Document:

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                                                                     EXHIBIT 4.2

                         INTERNET SECURITY SYSTEMS, INC.
                            (F.K.A. ISS GROUP, INC.)

                       RESTATED 1995 STOCK INCENTIVE PLAN

                   (AMENDED AND RESTATED THROUGH MAY 23, 2001)

                                   ARTICLE ONE

                               GENERAL PROVISIONS

         I.      PURPOSE OF THE PLAN

         This Restated 1995 Stock Incentive Plan is intended to promote the
interests of Internet Security Systems, Inc. (f.k.a. 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.

         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

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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).

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

         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 12,539,377
shares. This amount results from the two-for-one stock split of May 4, 1999, the
3,000,000 share increase approved by shareholders May 23, 2001, and the
automatic increases referred to in clause V. B. below through December 31, 2001.

         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 four percent
(4.0%) of the total number of shares of Common Stock outstanding on the last
trading day of the immediately preceding calendar year; provided, however, that
the number of shares added each calendar year under the automatic increase shall
not exceed a limit of 2,600,000 shares. 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 600,000 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

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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 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, (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; and (v) the number of shares by which the automatic annual increase
in the number of shares of Common Stock available for issuance under the Plan is
limited. 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.

         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:

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                          (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.

         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

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

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         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 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

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

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         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:

                 (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

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          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 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.

                                       12
<PAGE>   13

                                  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.

                                       13
<PAGE>   14

         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.

                                       14
<PAGE>   15

         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 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.

                                       15
<PAGE>   16

                                  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
25,000 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 initial option and annual
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
25,000-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
vest, and the Corporation's repurchase right shall lapse, upon the Optionee's
completion of one year of Board service measured from the grant date.

         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:

                                       16
<PAGE>   17

                 (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 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.

                                       17
<PAGE>   18

         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.

                                       18
<PAGE>   19

                                  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 September 6, 1995 and was approved by

                                       19
<PAGE>   20

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.

                                       20
<PAGE>   21

         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

                                       21
<PAGE>   22

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.

         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.

                                       22
<PAGE>   23

                                    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.

                                       23
<PAGE>   24

         H. CORPORATION shall mean Internet Security Systems, 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

                                       24
<PAGE>   25

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 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.

                                       25
<PAGE>   26

         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 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.

                                       26
<PAGE>   27

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

         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.

                                       27<PAGE>   1
                                                                  Exhibit 10.5.1
                                  AMENDMENT TO
                              EMPLOYMENT AGREEMENT

         THIS AMENDATORY AGREEMENT is dated the 29th day of March, 2001, among
Hamilton Bancorp Inc., a Florida corporation, Hamilton Bank, N.A. (the "Bank"),
a national banking association located in Miami, Florida (collectively, the
"Company"), and Juan Carlos Bernace (the "Executive").

         WHEREAS the parties entered into an Employment Agreement dated October
1, 1999 ("Agreement") and desire to amend the Agreement.

         ACCORDINGLY, the parties hereby agree as follows:

         1. The first paragraph of Section 6 is amended to read as follows:

         "If a Change of Control occurs during the term of this Agreement, the
         Executive shall be paid a performance bonus equal to the Executive's
         compensation paid by the Company and its affiliates which was
         includible in the Executive's gross income during the most recent
         taxable year ending before the date of the Change of Control."

         IN WITNESS WHEREOF, the Executive and duly authorized Company officers
have signed this Amendatory Agreement.

EXECUTIVE:                                  COMPANY:

                                            HAMILTON BANCORP INC.

-------------------------
Juan Carlos Bernace                         By:
                                                -------------------------------
                                            Title:

Addresses:

                                            By:
                                                -------------------------------
                                            Title:

                                            HAMILTON BANK, N.A.

                                            By:
                                                -------------------------------
                                            Title:
3750 N.W. 87th Avenue
Miami, Florida  33178                       By:
                                                -------------------------------
                                                Title:

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