Document:

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                         MEDICALOGIC/MEDSCAPE, INC.

COMMON STOCK

NUMBER

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THIS CERTIFICATE IS TRANSFERABLE IN
NEW YORK, NY OR RIDGEFIELD PARK, NJ

COMMON STOCK

SHARES

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SEE REVERSE FOR CERTAIN DEFINITIONS AND A
STATEMENT AS TO THE RIGHTS, PREFERENCES,
PRIVILEGES AND RESTRICTIONS ON SHARES

             INCORPORATED UNDER THE LAWS OF THE STATE OF OREGON

CUSIP 584642 10 2

THIS CERTIFIES THAT

SPECIMEN

IS THE OWNER OF

   FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE, OF
                         MEDICALOGIC/MEDSCAPE, INC.

transferable on the books of the Corporation by the holder hereof in person
or by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar.
  WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Dated:

  David C. Moffenbeier
CHIEF EXECUTIVE OFFICER
     AND SECRETARY

  Mark K. Leavitt, M.D.
       CHAIRMAN

SEAL

COUNTERSIGNED AND REGISTERED:
     CHASEMELLON SHAREHOLDER SERVICES, LLC.
          TRANSFER AGENT AND REGISTRAR

BY

                       AUTHORIZED SIGNATURE<PAGE>

                                MEDICALOGIC, INC.
                            1999 STOCK INCENTIVE PLAN

         1.   PURPOSE. The purpose of this 1999 Stock Incentive Plan (the
"Plan") is to enable MedicaLogic, Inc. (the "Company") to attract and retain
experienced and able directors, officers, employees and other key
contributors and to provide an additional incentive to these individuals to
exert their best efforts for the Company and its shareholders.

         2.   ADMINISTRATION. The Plan shall be administered by the board of
directors of the Company (the "Board of Directors"), which shall determine
and designate from time to time the persons to whom grants and awards shall
be made and the amounts, terms and conditions of those grants and awards.
Subject to the provisions of the Plan, the Board of Directors may from time
to time adopt or amend rules and regulations relating to administration of
the Plan, and the interpretation and construction of the provisions of the
Plan and any stock bonus, stock purchase and option agreements under the Plan
by the Board of Directors shall be final and conclusive. Whenever the
operation of the Plan requires that the fair market value of the Company's
common stock ("Stock") be determined, the fair market value shall be
determined by, or in a manner approved by, the Board of Directors. If the
Stock is not publicly traded, the Board of Directors may consider any
valuation methods it deems appropriate and may, but is not required to,
obtain one or more independent appraisals of the Company. If the Stock is
publicly traded, the fair market value of Stock shall be the closing price of
the Stock as reported in THE WALL STREET JOURNAL on the last trading day
preceding the date an award is granted or exercised, as applicable, or such
other reported value of the Stock as shall be specified by the Board of
Directors.

         3.   ELIGIBILITY. Grants and awards may be made under the Plan to
directors, officers, and employees of the Company or any parent or subsidiary
of the Company, and other key individuals such as consultants to the Company
who the Board of Directors believes have made or will make an essential
contribution to the Company; provided, however, that only employees of the
Company shall be eligible to receive Incentive Stock Options under the Plan.

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         4.   SHARES SUBJECT TO THE PLAN. Except as provided in Section 9,
the total number of shares of Stock that may be issued (i) upon exercise of
all options and stock appreciation rights granted under the Plan, (ii) as
bonuses under the Plan and (iii) pursuant to sales under the Plan, shall not
exceed in the aggregate 8,000,000 shares. If any option under the Plan or
stock appreciation right granted without a related option expires or is
cancelled or terminated and is unexercised in whole or in part, the shares
allocable to the unexercised portion shall again become available for awards
under the Plan, except that shares that are issued on exercise of a stock
appreciation right that were allocable to an option, or portion thereof,
surrendered in connection with exercise of the stock appreciation right shall
not again become available for awards under the Plan. If Stock sold or
awarded as a bonus under the Plan is forfeited to the Company or repurchased
by the Company pursuant to applicable restrictions, the number of shares
forfeited or repurchased shall again be available under the Plan. Stock
issued under the Plan may be subject to such restrictions on transfer,
repurchase rights, or other restrictions as are determined by the Board of
Directors. The certificates representing such Stock shall bear such legends
as are determined by the Board of Directors.

         5.   LIMITATION ON NUMBER OF SHARES. No employee may be granted
stock options or stock appreciation rights under the Plan for more than an
aggregate of 200,000 shares of Stock in connection with the hiring of the
employee or 500,000 shares in any calendar year thereafter.

         6.   EFFECTIVE DATE AND DURATION OF PLAN.

              6.1   EFFECTIVE DATE. The Plan shall become effective when
adopted by the Board of Directors (the "Effective Date"). The Plan shall not
be considered as adopted by the Board of Directors until the Plan is approved
by a majority vote of the shareholders of the Company entitled to vote
thereon at a duly held shareholders' meeting at which a quorum is present or
by any other method that satisfies applicable state law requirements
regarding approval of actions requiring shareholder voting. Subject to this
limitation, options and stock appreciation rights may be granted and Stock
may be awarded as bonuses or sold under the Plan at any time after the
Effective Date and before termination of the Plan.

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              6.2   DURATION OF THE PLAN. The Plan shall continue until, in
the aggregate, options and stock appreciation rights have been granted and
exercised and Stock has been awarded as bonuses or sold and the restrictions
on any such Stock have lapsed with respect to all shares subject to the Plan
under Section 4 (subject to any adjustments under Section 10), provided,
however, that unless sooner terminated by the Board of Directors, the Plan
shall terminate on, and no option or stock appreciation right or bonus right
shall be granted and no Stock shall be awarded as a bonus or sold under the
Plan on or after, the tenth anniversary of the date the plan was adopted by
the Board of Directors or approved by the shareholders in accordance with
Section 6.1, whichever occurs earlier. The Board of Directors may suspend or
terminate the Plan at any time except with respect to options, stock
appreciation rights and bonus rights, and Stock subject to restrictions then
outstanding under the Plan. Termination shall not affect any right of the
Company to repurchase shares or the forfeitability of shares issued under the
Plan.

         7.   GRANTS, AWARDS AND SALES.

              7.1   TYPE OF SECURITY. The Board of Directors may, from time
to time, take the following actions, separately or in combination, under the
Plan: (i) grant Incentive Stock Options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"); (ii) grant options
other than Incentive Stock Options (hereinafter "Non-Statutory Stock
Options"); (iii) grant stock appreciation rights or bonus rights; (iv) award
bonuses of Stock; and (v) sell Stock subject to restrictions. The Board of
Directors shall specify the action taken with respect to each person granted,
awarded, or sold any option or Stock under the Plan and shall specifically
designate each option granted under the Plan as an Incentive Stock Option or
a Non-Statutory Stock Option.

              7.2   GENERAL RULES RELATING TO OPTIONS.

                    7.2.1   TIME OF EXERCISE. Except as provided in Section 8,
options granted under the Plan may be exercised over the period stated in
each option in amounts and at times prescribed by the Board of Directors and
stated in the option, provided that options shall not be exercised for
fractional shares and provided further that the right to exercise shall be at
least 20% per year over five years from the date the option is granted,
subject to the provisions of Section 9. If the optionee does not exercise an
option in any period with respect to the full number of shares to which the
optionee is entitled in that period, the optionee's rights shall be
cumulative and the optionee may purchase those shares in any subsequent
period during the term of the option.

                    7.2.2   PURCHASE OF SHARES. Shares may be purchased or
acquired pursuant to an option granted under the Plan only on receipt by the
Company of notice in writing from the optionee of the optionee's intention to
exercise, specifying the number of shares the optionee desires to purchase
and the date on which the optionee desires to complete the transaction, which
may not be more than 30 days after receipt of the notice, and, unless in the
opinion of counsel for the Company such a representation is not required to
comply with the Securities Act of 1933, as amended, containing a
representation that the optionee intends

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to acquire the shares for investment and not with a view to distribution. On
or before the date specified for completion of the purchase, the optionee
must have paid the Company the full purchase price in cash, including cash
that may be the proceeds of a loan from the Company, in shares of Stock
previously acquired by the optionee valued at fair market value, or in any
combination of cash and shares of Stock. No shares shall be issued until full
payment therefor has been made. Each optionee who has exercised an option
shall, on notification of the amount due, if any, and prior to or
concurrently with delivery of the certificates representing the shares for
which the option was exercised, pay to the Company amounts necessary to
satisfy any applicable federal, state, and local withholding tax
requirements. If additional withholding becomes required beyond any amount
deposited before delivery of the certificates, the optionee shall pay such
amount to the Company on demand. If the employee fails to pay the amount
demanded, the Company shall have the right to withhold that amount from other
amounts payable by the Company to the optionee, including salary, subject to
applicable law.

              7.3   INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be
subject to the following additional terms and conditions:

                    7.3.1   LIMITATION ON AMOUNT OF GRANTS. No employee may
be granted Incentive Stock Options under the Plan such that the aggregate
fair market value, on the date of grant, of the Stock with respect to which
Incentive Stock Options are exercisable for the first time by that employee
during any calendar year, under the Plan and under any other incentive stock
option plan (within the meaning of Section 422 of the Code) of the Company or
any parent or subsidiary of the Company, exceeds $100,000.

                    7.3.2   EXERCISE PRICE. The exercise price per share
under each option granted under the Plan shall be determined by the Board of
Directors, but the exercise price with respect to an Incentive Stock Option
shall be not less than 100 percent of the fair market value of the shares
covered by the option on the date the option is granted.

                    7.3.3   DURATION OF OPTIONS. Subject to Sections 7.3.4
and 8, each option granted under the Plan shall continue in effect for the
period fixed by the Board of Directors, except that no Incentive Stock Option
shall be exercisable after the expiration of 10 years from the date it is
granted.

                    7.3.4   LIMITATIONS ON GRANTS TO 10 PERCENT SHAREHOLDERS.
An Incentive Stock Option may be granted under the Plan to an employee who
owns (within the meaning of Section 424(d) of the Code) more than 10 percent
of the total combined voting power of all classes of stock of the Company, or
of any parent or subsidiary of the Company, only if the exercise price is at
least 110 percent of the fair market value of the Stock subject to the option
on the date it is granted, and the option by its terms is not exercisable
after the expiration of five years from the date it is granted.

              7.4   NON-STATUTORY STOCK OPTIONS. Non-Statutory Stock Options
shall be subject to the following additional terms and conditions:

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                    7.4.1   EXERCISE PRICE. The exercise price per share
under each option granted under the Plan shall be determined by the Board of
Directors, but the exercise price shall be not less than 85 percent of the
fair market value of the shares covered by the option on the date the option
is granted.

                    7.4.2   DURATION OF OPTIONS. Non-Statutory Stock Options
granted under the Plan shall continue in effect for the period fixed by the
Board of Directors, not to exceed 10 years.

              7.5   STOCK BONUSES. Stock awarded as a bonus shall be subject
to the terms, conditions, and restrictions determined by the Board of
Directors at the time the Stock is awarded as a bonus. The Board of Directors
may require the recipient to sign an agreement as a condition of the award,
but may not require the recipient to pay any money consideration except as
provided in this Section 7.5. The agreement may contain such terms,
conditions, representations, and warranties as the Board of Directors may
require. The Company may require any recipient of a Stock bonus to pay to the
Company amounts necessary to satisfy any applicable federal, state, or local
tax withholding requirements prior to delivery of certificates. If additional
withholding becomes required beyond any amount deposited before delivery of
the certificates, the employee shall pay such amount to the Company on
demand. If the employee fails to pay the amount demanded, the Company shall
have the right to withhold that amount from other amounts payable by the
Company to the employee, including salary, subject to applicable law.

              7.6   RESTRICTED STOCK. The Board of Directors may issue shares
of Stock under the Plan for such consideration (including promissory notes
and services) as determined by the Board of Directors in accordance with the
law and with such restrictions concerning transferability, repurchase by the
Company, or forfeiture as determined by the Board of Directors. All shares of
Stock issued pursuant to this Section 7.6 shall be subject to a purchase
agreement, which shall be executed by the Company and the prospective
recipient of the Stock prior to the delivery of certificates representing
such shares to the recipient. The purchase agreement shall contain such terms
and conditions and representations and warranties as the Board of Directors
shall require. Each employee to whom shares of stock are issued pursuant to
this paragraph 7.6 shall, on notification of the amount due, if any, and
before or concurrently with delivery of the certificates representing the
shares, pay to the Company amounts necessary to satisfy any applicable
federal, state, and local withholding tax requirements. If additional
withholding becomes required beyond any amount deposited before delivery of
the certificates, the employee shall pay such amount to the Company on
demand. If the employee fails to pay the amount demanded, the Company shall
have the right to withhold that amount from other amounts payable by the
Company to the employee, including salary, subject to applicable law.

              7.7   STOCK APPRECIATION RIGHTS.

                    7.7.1   DESCRIPTION. Each stock appreciation right shall
entitle the holder, on exercise, to receive from the Company in exchange
therefor an amount equal in

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value to the excess of the fair market value on the date of exercise of one
share of Stock over its fair market value on the date of grant (or, in the
case of a stock appreciation right granted in connection with an option, the
exercise price per share under the option to which the stock appreciation
right relates) (the "Spread"), multiplied by the number of shares covered by
the stock appreciation right or the option, or portion thereof, that is
surrendered. If the stock appreciation right is granted in conjunction with
an incentive stock option, the stock appreciation right may be for no more
than 100 percent of the Spread multiplied by the number of shares covered by
the option or portion thereof that is surrendered.

                    7.7.2   EXERCISE. A stock appreciation right shall be
exercisable only at the time or times established by the Board of Directors.
If a stock appreciation right is granted in connection with an option, then
it shall be exercisable only to the extent and on the same conditions that
the related option is exercisable. Upon exercise of a stock appreciation
right, any option or portion thereof to which the stock appreciation right
relates must be surrendered unexercised. If the stock appreciation right is
issued in conjunction with an incentive stock option, the stock appreciation
right may be exercised with respect to the shares of stock covered by the
incentive stock option only if the Spread with respect to those shares is a
positive number.

                    7.7.3   PAYMENT. Payment by the Company upon exercise of
a stock appreciation right may be made in shares of Stock valued at fair
market value, or in cash, or partly in Stock and partly in cash, as
determined by the Board of Directors. No fractional shares shall be issued
upon exercise of a stock appreciation right. In lieu thereof, cash may be
paid in an amount equal to the value of the fraction or, in the discretion of
the Board of Directors, the number of shares may be rounded to the next whole
share.

                    7.7.4   WITHHOLDING. If payment by the Company of the
stock appreciation right is in cash, or partly in cash, the Company shall
have the right to withhold the amount of cash necessary to satisfy any
applicable federal, state or local withholding tax requirements. If payment
by the Company of the stock appreciation right is solely in shares of Stock
or if the amount of the payment in cash is insufficient to satisfy the
withholding requirements, the employee shall, on notification of the amount
due, and before or concurrently with delivery of the certificates
representing the shares, pay to the Company the amounts necessary to satisfy
the withholding requirements. If additional withholding becomes required
beyond any amount deposited before delivery of the certificates, the employee
shall pay such amount to the Company on demand. If the employee fails to pay
the amount demanded, the Company shall have the right to withhold that amount
from other amounts payable by the Company to the employee, including salary,
subject to applicable law.

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                    7.7.5   ADJUSTMENT. In the event of any adjustment
pursuant to Section 10 in the number of shares of Stock subject to an option
granted under the Plan, any stock appreciation right granted hereunder in
connection with such option shall be proportionately adjusted.

              7.8   CASH BONUS RIGHTS.

                    7.8.1   GRANT. The Board of Directors may grant bonus
rights under the Plan in connection with (i) an option or stock appreciation
right granted or previously granted, (ii) Stock awarded, or previously
awarded, as a bonus, and (iii) Stock sold, or previously sold, under the
Plan. Bonus rights will be subject to rules, terms, and conditions as the
Board of Directors may prescribe.

                    7.8.2   BONUS RIGHTS IN CONNECTION WITH OPTIONS AND STOCK
APPRECIATION RIGHTS. A bonus right granted in connection with an option will
entitle an optionee to a cash bonus when the related option is exercised (or
is surrendered in connection with exercise of a stock appreciation right
related to the option) in whole or in part. A bonus right granted in
connection with a stock appreciation right will entitle the holder to a cash
bonus when the stock appreciation right is exercised. Upon exercise of an
option, the amount of the bonus shall be determined by multiplying the excess
of the total fair market value of the shares to be acquired upon the exercise
over the total exercise price for the shares by the applicable bonus
percentage. Upon exercise of a stock appreciation right, the bonus shall be
determined by multiplying the total fair market value of the shares or cash
received pursuant to the exercise of the stock appreciation right by the
applicable bonus percentage. The bonus percentage applicable to a bonus right
shall be determined from time to time by the Board of Directors but shall in
no event exceed 100 percent.

                    7.8.3   BONUS RIGHTS IN CONNECTION WITH STOCK BONUS. A
bonus right granted in connection with Stock awarded as a bonus will entitle
the person awarded such Stock to a cash bonus either at the time the Stock is
awarded or at such time as restrictions, if any, to which the Stock is
subject lapse. If Stock awarded is subject to restrictions and is repurchased
by the Company or forfeited by the holder, the bonus right granted in
connection with such Stock shall terminate and may not be exercised. The
amount of any cash bonus to be awarded and the time such cash bonus is to be
paid shall be determined from time to time by the Board of Directors.

                    7.8.4   BONUS RIGHTS IN CONNECTION WITH STOCK PURCHASE. A
bonus right granted in connection with Stock purchased hereunder (excluding
Stock purchased pursuant to an option) shall terminate and may not be
exercised in the event the Stock is repurchased by the Company or forfeited
by the holder pursuant to restrictions applicable to the Stock. The amount of
any cash bonus to be awarded and the time such cash bonus is to be paid shall
be determined from time to time by the Board of Directors.

                    7.8.5   WITHHOLDING. The Company shall have the right to
withhold from the bonus the amount of cash necessary to satisfy any
applicable federal, state and local

<PAGE>

withholding tax requirements. If the amount of the payment in cash is
insufficient to satisfy the withholding requirements, the employee shall, on
notification of the amount due, and before or concurrently with delivery of
any stock certificates, pay to the Company the amounts necessary to satisfy
the withholding requirements. If additional withholding becomes required
beyond any amount deposited before delivery of the certificates, the employee
shall pay such amount to the Company on demand. If the employee fails to pay
the amount demanded, the Company shall have the right to withhold that amount
from other amounts payable by the Company to the employee, including salary,
subject to applicable law.

         8.   NONTRANSFERABILITY. Each option, stock appreciation right, or
cash bonus right granted under the Plan by its terms shall be nonassignable
and nontransferable by the holder except by will or by the laws of descent
and distribution of the state or country of the holder's domicile at the time
of death, and each option, stock appreciation right, or cash bonus right by
its terms shall be exercisable during the holder's lifetime only by the
holder.

         9.   TERMINATION OF EMPLOYMENT.

              9.1   RETIREMENT OR GENERAL TERMINATION. If an employee's
employment by the Company or any parent or subsidiary of the Company is
terminated by retirement or for any reason other than in the circumstances
specified in Section 9.2 below, any option, stock appreciation right or cash
bonus right held by the employee may be exercised at any time prior to its
expiration date or the expiration of three months after the date of the
termination, whichever is the shorter period, but only if and to the extent
the employee was entitled to exercise the option, stock appreciation right or
cash bonus right on the date of termination. Transfer of an employee by the
Company or any parent or subsidiary of the Company to the Company or any
parent or subsidiary of the Company shall not be considered a termination for
purposes of the Plan.

              9.2   DEATH OR DISABILITY. If an employee's employment by the
Company or any parent or subsidiary of the Company is terminated because of
death or physical disability (within the meaning of Section 22(e)(3) of the
Code), any option, stock appreciation right or cash bonus right held by the
employee may be exercised at any time prior to its expiration date or the
expiration of one year after the date of termination, whichever is the
shorter period, for the greater of (a) the number of remaining shares for
which the employee was entitled to exercise the option, stock appreciation
right or cash bonus right on the date of termination or (b) the number of
remaining shares for which the employee would have been entitled to exercise
the option, stock appreciation right or cash bonus right if such option or
right had been 50 percent exercisable on the date of termination. If an
employee's employment is terminated by death, any option, stock appreciation
right or cash bonus right held by the employee shall be exercisable only by
the person or persons to whom the employee's rights under the option, stock
appreciation right or cash bonus right pass by the employee's will or by the
laws of descent and distribution of the state or country of the employee's
domicile at the time of death.

<PAGE>

              9.3   TERMINATION OF UNEXERCISED RIGHTS. To the extent an
option, stock appreciation right or cash bonus right held by any deceased
employee or by any employee whose employment is terminated is not exercised
within the limited periods provided above, all further rights to exercise the
option, stock appreciation right or cash bonus right shall terminate at the
expiration of such periods.

              9.4   TERMINATION OF NON-EMPLOYEES. With respect to options,
stock appreciation rights and cash bonus rights granted to persons who are
not employees of the Company, the Board of Directors may establish provisions
relating to the termination of those persons' status with the Company.

              9.5   REPURCHASE OF OPTIONS. The Board of Directors may
establish provisions relating to the repurchase of any shares acquired upon
the exercise of options, in the event of termination of employment or
termination of service of non-employees for any reason other than in
circumstances specified in Section 9.2. The repurchase price may be stated in
each option as prescribed by the Board of Directors, provided that such
repurchase price shall not be an amount less than (i) the fair market value
at the time of purchase, or (ii) the original purchase price, whichever is
less, and further provided that the right to repurchase lapses with respect
to at least 20% of the number of shares per year over five years from the
date the option is granted, and the repurchase right is exercised within 90
days after termination of employment or service.

         10.   CHANGES IN CAPITAL STRUCTURE. If the outstanding shares of
Stock are increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company or of another
corporation, by reason of any reorganization, merger, consolidation, plan of
exchange, recapitalization, reclassification, stock split, combination of
shares, or dividend payable in shares, appropriate adjustment shall be made
by the Board of Directors in the number and kind of shares for the purchase
of which options or stock appreciation rights may be granted and for which
Stock may be awarded as bonuses or sold subject to restrictions under the
Plan. In addition, the Board of Directors shall make appropriate adjustments
in the number and kind of shares as to which outstanding options, or portions
thereof then unexercised, shall be exercisable, and the number and kind of
shares covered by outstanding stock appreciation rights. Adjustments in
outstanding options shall be made without change in the total price
applicable to the unexercised portion of any option and with a corresponding
adjustment in the exercise price per share; provided, however, that with
respect to Incentive Stock Options, (i) the excess of the aggregate fair
market value of the shares subject to the option immediately after the
adjustment over the aggregate exercise price of those shares shall not be
more than the excess of the aggregate fair market value of the shares subject
to the option immediately before the adjustment over the aggregate exercise
price of those shares, (ii) the adjusted option shall not give the optionee
additional benefits that the optionee did not have before the adjustment, and
(iii) on a share-by-share comparison, the ratio of the exercise price to the
fair market value of the shares subject to the option immediately after the
adjustment shall be no more favorable to the optionee than the ratio of the
exercise price to the fair market value of the shares subject to the option
immediately before the adjustment. Adjustments in outstanding stock
appreciation rights shall be made

<PAGE>

without change in their total value. Any such adjustment made by the Board of
Directors shall be conclusive. In the event of dissolution or liquidation of
the Company or a merger, consolidation, or plan of exchange affecting the
Company, in lieu of making adjustments as provided for above in this Section
10, the Board of Directors may, in its sole discretion, provide a 30-day
period prior to such event during which optionees shall have the right to
exercise options or stock appreciation rights.

         11.   CORPORATE MERGERS, ACQUISITIONS, ETC. The Board of Directors
may also grant options and stock appreciation rights having terms and
provisions which vary from those specified in this Plan provided that any
options and stock appreciation rights granted pursuant to this section are
granted in substitution for, or in connection with assumption of, existing
options and stock appreciation rights granted by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant to or
by reason of a transaction involving a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation
to which the Company or a subsidiary is a party.

         12.   AMENDMENT OF PLAN. The Board of Directors may at any time and
from time to time modify or amend the Plan in such respects as it deems
advisable because of changes in the law while the Plan is in effect or for
any other reason. After the Plan has been approved by the shareholders and
except as provided in Section 10, however, no change in an option or stock
appreciation right already granted to any person shall be made without the
written consent of such person. Furthermore, unless approved at an annual
meeting or a special meeting by the shareholders of the Company entitled to
vote thereon, no amendment or change shall be made in the Plan (a) increasing
the total number of shares that may be issued under the Plan, or (b) changing
the class of persons eligible to receive options under the Plan.

         13.   APPROVALS. The Company's obligations under the Plan are
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company will use its best efforts to take
steps required by state or federal law or applicable regulations, including
rules and regulations of the Securities and Exchange Commission in connection
with the granting of any option or the issuance or sale of any shares under
the Plan. The foregoing notwithstanding, the Company shall not be obligated
to issue or deliver shares of Stock under the Plan if the Company is advised
by its legal counsel that such issuance or delivery would violate applicable
state or federal laws.

         14.   EMPLOYMENT RIGHTS. Nothing in the Plan or any grant pursuant
to the Plan shall confer on any employee any right to be continued in the
employment of the Company or any parent or subsidiary of the Company or shall
interfere in any way with the right of the Company or any parent or
subsidiary of the Company by whom such employee is employed to terminate such
employee's employment at any time, with or without cause.

<PAGE>

         15.   RIGHTS AS A SHAREHOLDER. A holder of an option or a stock
appreciation right, a recipient of Stock awarded as a bonus, or a purchaser
of Stock shall have no rights as a shareholder with respect to any shares
covered by any option, stock appreciation right, bonus award, or stock
purchase agreement until the date of issue of a stock certificate to him or
her for such shares. Except as otherwise provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date is
prior to the date such stock certificate is issued.

         16.   INFORMATION. Financial statements of the Company will be
provided annually to each optionee under the Plan.

Effective Date: September 2, 1999

Amended: May 9, 2000

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