As filed with the Securities and Exchange Commission on November 17, 1997
Registration No. 333-
_________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
NEOPATH, INC.
(Exact Name of Registrant as Specified in Its Charter)
Washington 91-1436093
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
8271 - 154th Avenue N.E.
Redmond, Washington 98052
(Address of Principal Executive Offices (Zip Code))
NEOPATH, INC. 1997 EMPLOYEE STOCK PURCHASE PLAN
(Full Title of the Plan)
__________________________
ALAN C. NELSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NEOPATH, INC.
8271 - 154th Avenue N.E.
Redmond, Washington 98052
(425) 869-7284
(Name, Address and Telephone Number, Including Area
Code, of Agent for Service)
______________________
Copy to:
STEPHANIE G. DALEY-WATSON
PERKINS COIE
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
(206) 583-8433
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to Be Offering Price Agregate Offering Registration
to Be Registered Registered (1) Per Share (2) Offering Price Fee
- -------------------- -------------- ---------------- ----------------- ------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share 150,000 $17.6875 $2,653,125 $804
</TABLE>
(1) Includes an indeterminate number of additional shares
that may be issued to adjust the number of shares issued
pursuant to such Employee Stock Purchase Plan as the result
of any future stock split, stock dividend or similar
adjustment of the Registrant's outstanding common stock.
(2) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457 under the Securities
Act of 1933, as amended. The price per share is estimated
to be $17.6875, based on the average of the high sales price
($17.875) and the low sales price ($17.50) for the
Registrant's common stock in the over-the-counter market on
November 12, 1997, as reported by the Nasdaq National
Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Securities and
Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are hereby incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K
(File No. 0-25210) for the fiscal year ended December 31, 1996
which contains audited financial statements for the most
recent fiscal year for which such statements have been filed;
(b) The Registrant's Quarterly Reports on Form 10-Q
(File No. 0-25210) for the quarters ended March 31, 1997,
June 30, 1997 and September 30, 1997; and
(c) The description of the Registrant's Common
Stock contained in the Registration Statement on Form 8-A
filed with the Commission on November 30, 1994, under
Section 12(g) of the Exchange Act, including any amendments or
reports filed for the purpose of updating such description.
All documents filed by the Registrant pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date
hereof and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been
sold or which deregisters the securities covered hereby then
remaining unsold shall also be deemed to be incorporated by
reference into this Registration Statement and to be a part
hereof commencing on the respective dates on which such
documents are filed.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington
Business Corporation Act authorize a court to award, or a
corporation's board of directors to grant, indemnification to
directors and officers on terms sufficiently broad to permit
indemnification under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended (the
"Securities Act"). Section 10 of the Registrant's Amended and
Restated Bylaws provides for indemnification of the
Registrant's directors, officers, employees and agents to the
maximum extent permitted by Washington law.
Section 23B.08.320 of the Washington Business Corporation
Act authorizes a corporation to limit a director's liability
to the corporation or its shareholders for monetary damages
for acts or omissions as a director, except in certain
circumstances involving intentional misconduct, self-dealing
or illegal corporate loans or distributions, or any
transactions from which the director personally receives a
benefit in money, property or services to which the director
is not entitled. Article 8 of the Registrant's Restated
Articles of Incorporation contains provisions implementing, to
the fullest extent permitted by Washington law, such
limitations on a director's liability to the Registrant and
its shareholders.
The Registrant has also entered into indemnification
agreements pursuant to which it has agreed, among other
things, to indemnify its directors and officers against
certain liabilities.
Item 8. EXHIBITS
Exhibit Description
Number
- -------- ------------------------------------------------
5.1 Opinion of Perkins Coie regarding legality of
the Common Stock being registered
23.1 Consent of Ernst & Young LLP, Independent
Auditors (see page II-4)
23.2 Consent of Perkins Coie (included in
Exhibit 5.1)
Page II-1
<PAGE>
24.1 Power of Attorney (see Signature Page)
99.1 NeoPath, Inc. 1997 Employee Stock Purchase Plan
Item 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
and of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the Registration Statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered that remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
Page II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, the registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunder duly authorized, in the City of
Redmond, state of Washington, on the 17th day of November,
1997.
NEOPATH, INC.
/s/ Alan C. Nelson
-----------------------------
By:Alan C. Nelson
President, Chief Executive
Officer
and Director
Each person whose individual signature appears below
hereby authorizes Alan C. Nelson or William L. Scott or either
of them, as attorneys-in-fact with full power of substitution,
to execute in the name and on the behalf of each person,
individually and in each capacity stated below, and to file,
any and all amendments to this Registration Statement,
including any and all post-effective amendments, and any
related Rule 462(b) Registration Statement and any amendment
thereto.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities indicated below on the
17th day of November, 1997.
Signature Title
/s/ Alan C. Nelson President, Chief Executive
------------------- Officer and Director (Principal
Alan C. Nelson Executive Officer)
/s/ Walter L. Robb Chairman of the Board
-------------------
Walter L. Robb
/s/ William L. Scott Vice President, and Chief
--------------------- Financial Officer and Director
William L. Scott (Principal Financial Officer)
/s/ Robert C. Bateman Corporate Controller and
---------------------- Treasurer
Robert C. Bateman (Principal Accounting Officer)
/s/ Alan D. Frazier Director
--------------------
Alan D. Frazier
/s/ Cristina H. Kepner Director
-----------------------
Cristina H. Kepner
/s/ David A. Thompson Director
----------------------
David A. Thompson
/s/ Gail R. Wilensky Director
---------------------
Gail R. Wilensky
Page II-3
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement on Form S-8 pertaining to the NeoPath,
Inc. 1997 Employee Stock Purchase Plan of our reports dated
January 24, 1997 with respect to the financial statements of
NeoPath, Inc. incorporated by reference in its Annual Report
(Form 10-K) for the year ended December 31, 1996, and the
related financial statement schedule included therein, filed
with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Seattle, Washington
November 14, 1997
Page II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
Number
5.1 Opinion of Perkins Coie regarding legality of
the Common Stock being registered
23.1 Consent of Ernst & Young LLP, Independent
Auditors (see page II-4)
23.2 Consent of Perkins Coie (included in
Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 NeoPath, Inc. 1997 Employee Stock Purchase Plan
<PAGE>
Exhibit 5.1
[Perkins Coie Letterhead]
November 17, 1997
NeoPath, Inc.
8271 - 154th Avenue N.E.
Redmond, WA 98052
RE: Registration Statement on Form S-8
Gentlemen and Ladies:
We have acted as counsel to NeoPath, Inc. (the "Company")
in connection with the preparation of a Registration Statement
on Form S-8 (the "Registration Statement") which is being
filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), with respect
to 150,000 shares of common stock, $.01 par value, of the
Company (the "Shares"). The Shares may be issued pursuant to
the Company's 1997 Employee Stock Purchase Plan (the "Plan").
We have examined the Registration Statement and such documents
and records of the Company and other documents as we have
deemed relevant and necessary for the purpose of this opinion.
In giving this opinion, we are assuming the authenticity of
all instruments presented to us as originals, the conformity
with originals of all instruments presented to us as copies
and the genuineness of all signatures.
Based upon and subject to the foregoing, we are of the
opinion that the Shares that may be issued pursuant to the
Plan have been duly authorized and that, upon the due
execution by the Company and the registration by its registrar
of the Shares and the issuance thereof by the Company in
accordance with the terms of the Plan, and the receipt of the
consideration therefor in accordance with the terms of the
Plan, the Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. In giving such
consent, we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Act.
Very truly yours,
Perkins Coie
<PAGE>
Exhibit 99.1
NEOPATH, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE
The purposes of the NeoPath, Inc. 1997 Employee Stock
Purchase Plan (the "Plan") are to (a) assist employees of
NeoPath, Inc., a Washington corporation (the "Company"), and
of any subsidiary corporations in acquiring a stock ownership
interest in the Company pursuant to a plan that is intended to
qualify as an "employee stock purchase plan" under Section 423
of the Internal Revenue Code of 1986, as amended (the "Code"),
and (b) help employees provide for their future security and
encourage them to remain in the employ of the Company and any
subsidiary corporations.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall
be defined as set forth below.
"Board" means the Board of Directors of the Company.
"Change Notice Date" has the meaning set forth in
Section 9.2.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the Company's Compensation
Committee or another committee appointed by the Board and
given authority by the Board to administer the Plan.
"Company" means NeoPath, Inc., a Washington
corporation.
"Eligible Compensation" means all regular cash
compensation, including overtime, cash bonuses and
commissions. Regular cash compensation does not include
severance pay, hiring and relocation bonuses, pay in lieu
of vacations, sick leave or any other special payments.
"Eligible Employee" means any employee of the
Company (or any Parent Corporation or Subsidiary
Corporation designated by the Plan Administrator (a
"Designated Corporation")) who is in the employ of the
Company (or any such Designated Corporation) on one or
more Offering Dates and who meets the following criteria:
(a) the employee does not, immediately after the Option is
granted, own stock (as defined by the Code) possessing
5% or more of the total combined voting power or value
of all classes of stock of the Company or of a Parent
Corporation or Subsidiary Corporation of the Company;
(b) the employee's customary employment is for more than
20 hours per week;
(c) the employee's customary employment is for more than
five months in any calendar year; and
(d) the employee has been employed for at least six months.
If the Company permits any employee of a Designated
Corporation to participate in the Plan, then all
employees of that Designated Corporation who meet the
requirements of this paragraph shall also be considered
Eligible Employees.
Page 1
<PAGE>
"Enrollment Period" has the meaning set forth in
Section 6.1.
"ESPP Broker" has the meaning set forth in
Section 10.2.
"Offering" has the meaning set forth in Section 5.1.
"Offering Date" means the first day of an Offering.
"Offering Period" has the meaning set forth in
Section 5.1.
"Option" means an option granted under the Plan to
an Eligible Employee to purchase shares of Stock.
"Parent Corporation" means any corporation, other
than the Company, in an unbroken chain of corporations
ending with the Company if, at the time of the granting
of the Option, each of the corporations, other than the
Company, owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of
the other corporations in such chain.
"Participant" means any Eligible Employee who has
elected to participate in an Offering in accordance with
the procedures set forth in Section 6.1 and who has not
withdrawn from the Offering or whose participation in the
Offering has not terminated.
"Plan" means the NeoPath, Inc. 1997 Employee Stock
Purchase Plan.
"Plan Administrator" has the meaning set forth in
Section 3.1.
"Purchase Date" means the last day of each Purchase
Period.
"Purchase Period" has the meaning set forth in
Section 5.2.
"Purchase Price" has the meaning set forth in
Section 8.
"Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Subscription" has the meaning set forth in
Section 6.1.
"Subscription Date" has the meaning set forth in
Section 6.1.
"Subsidiary Corporation" means any corporation,
other than the Company, in an unbroken chain of
corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations,
other than the last corporation in the unbroken chain,
owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
SECTION 3. ADMINISTRATION
3.1 Plan Administrator
The Plan shall be administered by the Committee or by an
executive officer of the Company who is designated by the
Board or the Committee to administer the Plan (the "Plan
Administrator"), except for those items expressly reserved to
the Board or the Committee under the Plan. Any decisions made
by the Board, the Committee or the Plan Administrator shall be
applicable equally to all Eligible Employees.
Page 2
<PAGE>
3.2 Administration and Interpretation by the Plan
Administrator
Subject to the provisions of the Plan, the Plan
Administrator shall have exclusive authority, in its, his or
her discretion, to determine all matters relating to Options
granted under the Plan, including all terms, conditions,
restrictions and limitations of Options; provided, however,
that all Participants granted Options pursuant to the Plan
shall have the same rights and privileges within the meaning
of the Code. The Plan Administrator shall also have exclusive
authority to interpret the Plan and may from time to time
adopt, and change, rules and regulations of general
application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and
regulations, and all actions taken and determinations made by
the Plan Administrator pursuant to the Plan, unless revised by
the Board or the Committee, shall be conclusive and binding on
all parties involved or affected. The Plan Administrator may
delegate administrative duties to such of the Company's other
officers or employees as the Plan Administrator so determines.
SECTION 4. STOCK SUBJECT TO PLAN
Subject to adjustment from time to time as provided in
Section 19, a maximum of 150,000 shares of Stock may be sold
under the Plan. Shares sold under the Plan shall be drawn
from authorized and unissued shares or shall be shares
acquired by the Company. Any shares of Stock that have been
made subject to an Option that cease to be subject to the
Option (other than by reason of exercise of the Option),
including, without limitation, in connection with the
cancellation or termination of the Option, shall again be
available for sale in connection with future grants of Options
under the Plan.
SECTION 5. OFFERING DATES
5.1 Offering Periods
The Plan shall be implemented by a series of offerings
(each, an "Offering"). Except as otherwise set forth below,
Offerings shall commence on July 1 and January 1 of each year
and end on the next December 31 and June 30, respectively,
occurring thereafter. Notwithstanding the foregoing, the
Board or the Committee may establish (a) a different term for
one or more Offerings and (b) different commencing and ending
dates for such Offerings; provided, however, that an Offering
Period (the "Offering Period") may not exceed five years; and
provided further that if the Purchase Price may be less than
85% of the fair market value of the Stock on the Purchase
Date, the Offering Period may not exceed 27 months. Unless
the Plan Administrator in its sole discretion determines
otherwise for future Offerings, an employee who becomes
eligible to participate in the Plan after an Offering Period
has commenced shall not be eligible to participate in such
Offering but may participate in any subsequent Offering,
provided that such employee is still an Eligible Employee as
of the commencement of any such subsequent Offering. Unless
the Plan Administrator in its sole discretion determines
otherwise for future Offerings, Eligible Employees may not
participate in more than one Offering at a time. In the event
the first or the last day of an Offering Period is not a
regular business day, then the first day of the Offering
Period shall be deemed to be the next regular business day and
the last day of the Offering Period shall be deemed to be the
last preceding regular business day.
5.2 Purchase Periods
Each Offering Period shall consist of one or more
consecutive purchase periods (each, a "Purchase Period").
Except as otherwise set forth below, Purchase Periods shall
commence on July 1 and January 1 of each year and end on the
next December 31 and June 30, respectively, occurring
thereafter. Notwithstanding the foregoing, the Board or the
Committee may establish (a) different terms for one or more
Purchase Periods within an Offering Period and (b) different
commencing dates and Purchase Dates for any such Purchase
Period. The last day of each Purchase Period shall be the
Purchase Date for such Purchase Period. In the event the
first or last day of a Purchase Period is not a regular
business day, then the first day of the Purchase Period shall
be deemed to be the next regular business day and the last day
of the Purchase Period shall be deemed to be the last
preceding regular business day.
Page 3
<PAGE>
SECTION 6. PARTICIPATION IN THE PLAN
6.1 Initial Participation
An Eligible Employee shall become a Participant on the
first Offering Date after satisfying the eligibility
requirements and delivering to the Plan Administrator during
the enrollment period established by the Plan Administrator
(the "Enrollment Period") a subscription (the "Subscription")
in the form and manner prescribed by the Plan Administrator
and by the date established by the Plan Administrator (the
"Subscription Date"):
(a) indicating the Eligible Employee's election to
participate in the Plan;
(b) authorizing payroll deductions and stating the amount
to be deducted regularly from the Participant's pay; and
(c) authorizing the purchase of Stock for the Participant
in each Purchase Period.
An Eligible Employee who does not deliver a Subscription
to the Plan Administrator during the Enrollment Period and on
or before the Subscription Date shall not participate in the
Plan for that Offering Period or for any subsequent Offering
Period, unless such Eligible Employee subsequently enrolls in
the Plan by delivering a Subscription to the Plan
Administrator during the Enrollment Period and on or before
the Subscription Date for such subsequent Offering Period.
The Plan Administrator may, from time to time, change the
Subscription Date as deemed advisable by the Plan
Administrator in its, his or her sole discretion for the
proper administration of the Plan.
6.2 Continued Participation
A Participant shall automatically participate in the next
Offering Period until such time as such Participant withdraws
from the Plan pursuant to Section 11.2 or terminates
employment as provided in Section 12. If a Participant
withdraws from an Offering pursuant to Section 11.1, the
Participant is not required to file any additional
Subscription for the next subsequent Offering in order to
continue participation in the Plan.
SECTION 7. LIMITATIONS ON RIGHT TO PURCHASE SHARES
7.1 $25,000 Limitation
No Participant shall be entitled to purchase Stock under
the Plan (or any other employee stock purchase plan that is
intended to meet the requirements of Code Section 423
sponsored by the Company, a Parent Corporation or a Subsidiary
Corporation) at a rate that exceeds $25,000 in fair market
value, determined as of the Offering Date for each Offering
Period (or such other limit as may be imposed by the Code),
for each calendar year in which a Participant participates in
the Plan (or any other employee stock purchase plan described
in this Section 7.1).
7.2 Pro Rata Allocation
In the event the number of shares of Stock that might be
purchased by all Participants in the Plan exceeds the number
of shares of Stock available in the Plan, the Plan
Administrator shall make a pro rata allocation of the
remaining shares of Stock in as uniform a manner as shall be
practicable and as the Plan Administrator shall determine to
be equitable. Fractional shares may be issued under the Plan
only to the extent permitted by the Board or the Committee.
Page 4
<PAGE>
SECTION 8. PURCHASE PRICE
The purchase price (the "Purchase Price") at which Stock
may be acquired in an Offering pursuant to the exercise of all
or any portion of an Option granted under the Plan shall be
85% of the lesser of (a) the fair market value of the Stock on
the Offering Date of such Offering and (b) the fair market
value of the Stock on the Purchase Date. Notwithstanding the
foregoing, the Board or the Committee may establish a
different Purchase Price for any Offering, which shall not be
less than the Purchase Price set forth in the preceding
sentence. The fair market value of the Stock on the Offering
Date or on the Purchase Date shall be the average of the high
and low per share trading prices for the Stock as reported for
such day by the Nasdaq National Market (or any national stock
exchange (an "exchange") on which the Stock is at the time
listed or admitted to trading). If no sales of the Stock were
made on the Nasdaq National Market (or an exchange) on the
transaction date, fair market value shall be the average of
the high and low per share trading prices for the Stock as
reported for the next preceding day on which sales of the
Stock were made on the Nasdaq National Market (or an
exchange).
SECTION 9. PAYMENT OF PURCHASE PRICE
9.1 General Rules
Stock that is acquired pursuant to the exercise of all or
any portion of an Option may be paid for only by means of
payroll deductions from the Participant's Eligible
Compensation unless the Plan Administrator in its sole
discretion establishes other methods for payment of the
Purchase Price and except as provided in Section 9.12 for
leaves of absence. Except as set forth in this Section 9, the
amount of compensation to be withheld from a Participant's
Eligible Compensation during each pay period shall be
determined by the Participant's Subscription.
9.2 Change Notices
During an Offering Period, a Participant may elect to
increase or decrease the amount withheld from his or her
compensation by providing an amended Subscription to the Plan
Administrator by a date at least ten days prior to the end of
the pay period for which such election is to be effective (the
"Change Notice Date"); provided, however, that the Plan
Administrator may change the Change Notice Date from time to
time.
9.3 Percent Withheld
The amount of payroll withholding with respect to the
Plan for any Participant during any pay period shall be at
least 1% of the Participant's Eligible Compensation for such
pay, but shall not exceed 15% of the Participant's Eligible
Compensation for such pay period. Amounts shall be withheld
only in whole percentages.
9.4 Payroll Deductions
Payroll deductions shall commence on the first payday
following the Offering Date and shall continue through the
last payday of the Offering Period unless sooner altered or
terminated as provided in the Plan.
9.5 Memorandum Accounts
Individual accounts shall be maintained for each
Participant for memorandum purposes only. All payroll
deductions from a Participant's compensation shall be credited
to such account, but shall be deposited with the general funds
of the Company. All payroll deductions received or held by
the Company may be used by the Company for any corporate
purpose.
9.6 No Interest
No interest shall be paid on cash payments or payroll
deductions received or held by the Company.
Page 5
<PAGE>
9.7 Acquisition of Stock
On each Purchase Date of an Offering Period, each
Participant shall automatically acquire, pursuant to the
exercise of the Participant's Option, the number of shares of
Stock arrived at by dividing the total amount of the
Participant's accumulated payroll deductions for the Purchase
Period by the Purchase Price; provided, however, that in no
event shall the number of shares of Stock purchased by the
Participant exceed the number of whole shares of Stock so
determined, except to the extent that the Board or the
Committee has determined that fractional shares may be issued
under the Plan.
9.8 Refund of Excess Amounts
Any cash balance remaining in the Participant's account
after a purchase of Stock at the end of a Purchase Period
shall be refunded to the Participant as soon as practical
after the Purchase Date. In the event the cash to be returned
to a Participant pursuant to the preceding sentence is in an
amount less than the amount necessary to purchase a whole
share of Stock, and the Board or Committee has not determined
that fractional shares may be issued, the Plan Administrator
may establish procedures whereby such cash is maintained in
the Participant's account and applied to the purchase of Stock
in the subsequent Purchase Period or Offering Period.
9.9 Withholding Obligations
At the time the Option is exercised, in whole or in part,
or at the time some or all of the Stock is disposed of, the
Participant shall make adequate provision for federal and
state withholding obligations of the Company, if any, that
arise upon exercise of the Option or upon disposition of the
Stock. The Company may, but shall not be obligated to,
withhold from the Participant's compensation the amount
necessary to meet such withholding obligations.
9.10 Termination of Participation
No Stock shall be purchased on behalf of a Participant on
a Purchase Date if his or her participation in the Offering or
the Plan has terminated prior to such Purchase Date.
9.11 Procedural Matters
The Plan Administrator may, from time to time, establish
(a) limitations on the frequency and/or number of changes in
the amount withheld during the Offering, (b) an exchange ratio
applicable to amounts withheld in a currency other than U.S.
dollars, (c) payroll withholding in excess of the amount
designated by a Participant in order to adjust for delays or
mistakes in the Company's processing of properly completed
withholding elections, and (d) such other limitations or
procedures as deemed advisable by the Plan Administrator in
its sole discretion that are consistent with the Plan and in
accordance with the requirements of Code Section 423.
9.12 Leaves of Absence
During leaves of absence approved by the Company and
meeting the requirements of the applicable Treasury
Regulations, a Participant may continue participation in the
Plan by delivering cash payments to the Plan Administrator on
the Participant's normal paydays equal to the amount of his or
her payroll deduction under the Plan had the Participant not
taken a leave of absence.
SECTION 10. STOCK PURCHASED UNDER THE PLAN
10.1 Restrictions on Transfer of Stock
(a) Shares of Stock purchased under the Plan may be
registered in the name of a nominee or held in such other
manner as the Plan Administrator determines to be appropriate.
Each Participant will be the beneficial owner of the Stock
purchased under the Plan and will have all rights of
beneficial ownership in such
Page 6
<PAGE>
Stock, except that the Participant may not transfer or
otherwise dispose of such Stock for a period of six months
following the Purchase Date for such Stock.
(b) Cash dividends paid on shares of Stock that are
subject to the six-month restriction set forth in subparagraph
(a) above will be paid to the Participant. Dividends paid in
the form of shares of Stock with respect to Stock that has
been purchased under the Plan but which is subject to the six-
month restriction set forth in subparagraph (a) above shall be
credited to the Participant's account and shall be restricted
for the same period as the Stock with respect to which the
stock dividend was paid.
(c) Upon termination of the Participant's employment
because of retirement, disability or death, the six-month
restriction set forth in subparagraph (a) above will be deemed
to be satisfied as of the date of such termination.
(d) The Company or brokerage firm or other entity
selected by the Company may retain custody of any certificates
representing the Stock purchased under the Plan for a period
of time ending no earlier than the expiration of the six-month
restriction set forth in subparagraph (a) above, or the
Company, in its sole discretion, may deliver to Participants
such certificates imprinted with a legend setting forth the
restriction on transfer contemplated by the Plan and may place
a stop transfer order with the Company's transfer agent
against the Stock until it may be transferred in accordance
with the Plan.
10.2 ESPP Broker
If the Plan Administrator designates or approves a stock
brokerage or other financial services firm to hold shares
purchased under the Plan for the accounts of Participants (the
"ESPP Broker"), the following procedures shall apply.
Promptly following each Purchase Date, the number of shares of
Stock purchased by each Participant shall be deposited into an
account established in the Participant's name with the ESPP
Broker. A Participant shall be free to undertake a
disposition of the shares of Stock in his or her account at
any time (subject to the provisions of Section 10.1), but, in
the absence of such a disposition, the shares of Stock must
remain in the Participant's account at the ESPP Broker until
the holding period set forth in Code Section 423(a) has been
satisfied. With respect to shares of Stock for which the Code
Section 423(a) holding periods have been satisfied, the
Participant may move those shares of Stock to another
brokerage account of the Participant's choosing or request
that a stock certificate be issued and delivered to him or
her. A Participant who is not subject to payment of U.S.
income taxes may move his or her shares of Stock to another
brokerage account of his or her choosing or request that a
stock certificate be delivered to him or her at any time,
without regard to the Code Section 423(a) holding period.
10.3 Notice of Disposition
By entering the Plan, each Participant agrees to give the
Company prompt notice of any Stock acquired in an Offering
that is disposed of within the later of (a) two years after
the Offering Date for such Offering and (b) one year after the
Purchase Date for such Stock, showing the number of such
shares disposed of and the Purchase Date for such Stock. This
notice shall not be required if and so long as the Company has
a designated ESPP Broker.
SECTION 11. VOLUNTARY WITHDRAWAL
11.1 Withdrawal From an Offering
A Participant may withdraw from an Offering by providing
to the Plan Administrator a notice of withdrawal in the form
and manner required by the Plan Administrator for such
purpose. Such withdrawal must be elected within the time
period established for an Offering Period by the Plan
Administrator. If a Participant withdraws after the Purchase
Date for a Purchase Period of an Offering, the withdrawal
shall not affect Stock acquired by the Participant in that
Purchase Period and any earlier Purchase Periods. Unless the
Plan Administrator establishes a different rule, withdrawal
from an Offering shall not result in a withdrawal
Page 7
<PAGE>
from the Plan and any succeeding Offering therein. A
Participant is prohibited from again participating in the same
Offering at any time upon withdrawal from such Offering.
11.2 Withdrawal From the Plan
A Participant may withdraw from the Plan by providing to
the Plan Administrator a notice of withdrawal in the form and
manner required by the Plan Administrator for such purpose.
Such notice must be provided to the Plan Administrator within
the time period established for an Offering Period by the Plan
Administrator. If a Participant withdraws after the Purchase
Date for a Purchase Period of an Offering, the withdrawal
shall not affect Stock acquired by the Participant in that
Purchase Period and any earlier Purchase Periods. In the
event a Participant voluntarily elects to withdraw from the
Plan, the withdrawing Participant may not resume participation
in the Plan during the same Offering Period, but may
participate in any subsequent Offering under the Plan by again
satisfying the definition of Participant.
11.3 Return of Payroll Deductions
Upon withdrawal from an Offering pursuant to Section 11.1
or from the Plan pursuant to Section 11.2, the withdrawing
Participant's accumulated payroll deductions that have not
been applied to the purchase of Stock shall be returned as
soon as practical after the withdrawal, without the payment of
any interest, to the Participant, and the Participant's
interest in the Offering shall terminate. Such accumulated
payroll deductions may not be applied to any other Offering
under the Plan.
SECTION 12. TERMINATION OF EMPLOYMENT
Termination of a Participant's employment with the
Company for any reason, including retirement, disability or
death, or the failure of a Participant to remain an Eligible
Employee, shall immediately terminate the Participant's
participation in the Plan. The payroll deductions credited to
the Participant's account since the last Purchase Date shall,
as soon as practical, be returned to the Participant or, in
the case of a Participant's death, to the Participant's legal
representative, and all the Participant's rights under the
Plan shall terminate. Interest shall not be paid on sums
returned to a Participant pursuant to this Section 12.
SECTION 13. RESTRICTIONS UPON ASSIGNMENT
An Option granted under the Plan shall not be
transferable otherwise than by will or by the applicable laws
of descent and distribution, and shall be exercisable during
the Participant's lifetime only by the Participant. The Plan
Administrator will not recognize, and shall be under no duty
to recognize, any assignment or purported assignment by a
Participant, other than by will or by the applicable laws of
descent and distribution, of the Participant's interest in the
Plan, of his or her Option or of any rights under his or her
Option.
SECTION 14. NO RIGHTS OF SHAREHOLDER UNTIL SHARES ISSUED
With respect to shares of Stock subject to an Option, a
Participant shall not be deemed to be a shareholder of the
Company, and he or she shall not have any of the rights or
privileges of a shareholder. A Participant shall have the
rights and privileges of a shareholder of the Company when,
but not until, the shares have been issued following exercise
of the Participant's Option.
SECTION 15. AMENDMENT OF THE PLAN
The Board or the Committee may amend the Plan in such
respects as it shall deem advisable; provided, however, that
to the extent required for compliance with Code Section 423 or
any applicable law or regulation, shareholder approval will be
required for any amendment that will (a) increase the total
number of shares as to which Options may be granted under the
Plan, (b) modify the class of employees eligible to receive
Options, or (c) otherwise require shareholder approval under
any applicable law or regulation.
Page 8
<PAGE>
SECTION 16. TERMINATION OF THE PLAN
The Board may suspend or terminate the Plan at any time.
Unless the Plan shall theretofore have been terminated by the
Board, the Plan shall terminate on, and no Options shall be
granted after, May 22, 2007, except that such termination
shall have no effect on Options granted prior thereto. No
Options shall be granted during any period of suspension of
the Plan.
SECTION 17. NO RIGHTS AS AN EMPLOYEE
Nothing in the Plan shall be construed to give any person
(including any Eligible Employee or Participant) the right to
remain in the employ of the Company or a Parent Corporation or
Subsidiary Corporation or to affect the right of the Company
and the Parent Corporations and Subsidiary Corporations to
terminate the employment of any person (including any Eligible
Employee or Participant) at any time with or without cause.
SECTION 18. EFFECT UPON OTHER PLANS
The adoption of the Plan shall not affect any other
compensation or incentive plans in effect for the Company or
any Parent Corporation or Subsidiary Corporation. Nothing in
the Plan shall be construed to limit the right of the Company,
any Parent Corporation or any Subsidiary Corporation to
(a) establish any other forms of incentives or compensation
for employees of the Company, any Parent Corporation or any
Subsidiary Corporation or (b) grant or assume options
otherwise than under the Plan in connection with any proper
corporate purpose, including, but not by way of limitation,
the grant or assumption of options in connection with the
acquisition, by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any
corporation, firm or association.
SECTION 19. ADJUSTMENTS
19.1 Adjustment of Shares
In the event that, at any time or from time to time, a
stock dividend, stock split, spin-off, combination or exchange
of shares, recapitalization, merger, consolidation,
distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or
capital structure results in (a) the outstanding shares, or
any securities exchanged therefor or received in their place,
being exchanged for a different number or class of securities
of the Company or of any other corporation or (b) new,
different or additional securities of the Company or of any
other corporation being received by the holders of shares of
Stock, then (subject to any required action by the Company's
shareholders) the Board or the Committee, in its sole
discretion, shall make such equitable adjustments as it shall
deem appropriate in the circumstances (i) in the maximum
number and kind of securities subject to the Plan as set forth
in Section 4 and (ii) the number and kind of securities
subject to any outstanding Option and the per share price of
such securities. The determination by the Board or the
Committee as to the terms of any of the foregoing adjustments
shall be conclusive and binding.
19.2 Merger, Acquisition or Liquidation of the
Company
In the event of the merger or consolidation of the
Company into another corporation, the acquisition by another
corporation of all or substantially all of the Company's
assets, or the liquidation or dissolution of the Company, the
Purchase Date with respect to outstanding Options shall be the
business day immediately preceding the effective date of such
merger, consolidation, liquidation or dissolution unless the
Board or the Committee shall, in its sole discretion, provide
for the assumption or substitution of such Options in a manner
complying with Code Section 424(a).
Page 9
<PAGE>
19.3 Limitations
The grant of Options will in no way affect the Company's
right to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its
business or assets.
SECTION 20. REGISTRATION
The Company shall be under no obligation to any
Participant to register for offering or resale under the
Securities Act of 1933, as amended, or register or qualify
under state securities laws, any shares of Stock. The Company
may issue certificates for shares with such legends and
subject to such restrictions on transfer and stop-transfer
instructions as counsel for the Company deems necessary or
desirable for compliance by the Company with federal and state
securities laws.
SECTION 21. EFFECTIVE DATE
The Plan's effective date is the date on which it is
approved by the Company's shareholders.
Page 10
<PAGE>
