to exercise in full or
(ii) the options are cancelled in accordance with the cancellation-regrant
provisions of Article Two. Unvested shares issued under the Plan and
subsequently repurchased by the Corporation at the original issue price paid
per share pursuant to the Corporation's repurchase rights under the Plan shall
be added back to the number of shares of Common Stock reserved for issuance
under the Plan and shall accordingly be available for reissuance through one or
more subsequent option grants or direct stock issuances under the Plan.
However, should the exercise price of an option under the Plan be paid with
shares of Common Stock or should shares of Common Stock otherwise issuable
under the Plan be withheld by the corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an option or the
vesting of a stock issuance under the Plan, then the number of


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shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised or which vest under
the stock issuance, and not by the net number of shares of Common Stock issued
to the holder of such option or stock issuance.

                  E.       Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities
for which any one person may be granted options, separately exercisable stock
appreciation rights and direct stock issuances per calendar year, (iii) the
number and/or class of securities for which grants are subsequently to be made
under the Automatic Option Grant Program to new and continuing non-employee
Board members, and (iv) the number and/or class of securities and the exercise
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive.


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                                  ARTICLE TWO

                       DISCRETIONARY OPTION GRANT PROGRAM

         I.       OPTION TERMS

                  Each option shall be evidenced by one or more documents in
the form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the
Plan applicable to such options.

                  A.       EXERCISE PRICE.

                           1.       The exercise price per share shall be fixed
by the Plan Administrator and may be equal to, greater than or less than the
Fair Market Value per share of Common Stock on the option grant date.

                           2.       The exercise price shall become immediately
due upon exercise of the option and shall, subject to the provisions of Section
I of Article Five and the documents evidencing the option, be payable in cash
or check made payable to the Corporation. Should the Common Stock be registered
under Section 12(g) of the 1934 Act at the time the option is exercised, then
the exercise price may also be paid as follows:

                                    (i)      in shares of Common Stock held for
         the requisite period necessary to avoid a charge to the Corporation's
         earnings for financial reporting purposes and valued at Fair Market
         Value on the Exercise Date, or

                                    (ii)     to the extent the option is
         exercised for vested shares, through a special sale and remittance
         procedure pursuant to which the Optionee shall concurrently provide
         irrevocable instructions (A) to a Corporation-designated brokerage
         firm to effect the immediate sale of the purchased shares and remit to
         the Corporation, out of the sale proceeds available on the settlement
         date, sufficient funds to cover the aggregate exercise price payable
         for the purchased shares plus all applicable Federal, state and local
         income and employment taxes required to be withheld by the Corporation
         by reason of such exercise and (B) to the Corporation to deliver the
         certificates for the purchased shares directly to such brokerage firm
         in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.

                  B.       EXERCISE AND TERM OF OPTIONS. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option grant. However, no option shall have a term in
excess of ten (10) years measured from the option grant date.


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                  C.       EFFECT OF TERMINATION OF SERVICE.

                           1.       The following provisions shall govern the
exercise of any options held by the Optionee at the time of cessation of
Service or death:

                                    (i)      Should the Optionee cease to
         remain in Service for any reason other than Permanent Disability or
         Misconduct, then the Optionee shall have a period of three (3) months
         following the date of such cessation of Service during which to
         exercise each outstanding option held by such Optionee.

                                    (ii)     Should the Optionee's Service
         terminate by reason of Permanent Disability, then the Optionee shall
         have a period of twelve (12) months following the date of such
         cessation of Service during which to exercise each outstanding option
         held by such Optionee.

                                    (iii)    If the Optionee dies while holding
         an outstanding option, then the personal representative of his or her
         estate or the person or persons to whom the option is transferred
         pursuant to the Optionee's will or the laws of inheritance shall have
         a twelve (12)-month period following the date of the Optionee's death
         to exercise such option.

                                    (iv)     Under no circumstances, however,
         shall any such option be exercisable after the specified expiration of
         the option term.

                                    (v)      During the applicable post-Service
         exercise period, the option may not be exercised in the aggregate for
         more than the number of vested shares for which the option is
         exercisable on the date of the Optionee's cessation of Service. Upon
         the expiration of the applicable exercise period or (if earlier) upon
         the expiration of the option term, the option shall terminate and
         cease to be outstanding for any vested shares for which the option has
         not been exercised. However, the option shall, immediately upon the
         Optionee's cessation of Service, terminate and cease to be outstanding
         with respect to any and all option shares for which the option is not
         otherwise at the time exercisable or in which the Optionee is not
         otherwise at that time vested.

                                    (vi)     Should the Optionee's Service be
         terminated for Misconduct, then all outstanding options held by the
         Optionee shall terminate immediately and cease to remain outstanding.

                                    (vii)    In the event of a Corporate
         Transaction or Change in Control, the provisions of Section III of
         this Article Two shall govern the period for which outstanding options
         are to remain exercisable following the Optionee's cessation of
         Service and shall supersede any provisions to the contrary in this
         paragraph.


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                           2.       The Plan Administrator shall have the
discretion, exercisable either at the time an option is granted or at any time
while the option remains outstanding, to:

                                    (i)      extend the period of time for
         which the option is to remain exercisable following the Optionee's
         cessation of Service or death from the limited period otherwise in
         effect for that option to such greater period of time as the Plan
         Administrator shall deem appropriate, but in no event beyond the
         expiration of the option term, and/or

                                    (ii)     permit the option to be exercised,
         during the applicable post-Service exercise period, not only with
         respect to the number of vested shares of Common Stock for which such
         option is exercisable at the time of the Optionee's cessation of
         Service but also with respect to one or more additional installments
         in which the Optionee would have vested under the option had the
         Optionee continued in Service.

                  D.       LIMITED TRANSFERABILITY OF OPTIONS. During the
lifetime of the Optionee, Incentive Options shall be exercisable only by the
Optionee and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following the Optionee's death. However, a
Non-Statutory Option may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established
exclusively for one or more such family members. The assigned portion may only
be exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.

                  E.       STOCKHOLDER RIGHTS. The holder of an option shall
have no stockholder rights with respect to the shares subject to the option
until such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.

                  F.       UNVESTED SHARES. The Plan Administrator shall have
the discretion to grant options which are exercisable for unvested shares of
Common Stock. Should the Optionee cease Service while holding such unvested
shares, the Corporation shall have the right to repurchase, at the exercise
price paid per share, any or all of those unvested shares. The terms upon which
such repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Plan Administrator and set forth in the document
evidencing such repurchase right.

                  G.       FIRST REFUSAL RIGHTS. Until the Section 12(g)
Registration Date, the Corporation shall have the right of first refusal with
respect to any proposed disposition by the Optionee (or any successor in
interest) of any shares of Common Stock issued under the Plan. Such right of
first refusal shall be exercisable in accordance with the terms established by
the Plan Administrator and set forth in the document evidencing such right.


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                  H.       MARKET STAND-OFF. In connection with any
underwritten public offering by the Corporation of its equity securities
pursuant to an effective registration statement filed under the Securities Act
of 1933, including the Corporation's initial public offering, the Optionee may
not sell, make any short sale of, loan, hypothecate, pledge, grant any option
for the purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to, any
shares of Common Stock acquired upon exercise of an option granted under the
Plan without the prior written consent of the Corporation or its underwriters.
Such restriction (the "Market Stand-Off") shall be in effect for such period of
time from and after the effective date of the final prospectus for the offering
as may be requested by the Corporation or such underwriters. The Optionee shall
be required to execute such agreements as the Corporation or the underwriters
request in connection with the Market Stand-Off.

                  I.       FORFEITURE FOR COMPETITION. If, at any time while
the Optionee remains in Service or after the Optionee's termination of Service
while the option remains outstanding, the Optionee provides services to a
competitor of the Corporation (or any Parent or Subsidiary), whether as an
employee, officer, director, independent contractor, consultant, agent or
otherwise, such services being of a nature that can reasonably be expected to
involve the skills and experience used or developed by the Optionee while in
the Corporation's Service, then the Optionee's rights under any options
outstanding under the Plan shall be forfeited and terminated, subject to a
determination to the contrary by the Plan Administrator.

         II.      INCENTIVE OPTIONS

                  The terms specified below shall be applicable to all
Incentive Options. Except as modified by the provisions of this Section II, all
the provisions of the Plan shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options shall not be subject
to the terms of this Section II.

                  A.       ELIGIBILITY. Incentive Options may only be granted
to Employees.

                  B.       EXERCISE PRICE. The exercise price per share shall
not be less than one hundred percent (100%) of the Fair Market Value per share
of Common Stock on the option grant date.

                  C.       DOLLAR LIMITATION. The aggregate Fair Market Value
of the shares of Common Stock (determined as of the respective date or dates of
grant) for which one or more options granted to any Employee under the Plan (or
any other option plan of the Corporation or any Parent or Subsidiary) may for
the first time become exercisable as Incentive Options during any one (1)
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.

                  D.       10% STOCKHOLDER. If any Employee to whom an
Incentive Option is granted is a 10% Stockholder, then the option term shall
not exceed five (5) years measured from the option grant date and the exercise
price per share of the option shall be equal to at least one


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hundred ten percent (110%) of the Fair Market Value per share of Common Stock
on the option grant date.

         III.     CORPORATE TRANSACTION/CHANGE IN CONTROL

                  A.       In the event of any Corporate Transaction, each
outstanding option shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. However, an outstanding option shall not
so accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation (or
parent thereof) or to be replaced with a comparable option to purchase shares
of the capital stock of the successor corporation (or parent thereof), (ii)
such option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested option shares
at the time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of option
comparability under clause (i) above shall be made by the Plan Administrator,
and its determination shall be final, binding and conclusive.

                  B.       All outstanding repurchase rights shall also
terminate automatically, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Corporate
Transaction, except to the extent: (i) those repurchase rights are to be
assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.

                  C.       Immediately following the consummation of the
Corporate Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

                  D.       If an outstanding option is assumed by the successor
corporation (or parent thereof) in connection with a Corporate Transaction, and
the Corporation's repurchase rights with respect to the unvested option shares
are assigned to such successor corporation (or parent thereof), and at the time
of or within twelve (12) months following such Corporate Transaction either (i)
the Optionee is offered a Lesser Position in replacement of the position held
by him or her immediately prior to the Corporate Transaction or (ii) the
Optionee's Service terminates by reason of an Involuntary Termination, then,
effective as of the date on which such Lesser Position is offered to the
Optionee or the effective date of such Involuntary Termination, respectively,
the option shall automatically accelerate in part so that, in addition to the
number of vested shares of Common Stock for which the option is exercisable at
such time, the option shall become exercisable with respect to the next annual
installment of option shares for which the option is scheduled to become
exercisable in accordance with the exercise schedule established for the option
(and the Corporation's repurchase rights shall automatically lapse with respect
to such option shares). Following such acceleration, to the extent the Optionee
continues in Service, the exercise schedule for the option shall be adjusted so
that the option shall become


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exercisable, with respect to each subsequent annual installment of option
shares under the original exercise schedule, on each subsequent anniversary of
the effective date of such option acceleration. In the event that both the
offer of a Lesser Position and a subsequent Involuntary Termination of an
Optionee's Service occur within twelve (12) months following a Corporate
Transaction, then acceleration of the option shares shall occur only in
connection with the offer of such Lesser Position and no additional
acceleration shall occur in connection with such subsequent Involuntary
Termination. Following an Involuntary Termination that occurs within twelve
(12) months following a Corporate Transaction, the option shall remain
exercisable for any or all of the vested option shares until the earlier of (i)
the expiration of the option term or (ii) the expiration of the one (1)-year
period measured from the effective date of the Involuntary Termination.

                  E.       Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan following the
consummation of such Corporate Transaction, (ii) the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same and (iii) the maximum number
of securities and/or class of securities for which any one person may be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances under the Plan.

                  F.       Notwithstanding Sections III.A., III.B. and III.D of
this Article Two, the Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Corporate Transaction,
whether or not those options are to be assumed or replaced (or those repurchase
rights are to be assigned) in the Corporate Transaction. The Plan Administrator
shall also have the discretion to grant options which do not accelerate whether
or not such options are assumed (and to provide for repurchase rights that do
not terminate whether or not such rights are assigned) in connection with a
Corporate Transaction.

                  G.       The Plan Administrator shall also have the
discretion, exercisable at the time the option is granted or at any time while
the option remains outstanding, to provide for the automatic acceleration, of
any options which are assumed or replaced in a Corporate Transaction and do not
otherwise accelerate at that time (and the termination of any of the
Corporation's outstanding repurchase rights which do not otherwise terminate at
the time of the Corporate Transaction) in the event that within twelve (12)
months following the effective date of such Corporate Transaction either (i)
the Optionee should be offered a Lesser Position in replacement of the position
held by him or her immediately prior to the Corporate Transaction or (ii) the
Optionee's Service should subsequently terminate by reason of an Involuntary
Termination. Following an Involuntary Termination that occurs within twelve
(12) months following a Corporate Transaction, any options accelerated under
this Section III. G shall remain exercisable for the vested option shares until
the earlier of (i) the expiration of the option term or (ii) the


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expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination.

                  H.       The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of
one or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of
Common Stock subject to those rights) upon the occurrence of a Change in
Control or (ii) condition any such option acceleration (and the termination of
any outstanding repurchase rights) upon the occurrence of either of the
following events within a specified period (not to exceed twelve (12) months)
following the effective date of such Change in Control: (a) the offer to the
Optionee of a Lesser Position in replacement of the position held by him or her
immediately prior to the Change in Control or (b) the Involuntary Termination
of the Optionee's Service. Any options accelerated in connection with a Change
in Control shall remain fully exercisable until the expiration or sooner
termination of the option term; provided, however, that following an
Involuntary Termination that occurs within twelve (12) months following a
Change in Control, any options accelerated under this Section III.H shall
remain exercisable for the vested option shares until the earlier of (i) the
expiration of the option term or (ii) the expiration of the one (1)-year period
measured from the effective date of the Involuntary Termination.

                  I.       The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One
Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent
such dollar limitation is exceeded, the accelerated portion of such option
shall be exercisable as a Non-Statutory Option under the Federal tax laws.

                  J.       The grant of options under the Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

         IV.      CANCELLATION AND REGRANT OF OPTIONS

                  The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option
holders, the cancellation of any or all outstanding options under the Plan and
to grant in substitution therefor new options covering the same or different
number of shares of Common Stock but with an exercise price per share based on
the Fair Market Value per share of Common Stock on the new option grant date.

         V.       STOCK APPRECIATION RIGHTS

                  A.       The Plan Administrator shall have full power and
authority to grant to selected Optionee's tandem stock appreciation rights
and/or limited stock appreciation rights.

                  B.       The following terms shall govern the grant and
exercise of tandem stock appreciation rights:


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                           (i)      One or more Optionees may be granted the
         right, exercisable upon such terms as the Plan Administrator may
         establish, to elect between the exercise of the underlying option for
         shares of Common Stock and the surrender of that option in exchange
         for a distribution from the Corporation in an amount equal to the
         excess of (a) the Fair Market Value (on the option surrender date) of
         the number of shares in which the Optionee is at the time vested under
         the surrendered option (or surrendered portion thereof) over (b) the
         aggregate exercise price payable for such shares.

                           (ii)     No such option surrender shall be effective
         unless it is approved by the Plan Administrator. If the surrender is
         so approved, then the distribution to which the Optionee shall be
         entitled may be made in shares of Common Stock valued at Fair Market
         Value on the option surrender date, in cash, or partly in shares and
         partly in cash, as the Plan Administrator shall in its sole discretion
         deem appropriate.

                           (iii)    If the surrender of an option is rejected
         by the Plan Administrator, then the Optionee shall retain whatever
         rights the Optionee had under the surrendered option (or surrendered
         portion thereof) on the option surrender date and may exercise such
         rights at any time prior to the later of (a) five (5) business days
         after the receipt of the rejection notice or (b) the last day on which
         the option is otherwise exercisable in accordance with the terms of
         the documents evidencing such option, but in no event may such rights
         be exercised more than ten (10) years after the option grant date.

                  C.       The following terms shall govern the grant and
exercise of limited stock appreciation rights:

                           (i)      One or more Section 16 Insiders may be
         granted limited stock appreciation rights with respect to their
         outstanding options.

                           (ii)     Upon the occurrence of a Hostile Take-Over,
         each such individual holding one or more options with such a limited
         stock appreciation right shall have the unconditional right
         (exercisable for a thirty (30)-day period following such Hostile
         Take-Over) to surrender each such option to the Corporation, to the
         extent the option is at the time exercisable for vested shares of
         Common Stock. In return for the surrendered option, the Optionee shall
         receive a cash distribution from the Corporation in an amount equal to
         the excess of (a) the Take-Over Price of the shares of Common Stock
         which are at the time vested under each surrendered option (or
         surrendered portion thereof) over (b) the aggregate exercise price
         payable for such shares. Such cash distribution shall be paid within
         five (5) days following the option surrender date.

                           (iii)    The Plan Administrator shall pre-approve,
         at the time the limited right is granted, the subsequent exercise of
         that right in accordance with the terms of the grant and the
         provisions of this Section V.C. No


                                      12
<PAGE>   13


         additional approval of the Plan Administrator or the Board shall be
         required at the time of the actual option surrender and cash
         distribution.

                           (iv)     The balance of the option (if any) shall
         continue in full force and effect in accordance with the documents
         evidencing such option.


                                      13
<PAGE>   14


                                 ARTICLE THREE

                             STOCK ISSUANCE PROGRAM

         I.       STOCK ISSUANCE TERMS

                  Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below.

                  A.       PURCHASE PRICE.

                           1.       The purchase price per share shall be fixed
by the Plan Administrator and may be less than, equal to or greater than the
Fair Market Value per share of Common Stock on the issue date.

                           2.       Subject to the provisions of Section I of
Article Four, shares of Common Stock may be issued under the Stock Issuance
Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:

                                    (i)      cash or check made payable to the
         Corporation, or

                                    (ii)     past services rendered to the
         Corporation (or any Parent or Subsidiary).

                  B.       VESTING PROVISIONS.

                           1.       Shares of Common Stock issued under the
Stock Issuance Program may, in the discretion of the Plan Administrator, be
fully and immediately vested upon issuance or may vest in one or more
installments over the Participant's period of Service or upon attainment of
specified performance objectives.

                           2.       Any new, substituted or additional
securities or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
the Participant's unvested shares of Common Stock by reason of any stock
dividend, stock split, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration shall be issued subject to
(i) the same vesting requirements applicable to the Participant's unvested
shares of Common Stock and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.

                           3.       The Participant shall have full stockholder
rights with respect to any shares of Common Stock issued to the Participant
under the Stock Issuance Program, whether or not the Participant's interest in
those shares is vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash dividends paid on such shares.


                                      14
<PAGE>   15


                           4.       Should the Participant cease to remain in
Service while holding one or more unvested shares of Common Stock issued under
the Stock Issuance Program or should the performance objectives not be attained
with respect to one or more such unvested shares of Common Stock, then those
shares shall be immediately surrendered to the Corporation for cancellation,
and the Participant shall have no further stockholder rights with respect to
those shares. To the extent the surrendered shares were previously issued to
the Participant for consideration paid in cash or cash equivalent (including
the Participant's purchase-money indebtedness), the Corporation shall repay to
the Participant the cash consideration paid for the surrendered shares and
shall cancel the unpaid principal balance of any outstanding purchase-money
note of the Participant attributable to such surrendered shares.

                           5.       The Plan Administrator may in its
discretion waive the surrender and cancellation of one or more unvested shares
of Common Stock (or other assets attributable thereto) which would otherwise
occur upon the non-completion of the vesting schedule applicable to such
shares. Such waiver shall result in the immediate vesting of the Participant's
interest in the shares of Common Stock as to which the waiver applies. Such
waiver may be effected at any time, whether before or after the Participant's
cessation of Service or the attainment or non-attainment of the applicable
performance objectives.

                  C.       FIRST REFUSAL RIGHTS. Until the Section 12(g)
Registration Date, the Corporation shall have the right of first refusal with
respect to any proposed disposition by the Participant (or any successor in
interest) of any shares of Common Stock issued under the Stock Issuance
Program. Such right of first refusal shall be exercisable in accordance with
the terms established by the Plan Administrator and set forth in the document
evidencing such right.

         II.      CORPORATE TRANSACTION/CHANGE IN CONTROL

                  A.       All of the Corporation's outstanding repurchase
rights under the Stock Issuance Program shall terminate automatically, and all
the shares of Common Stock subject to those terminated rights shall immediately
vest in full, in the event of any Corporate Transaction, except to the extent
(i) those repurchase rights are assigned to the successor corporation (or
parent thereof) in connection with such Corporate Transaction or (ii) such
accelerated vesting is precluded by other limitations imposed in the Stock
Issuance Agreement.

                  B.       Notwithstanding Section II.A. of this Article Three,
the Plan Administrator shall have the discretionary authority, exercisable
either at the time the unvested shares are issued or any time while the
Corporation's repurchase rights remain outstanding under the Stock Issuance
Program, to provide that those rights shall automatically terminate in whole or
in part, and the shares of Common Stock subject to those terminated rights
shall immediately vest, in the event of a Corporate Transaction, whether or not
those repurchase rights are to be assigned to the successor corporation (or its
parent) in connection with such Corporate Transaction. The Plan Administrator
shall also have the discretion to provide for repurchase rights with terms
different from those in effect under this Section II in connection with a
Corporate Transaction.

                  C.       The Plan Administrator shall have the discretion,
exercisable either at the time the unvested shares are issued or at any time
while the Corporation's repurchase rights


                                      15
<PAGE>   16


remain outstanding, to provide that any repurchase rights that are assigned in
the Corporate Transaction shall automatically terminate, and the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event that either of the following events should occur either at the
time of or within a specified period (not to exceed twelve (12) months)
following the effective date of the Corporate Transaction: (a) the Participant
is offered a Lesser Position in replacement of the position held by him or her
immediately prior to the Corporate Transaction or (b) the Participant's Service
terminates by reason of an Involuntary Termination.

                  D.       The Plan Administrator shall have the discretion,
exercisable either at the time the unvested shares are issued or at any time
while the Corporation's repurchase right remains outstanding, to (i) provide
for the automatic termination of one or more outstanding repurchase rights and
the immediate vesting of the shares of Common Stock subject to those rights
upon the occurrence of a Change in Control or (ii) condition any such
accelerated vesting upon the occurrence of either of the following events at
the time of or within a specified period (not to exceed twelve (12) months)
following the effective date of such Change in Control: (a) the Participant is
offered a Lesser Position in replacement of the position held by him or her
immediately prior to the Change in Control or (b) the Involuntary Termination
of the Participant's Service.

         III.     SHARE ESCROW/LEGENDS

                  Unvested shares may, in the Plan Administrator's discretion,
be held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.

         IV.      MARKET STAND-OFF

                  In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the Securities Act of 1933, including the Corporation's
initial public offering, the Participant may not sell, make any short sale of,
loan, hypothecate, pledge, grant any option for the purchase of, or otherwise
dispose or transfer for value or otherwise agree to engage in any of the
foregoing transactions with respect to, any shares of Common Stock acquired
under the Plan without the prior written consent of the Corporation or its
underwriters. Such restriction (the "Market Stand-Off") shall be in effect for
such period of time from and after the effective date of the final prospectus
for the offering as may be requested by the Corporation or such underwriters.
The Participant shall be required to execute such agreements as the Corporation
or the underwriters request in connection with the Market Stand-Off.


                                      16
<PAGE>   17


                                 ARTICLE FOUR

                         AUTOMATIC OPTION GRANT PROGRAM

         I.       OPTION TERMS

                  A.       GRANT DATES. Options shall be made on the dates
specified below:

                           1.       Each individual who is first elected or
appointed as a non-employee Board member after January 18, 1999 shall
automatically be granted, on the date of such initial election or appointment,
a Non-Statutory Option to purchase 20,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.

                           2.       On the date of each Annual Stockholders
Meeting, beginning with the meeting held in 1999, each individual who is to
continue to serve as a non-employee Board member, whether or not that
individual is standing for re-election to the Board, shall automatically be
granted a Non-Statutory Option to purchase 2,500 shares of Common Stock,
provided such individual has served as a non-employee Board member for at least
six (6) months.

                  B.       EXERCISE PRICE.

                           1.       The exercise price per share shall be equal
to one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.

                           2.       The exercise price shall be payable in one
or more of the alternative forms authorized under the Discretionary Option
Grant Program. Except to the extent the sale and remittance procedure specified
thereunder is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.

                  C.       OPTION TERM. Each option shall have a term of ten
(10) years measured from the option grant date.

                  D.       EXERCISE AND VESTING OF OPTIONS. Each option shall
be immediately exercisable for any or all of the option shares. However, any
shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's
cessation of Board service prior to vesting in those shares. Each initial
20,000-share option shall vest, and the Corporation's repurchase right shall
lapse, in a series of four (4) successive equal annual installments upon the
Optionee's completion of each year of Board service over the four (4)-year
period measured from the option grant date. Each annual 2,500-share option
shall be fully-vested at the time of grant.


                                      17
<PAGE>   18


                  E.       CESSATION OF BOARD SERVICE. The following provisions
shall govern the exercise of any options outstanding at the time of the
Optionee's cessation of Board service:

                           (i)      The Optionee (or, in the event of
         Optionee's death, the personal representative of the Optionee's estate
         or the person or persons to whom the option is transferred pursuant to
         the Optionee's will or in accordance with the laws of descent and
         distribution) shall have a twelve (12)-month period following the date
         of such cessation of Board service in which to exercise each such
         option.

                           (ii)     During the twelve (12)-month exercise
         period, the option may not be exercised in the aggregate for more than
         the number of vested shares of Common Stock for which the option is
         exercisable at the time of the Optionee's cessation of Board service.

                           (iii)    Should the Optionee cease to serve as a
         Board member by reason of death or Permanent Disability, then all
         shares at the time subject to the option shall immediately vest so
         that such option may, during the twelve (12)-month exercise period
         following such cessation of Board service, be exercised for all or any
         portion of those shares as fully-vested shares of Common Stock.

                           (iv)     In no event shall the option remain
         exercisable after the expiration of the option term. Upon the
         expiration of the twelve (12)-month exercise period or (if earlier)
         upon the expiration of the option term, the option shall terminate and
         cease to be outstanding for any vested shares for which the option has
         not been exercised. However, the option shall, immediately upon the
         Optionee's cessation of Board service for any reason other than death
         or Permanent Disability, terminate and cease to be outstanding to the
         extent the option is not otherwise at that time exercisable for vested
         shares.

         II.      CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

                  A.       In the event of any Corporate Transaction, the
shares of Common Stock at the time subject to each outstanding option but not
otherwise vested shall automatically vest in full so that each such option
shall, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for all or any portion of those
shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, each automatic option grant shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).

                  B.       In connection with any Change in Control, the shares
of Common Stock at the time subject to each outstanding option but not
otherwise vested shall automatically vest in full so that each such option
shall, immediately prior to the effective date of the Change in Control, become
fully exercisable for all of the shares of Common Stock at the time subject to


                                      18
<PAGE>   19


such option and may be exercised for all or any portion of those shares as
fully-vested shares of Common Stock. Each such option shall remain exercisable
for such fully-vested option shares until the expiration or sooner termination
of the option term or the surrender of the option in connection with a Hostile
Take-Over.

                  C.       Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender to the
Corporation each of his or her outstanding automatic option grants. The
Optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
shares of Common Stock at the time subject to each surrendered option (whether
or not the Optionee is otherwise at the time vested in those shares) over (ii)
the aggregate exercise price payable for such shares. Such cash distribution
shall be paid within five (5) days following the surrender of the option to the
Corporation.

                  D.       Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price
payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same.

                  E.       The grant of options under the Automatic Option
Grant Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

         III.     REMAINING TERMS

                  The remaining terms of each option granted under the
Automatic Option Grant Program shall be the same as the terms in effect for
options made under the Discretionary Option Grant Program.


                                      19
<PAGE>   20


                                 ARTICLE FIVE

                                 MISCELLANEOUS

         I.       FINANCING

                  The Plan Administrator may permit any Optionee or Participant
to pay the option exercise price under the Discretionary Option Grant Program
or the purchase price of shares issued under the Stock Issuance Program by
delivering a full-recourse, interest bearing promissory note payable in one or
more installments. The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. In no event may the maximum credit
available to the Optionee or Participant exceed the sum of (i) the aggregate
option exercise price or purchase price payable for the purchased shares (less
the par value, if any, of those shares) plus (ii) any Federal, state and local
income and employment tax liability incurred by the Optionee or the Participant
in connection with the option exercise or share purchase.

         II.      TAX WITHHOLDING

                  A.       The Corporation's obligation to deliver shares of
Common Stock upon the exercise of options or upon the issuance or vesting of
such shares under the Plan shall be subject to the satisfaction of all
applicable Federal, state and local income and employment tax withholding
requirements.

                  B.       The Plan Administrator may, in its discretion,
provide any or all holders of Non-Statutory Options or unvested shares of
Common Stock under the Plan with the right to use shares of Common Stock in
satisfaction of all or part of the Taxes incurred by such holders in connection
with the exercise of their options or the vesting of their shares. Such right
may be provided to any such holder in either or both of the following formats:

                           (i)      STOCK WITHHOLDING: The election to have the
         Corporation withhold, from the shares of Common Stock otherwise
         issuable upon the exercise of such Non-Statutory Option or the vesting
         of such shares, a portion of those shares with an aggregate Fair
         Market Value equal to the percentage of the Taxes (not to exceed one
         hundred percent (100%)) designated by the holder.

                           (ii)     STOCK DELIVERY: The election to deliver to
         the Corporation, at the time the Non-Statutory Option is exercised or
         the shares vest, one or more shares of Common Stock previously
         acquired by such holder (other than in connection with the option
         exercise or share vesting triggering the Taxes) with an aggregate Fair
         Market Value equal to the percentage of the Taxes (not to exceed one
         hundred percent (100%)) designated by the holder.

         III.     EFFECTIVE DATE AND TERM OF PLAN

                  A.       The Plan became effective when adopted by the board
of directors of Internet Security Systems, Inc., a Georgia Corporation, (the
"Predecessor Corporation") on


                                      20
<PAGE>   21


September 6, 1995 and was approved by the stockholders of the Predecessor
Corporation on January 31, 1996. Effective as of February 28, 1997, the board
of directors of the Predecessor Corporation restated, subject to approval by
the stockholders, the Plan to make the following changes: (i) to re-name the
Plan the "Restated 1995 Stock Incentive Plan", (ii) to increase the number of
shares of the Predecessor Corporation's common stock available for issuance
thereunder by 600,000 shares from 948,029 to 1,548,029 shares, (iii) to add the
Stock Issuance Program, (iv) to give the Plan Administrator additional
discretion to structure options as immediately exercisable options, subject to
repurchase at the option exercise price paid per share, (v) to give the Plan
Administrator additional discretion to provide for the accelerated vesting of
options or issued shares of Common Stock in connection with a Corporate
Transaction or Change in Control or upon either (a) the offer to an Optionee or
Participant of a Lesser Position or (b) the Involuntary Termination of an
Optionee or Participant's Service following such Corporate Transaction or
Change in Control and (vi) to incorporate certain features which would be
appropriate after the Section 12(g) Registration Date including, in particular
the power to grant stock appreciation rights, certain amendments to the
administrative provisions of the Plan to comply with applicable Federal
securities and tax laws and the imposition of a 300,000-share limit on the
number of shares which may be awarded to any individual under the Plan after
the Section 12(g) Registration Date, as required by Section 162(m) of the Code.

                  The provisions of the February 28, 1997 restatement of the
Plan shall apply only to options granted and stock issuances made under the
Plan from and after February 28, 1997. All options outstanding under the Plan
at the time of the February 28, 1997 restatement shall continue to be governed
by the terms and conditions of the Plan (and the respective instruments
evidencing each such option) as in effect on the date each such option was
granted; provided, however, that one or more provisions of the restated Plan,
may, in the Plan Administrator's discretion, be extended to one or more such
options.

                  B.       On December 3, 1997, in connection with
incorporation of the Corporation, the Plan was assumed by the Corporation and
each option outstanding thereunder was assumed by the Corporation and converted
into an option to purchase shares of the Corporation's Common Stock on a
1-for-1 basis, at the original option exercise price per share and subject to
the original terms and conditions of each such option. Also on December 3,
1997, the Board, in anticipation of the initial public offering of the Common
Stock and subject to approval by the Corporation's stockholders, further
amended the Plan to (i) render non-employee Board members and consultants and
independent advisors eligible to receive option grants under the Plan after the
Section 12(g) Registration Date, (ii) add the Automatic Option Grant Program,
(iii) increase the number of shares of Common Stock issuable under the Plan
from 1,548,029 to 3,000,000 shares and (iv) provide for an automatic annual
increase in the total number of shares of Common Stock authorized for issuance
under the Plan.

                  C.       The Plan shall terminate upon the earliest of (i)
September 6, 2005, (ii) the date on which all shares available for issuance
under the Plan shall have been issued as vested shares or (iii) the termination
of all outstanding options in connection with a Corporate Transaction. All
options and unvested stock issuances outstanding at that time under the Plan
shall continue to have full force and effect in accordance with the provisions
of the documents evidencing such options or issuances.


                                      21
<PAGE>   22


         IV.      AMENDMENT OF THE PLAN

                  A.       The Board shall have complete and exclusive power
and authority to amend or modify the Plan in any or all respects. However, no
such amendment or modification shall adversely affect the rights and
obligations with respect to options or unvested stock issuances at the time
outstanding under the Plan unless the Optionee or the Participant consents to
such amendment or modification. In addition, certain amendments may require
stockholder approval pursuant to applicable laws and regulations.

                  B.       Options may be granted under the Discretionary
Option Grant Program and shares may be issued under the Stock Issuance Program
which are in each instance in excess of the number of shares of Common Stock
then available for issuance under the Plan, provided any excess shares actually
issued under those programs shall be held in escrow until there is obtained
stockholder approval of an amendment sufficiently increasing the number of
shares of Common Stock available for issuance under the Plan. If such
stockholder approval is not obtained within twelve (12) months after the date
the first such excess issuances are made, then (i) any unexercised options
granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the Optionees and
the Participants the exercise or purchase price paid for any excess shares
issued under the Plan and held in escrow, together with interest (at the
applicable Short Term Federal Rate) for the period the shares were held in
escrow, and such shares shall thereupon be automatically cancelled and cease to
be outstanding.

         V.       USE OF PROCEEDS

                  Any cash proceeds received by the Corporation from the sale
of shares of Common Stock under the Plan shall be used for general corporate
purposes.

         VI.      WITHHOLDING

                  The Corporation's obligation to deliver shares of Common
Stock upon the exercise of any options or upon the vesting of any shares issued
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.

         VII.     REGULATORY APPROVALS

                  A.       The implementation of the Plan, the granting of any
options under the Plan and the issuance of any shares of Common Stock (i) upon
the exercise of any option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the options
granted under it and the shares of Common Stock issued pursuant to it.

                  B.       No shares of Common Stock or other assets shall be
issued or delivered under the Plan unless and until there shall have been
compliance with all applicable requirements of Federal and state securities
laws and all applicable listing requirements of any stock exchange (or the
Nasdaq National Market, if applicable) on which Common Stock is then listed for
trading.


                                      22
<PAGE>   23


         VIII.    NO EMPLOYMENT OR SERVICE RIGHTS

                  Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining such person) or
of the Optionee or the Participant, which rights are hereby expressly reserved
by each, to terminate such person's Service at any time for any reason, with or
without cause.


                                      23
<PAGE>   24


                                    APPENDIX

                  The following definitions shall be in effect under the Plan:

                  A.       AUTOMATIC OPTION GRANT PROGRAM shall mean the
automatic option grant program in effect under the Plan.

                  B.       BOARD shall mean the Corporation's Board of
Directors.

                  C.       CHANGE IN CONTROL shall mean a change in ownership
or control of the Corporation effected through either of the following
transactions:

                           (i)      the acquisition, directly or indirectly, by
         any person or related group of persons (other than the Corporation or
         a person that directly or indirectly controls, is controlled by, or is
         under common control with, the Corporation), of beneficial ownership
         (within the meaning of Rule 13d-3 of the 1934 Act) of securities
         possessing more than fifty percent (50%) of the total combined voting
         power of the Corporation's outstanding securities pursuant to a tender
         or exchange offer made directly to the Corporation's stockholders, or

                           (ii)     a change in the composition of the Board
         over a period of thirty-six (36) consecutive months or less such that
         a majority of the Board members ceases, by reason of one or more
         contested elections for Board membership, to be comprised of
         individuals who either (A) have been Board members continuously since
         the beginning of such period or (B) have been elected or nominated for
         election as Board members during such period by at least a majority of
         the Board members described in clause (A) who were still in office at
         the time the Board approved such election or nomination.

                  D.       CODE shall mean the Internal Revenue Code of 1986,
as amended.

                  E.       COMMITTEE shall mean a committee of one (1) or more
Board members appointed by the Board to exercise one or more administrative
functions under the Plan.

                  F.       COMMON STOCK shall mean the Corporation's common
stock.

                  G.       CORPORATE TRANSACTION shall mean either of the
following stockholder-approved transactions to which the Corporation is a
party:

                           (i)      a merger or consolidation in which
         securities possessing more than fifty percent (50%) of the total
         combined voting power of the Corporation's outstanding securities are
         transferred to a person or persons different from the persons holding
         those securities immediately prior to such transaction, or

                           (ii)     the sale, transfer or other disposition of
         all or substantially all of the Corporation's assets in complete
         liquidation or dissolution of the Corporation.


                                      A-1
<PAGE>   25


                  H.       CORPORATION shall mean ISS Group, Inc., a Delaware
corporation.

                  I.       DISCRETIONARY OPTION GRANT PROGRAM shall mean the
option grant program in effect under the Plan.

                  J.       EMPLOYEE shall mean an individual who is in the
employ of the Corporation (or any Parent or Subsidiary), subject to the control
and direction of the employer entity as to both the work to be performed and
the manner and method of performance.

                  K.       EXERCISE DATE shall mean the date on which the
Corporation shall have received written notice of the option exercise.

                  L.       FAIR MARKET VALUE per share of Common Stock on any
relevant date shall be determined in accordance with the following provisions:

                           (i)      If the Common Stock is at the time traded
         on the Nasdaq National Market, then the Fair Market Value shall be the
         closing selling price per share of Common Stock on the date in
         question, as such price is reported by the National Association of
         Securities Dealers on the Nasdaq National Market. If there is no
         closing selling price for the Common Stock on the date in question,
         then the Fair Market Value shall be the closing selling price on the
         last preceding date for which such quotation exists.

                           (ii)     If the Common Stock is at the time listed
         on any Stock Exchange, then the Fair Market Value shall be the closing
         selling price per share of Common Stock on the date in question on the
         Stock Exchange determined by the Plan Administrator to be the primary
         market for the Common Stock, as such price is officially quoted in the
         composite tape of transactions on such exchange. If there is no
         closing selling price for the Common Stock on the date in question,
         then the Fair Market Value shall be the closing selling price on the
         last preceding date for which such quotation exists.

                           (iii)    For purposes of any option grants made on
         the Underwriting Date, the Fair Market Value shall be deemed to be
         equal to the price per share at which the Common Stock is sold in the
         initial public offering pursuant to the Underwriting Agreement.

                           (iv)     For purposes of any option grants made
         prior to the Underwriting Date, the Fair Market Value shall be
         determined by the Plan Administrator after taking into account such
         factors as the Plan Administrator shall deem appropriate.

                  M.       HOSTILE TAKE-OVER shall mean the acquisition,
directly or indirectly, by any person or related group of persons (other than
the Corporation or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's


                                      A-2
<PAGE>   26


outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.

                  N.       1934 ACT shall mean the Securities Exchange Act of
1934, as amended.

                  O.       INCENTIVE OPTION shall mean an option which
satisfies the requirements of Code Section 422.

                  P.       INVOLUNTARY TERMINATION shall mean the termination
of the Service of any individual which occurs by reason of:

                           (i)      such individual's involuntary dismissal or
         discharge by the Corporation for reasons other than Misconduct, or

                           (ii)     such individual's voluntary resignation
         following the offer to such individual of a Lesser Position in
         replacement of the position held by him or her immediately prior to
         the Corporate Transaction or Change in Control.

                  Q.       LESSER POSITION FOR AN OPTIONEE OR PARTICIPANT shall
mean a new position or a change in the Optionee or Participant's position
which, compared with such individual's position with the Corporation
immediately prior to the Corporate Transaction or Change in Control, (i) offers
a lower level of compensation (including base salary, fringe benefits and
target bonuses under any corporate-performance based bonus or incentive
programs), or (ii) materially reduces such individual's duties or level of
responsibility.

                  R.       MISCONDUCT shall mean the commission of any act of
fraud, embezzlement or dishonesty by the Optionee or Participant, any
unauthorized use or disclosure by such person of confidential information or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by such person adversely affecting the business or
affairs of the Corporation (or any Parent or Subsidiary) in a material manner.
The foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any Parent or Subsidiary) may consider as
grounds for the dismissal or discharge of any Optionee, Participant or other
person in the Service of the Corporation (or any Parent or Subsidiary).

                  S.       1934 ACT shall mean the Securities Exchange Act of
1934, as amended.

                  T.       NON-STATUTORY OPTION shall mean an option not
intended to satisfy the requirements of Code Section 422.

                  U.       OPTIONEE shall mean any person to whom an option is
granted under the Plan.

                  V.       PARENT shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock


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<PAGE>   27


possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

                  W.       PARTICIPANT shall mean any person who is issued
shares of Common Stock under the Stock Issuance Program.

                  X.       PERMANENT DISABILITY OR PERMANENTLY DISABLED shall
mean the inability of the Optionee or the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment expected to result in death or to be of continuous
duration of twelve (12) months or more. However, solely for purposes of the
Automatic Option Grant Program, Permanent Disability or Permanently Disabled
shall mean the inability of the non-employee Board member to perform his or her
usual duties as a Board member by reason of any medically determinable physical
or mental impairment expected to result in death or to be of continuous
duration of twelve (12) months or more.

                  Y.       PLAN shall mean the Corporation's Restated 1995
Stock Incentive Plan, as set forth in this document.

                  Z.       PLAN ADMINISTRATOR shall mean the particular entity,
whether the Primary Committee, the Board or the Secondary Committee, which is
authorized to administer the Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity
is carrying out its administrative functions under those programs with respect
to the persons under its jurisdiction.

                  AA.      PRIMARY COMMITTEE shall mean the committee of two
(2) or more non-employee Board members appointed by the Board to administer the
Option Grant and Stock Issuance Programs with respect to Section 16 Insiders.

                  BB.      SECONDARY COMMITTEE shall mean a committee of one
(1) or more Board members appointed by the Board to administer the Option Grant
and Stock Issuance Programs with respect to eligible persons other than Section
16 Insiders.

                  CC.      SECTION 12(G) REGISTRATION DATE shall mean the date
on which the Common Stock is first registered under Section 12(g) of the 1934
Act.

                  DD.      SECTION 16 INSIDER shall mean an officer or director
of the Corporation subject to the short-swing profit liabilities of Section 16
of the 1934 Act.

                  EE.      SERVICE shall mean the provision of services to the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in
the documents evidencing the option grant.

                  FF.      STOCK EXCHANGE shall mean either the American Stock
Exchange or the New York Stock Exchange.


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<PAGE>   28


                  GG.      STOCK ISSUANCE AGREEMENT shall mean the agreement
entered into by the Corporation and the Participant at the time of issuance of
shares of Common Stock under the Stock Issuance Program.

                  HH.      STOCK ISSUANCE PROGRAM shall mean the stock issuance
program in effect under the Plan.

                  II.      SUBSIDIARY shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

                  JJ.      TAKE-OVER PRICE shall mean the greater of (i) the
Fair Market Value per share of Common Stock on the date the option is
surrendered to the Corporation in connection with a Hostile Take-Over or (ii)
the highest reported price per share of Common Stock paid by the tender offeror
in effecting such Hostile Take-Over. However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (i) price per
share.

                  KK.      TAXES shall mean the Federal, state and local income
and employment tax liabilities incurred by the holder of Non-Statutory Options
or unvested shares of Common Stock in connection with the exercise of those
options or the vesting of those shares.

                  LL.      10% STOCKHOLDER shall mean the owner of stock (as
determined under Code Section 424(d)) possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Corporation (or
any Parent or Subsidiary).

                  MM.      UNDERWRITING AGREEMENT shall mean the agreement
between the Corporation and the underwriter or underwriters managing the
initial public offering of the Common Stock.

                  NN.      UNDERWRITING DATE shall mean the date on which the
Underwriting Agreement is executed and the initial public offering price of the
Common Stock is established.


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