Document:

EXHIBIT 10.2

                  AMENDMENT #2 TO THE SHAREHOLDER AGREEMENT AND
                   AMENDMENT TO THE SUPPLEMENT TO SHAREHOLDER
                                    AGREEMENT

This Amendment #2 to the Shareholder Agreement and Amendment to the Supplement
to Shareholder Agreement, dated as of July 24, 2000, ("July 2000 Amendment "),
is made by and among Interstate Bakeries Corporation, a Delaware corporation
("IBC"), Ralston Purina Company, a Missouri corporation ("Ralston"), and Tower
Holding Company, Inc., a Delaware corporation ("Tower Holding"), a wholly owned
subsidiary of Ralston and the transferee of all shares of IBC common stock
formerly held by VCS Holding Company ("VCS").

This July 2000 Amendment amends and supplements the Shareholder Agreement by and
among IBC, Ralston and VCS, dated July 22, 1995 (the "Shareholder Agreement"),
as supplemented and amended by the Supplement to Shareholder Agreement by and
among IBC, Ralston and VCS, dated July 25, 1995 (the "Supplemental Agreement"),
which Supplemental Agreement is itself amended by this July 2000 Amendment; and
as further supplemented and amended by a Letter Agreement by and among IBC and
Ralston, dated July 3, 1997 (the "Letter Agreement"), and as further
supplemented and amended by the Amendment to Shareholder Agreement by and among
IBC, Ralston and Tower Holding, dated March 30, 2000 (the "March 2000
Amendment").

Defined terms used herein without definition shall have the meanings ascribed to
them in the Shareholder Agreement or the March 2000 Amendment.

                                   WITNESSETH

WHEREAS, IBC, Ralston and VCS entered into the Shareholder Agreement to provide
certain rights and restrictions with respect to the IBC Equity owned by Ralston;
and

WHEREAS, the parties have agreed to enter this July 2000 Amendment to make
certain amendments to the Shareholder Agreement, the Supplemental Agreement and
the March 2000 Amendment; and

WHEREAS, the parties agree that by entering this July 2000 Amendment, they
acknowledge and confirm that they will continue to be bound by the terms of the
Shareholder Agreement, as previously supplemented and amended by the
Supplemental Agreement, the Letter Agreement and the March 2000 Amendment, all
as amended by this July 2000 Amendment.

NOW, THEREFORE, in consideration of the mutual covenants and obligations set
forth herein, the parties agree as follows:

                                       1

<PAGE>

1.    Section 4.1(a) of the Shareholder Agreement, as amended by Section 9 of
      the March 2000 Amendment, is hereby deleted in its entirety and replaced
      with the following:

      "(a) Except for Transfers permitted by Section 3.2(a) and (b) and Section
      10.6(a), and Transfers to a Person making a tender offer for outstanding
      IBC Equity which is recommended to shareholders of IBC by the board of
      directors of IBC, during the term of this Agreement, Ralston and its
      Affiliates shall not sell any shares of IBC Equity to any Person unless it
      has first made an offer (the "First Offer") to sell such shares to IBC in
      accordance with this Article IV and such First Offer shall have been
      rejected or not accepted within the Applicable Acceptance Period (as
      hereinafter defined); provided, however, that if Ralston or any of its
      Affiliates propose to sell a specified number of shares of IBC Equity
      pursuant to a Transfer permitted by Section 3.2(f) and the First Offer
      shall have been rejected by IBC, the proposed Transfer by Ralston or its
      Affiliates may proceed at any time thereafter under Rule 144 without
      regard to the 20 day period referenced in Section 4.1(d)."

2.    Section 10.6 of the Shareholder Agreement, as amended by Section 15 of the
      March 2000 Amendment, is hereby deleted in its entirety and replaced with
      the following:

      "Section 10.6 - Maximum Allowed Ownership of IBC Securities.

      "(a) Ralston and Tower Holding agree to sell, and IBC agrees to purchase,
      15,498,000 shares of IBC Stock on such date or dates, and in accordance
      with such terms and conditions, as are set forth in a Share Purchase
      Agreement entered into by Ralston, Tower Holding and IBC contemporaneously
      with the execution of this July 2000 Amendment.

      "(b) Ralston covenants and agrees that by August 1, 2004, the ownership of
      IBC Securities by Ralston and its Affiliates shall be not more than 15% of
      the then total outstanding IBC Securities.

      "(c) Ralston covenants and agrees that by August 1, 2005, the ownership of
      IBC Securities by Ralston and its Affiliates shall be not more than 10% of
      the then total outstanding IBC Securities.

      "(d) In the event that Ralston and its Affiliates do not attain the levels
      of ownership of IBC Equity provided for in paragraphs (b) and (c) above by
      the prescribed dates, IBC shall thereafter be entitled to purchase at one
      time or from time to time, all or any portion of the IBC Equity then owned
      by Ralston and its Affiliates which would have otherwise been required to
      have been sold, at a purchase price equal to the IBC Market Price of the
      IBC Equity."

3.    Paragraph 4 of the Supplemental Agreement is deleted in its entirety and
      a new Paragraph 4 inserted as follows:

      "If the Chief Executive Officer of IBC notifies RPC that the number of
      shares of IBC Securities owned by such officers, directors and employees
      who are or would be deemed to

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<PAGE>

     be Affiliates of Ralston exceeds the greater of the 2% threshold or the
     aggregate number of shares (adjusted for any stock split, reverse stock
     split, stock dividend or any similar event) owned by such officers,
     directors and employees as of August 1, 2000 (collectively, the "Permitted
     Affiliate Holdings"), then Ralston shall immediately take such action
     necessary (including the delivery of one of its Demand Notices) to divest
     at least that number of shares of IBC Securities equal to the number of
     shares owned by such officers, directors and employees in excess of the
     Permitted Affiliate Holdings; provided, that neither (a) options to
     purchase IBC Securities held by James R. Elsesser as of August 1, 2000 or
     granted to him on any succeeding date by IBC, nor (b) James R. Elsesser's
     beneficial ownership of IBC Securities acquired upon the exercise of such
     IBC stock options shall be included for purposes of calculating the
     Permitted Affiliate Holdings, but shares issued by IBC in connection with
     the exercise of any such options shall be included in any calculation of
     outstanding shares of the IBC Securities."

4.   In all respects, the parties hereby agree that the Shareholder Agreement,
     the Supplemental Agreement, the Letter Agreement and the March 2000
     Amendment, as amended by this July 2000 Amendment, remain in full force
     and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment #2 to the
Shareholder Agreement and Amendment to the Supplement to Shareholder Agreement
as of the 24th day of July, 2000.

INTERSTATE BAKERIES CORPORATION

By /S/ RAY SANDY SUTTON
  ------------------------------------
   Ray Sandy Sutton
   Vice President

RALSTON PURINA COMPANY                    TOWER HOLDING COMPANY, INC.

By /S/ JAMES M. NEVILLE                   By /S/ NANCY E. HAMILTON
  ------------------------------------       ----------------------------------
   James M. Neville                          Nancy E. Hamilton
   Vice President & Senior Counsel, Law      Vice President & Secretary

                                       3[William & Webster, P.S. Letterhead]

                     CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Trend Mining Company
Coeur D'Alene, Idaho

We consent to the use of our report dated January 24, 2000 on the financial
statements of Trend Mining Company as of September 30, 1999 and 1998 and the
years then ended, and the inclusion of our name under the heading "Experts" in
the Form 10-SB Registration Statement filed with the Securities and Exchange
Commission.

/s/ Williams & Webster, P.S.

Williams & Webster, P.S.
Spokane, Washington

July 24, 2000[William & Webster, P.S. Letterhead]

                   CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Trend Mining Company
Coeur D'Alene, Idaho

We consent to the use of our report dated May 11, 2000 on the financial
statements of Trend Mining Company as of March 31, 2000 and the period then
ended, and the inclusion of our name under the heading "Experts" in the Form
10-SB Registration Statement filed with the Securities and Exchange Commission.

/s/ Williams & Webster, P.S.

Williams & Webster, P.S.
Spokane, Washington

July 24, 2000<PAGE>

                                                                    Exhibit 10.1
                             NEWSUB SERVICES, INC.

                            1997 STOCK OPTION PLAN

1.   Establishment and Purpose.

     There is hereby adopted the NewSub Services, Inc. 1997 Stock Option Plan
(the "Plan").  This Plan is intended to promote the interests of the Company (as
defined below) and the stockholders of NewSub Services, Inc. ("NSS") by
providing officers and other employees of the Company with appropriate
incentives and rewards to encourage them to enter into and continue in the
employ of the Company and to acquire a proprietary interest in the long-term
success of the Company; and to reward the performance of individual officers,
other employees, consultants and directors in fulfilling their responsibilities
for long-range achievements.

2.   Definitions.

     As used in the Plan, the following definitions apply to the terms indicated
below:

     (a)  "Agreement" shall mean the written agreement between NSS and a
          Participant evidencing an Incentive Award.

     (b)  "Board of Directors" shall mean the Board of Directors of NSS.

     (c)  "Cause" shall mean (1) the willful and continued failure by the
          Participant substantially to perform his or her duties and obligations
          to the Company (other than any such failure resulting from his or her
          incapacity due to physical or mental illness); (2) the willful
          engaging by the Participant in misconduct which is materially
          injurious to the Company; (3) the commission by the Participant of a
          felony; or (4) the commission by the Participant of a crime against
          the Company which is materially injurious to the Company.  For
          purposes of this Section 2(c), no act, or failure to act, on a
          Participant's part shall be considered "willful" unless done, or
          omitted to be done, by the Participant in bad faith and without
          reasonable belief that his or her action or omission was in the best
          interest of the Company.  Determination of Cause shall be made by the
          Committee in its sole discretion.

     (d)  "Code" shall mean the Internal Revenue Code of 1986, as amended from
          time to time, and any regulations promulgated thereunder.

     (e)  "Committee" shall mean the Stock Option Committee of the Board of
          Directors, or, if no such Committee has been constituted by the Board
          of Directors, then the Board of Directors of NSS.
<PAGE>

     (f)  "Company" shall mean, collectively, NSS and each of its Subsidiaries
          now held or hereafter acquired.

     (g)  "Company Stock" shall mean the Class B common stock of NSS.

     (h)  "Disability" shall mean: (1) any physical or mental condition that
          would qualify a Participant for a disability benefit under the long-
          term disability plan maintained by the Company and applicable to him
          or her; (2) when used in connection with the exercise of an Incentive
          Stock Option following termination of employment, disability within
          the meaning of Section 22(e)(3) of the Code; or (3) such other
          condition as may be determined in the sole discretion of the Committee
          to constitute Disability.

     (i)  "Effective Date" shall mean the date upon which this Plan is adopted
          by the Board of Directors.

     (j)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
          amended from time to time.

     (k)  "Executive Officer" shall have the meaning set forth in Rule 3b-7
          promulgated under the Exchange Act.

     (l)  The "Fair Market Value" of a share of Company Stock, as of a date of
          determination, shall mean (1) the closing sales price per share of
          Company Stock on the national securities exchange on which such stock
          is principally traded for the last preceding date on which there was a
          sale of such stock on such exchange, or (2) if the shares of Company
          Stock are not listed or admitted to trading on any such exchange, the
          closing price as reported by the NASDAQ Stock Market for the last
          preceding date on which there was a sale of such stock on such
          exchange, or (3) if the shares of Company Stock are not then listed on
          the NASDAQ Stock Market, the average of the highest reported bid and
          lowest reported asked prices for the shares of Company Stock as
          reported by the National Association of Securities Dealers, Inc.
          Automated Quotations System for the last preceding date on which there
          was a sale of such stock in such market, or (4) if the shares of
          Company Stock are not then listed on a national securities exchange or
          traded in an over-the-counter market or the value of such shares is
          not otherwise determinable, such value as determined by the Committee
          in good faith.

     (m)  "Incentive Award" shall mean any Option or Other Award granted
          pursuant to the terms of the Plan.

     (n)  "Incentive Stock Option" shall mean an Option that is an "incentive
          stock option" within the meaning of Section 422 of the Code, or any
          successor provision, and that is designated by the Committee as an
          Incentive Stock Option.

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<PAGE>

     (o)  "Non-Qualified Stock Option" shall mean an Option other than an
          Incentive Stock Option.

     (p)  "Option" shall mean an option to purchase shares of Company Stock
          granted pursuant to Section 7.

     (q)  "Other Award" shall mean an award granted pursuant to Section 8
          hereof.

     (r)  "Partial Exercise" shall mean an exercise of an Incentive Award for
          less than the full extent permitted at the time of such exercise.

     (s)  "Participant" shall mean (1) an employee or consultant of the Company
          to whom an Incentive Award is granted pursuant to the Plan and (2)
          upon the death of an individual described in (1), his or her
          successors, heirs, executors and administrators, as the case may be.

     (t)  "Reload Option" shall mean a Non-Qualified Stock Option granted
          pursuant to Section 7(c)(5).

     (u)  "Rule 16b-3" shall mean the Rule 16b-3 promulgated under the Exchange
          Act, as amended from time to time.

     (v)  "Securities Act" shall mean the Securities Act of 1933, as amended
          from time to time.

     (w)  "Subsidiary" shall mean a "subsidiary corporation" within the meaning
          of Section 424(f) of the Code.

3.   Stock Subject to the Plan

     (a)  Shares Available for Awards

          The maximum number of shares of Company Stock reserved for issuance
          under the Plan shall be 708 shares (subject to adjustment as provided
          herein).  Such shares may be authorized but unissued Company Stock or
          authorized and issued Company Stock held in NSS's treasury.

          The present authorized capitalization of the Company consists of 7,500
          shares of Class A voting Common Stock having no par value and 7,500
          shares of Class B non-voting Common Stock having no par value. There
          are currently 2,000 shares of Class A Common Stock and 6,792 shares of
          Class B Common Stock outstanding, or a total of 8,792 shares of Common
          Stock outstanding. Incentive Awards granted pursuant to this Plan
          shall be issued on the assumption that the Company has (i) amended its
          Certificate of Incorporation to increase its

                                      -3-
<PAGE>

          authorized capital stock to 7,500 shares of Class A voting Common
          Stock having no par value and 35,000,000 shares of Class B non-voting
          Common Stock having no par value and (ii) distributed 3,684 shares of
          Class B non-voting Common Stock for each outstanding share of Class A
          and Class B Common Stock of the Company as of the date of adoption of
          this Plan (the "Recapitalization").  The Company does not intend to
          effect the Recapitalization currently but may, in its sole discretion,
          do so at any time in the future.  Accordingly, in the event that the
          Recapitalization is not effected, the maximum number of shares of
                              ---
          Company stock reserved for issuance under the Plan shall be equal to
          the 708 shares recited in the immediately preceding paragraph.  In the
          event that the Recapitalization is effected, then the maximum number
          of shares of Company stock reserved for issuance under the Plan shall
          be equal to 708 multiplied by 3,684, or 2,608,272.  Since Incentive
          Awards granted pursuant to this Plan shall be issued on the assumption
          that the Recapitalization has been effected, if the Recapitalization
          is not effected, then the number of shares of Company stock subject to
             ---
          an Incentive Award shall be divided by 3,684 and the exercise price
          per share shall be multiplied by 3,684.

          The Committee may direct that any stock certificate evidencing shares
          issued pursuant to the Plan shall bear a legend setting forth such
          restrictions on transferability as may apply to such shares pursuant
          to the Plan.

(b)       Adjustment for Change in Capitalization.

          In the event that the Committee shall determine that any dividend or
          other distribution (whether in the form of cash, Company Stock, or
          other property), recapitalization, Company Stock split, reverse
          Company Stock split, reorganization, merger, consolidation, spin-off,
          combination, repurchase, or share exchange, or other similar corporate
          transaction or event, affects the Company Stock such that an
          adjustment is appropriate in order to prevent dilution or enlargement
          of the rights of Participants under the Plan, then the Committee shall
          make such equitable changes or adjustments as it deems necessary or
          appropriate to any or all of (1) the number and kind of shares of
          Company Stock which may thereafter be issued in connection with
          Incentive Awards, (2) the number and kind of shares of Company Stock
          issued or issuable in respect of outstanding Incentive Awards, (3) the
          exercise price, grant price or purchase price relating to any
          Incentive Award, and (4) the maximum number of shares subject to
          Incentive Awards which may be awarded to any employee during any tax
          year of the Company; provided that, with respect to Incentive Stock
          Options, such adjustment shall be made in accordance with Section 424
          of the Code. Notwithstanding anything contained herein, the Committee
          shall not make any such changes or adjustments with respect to the
          Recapitalization defined in 3(a) above as Incentive Awards shall be
          issued on the assumption that the Recapitalization has been effected.

                                      -4-
<PAGE>

     (c)  Re-use of Shares.

          The following shares of Company Stock shall again become available for
          Incentive Awards: except as provided below, any shares subject to an
          Incentive Award that remain unissued upon the cancellation, surrender,
          exchange or termination of such award for any reason whatsoever.
          Notwithstanding the foregoing, upon the exercise of any Incentive
          Award granted in tandem with any other Incentive Awards, such related
          Awards shall be cancelled to the extent of the number of shares of
          Company Stock as to which the Incentive Award is exercised and such
          number of shares shall no longer be available for Incentive Awards
          under the Plan.

4.   Administration of the Plan.

     The Plan shall be administered by the Committee.  The Committee shall have
the authority in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Incentive Awards; to determine the persons to
whom and the time or times at which Incentive Awards shall be granted; to
determine the type and number of Incentive Awards to be granted, the number of
shares of Stock to which an Award may relate and the terms, conditions,
restrictions and performance criteria relating to any Incentive Award; to
determine whether, to what extent, and under what circumstances an Incentive
Award may be settled, cancelled, forfeited, exchanged, or surrendered; to make
adjustments in the performance goals in recognition of unusual or non-recurring
events affecting the Company or the financial statements of the Company (to the
extent not inconsistent with Section 162(m) of the Code, if applicable), or in
response to changes in applicable laws, regulations, or accounting principles;
to construe and interpret the Plan and any Incentive Award; to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine the terms
and provisions of Agreements; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.

     The Committee may, in its absolute discretion, without amendment to the
Plan, (a) accelerate the date on which any Option granted under the Plan becomes
exercisable, waive or amend the operation of Plan provisions respecting exercise
after termination of employment or otherwise adjust any of the terms of such
Option, and (b) waive any condition imposed hereunder with respect to any
Incentive Award or otherwise adjust any of the terms applicable to any such
Incentive Award.

     No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company shall indemnify (to the
extent permitted under Connecticut law and the bylaws of the Company) and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the

                                      -5-
<PAGE>

approval of the Committee) arising out of any action, omission or determination
relating to the Plan, unless, in either case, such action, omission or
determination was taken or made by such member, director or employee in bad
faith and without reasonable belief that it was in the best interests of the
Company.

5.   Eligibility.

     The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such employees of the Company (including officers of the
Company), consultants and directors of the Company as the Committee shall select
from time to time.

6.   Awards Under the Plan; Agreement.

     The Committee may grant Options and Other Awards in such amounts and with
such terms and conditions as the Committee shall determine, subject to the
provisions of the Plan.

     Each Incentive Award granted under the Plan shall be evidenced by an
Agreement which shall contain such provisions as the Committee may in its sole
discretion deem necessary or desirable.  By accepting an Incentive Award, a
Participant thereby agrees that the award shall be subject to all of the terms
and provisions of the Plan and the applicable Agreement.

7.   Options.

     (a)  Identification of Options.

          Each Option shall be clearly identified in the applicable Agreement as
          either an Incentive Stock Option or a Non-Qualified Stock Option.

     (b)  Exercise Price.

          Each Agreement with respect to an Option shall set forth the amount
          (the "option exercise price") payable by the grantee to the Company
          upon exercise of the Option.  The option exercise price per share
          shall be determined by the Committee; provided, however, that in the
          case of an Incentive Stock Option, the option exercise price shall in
          no event be less than the Fair Market Value of a share of Company
          Stock on the date the Option is granted.

     (c)  Term and Exercise of Options.

          (1)  Unless the applicable Agreement provides otherwise, an Option
               shall become exercisable as to one hundred (100%) percent of the
               shares covered thereby on the fourth anniversary of the date of
               grant. The Committee shall determine the expiration date of each
               Option; provided, however, that no Incentive Stock Option shall
               be exercisable more than 10 years after the date of grant. Unless
               the applicable Agreement provides

                                      -6-
<PAGE>

               otherwise, no Option shall be exercisable prior to the first
               anniversary of the date of grant.

          (2)  An Option may be exercised for all or any portion of the shares
               as to which it is exercisable, provided that no Partial Exercise
               of an Option shall be for an aggregate exercise price of less
               than $1,000. The Partial Exercise of an Option shall not cause
               the expiration, termination or cancellation of the remaining
               portion thereof.

          (3)  An Option shall be exercised by delivering notice to NSS's
               principal office, to the attention of its Secretary. Such notice
               shall be accompanied by the applicable Agreement, shall specify
               the number of shares of Company Stock with respect to which the
               Option is being exercised and the effective date of the proposed
               exercise and shall be signed by the Participant or other person
               then having the right to exercise the Option. Payment for shares
               of Company Stock purchased upon the exercise of an Option shall
               be made on the effective date of such exercise in cash or by
               certified check, bank cashier's check or wire transfer.

          (4)  Certificates for shares of Company Stock purchased upon the
               exercise of an Option shall be issued in the name of the
               Participant or other person entitled to receive such shares, and
               delivered to the Participant or such other person as soon as
               practicable following the effective date on which the Option is
               exercised.

          (5)  The Committee shall have the authority to specify, at the time of
               grant or, with respect to Non-Qualified Stock Options, at or
               after the time of grant, that a Participant shall be granted a
               new Non-Qualified Stock Option (a "Reload Option") for a number
               of shares equal to the number of shares surrendered by the
               Participant upon exercise of all or a part of an Option in the
               manner described in Section 7(c)(3) above, subject to the
               availability of shares of Company Stock under the Plan at the
               time of such exercise. Reload Options shall be subject to such
               conditions as may be specified by the Committee in its
               discretion, subject to the terms of the Plan.

     (d)  Limitations on Incentive Stock Options.

          (1)  To the extent that the aggregate Fair Market Value of shares of
               Company Stock with respect to which Incentive Stock Options are
               exercisable for the first time by a Participant during any
               calendar year under the Plan and any other stock option plan of
               the Company (or any Subsidiary) shall exceed $100,000, such
               Options shall be treated as Non-Qualified Stock Options. Such
               Fair Market Value shall be determined as of the date on which
               each such Incentive Stock Option is granted.

                                      -7-
<PAGE>

          (2)  No Incentive Stock Option may be granted to an individual if, at
               the time of the proposed grant, such individual owns (or is
               attributed to own by virtue of the Code) stock possessing more
               than ten percent of the total combined voting power of all
               classes of stock of the Company or any Subsidiary unless (i) the
               exercise price of such Incentive Stock Option is at least 110
               percent of the Fair Market Value of a share of Company Stock at
               the time such Incentive Stock Option is granted and (ii) such
               Incentive Stock Option is not exercisable after the expiration of
               five years from the date such Incentive Stock Option is granted.

     (e)  Effect of Termination of Employment.

          (1)  Unless the applicable Agreement provides otherwise, in the event
               that the employment of a Participant with the Company shall
               terminate for any reason other than Cause, Disability or death,
               (i) Options granted to such Participant, to the extent that they
               are exercisable at the time of such termination, shall remain
               exercisable until the date that is three months after such
               termination, on which date they shall expire, and (ii) Options
               granted to such Participant, to the extent that they were not
               exercisable at the time of such termination, shall expire at the
               close of business on the date of such termination. The three-
               month period described in this Section 7(e)(1) shall be extended
               to one year from the date of such termination in the event of the
               Participant's death during such three-month period.
               Notwithstanding the foregoing, no Option shall be exercisable
               after the expiration of its term.

          (2)  Unless the applicable Agreement provides otherwise, in the event
               that the employment of a Participant with the Company shall
               terminate on account of the Disability or death of the
               Participant, (i) Options granted to such Participant, to the
               extent that they were exercisable at the time of such
               termination, shall remain exercisable until the first anniversary
               of such termination, on which date they shall expire, and (ii)
               Options granted to such Participant, to the extent that they were
               not exercisable at the time of such termination, shall expire at
               the close of business on the date of such termination; provided,
               however, that no Option shall be exercisable after the expiration
               of its term.

          (3)  In the event of the termination of a Participant's employment for
               Cause, all outstanding Options granted to such Participant shall
               expire at the commencement of business on the date of such
               termination.

8.   Other Awards.

     Other forms of Incentive Awards ("Other Awards") valued in whole or in part
by

                                      -8-
<PAGE>

reference to, or otherwise based on, Company Stock may be granted either alone
or in addition to other Incentive Awards under the Plan.  Subject to the
provisions of the Plan, the Committee shall have sole and complete authority to
determine the persons to whom and the time or times at which such Other Awards
shall be granted, the number of shares of Company Stock to be granted pursuant
to such Other Awards and all other conditions of such Other Awards.

9.   Rights as a Stockholder.

     No person shall have any rights as a stockholder with respect to any shares
of Company Stock covered by or relating to any Incentive Award until the date of
issuance of a stock certificate with respect to such shares.  Except as
otherwise expressly provided in Section 3(c), no adjustment to any Incentive
Award shall be made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.

10.  No Special Employment Rights; No Right to Incentive Award.

     Nothing contained in the Plan or any Agreement shall confer upon any
Participant any right with respect to the continuation of employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant.

     No person shall have any claim or right to receive an Incentive Award
hereunder.  The Committee's granting of an Incentive Award to a participant at
any time shall neither require the Committee to grant any other Incentive Award
to such Participant or other person at any time or preclude the Committee from
making subsequent grants to such Participant or any other person.

11.  Securities Matters.

     (a)  NSS shall be under no obligation to effect the registration pursuant
          to the Securities Act of any interests in the Plan or any shares of
          Company Stock to be issued hereunder or to effect similar compliance
          under any state laws. Notwithstanding anything herein to the contrary,
          NSS shall not be obligated to cause to be issued or delivered any
          certificates evidencing shares of Company Stock pursuant to the Plan
          unless and until NSS is advised by its counsel that the issuance and
          delivery of such certificates is in compliance with all applicable
          laws, regulations of governmental authority and the requirements of
          any securities exchange on which shares of Company Stock are traded.
          The Committee may require, as a condition of the issuance and delivery
          of certificates evidencing shares of Company Stock pursuant to the
          terms hereof, that the recipient of such shares make such agreements
          and representations, and that such certificates bear such legends, as
          the Committee, in its sole discretion, deems necessary or desirable.

                                      -9-
<PAGE>

     (b)  The transfer of any shares of Company Stock hereunder shall be
          effective only at such time as counsel to NSS shall have determined
          that the issuance and delivery of such shares is in compliance with
          all applicable laws, regulations of governmental authority and the
          requirements of any securities exchange on which shares of Company
          Stock are traded. The Committee may, in its sole discretion, defer the
          effectiveness of any transfer of shares of Company Stock hereunder in
          order to allow the issuance of such shares to be made pursuant to
          registration or an exemption from registration or other methods for
          compliance available under federal or state securities laws. The
          Committee shall inform the Participant in writing of its decision to
          defer the effectiveness of a transfer. During the period of such
          deferral in connection with the exercise of an Option, the Participant
          may, by written notice, withdraw such exercise and obtain the refund
          of any amount paid with respect thereto.

12.  Withholding Taxes.

     Whenever shares of Company Stock are to be delivered pursuant to an
Incentive Award, the Company shall have the right to require the Participant to
remit to the Company in cash an amount sufficient to satisfy any federal, state
and local withholding tax requirements related thereto.  With the approval of
the Committee, a Participant may satisfy the foregoing requirement by electing
to have the Company withhold from delivery shares of Company Stock having a
value equal to the amount of tax to be withheld.  Such shares shall be valued at
their Fair Market Value on the date on which the amount of tax to be withheld is
determined (the "Tax Date").  Fractional share amounts shall be settled in cash.
Such a withholding election may be made with respect to all or any portion of
the shares to be delivered pursuant to an Incentive Award.

13.  Notification Upon Disqualifying Disposition Under Section 421(b) of the
Code.

     Each Agreement with respect to an Incentive Stock Option shall require the
Participant to notify the Company of any disposition of shares of Company Stock
issued pursuant to the exercise of such Option under the circumstances described
in Section 421(b) of the Code (relating to certain disqualifying dispositions),
within 10 days of such disposition.

14.  Amendment or Termination of the Plan.

     The Board of Directors may, at any time, suspend or terminate the Plan or
revise or amend it in any respect whatsoever; provided, however, that
stockholder approval shall be required if and to the extent required by Rule
16b-3 or by any comparable or successor exemption under which the Board of
Directors believes it is appropriate for the Plan to qualify, or if and to the
extent the Board of Directors determines that such approval is appropriate for
purposes of satisfying Section 162(m) or 422 of the Code.  Incentive Awards may
be granted under the Plan prior to the receipt of such stockholder approval but
each such grant shall be subject in its entirety to such approval and no award
may be exercised, vested or otherwise satisfied prior to the receipt of such
approval.  Nothing herein shall restrict the Committee's ability to exercise its
discretionary authority pursuant to Section 4, which discretion may be

                                      -10-
<PAGE>

exercised without amendment to the Plan. No action hereunder may, without the
consent of a Participant, reduce the Participant's rights under any outstanding
Incentive Award.

15.  Transfers Upon Death; Nonassignability.

     Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executor or administrator of the
Participant's estate or by a person who shall have acquired the right to such
exercise by will or by the laws of descent and distribution.  No transfer of an
Incentive Award by will or the laws of descent and distribution shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will and/or such evidence
as the Committee may deem necessary to establish the validity of the transfer
and (b) an agreement by the transferee to comply with all the terms and
conditions of the Incentive Award that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the Participant in
connection with the grant of the Incentive Award.

     During a Participant's lifetime, the Committee may permit the transfer,
assignment or other encumbrance of an outstanding Option unless (y) such Option
is an Incentive Stock Option and the Committee and the Participant intend that
it shall retain such status, or (z) such Option is meant to qualify for the
exemptions available under Rule 16b-3, nontransferability is necessary under
Rule 16b-3 in order for the award to so qualify and the Committee and the
Participant intend that it shall continue to so qualify.  Subject to any
conditions as the Committee may prescribe, a Participant may, upon providing
written notice to the Secretary of NSS, elect to transfer any or all Options
granted to such Participant pursuant to the Plan to members of his or her
immediate family, including, but not limited to, children, grandchildren and
spouse or to trusts for the benefit of such immediate family members or to
partnerships in which such family members are the only partners; provided,
however, that no such transfer by any Participant may be made in exchange for
consideration.

16.  Expenses and Receipts.

     The expenses of the Plan shall be paid by the Company.  Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.

17.  Failure to Comply.

     In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant (or beneficiary) to comply with any of the terms and
conditions of the Plan or the applicable Agreement, unless such failure is
remedied by such Participant (or beneficiary) within ten days after notice of
such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part, as the Committee, in
its absolute discretion, may determine.

                                      -11-
<PAGE>

18.  Effective Date and Term of Plan.

     The Plan became effective on the Effective Date, but the Plan (and any
grants of Incentive Awards made prior to stockholder approval of the Plan) shall
be subject to the requisite approval of the stockholders of NSS.  In the absence
of such approval, such Incentive Awards shall be null and void.  Unless earlier
terminated by the Board of Directors, the right to grant Incentive Awards under
the Plan will terminate on the tenth anniversary of the Effective Date.
Incentive Awards outstanding at Plan termination will remain in effect according
to their terms and the provisions of the Plan.

19.  Applicable Law.

     Except to the extent preempted by any applicable federal law, the Plan will
be construed and administered in accordance with the laws of the State of
Connecticut, without reference to its principles of conflicts of law.

20.  Participant Rights.

     No Participant shall have any claim to be granted any award under the Plan,
and there is no obligation for uniformity of treatment for Participants.  Except
as provided specifically herein, a Participant or a transferee of an Incentive
Award shall have no rights as a stockholder with respect to any shares covered
by any award until the date of the issuance of a Company Stock certificate to
him or her for such shares.

21.  Unfunded Status of Awards.

     The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation.  With respect to any payments not yet made to a
Participant pursuant to an Incentive Award, nothing contained in the Plan or any
Agreement shall give any such Participant any rights that are greater than those
of a general creditor of the Company.

22.  Beneficiary.

     A Participant may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation.  If no designated beneficiary
survives the Participant, the executor or administrator of the Participant's
estate shall be deemed to be the grantee's beneficiary.

23.  Interpretation.

     The Plan is designed and intended to comply with Rule 16b-3 and, to the
extent applicable, with Section 162(m) of the Code, and all provisions hereof
shall be construed in a manner to so comply.

                                      -12-
<PAGE>

24.  Severability.

     If any provision of the Plan is held to be invalid or unenforceable, the
other provisions of the Plan shall not be affected but shall be applied as if
the invalid or unenforceable provision had not been included in the Plan.

                                      -13-

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