Document:

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                                                                    Exhibit 10.2

                     INNOVATIVE SOLUTIONS AND SUPPORT, INC.

                             1998 STOCK OPTION PLAN

     Innovative Solutions and Support, Inc. (the "Company") hereby establishes
and adopts the Innovative Solutions and Support, Inc. 1998 Stock Option Plan, as
set forth in this document.

     1. PURPOSE. The Plan is intended to recognize the contributions made to the
Company or an Affiliate by employees of the Company or any Affiliate (as
hereinafter defined), members of the Board of Directors of the Company or any
Affiliate, and certain consultants and advisors to the Company or any Affiliate,
to provide such persons with additional incentive to devote themselves to the
future success of the Company or any Affiliate, and to improve the ability of
the Company or an Affiliate to attract, retain, and motivate individuals upon
whom the Company's sustained growth and financial success depend, by providing
such persons with an opportunity to acquire or increase their proprietary
interest in the Company through receipt of rights to acquire the Company's
Common Stock, $.001 par value (the "Common Stock").

     2. DEFINITIONS. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:

        (a) "Act" means the Securities Act of 1933, as amended.

        (b) "Affiliate" means a corporation which is a parent corporation or a
subsidiary corporation with respect to the Company within the meaning of Section
424(e) or (f) of the Code.

        (c) "Board of Directors" means the Board of Directors of the Company.

        (d) "Change of Control" shall have the meaning set forth in Section 9 of
the Plan.

        (e) "Code" means the Internal Revenue Code of 1986, as amended.

        (f) "Committee" means the committee designated by the Board of Directors
in accordance with the provisions of Section 3 of the Plan.

        (g) "Company" means Innovative Solutions and Support, Inc., a
Pennsylvania corporation.

        (h) "Disability" shall mean, in the case of an Optionee who is covered
by a disability policy or plan paid for or provided by the Company, a condition
which entitles the Optionee to benefits under the policy or plan. If there is no
such policy or plan covering the Optionee, "Disability" shall mean a mental or
physical condition which renders the Optionee incapable of performing his duties
for the Company and which is expected to be permanent, as determined by the
Committee.
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        (i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

        (j) "Fair Market Value" shall have the meaning set forth in Section 8(b)
of the Plan.

        (k) "ISO" means an Option granted under the Plan which is an "incentive
stock option" within the meaning of Section 422(b) of the Code.

        (l) "Non-qualified Stock Option" means an Option granted under the Plan
which is not intended to qualify, or otherwise does not qualify, as an ISO.

        (m) "Option" means either an ISO or a Non-qualified Stock Option granted
by the
     Company under the Plan.

        (n) "Optionee" means a person to whom an Option has been granted under
the Plan.

        (o) "Option Document" means the written document described in Section 8
of the Plan evidencing the Option and setting forth the terms and conditions
upon which the Option is granted and upon which it may be exercised.

        (p) "Option Price" means the price at which Shares may be purchased upon
exercise of an Option, as determined pursuant to Section 8(b) of the Plan.

        (q) "Plan" means the Innovative Solutions and Support, Inc. 1998 Stock
Option Plan.

        (r) "Shares" means the shares of Common Stock of the Company which are
the subject of Options, except as the same may be modified pursuant to the terns
of Section 10 of the Plan.

     3. ADMINISTRATION OF THE PLAN.

        (a) Committee. The Plan shall be administered by a committee appointed
by the Board of Directors composed of two or more "outside directors" within the
meaning of Section 162(m) of the Code. No person shall be eligible or continue
to serve as a member of the Committee unless such person is an "outside
director" as aforesaid. Members of the Committee shall serve at the pleasure of
the Board of Directors which shall also fill any vacancies in the membership of
the Committee.

        (b) Meetings. The Committee shall hold meetings at such times and places
as it may determine and shall keep minutes of its meetings. A majority of the
Committee shall constitute a quorum thereof, and acts approved at a meeting or
acts approved in writing by a majority of the members of the Committee shall be
the valid acts of the Committee.

        (c) Grants. The Committee shall from time to time, in its discretion,
direct the Company to grant Options pursuant to the terms of the Plan. The
Committee shall have plenary authority to (i) determine the Optionees to whom,
the times at which, and the price at which

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Options shall be granted, (ii) determine the type of Option to be granted and
the number of Shares subject thereto, and (iii) approve the form and terms and
conditions of the Option Documents; all subject, however, to the express
provisions of the Plan. In making such determinations, the Committee shall take
into account the nature of the Optionee's services and responsibilities, the
Optionee's present and potential contribution to the Company's success and such
other factors as the Committee may deem relevant. The interpretation and
construction by the Committee of any provisions of the Plan or of any Option
granted under the Plan, and of any Option Document, shall be final, binding and
conclusive.

        (d) Exculpation. No member of the Committee or of the Board of Directors
shall be personally liable for monetary damages for any action taken or any
failure to take any action in connection with the administration of the Plan or
the granting of Options under the Plan, provided that this Section 3(d) shall
not apply to (i) any breach of such member's duty of loyalty to the Company or
its shareholders, (ii) acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law, (iii) acts or omissions
that would result in liability under Section 1553 of the Pennsylvania Business
Corporation Law, as amended, or (iv) any transaction from which the member
derived an improper personal benefit.

        (e) Indemnification. Service on the Committee shall constitute service
as a member of the Board of Directors. Each member of the Committee shall be
entitled without further act on his part to indemnity from the Company to the
fullest extent provided by applicable law and the Company's Articles of
Incorporation and/or By-laws in connection with or arising out of any action,
suit or proceeding with respect to the administration of the Plan or the
granting of Options thereunder in which he or she may be involved by reason of
his or her being or having been a member of the Committee, whether or not he or
she continues to be a member of the Committee at the time of the action, suit or
proceeding.

     4. GRANTS UNDER THE PLAN. Grants under the Plan may be in the form of a
Non-qualified Stock Option, an ISO or a combination thereof, at the discretion
of the Committee. More than one Option may be granted to any individual, and
each such grant may include Options which are intended to be ISOs and Options
which are not intended to be ISOs, but only on the terms and subject to the
conditions and restrictions of the Plan.

     5. ELIGIBILITY. All employees and members of the Board of Directors of,
and consultants and advisors to, the Company or an Affiliate shall be eligible
to receive Options hereunder.

     6. SHARES SUBJECT TO PLAN. The aggregate maximum number of Shares for
which Options may be granted pursuant to the Plan is 790,812, subject to
adjustment as provided in Section 10 of the Plan. The Shares shall be issued
from either authorized and unissued Common Stock or Common Stock held in or
hereafter acquired for the treasury of the Company. If an Option terminates or
expires without having been fully exercised for any reason, the Shares for which
the Option was not exercised may again be the subject of further Option grants
under the Plan.

     7. TERM OF THE PLAN. No Option may be granted under the Plan after
November 13, 2008 or the earlier termination of the Plan.

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     8. OPTION DOCUMENTS AND TERMS. Each Option granted under the Plan shall
be a Non-qualified Stock Option unless the Option shall specifically be
designated an ISO at the time of grant. If any Option designated as an ISO is
determined for any reason not to qualify as an incentive stock option within the
meaning of Section 422 of the Code, such Option shall be treated as a
Non-qualified Stock Option for all purposes under the provisions of the Plan.
The grant of each Option under the Plan shall be evidenced by one or more Option
Documents in such form as the Committee shall from time to time approve, which
Option Documents shall be executed by the Company as promptly as possible
following such grant. Each Option Document shall comply with and be subject to
the following terms and conditions and such other terms and conditions as the
Committee shall from time to time require which are not inconsistent with the
terms of the Plan, and the Option Document shall expressly state the provisions
of the Plan or incorporate them by reference.

        (a) Number of Option Shares. Each Option Document shall state the number
of Shares to which it pertains.

        (b) Option Price. Each Option Document shall, subject to adjustment as
provided in Section 10 of the Plan, state the Option Price which, for a Non-
qualified Stock Option, may be less than, equal to, or greater than the Fair
Market Value of the Shares on the date the Option is granted and, for an ISO,
shall be at least 100% of the Fair Market Value of the Shares on the date the
Option is granted as determined by the Committee in accordance with this Section
8(b); provided, however, that if an ISO is granted to an Optionee who then owns,
directly or by attribution under Section 424(d) of the Code, stock possessing
more than ten percent of the total combined voting power of all classes of stock
of the Company or an Affiliate, then the Option Price shall be at least 110% of
the Fair Market Value of the Shares on the date the Option is granted. If the
Common Stock is traded in a public market, the Fair Market Value per share shall
be, if the Common Stock is listed on a national securities exchange or included
in the Nasdaq National Market, the last reported sale price thereof on the
relevant date, or, if the Common Stock is not so listed or included, the mean
between the last reported "bid" and "asked" prices thereof on the relevant date,
as reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines. If the Common Stock is
not traded in a public market on the relevant date, the Fair Market Value shall
be as determined in good faith by the Committee.

        (c) Exercise. An Option granted under the Plan may be exercised in whole
or in part to the extent then exercisable under the terms of the Option Document
and this Plan, provided that no Option shall be deemed to have been exercised
prior to the receipt by the Company of written notice of such exercise (on such
form or forms as the Committee may prescribe for this purpose) and of payment in
full (except as otherwise provided in Section 8(d) of the Plan) of the Option
Price for the Shares to be purchased. Moreover, except as an Option Document may
otherwise provide, no Option may be exercised within six months of the date of
grant. Each such notice of exercise shall specify the number of Shares to be
purchased and shall (unless the Shares are covered by a then current and
effective registration statement or qualified Offering Statement under
Regulation A under the Securities Act) contain the Optionee's acknowledgment in
form and substance satisfactory to the Company that (i) such Shares are being
purchased for investment and not for distribution or

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resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (ii) the Optionee has been advised and understands that
(A) the Shares have not been registered under the Act, are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (B) the Company is under no obligation to register
the Shares under the Act or to take any action which would make available to the
Optionee any exemption from such registration, (iii) such Shares may not be
transferred without compliance with all applicable federal and state securities
laws, and (iv) an appropriate legend referring to the foregoing restrictions on
transfer and any other restrictions imposed under the Option Documents may be
endorsed on the certificates. Notwithstanding the foregoing, if the Company in
its sole discretion determines that issuance of Shares should be delayed pending
(I) registration under federal or state securities laws, (II) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available, (III) the listing, registration,
qualification or inclusion of the Shares on any securities exchange or an
automated quotation system or under any state or federal law or (IV) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary or desirable in connection with the issuance of such Shares, the
Company may defer exercise of any Option granted hereunder until any of the
events described in this sentence has occurred.

        (d) Medium of Payment. Upon exercise of an Option, the aggregate Option
Price for the Shares as to which the Option is being exercised shall, in the
discretion of the Committee, be (i) paid in U.S. funds by cash (including a
check, draft or wire transfer made payable to the order of the Company), or
delivery of stock certificates for Shares of the Company's Common Stock, free of
all liens, claims and encumbrances of every kind, and endorsed in blank or
accompanied by executed stock powers with signatures guaranteed by a national
bank or trust company or a member of a national securities exchange evidencing
Shares which have been held for more than six months (in which case the value of
such Shares shall be deemed to be their Fair Market Value on the date of
exercise of the Option), (ii) paid on a deferred basis upon such terms and
conditions as the Committee in its discretion shall provide, (iii) deemed to be
paid provided the notice of exercise of the Option is accompanied to the
Committee's satisfaction by a copy of irrevocable instructions to a broker to
promptly deliver to the Company an amount of sales or loan proceeds sufficient
to pay the Option Price in full, or (iv) a combination of the foregoing. If any
part of the Option Price is to be paid on a deferred basis, the Shares with
respect to which payment is deferred shall be registered in the name of the
Optionee, but the certificate representing such Shares shall serve as security
to the Company for the payment of the Option Price and shall not be delivered to
the Optionee until the Option Price for said Shares has been paid in full.

        (e) Termination of Options.

            (i) No Option or any unexercised installment thereof shall be
exercisable after the first to occur of the following:

                (A) Expiration of the Option term specified in the Option
Document which, subject to earlier termination as hereinafter provided, shall
not exceed (1) ten years from the date of grant, or (2) five years from the date
of grant of an ISO if the Optionee on the date of grant owns, directly and/or by
attribution under Section 424(d) of the Code, stock

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possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or of an Affiliate;

                (B) Expiration of three months from the date the Optionee's
employment or service with the Company or its Affiliates terminates for any
reason other than Disability or death or as otherwise specified in Subsection
8(e)(i)(D) or 8(e)(i)(E) below; provided, however, that such Option was
exercisable on the date of termination of employment or service under the
provisions of the Option Document or the Committee specifically waives the
restrictions relating to exercisability, if any, contained in the Option
Document.

                (C) Expiration of one year from the date such employment or
service with the Company or its Affiliates terminates due to the Optionee's
Disability or death, whether or not the Option was exercisable on the date of
such termination under the provisions of the Option Document relating thereto.
The determination of whether the termination of the Optionee's employment or
service with the Company is due to Disability shall be made by the Committee,
and such determination shall be final and binding on the Company and the
Optionee;

                (D) A finding by the Committee, after full consideration of the
facts presented on behalf of both the Company and the Optionee, that the
Optionee has breached his employment or service contract with the Company or an
Affiliate, or has been engaged in disloyalty to the Company or an Affiliate,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his or her employment or service,
or has committed an intentional or grossly negligent act detrimental to the
interests of the Company or an Affiliate. In such event, in addition to
immediate termination of the Option, the Optionee shall automatically forfeit
all Shares for which the Company has not yet delivered the share certificates
upon refund by the Company of the Option Price of such Shares. Notwithstanding
anything herein to the contrary, the Company may withhold delivery of share
certificates pending the resolution of any inquiry that could lead to a finding
resulting in a forfeiture; or

                (E) The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of a Change of Control.

            (ii) Notwithstanding the Option termination provisions of
Section 8(e)(i), the Committee, in it sole discretion, may extend the period
during which all or any portion of an Option may be exercised to a date no later
than the Option term specified in the Option Document pursuant to Section
8(e)(i)(A), provided that any change pursuant to this Section 8(e)(ii) which
would cause an ISO to become a Non-qualified Stock Option may be made only with
the consent of the Optionee.

        (f) Transfers. Except as otherwise provided by law, no Option granted
under the Plan may be transferred, except by will or by the laws of descent and
distribution. During the lifetime of the person to whom an Option is granted,
such Option may be exercised only by him or his guardian or legal
representative. Notwithstanding the foregoing, the Committee in its sole
discretion may permit the transfer of an Option, without payment of
consideration, to immediate family members of the Optionee or to trusts or
partnerships for such family members.

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        (g) Limitation on ISO Grants. In no event shall the aggregate fair
market value of the Shares of Common Stock (determined at the time an ISO is
granted) with respect to which incentive stock options under all incentive stock
option plans of the Company or its Affiliates are exercisable for the first time
by the Optionee during any calendar year exceed $100,000 or such greater sum as
may here after be permitted under Section 422 of the Code.

        (h) Conversion of ISO to Non-Qualified Stock Option. An Optionee shall
have the right, at the Optionee's election and upon notice to the Company, to
convert or to otherwise cause the conversion of ISO's granted to the Optionee
hereunder into Non-qualified Stock Options; provided, that Optionee shall
indemnify and hold harmless the Company from and against any loss or damage
resulting from such conversion, including, but not limited to, any loss incurred
by reason of the nonavailability of any deduction to the Company under federal
income tax law.

        (i) Other Provisions. Subject to the provisions of the Plan, each Option
Document shall contain such other provisions including, without limitation,
provisions authorizing the Committee to accelerate the exercisability of all or
any portion of an Option granted pursuant to the Plan, additional restrictions
upon the exercise of the Option or additional limitations upon the term of the
Option, as the Committee shall deem advisable.

        (j) Amendment. The Committee shall have the right to amend any Option
Document issued to an Optionee to the extent the terms to be amended are within
the Committee's discretion as provided in the Plan but subject to the Optionee's
consent if such amendment is not favorable to the Optionee, except that the
consent of the Optionee shall not be required for any amendment made pursuant to
Section 8(e)(i)(E) or Section 9 of the Plan, as applicable.

     9. CHANGE OF CONTROL. In the event of a Change of Control, all Options
then outstanding under the Plan immediately shall become vested and exercisable
in full; provided that any acceleration of exercisability of options under this
Section 9 which would cause an ISO to become a Non-Qualified Stock Option may be
made only with the consent of the Optionee. In addition, in the event of a
Change of Control, the Committee may take whatever other action with respect to
Options outstanding as it deems necessary or desirable, including without
limitation, accelerating the expiration date of any Options. Any amendment to
this Section 9 which diminishes the rights of Optionees shall not be effective
with respect to Options outstanding at the time of adoption of such amendment,
whether or not such outstanding Options are then exercisable.

     A "Change of Control" shall be deemed to have occurred upon the earliest to
occur of the following events: (a) the date the shareholders of the Company (or
the Board of Directors, if shareholder action is not required) approve a plan or
other arrangement pursuant to which the Company will be dissolved or liquidated,
(b) the date the shareholders of the Company (or the Board of Directors, if
shareholder action is not required) approve a definitive agreement to sell or
otherwise dispose of substantially all of the assets of the Company, (c) the
date the shareholders of the Company (or the Board of Directors, if shareholder
action is not required) and the shareholders of the other constituent
corporation (or its board of directors if shareholder action is not required)
have approved a definitive agreement to merge or consolidate the Company with or

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into such other corporation other than, in either case, a merger or
consolidation of the Company in which holders of Shares of Common Stock
immediately prior to the merger or consolidation will have at least a majority
of the voting power of the surviving corporation's voting securities immediately
after the merger or consolidation, which voting securities are to be held in the
same proportion as such holders' ownership of Common Stock immediately before
the merger or consolidation, (d) the date any entity, person or group, within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act (other
than (i) the Company or any of its Affiliates or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its Affiliates,
or (ii) any other person who, as of January 1, 1995, shall have been the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 30% of outstanding shares of Common Stock), shall
have become the beneficial owner of, or shall have obtained voting control over,
more than 30% of the outstanding shares of Common Stock, or (e) the first day
after the date this Plan is effective when directors are elected such that a
majority of the Board of Directors shall have been members of the Board of
Directors for less than two years, unless the nomination for election of each
new director who was not a director at the beginning of such two-year period was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period.

     10. ADJUSTMENTS. In the event that a dividend shall be declared upon the
Common Stock payable in Shares of Common Stock or if a stock split is declared
with respect to the Common Stock, the number of Shares of Common Stock then
subject to any Option outstanding under the Plan and the number of Shares
reserved for the grant of Options pursuant to the Plan but not yet subject to an
Option shall be adjusted by adding to each such Share the number of shares which
would be distributable in respect thereof if such Shares had been outstanding on
the date fixed for determining the shareholders of the Company entitled to
receive such stock dividend or stock split. In the event that the outstanding
shares of Common Stock shall be changed into or exchanged for a different number
or kind of shares of stock or other securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock split
combination of shares, merger, consolidation or otherwise, there shall be
substituted for each Share of Common Stock subject to any such Option and for
each Share of Common Stock reserved for the grant of Options pursuant to the
Plan but not yet subject to an Option, the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock shall have
been so changed or for which each such share shall have been exchanged. In the
event there shall be any change, other than as specified above in this Section
10, in the number or kind of outstanding shares of Common Stock or of any stock
or other securities into which such Common Stock shall have been changed or for
which it shall have been exchanged, then if the Board of Directors shall in its
sole discretion determine that such change equitably requires an adjustment in
the number or kind of Shares theretofore reserved for the grant of Options
pursuant to the Plan but not yet subject to an Option and of the Shares then
subject to Options, such adjustment shall be made by the Board of Directors and
shall be effective and binding for all purposes of the Plan and of each Option
outstanding thereunder. In the case of any such substitution or adjustment as
provided for in this Section 10, the Option Price for each Share of stock or
other security which shall have been substituted for each Share of Common Stock
covered by an outstanding Option shall be adjusted appropriately to reflect such
substitution or adjustment. No adjustment or substitution provided for in this
Section 10 shall require the Company to sell a fractional share of Common Stock,
and the total substitution or adjustment with respect to each outstanding Option
shall be limited accordingly. Upon any adjustment

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made pursuant to this Section 10, the Company will, upon request, deliver to the
Optionee a certificate of its Secretary setting forth the Option Price
thereafter in effect and the number and kind of shares or other securities
thereafter purchasable on the exercise of such Option.

     11. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors may
terminate the Plan in whole or in part at any time or amend the Plan from time
to time in such manner as it may deem advisable. Nevertheless, the Board of
Directors of the Company shall not (a) change the class of individuals eligible
to receive an ISO, (b) increase the maximum number of Shares as to which Options
may be granted or (c) make any other change or amendment to which shareholder
approval is required in order to satisfy the conditions set forth in Rule 16b-3
promulgated under the Exchange Act, in each case without obtaining approval,
within twelve months before or after such action, by vote of a majority of the
votes cast at a duly called meeting of the shareholders at which a quorum
representing a majority of all outstanding voting stock of the Company is,
either in person or by proxy, present and voting on the matter. No amendment to
the Plan, however, shall adversely affect any outstanding Option in any material
respect without the consent of the Optionee.

     12. NO COMMITMENT TO RETAIN. The grant of an Option pursuant to the Plan
shall not be construed to imply or to constitute evidence of any agreement,
express or implied, on the part of the Company or any Affiliate to retain the
Optionee in the employ or service of the Company or an Affiliate and/or as a
member of the Company's Board of Directors or in any other capacity, and nothing
in the Plan shall interfere with or limit in any way the right of the Company or
an Affiliate to terminate the employment or service of an Optionee.

     13. WITHHOLDING OF TAXES. The Company shall deduct or withhold an amount
sufficient to satisfy all Federal, state and local taxes required by law to be
withheld with respect to any grant or exercise of an Option or other transaction
under the Plan which gives rise to a withholding obligation and, in so doing,
the Company shall by agreement with the Optionee or unilaterally take such
action as it deems necessary or prudent to protect the Company's interest with
respect to such withholding obligations. In the sole discretion of the
Committee, and subject to such conditions or limitations as the Committee shall
prescribe, an Optionee may satisfy the withholding obligation, in whole or in
part, by electing to have the number of Shares to be issued upon exercise of an
Option reduced by a number of Shares having a Fair Market Value equal to the
desired withholding amount or by surrendering to the Company Shares which the
Optionee has held for more than six months having an equivalent Fair Market
Value. If the method of payment for the Shares is from a loan or sale by a
broker of the Shares acquired on exercise of the Option, the withholding
obligation shall be satisfied from the proceeds of such loan or sale.

     14. INTERPRETATION. It is the intent of the Company that transactions under
the Plan with respect to directors and officers (within the meaning of Section
16(a) of the Exchange Act) satisfy the conditions of Rule 16b-3 promulgated
under the Exchange Act. To the extent that any provision of the Plan or action
by the Committee would result in a conflict with or fail to comply with any such
condition, such provision or action shall be deemed null and void as applied to
such transactions to the extent permitted by applicable law and deemed advisable
by the Company. This Section 14 shall not be applicable if no class of the
Company's equity securities is then registered pursuant to Section 12 of the
Exchange Act. In addition, with respect to

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employees subject to Section 162(m) of the Code, transactions under the Plan are
intended to avoid the loss of a deduction under that Code section. Accordingly,
to the extent any provision of the Plan or action by the Committee fails to
comply with Section 162(m) of the Code to avoid the loss of a deduction, it
shall be deemed null and void to the extent permitted by law and deemed
advisable by the Company.

15.  GOVERNING LAW.  The granting of Options and the issuance of Shares under
the Plan shall be subject to all applicable laws and regulations and to such
approvals by any governmental agency or national securities exchanges as may be
required.  To the extent not pre-empted by Federal law, the Plan and all Option
Documents hereunder shall be construed in accordance with and governed by the
laws of Pennsylvania.

                                      -10-<PAGE>

                                                                    Exhibit 10.3

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 3rd day of May, 1999 (the "Effective Date") between INNOVATIVE SOLUTIONS AND
SUPPORT, INCORPORATED, a Pennsylvania corporation (the "Company"), and ROBERT J.
EWY a resident of the State of Kansas ("Employee").

                                    RECITALS

A.   Employee has served in various executive capacities with other companies
over the past several years and has extensive managerial and administrative
experience and possesses skills vital to the Company's continued growth and
prosperity.

B.   Company desires Employee to serve as an employee of the Company in order to
ensure the continued growth and success of the business of the Company.

C.   The parties wish to set forth herein the terms and conditions on which
Employee will serve as an employee of the Company.

     The parties agree as follows:

     1. Agreement: Position. Subject to the terms and conditions of this
Agreement, during the term of this Agreement the Company agrees to employ
Employee, and Employee agrees to be employed by the Company and to serve the
Company as the President of the Company. Employee's title may not be changed
during the term of this Agreement without his prior written consent.

     2. Duties of Employee

        2.1 General Duties. As President of the Company, Employee will have
day-to-day responsibility for management of the Company as its chief operating
officer and will be responsible to the Company's CEO and Board of Directors (the
"Board"). Employee will report to the CEO. Employee agrees that Employee's
duties may be changed by the Board and that Employee will cooperate with the
Board and will serve the Company in such other capacities and with such other
duties and responsibilities as are typically accorded to the position of
President subject to the Company's Bylaws. The duties and services to be
performed by Employee under this Agreement are collectively referred to herein
as the "Services".

        2.2 Other Duties and Obligations. In addition to performing the duties
and the Services described in Section 2.1, Employee further agrees with the
Company that, during the term of this Agreement:

            (a) Employee will perform the Services and his duties hereunder, and
will manage and operate the business of the Company, subject to, and in
accordance with, the directions of the CEO.

<PAGE>

            (b) Employee will comply with and be bound by the operating
policies, procedures, standards, regulations and practices of the Company that
are in effect from time to time during Employee's employment with the Company.

            (c) Employee will be generally available and readily accessible to
Company personnel by telephone, e-mail and facsimile at all reasonable times.

            (d) Employee will not: (i) engage in any unethical, dishonest,
fraudulent or felonious criminal behavior; (ii) intentionally or deliberately
cause or attempt to cause an injury to the Company; or (iii) steal, convert,
misappropriate or wrongfully and willfully use or disclose any proprietary
information, technology or trade secret of the Company.

        2.3 Working Facilities. Employee shall have a private office,
stenographic help, a personal computer and other facilities and services that
are suitable for his position and appropriate for the performance of his duties.

        2.4 Representations of Employee. Employee represents and warrants to
the Company that he is free to enter into and fully perform this Agreement and
the agreements referred to herein without breach of any agreement or contract to
which Employee is a party or by which Employee is bound.

     3. Exclusive Service. Employee will devote his full working time, energy,
skill and efforts exclusively to the performance of the Services for the Company
and will apply all his skill and experience to the performance of the Services
and advancing the Company's interests and will do nothing inconsistent with the
performance of the Services hereunder.

     4. Compensation and Benefits

        4.1 Salary and Bonus. During the term of the Agreement, the Company will
pay Employee a gross base salary at the rate of Two Hundred Twenty Five Thousand
Dollars ($225,000) per year payable bi-weekly.

        4.2 Additional Benefits. Employee will be eligible to participate in the
Company's employee benefit plans of general application, including without
limitation any pension plans and any life, health, and dental insurance plans in
accordance with the rules established for individual participation in any such
plan and applicable law, including health and dental for spouse. In addition,
Employee will be entitled to three weeks vacation.

        4.3 Moving Expenses. To assist Employee with relocation, Company shall
reimburse Employee for approved, reasonable moving expenses associated with
Employee's relocation to Pennsylvania. Reasonable expenses include closing
costs, moving expenses, and temporary living costs. Employee agrees that
relocation expenses are fully repayable to the Company if the Employee resigns
or is terminated for cause during the term of this Agreement.

        4.4 Stock Options. Employee shall be granted stock options for 300,000
shares of the Company's common stock at an option price of $3.60 per share under
the 1998 Incentive Stock Option Plan. These options shall vest at the rate of
100,000 at the end of each 12 months

                                       2
<PAGE>

throughout the term of this agreement. Employee expressly acknowledges and
agrees that, to the extent of any inconsistency between the terms of this
Agreement and the 1998 Incentive Stock Option Plan, the terms of the 1998
Incentive Stock Option Plan shall govern and control; provided, however, that to
the extent that the terms of the stock option agreement issued to Employee on
account of the foregoing options contains terms and conditions which, by the
terms of the 1998 Incentive Stock Option Plan, may be included therein, the
terms set forth in such stock option agreement shall govern and control.

        4.5 Expenses. All reasonable and necessary expenses incurred by Employee
in connection with Employee's performance of the Services shall be reimbursed
provided that such expenses are; (a) in accordance with the Company's policies,
as determined from time to time by the Board; and (b) properly documented and
accounted for.

     5. Term and Termination.

        5.1 Term of Agreement. Unless this Agreement is earlier terminated in
accordance with the provision of this Section 5, the term of this Agreement will
commence on the Effective Date, and will continue until the date that is three
(3) years after the Effective Date (the "Initial Term".) Thereafter, this
Agreement shall be renewed yearly for one-year periods(each, a "Renewal Term")
unless either party provides the other party with written notice of termination
of this Agreement not later than ninety (90) days from the end of the then
current term of the Agreement. The expiration of this Agreement at the end of
the Initial Term or the then current Renewal term is hereinafter called the
"Expiration Date".

        5.2 Events of Termination. Employee's employment with the Company will
terminate immediately upon any one of the following occurrences:

            (a) the giving of a written notice by the Company to Employee other
than pursuant to Section 5.1 stating that Employee's employment with the Company
is being terminated without Cause, which notice may be given by the Company at
any time at the sole discretion of the Company ("Termination Without Cause");

            (b) the Company's termination of Employee's employment hereunder due
to Employee's death or Employee's becoming "Disabled" as defined in Section 5.4
below ("Termination for Death or Disability");

            (c) any resignation by Employee of his employment with the Company
or any other voluntary termination or abandonment by Employee of his employment
with the Company other than as provided in Section 5.1 ("Voluntary
Termination"); or

            (d) the Company's termination of Employee's employment hereunder for
"Cause" as defined in Section 5.3 below ("Termination for Cause").

        5.3 "Cause" Defined. For purposes of this Agreement, the term
"Cause" means (i) the conviction of Employee of any misdemeanor (other than
traffic or similar offenses) or felony, (ii) any material breach by Employee of
this Agreement, or (iii) gross negligence or malfeasance by Employee in the
performance of his duties hereunder.

                                       3
<PAGE>

        5.4 "Disabled" Defined. For purposes of this Agreement, Employee
will be deemed to be "Disabled" if Employee is unable to perform the Services
hereunder for more than 90 days during any consecutive 120 day period because of
Employee's illness or physical or mental disability, or incapacity, as
determined by the Board, in consultation with a licensed physician mutually
agreeable to the Board and Employee.

        5.5 Date of Termination. the effective date of Employee's
termination pursuance to Section 5.2 (a), (b), (c) or (d), is referred to herein
as the "Termination Date."

     6. Effect of Termination.

        6.1 Termination Without Cause. In the event of the termination of
Employee's employment pursuant to Section 5.2(a) prior to the end of the then
current term of this Agreement , Company will pay Employee the compensation and
benefits otherwise payable to Employee under Section 4 until the Expiration
Date. To the extent Employee receives compensation from any source for services
rendered during the period following the Termination Date during which Company
is obligated to continue payments to Employee hereunder, whether for full-time
or part-time employment or for consulting or similar services, such compensation
shall be offset against payments otherwise due Employee under this Section 6.1.

        6.2 Termination for Death or Disability. In the event of any termination
of Employee's employment pursuant to Sections 5.2(b), the Company will pay
Employee the compensation and benefits otherwise payable to Employee under
Section 4 through the Termination Date. Employee's rights under the Company's
benefit plans for general application in which Employee then participates, will
be determined under the provision of such plans. All options vested as of the
Termination Date shall be exercisable to the extent set forth in the option
agreement. Employee will be entitled to no other payment or compensation upon
any such termination.

        6.3 Voluntary Termination. In the event of the termination of Employee's
employment pursuant to Section 5.2(c), company will pay Employee no additional
compensation or benefits and Employee shall forfeit all unexercised stock
options.

        6.4 Termination for Cause. In the event of termination of Employee's
employment pursuance to Section 5.2(d), the Company will pay the Employee
compensation and benefits otherwise payable to Employee through the date of
termination and Employee shall forfeit all unexercised stock options.

     7. Noncompetition, Trade Secrets, Etc. Employee hereby acknowledges that
during his employment by the Company, Employee will have access to confidential
information and business and professional contacts. In consideration of
Employee's employment and the special and unique opportunities afforded by
Company to Employee as a result of Employee's employment, the Employee hereby
agrees as follows:

        7.1 Non-Competition. For so long as Employee remains an employee of the
Company and for the Restricted Period (as defined in subsection 7.3 below) after
the termination of employment with Company, as such period may be extended as
hereinafter set forth,

                                       4
<PAGE>

Employee shall not directly or indirectly engage in (as a principal,
shareholder, partner, director, officer, agent, employee, consultant or
otherwise) or be financially interested in any business which is involved in
business activities which are the same as or in direct competition with business
activities carried on by Company, or being definitively planned by Company at
the time of the termination of Employee's employment.) Nothing contained in this
Subsection 7.1 shall prevent Employee from holding for investment up to three
percent (3%) of any class of equity securities of a company whose securities are
publicly traded on a national securities exchange or in a national market
system.

        7.2 Non-Solicitation. For so long as Employee remains an employee of the
Company and for a period of twelve months after the termination of employment
with Company for any reason, Employee shall not directly or indirectly (as a
principal, shareholder, partner, director, officer, agent, employee, consultant
or otherwise) induce or attempt to influence any employee, customer, independent
contractor or supplier of Company to terminate employment or any other
relationship with Company.

        7.3 Restricted Period Defined; Extension of Restricted Period. For
purposes of this Agreement, the term "Restricted Period" shall mean: (A) the
period during which the Company continues to pay Employee upon termination of
employment pursuant to Section 5.2(a); (B) three (3) months following
termination of Employee's employment pursuant to Section 5.2(b); or (C) six (6)
months following termination of Employee's employment pursuant to Section 5.2(c)
or Section 5.2(d). In addition to the foregoing, Company shall have the option,
by delivering written notice to Employee within sixty (60) days from the
Termination Date, to extend the Restricted Period to a total of twelve (12)
months under clauses (A), (B) and (C) above, or to extend the Restricted Period
to a total of six (6) months following the Expiration Date upon termination of
this Agreement at the end of the then current Initial Term or Renewal Term
pursuant to Section 5.1 of this Agreement, in each case by paying Employee an
amount equal to the monthly portion of Employee's annual salary as of the
Termination Date or Expiration Date, as the case may be, for the additional
months by which the Restricted Period is extended, which payments shall be made
bi-weekly during the extended period.

        7.4 Non-Disclosure. Employee shall not use for Employee's personal
benefit, or disclose, communicate or divulge to, or use for the direct or
indirect benefit of any person, firm, association or company other than company,
any "Confidential Information," which term shall mean any information regarding
the business methods, business policies, policies, procedures, techniques,
research or development projects or results, historical or projected financial
information, budgets, trade secrets, or other knowledge or processes of, or
developed by, Company or any other confidential information relating to or
dealing with the business operations or activities of Company, made known to
Employee or learned or acquired by Employee while in the employ of Company, but
Confidential Information shall not include information otherwise lawfully known
generally by or readily accessible to the trade or the general public. The
foregoing provisions of this Subsection (b) shall apply during and after the
period when Employee is an employee of the Company and shall be in addition to
(and not a limitation of) any legally applicable protections of Company's
interest in confidential information, trade secrets, and the like. At

                                       5
<PAGE>

the termination of Employee's employment with Company, Employee shall return to
the Company all copies of Confidential Information in any medium, including
computer tapes and other forms of data storage.

        7.5 Remedies.

            (a) Employee acknowledges that the restrictions contained in the
foregoing Subsections 7.1 through 7.4, are reasonable and necessary to protect
the legitimate interests of the Company, that their enforcement will not impose
a hardship on Employee or significantly impair Employee's ability to earn a
livelihood, and that any violation thereof would result in irreparable injuries
to Company. Employee therefore acknowledges that, in the event of Employee's
violation of any of these restrictions, Company shall be entitled to obtain from
any court of competent jurisdiction preliminary and permanent injunctive relief,
as well as damages and an equitable accounting of all earnings, profits and
other benefits arising from such violation, which rights shall be cumulative and
in addition to any other rights or remedies to which Company may be entitled.

            (b) If any of the restrictions specified in Subsections 7.1 or 7.2
above should be adjudged unreasonable in any proceeding, then such restrictions
shall be modified so that they may be enforced for such time and in such area as
is adjudged to be reasonable.

            (c) If Employee violates any of the restrictions contained in
Subsection 7.1, the Restricted Period shall be extended by a period equal to the
length of time from the commencement of any such violation until such time as
such violation shall be cured by Employee to the satisfaction of Company.

     8. Miscellaneous.

        8.1 Arbitration. Employee and the Company will submit to mandatory
binding arbitration any controversy or claim arising out of, or relating to,
this Agreement or any breach hereof as well as all claims under any federal,
state or local anti-discrimination laws, provided, however, that each party will
retain its right to, and will not be prohibited, limited or in any other way
restricted form, seeking or obtaining equitable relief (such as injunctive
relief) from a court having jurisdiction over the parties. Such arbitration will
be conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at that time, and judgment upon the
determination or award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.

        8.2 Severability. If any provision of this Agreement is found by any
arbitrator or court of competent jurisdiction to be invalid or unenforceable,
then the parties hereby waive such provision t the extent that it is found to be
invalid or unenforceable. Such provision will, to the extent allowable by law
and the preceding sentence, not be voided or canceled but will instead be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, will be enforced as any other provision hereof, all the other
provision continuing in full force and effect.

        8.3 No Waiver. The failure by either party at any time to require
performance or compliance by the other of any of its obligation or agreements
will in no way affect the right to require such performance or compliance at any
time thereafter. the waiver of either party of a

                                       6
<PAGE>

breach of any provision hereof will not be taken or held to be a waiver of any
preceding or succeeding breach of such provision or as a waiver of the provision
itself. No waiver of any kind will be effective or binding, unless it is in
writing and is signed by the party against whom such waiver is sought to be
enforced.

        8.4 Assignment. This Agreement and all rights hereunder are personal to
Employee and may not be transferred or assigned by Employee at any time.

        8.5 Entire Agreement. This Agreement constitutes the entire and only
agreement between the parties relating to employment of Employee with the
Company, and this Agreement supersedes and cancels any and all previous
contracts, arrangements or understandings with respect thereto.

        8.6 Amendment; Waiver. No provision of this Agreement may be modified,
waived, terminated or amended except by a written instrument executed by the
parties hereto. No waiver of a breach of any provision of this Agreement shall
constitute a waiver of any subsequent breach of the same or other provisions
hereof.

        8.7 Notices. All notices and other communications required or permitted
under this Agreement will be in writing and hand delivered, sent by telecopier,
sent by certified first class mail, postage prepaid, or sent by nationally
recognized express courier service. Such notices and other communications will
be effective upon receipt of hand delivered five (5) days after mailing--if sent
by mail, or by express courier, to the following addresses, or such other
addresses as any party may notify the other parties in accordance with this
Section:

Employee:                           Company:
Robert J. Ewy                       Chairman
12917 Richards                      Innovative Solutions
Overland Park, KS 66213              and Support, Inc.
                                    420 Lapp Road
                                    Malvern, PA 19355

        8.8 Successors and Assigns. This Agreement will be binding upon, and
inure to the benefit of, the successors and personal representatives of the
respective parties hereto.

        8.9 Headings. The headings contained in this Agreement are for reference
purposes only and will in no way affect the meaning or interpretation of this
Agreement. In this Agreement, the singular includes the plural, the plural
includes the singular, the masculine gender includes both male and female
referents, and the word "or" is used in the inclusive sense.

        8.10 Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original but all of which, taken together, constitute
one and the same agreement.

        8.11 Survival. The provision of Sections 4, 5 and 6 will survive the
termination or expiration of this Agreement as a continuing agreement of the
Company and Employee.

                                       7
<PAGE>

        8.12 Governing Law. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the Commonwealth of
Pennsylvania.

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

ROBERT J. EWY                               INNOVATIVE SOLUTIONS AND
                                            SUPPORT, INC.

/s/ Robert J. Ewy                           /s/ Geoffrey S. M. Hedrick
-----------------                           --------------------------

                                       8

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