<PAGE>
As filed with the Securities and Exchange Commission on August 13, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM S-8
REGISTRATION STATEMENT
Under The Securities Act of 1933
________________________
PROTOCOL SYSTEMS, INC.
(Exact name of registrant as specified in charter)
OREGON 93-0913130
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
________________________
8500 S.W. CREEKSIDE PLACE, BEAVERTON, OREGON 97008
(503) 526-8500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
________________________
PROTOCOL SYSTEMS, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN
________________________
DAVID F. BOLENDER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
PROTOCOL SYSTEMS, INC.
8500 S.W. CREEKSIDE PLACE, BEAVERTON, OREGON 97008
(503) 526-8500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
________________________
WITH COPIES TO:
GREGORY E. STRUXNESS, ESQ.
ATER WYNNE LLP
222 S.W. COLUMBIA, SUITE 1800
PORTLAND, OREGON 97201
(503) 226-1191
________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
Proposed
Title of Securities to Be Amount to be Registered Maximum Offering Proposed Maximum Amount of
Registered Price Per Share (1) Aggregate Offering Price (1) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share (2)........ 100,000 shares $8.875 $887,500 $262
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Including associated Preferred Stock Purchase Rights. Prior to the
occurrence of certain events, the Preferred Stock Purchase Rights will not
be evidenced or traded separately from the Common Stock.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
This registration statement is filed in accordance with the provisions of
General Instruction E to Form S-8 for the purpose of registering additional
shares of common stock for offer and sale under the Protocol Systems, Inc. 1994
Employee Stock Purchase Plan for which a registration statement on Form S-8
(File No. 33-74384) is already effective. Except to the extent that exhibits
are filed herewith the contents of Protocol Systems, Inc.'s registration
statement on Form S-8 (File No. 33-74384) are hereby incorporated by reference.
ITEM 8. EXHIBITS
Number Description
------ -----------
5.1 Opinion of Ater Wynne LLP as to the legality of the securities
being registered
23.1 Consent of Ater Wynne LLP (included in legal opinion filed as
Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
24.1 Powers of Attorney (included in signature page in Part II of the
Registration Statement)
99.1 Protocol Systems, Inc. 1994 Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.14 to Registrant's
Registration Statement on Form S-1 (File No. 33-45067))
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement:
1. to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
2. to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment
-2-
<PAGE>
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
3. to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that subparagraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those subparagraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
B. The undersigned registrant hereby undertakes that, for the
purpose of determining liability under the Securities Act of 1933, 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.
C. The undersigned registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
D. The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
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.
E. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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 a director, officer or controlling person in
connection with 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 Act and will
be governed by the final adjudication of such issue.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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, thereunto authorized,
in the City of Portland, State of Oregon, on the 12th day of August, 1998.
PROTOCOL SYSTEMS, INC.
By: /s/ David F. Bolender
------------------------------------
David F. Bolender
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David F. Bolender and James B. Moon and each of
them singly, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the registration statement filed herewith and any
or all amendments to said registration statement (including post-effective
amendments), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
granting unto said attorneys-in-fact and agents and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the foregoing, as fully to all intents and purposes as
he or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Witness our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
[Signatures on following page]
-4-
<PAGE>
Signature Title Date
--------- ----- ----
/s/ David F. Bolender
- ------------------------- Chairman of the Board 8/12/98
David F. Bolender and Chief Executive Officer
(Principal Executive Officer)
/s/ James B. Moon
- ------------------------- President, Chief Technical Officer 8/12/98
James B. Moon and Director
/s/ Craig M. Swanson Vice President, Finance, Chief 8/12/98
- ------------------------- Financial Officer and Secretary
Craig M. Swanson (Principal Financial Officer)
/s/ Frank E. Samuel, Jr. Director 8/12/98
- -------------------------
Frank E. Samuel, Jr.
/s/ Ronald S. Newbower Director 8/12/98
- -------------------------
Ronald S. Newbower
/s/ Steven E. Wynne Director 8/12/98
- -------------------------
Steven E. Wynne
/s/ Curtis M. Stevens Director 8/12/98
- -------------------------
Curtis M. Stevens
-5-
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
Number Exhibit No.
------- ------- ----
5.1 Opinion of Ater Wynne LLP as to the legality of the
securities being registered
23.1 Consent of Ater Wynne LLP (included in legal opinion
filed as Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
24.1 Powers of Attorney (included in signature page in Part II
of the Registration Statement)
99.1 Protocol Systems, Inc. 1994 Employee Stock Purchase
Plan as amended on May 19, 1998
<PAGE>
EXHIBIT 5.1
ATER WYNNE LLP
222 S.W. Columbia, Suite 1800
Portland, Oregon 97201
(503)226-1191 (phone)
(503)226-0079 (fax)
August 12, 1998
Board of Directors
Protocol Systems, Inc.
8500 S.W. Creekside Place
Beaverton, OR 97008
Gentlemen:
In connection with the registration of 100,000 shares of common stock, par
value $.01 per share (the "Common Stock"), of Protocol Systems, Inc., an Oregon
corporation (the "Company"), under the Registration Statement on Form S-8 to be
filed with the Securities and Exchange Commission on August 13, 1998, and the
proposed offer and sale of the Common Stock pursuant to the terms of the
Company's 1994 Employee Stock Purchase Plan (the "1994 Plan"), we have examined
such corporate records, certificates of public officials and officers of the
Company and other documents as we have considered necessary or proper for the
purpose of this opinion.
Based on the foregoing and having regard to legal issues which we deem
relevant, it is our opinion that the shares of Common Stock to be offered
pursuant to the 1994 Plan, when such shares have been delivered against payment
therefor as contemplated by the 1994 Plan, will be validly issued, fully paid
and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the above-
mentioned registration statement.
Very truly yours,
/s/ Ater Wynne LLP
-----------------
Ater Wynne LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
Protocol Systems, Inc.:
We consent to incorporation by reference in the Registration Statement on Form
S-8 of Protocol Systems, Inc. to register 100,000 shares of common stock of
Protocol Systems, Inc. of our report dated January 23, 1998, relating to the
consolidated balance sheets of Protocol Systems, Inc. and subsidiaries as of
December 31, 1997, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1997, and all related financial statement schedules,
which report appears in the December 31, 1997 Annual Report on Form 10-K of
Protocol Systems, Inc.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
Portland, Oregon
August 12, 1998
<PAGE>
PROTOCOL SYSTEMS, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN*
The following provisions constitute the Protocol Systems, Inc. 1994 Employee
Stock Purchase Plan.
1. PURPOSE. The purpose of the Plan is to provide employees of the Company and
its Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of
the Plan, accordingly, shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. DEFINITIONS.
2.1 "ACCOUNT" shall mean each separate account maintained for a Participant
under the Plan, collectively or singly as the context requires. Each
Account shall be credited with a Participant's contributions, and shall
be charged for the purchase of Common Stock. A Participant shall be
fully vested in the cash contributions to his or her account at all
times. The Plan Administrator may create special types of accounts for
administrative reasons, even though the Accounts are not expressly
authorized by the Plan.
2.2 "BOARD" shall mean the Board of Directors of the Company.
2.3 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "COMMITTEE" shall mean the Compensation Committee of the Board.
2.5 "COMMON STOCK" shall mean the Common Stock of the Company.
2.6 "COMPANY" shall mean Protocol Systems, Inc., an Oregon corporation.
2.7 "COMPENSATION" shall mean all base straight time gross earnings plus
payments for overtime, shift premiums and sales commissions, but
excluding incentive compensation, incentive payments, bonuses, awards,
and other compensation.
2.8 "DESIGNATED SUBSIDIARY" shall mean each Subsidiary which has been
designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
2.9 "EMPLOYEE" shall mean an individual who renders services to the Company
or to a Designated Subsidiary pursuant to a regular-status employment
relationship with such employer. A person rendering services to the
Company or to a Designated Subsidiary purportedly as an independent
consultant or contractor shall not be an Employee for purposes of the
Plan.
* NOTE: Matter in BOLD FACE (other than headings) is new, and matter in
[brackets] has been deleted.
1 - PROTOCOL SYSTEMS, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
2.10 "ENROLLMENT DATE" shall mean the first day of each Offering Period.
2.11 "FAIR MARKET VALUE"
2.11.1 The Fair Market Value of the Common Stock on any date shall
be equal to the closing price of such Common Stock on the
Valuation Date, as reported on the NASDAQ.
2.11.2 If 2.11.1 is not applicable, the Fair Market Value of the
Common Stock shall be determined by the Board in good faith.
Such determination shall be conclusive and binding on all
persons.
2.12 NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System Stock Market's National Market or such
other quotation system that supersedes it.
2.13 "OFFERING PERIOD" shall mean the period of approximately six (6)
months, commencing on the first Trading Day on or after a date
designated in advance by the Board and terminating on the last
Trading Day in the period ending six months later, during which an
option granted pursuant to the Plan may be exercised. The duration of
Offering Periods may be changed pursuant to Section 4 of this Plan.
2.14 "PARTICIPANT" shall mean any Employee who is participating in this
Plan by meeting the eligibility requirements of Section 3 and has
completed a Payroll Participation Form.
2.15 "PAYROLL PARTICIPATION FORM" shall mean the form provided by the
Company on which a Participant shall elect to participate in the Plan
and designate the percentage of his or her Compensation to be
contributed to his or her Account through payroll deductions.
2.16 "PLAN" shall mean this Employee Stock Purchase Plan.
2.17 "PURCHASE DATE" shall mean the last day of each Offering Period.
2.18 "PURCHASE PRICE" shall mean an amount equal to 85% of the Fair Market
Value of a share of Common Stock (i) on the Enrollment Date or (ii)
on the Purchase Date, whichever is lower.
2.19 "RESERVES" shall mean the number of shares of Common Stock covered by
each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for
issuance under the Plan but not yet placed under option.
2.20 "SUBSIDIARY" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company of a Subsidiary.
2 - PROTOCOL SYSTEMS, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
2.21 "TRADING DAY" shall mean a day on which national stock exchanges and
the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.
2.22 "VALUATION DATE" shall mean the date upon which the Fair Market Value
of Common Stock is to be determined for purposes of setting the price
of Shares of Common Stock under Section 2.18 (that is, the Enrollment
Date or the applicable Purchase Date). If the Enrollment Date is not
a date on which the Fair Market Value may be determined in accordance
with Section 2.11, the Valuation Date shall be the first day after
the Enrollment Date for which such Fair Market Value may be
determined. If the Purchase Date is not a date on which the Fair
Market Value may be determined in accordance with Section 2 the
Valuation Date shall be the first date prior to the Purchase Date on
which such fair market value may be determined.
3. ELIGIBILITY.
3.1 A person shall become eligible to participate in the Plan on the
first Enrollment Date on or after which he or she first meets all of
the following requirements; provided, however, that no one shall
become eligible to participate in the Plan prior to the Enrollment
Date of the first Offering Period provided for in Section 2.13:
3.1.1 The person has been an employee of the Company for a
continuous period of three months;
3.1.2 The person's customary period of employment is for more than
twenty (20) hours per week;
3.1.3 The person's customary period of employment is for more than
five (5) months in any calendar year.
3.2 Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose
stock would be attributed to such Employee pursuant to Section 424(d)
of the Code) would own stock and/or hold outstanding options to
purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company
or of any Subsidiary, or (ii) which permits his or her rights to
purchase stock under all employee stock purchase plans (under Section
423 of the Code) of the Company and Subsidiaries to accrue at a rate
which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock
(determined at the fair market value of the shares at the time such
option is granted) for each calendar year in which such option is
outstanding at any time.
3.3 For purposes of the Plan, eligibility shall be treated as continuing
intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90
days and the individual's right to reemployment is not guaranteed
either by statute or by contract, eligibility to participate in the
Plan will be deemed to have terminated on the 91st day of such leave.
3 - PROTOCOL SYSTEMS, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
4. OFFERING PERIODS. The Plan shall be implemented by consecutive Offering
Periods with the first Offering Period commencing on a date designated in
advance by the Board, and continuing for six month periods thereafter until
terminated in accordance with Section 19 hereof. The Board shall have the
power to change the duration of Offering Periods (including the
commencement dates thereof) with respect to future offerings without
shareholder approval if such change is announced at least fifteen (15) days
prior to the scheduled beginning of the first Offering Period to be
affected thereafter.
5. PARTICIPATION.
5.1 An eligible Employee may become a Participant in the Plan by
completing a Payroll Participation Form and filing it with the
Company's Administration Department (as set forth in Section 20 below)
at least fifteen (15) days prior to the applicable Enrollment Date,
unless a later time for filing the Payroll Participation Form is set
by the Board for all eligible Employees with respect to a given
Offering Period.
5.2 Payroll deductions for a Participant shall commence on the first
payroll period following the Enrollment Date and shall end on the last
payroll period in the Offering Period, unless sooner terminated by the
Participant as provided in Section 10 hereof.
6. PAYROLL DEDUCTIONS.
6.1 At the time a Participant files his or her Payroll Participation Form,
he or she shall elect to have payroll deductions made on each payday
during the Offering Period in an amount not exceeding ten percent
(10%) of the Compensation which he or she receives on each payday
during the Offering Period, and the aggregate of such payroll
deductions during the Offering Period shall not exceed ten percent
(10%) of the Participant's Compensation during said Offering Period.
6.2 A Participant shall specify that he or she desires to make
contributions to the Plan in whole percentages not less than one
percent (1%) and not more than ten percent (10%) of the Participant's
Compensation during each pay period in the Offering Period, or such
other minimum or maximum percentage as the Board shall establish from
time to time.
6.3 All payroll deductions made for a Participant shall be credited to his
or her Account under the Plan and will be withheld in whole
percentages only. A Participant may not make any additional payments
into such Account.
6.4 A Participant may discontinue his or her participation in the Plan as
provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by filing
with the Company's Administration Department (as set forth in Section
20 below) a new Payroll Participation Form authorizing a change in
payroll deduction rate. A Participant is limited to making one change
during an Offering Period. The change in rate shall be effective with
the first full payroll period following fifteen (15) days after the
Company's receipt of a new Payroll Participation Form unless the
Company elects to process a given change in participation more
quickly. A Participant's Payroll
4 - PROTOCOL SYSTEMS, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
Participation Form shall remain in effect for successive Offering
Periods unless terminated as provided in Section 10.
6.5 Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 3.2 hereof, a Participant's
payroll deductions shall be decreased to 0% at such time during any
Offering Period which is scheduled to end during the current calendar
year (the "Current Offering Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan
in a prior Offering Period which ended during that calendar year plus
all payroll deductions accumulated with respect to the Current
Offering Period equal $21,250 (85% of $25,000). Payroll deductions
shall recommence at the rate provided in such Participant's Payroll
Participation Form at the beginning of the first Offering Period which
is scheduled to end in the following calendar year, unless terminated
by the Participant as provided in Section 10.
6.6 At the time the option is exercised, or at the time some or all of the
Common Stock issued under the Plan is disposed of, the Participant
must make adequate provision for the Company's federal, state, or
other tax withholding obligations, if any, which arise upon the
exercise of the option or the disposition of the Common Stock. At any
time, the Company may, but will not be obligated to, withhold from the
Participant's compensation the amount necessary for the Company to
meet applicable withholding obligations, including any withholding
required to make available to the Company any tax deductions or
benefit attributable to sale or early disposition of Common Stock by
the Employee.
7. OPTION TO PURCHASE COMMON STOCK. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall
be granted an option to purchase on the Purchase Date of such Offering
Period (at the applicable Purchase Price) up to a number of shares of the
Common Stock determined by dividing such Employee's payroll deductions
accumulated prior to such Purchase Date and retained in the Participant's
account as of the Purchase Date by the applicable Purchase Price; provided
that in no event shall an Employee be permitted to purchase during each
Offering Period more than a number of shares determined by dividing $12,500
by the fair market value of a share of the Common Stock on the Enrollment
Date, and provided further that such purchase shall be subject to the
limitations set forth in Section 3.2 and 12 hereof. Purchase of the Common
Stock shall occur as provided in Section 8, unless the Participant has
withdrawn pursuant to Section 10, and the option shall expire on the last
day of the Offering Period.
8. PURCHASE OF COMMON STOCK. Unless a Participant withdraws from the Plan as
provided in Section 10.1 below, his or her option for the purchase of
Common Stock will be exercised automatically on the Purchase Date, and the
maximum number of full shares subject to option shall be purchased for such
Participant at the applicable Purchase Price with the accumulated payroll
deductions in his or her account. No fractional shares of Common Stock will
be purchased; any payroll deductions accumulated in a Participant's account
which are not sufficient to purchase a full share shall be retained in the
Participant's account for the subsequent Offering Period, subject to
earlier withdrawal by the Participant as provided in Section 10 hereof.
During a Participant's life-time, a Participant's option to purchase shares
of Common Stock hereunder is exercisable only by him or her.
5 - PROTOCOL SYSTEMS, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
9. DELIVERY. As promptly as practicable after each Purchase Date, the Company
shall arrange the delivery to each Participant the shares of Common Stock
purchased with his or her payroll deductions.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
10.1 A Participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to
purchase shares of Common Stock under the Plan by giving written
notice to the Company's Administration Department (as set forth in
Section 20 below) no less than 15 days immediately preceding a
Purchase Date. All of the Participant's payroll deductions credited
to his or her Account will be paid to such Participant as soon as
practicable after receipt of notice of withdrawal and such
Participant's option for the Offering Period will be automatically
terminated, and no further payroll deductions for the purchase of
shares will be made during the Offering Period. If a Participant
withdraws from an Offering Period, payroll deductions will not resume
at the beginning of the succeeding Offering Period unless the
Participant delivers to the Company a new Payroll Participation Form.
10.2 Upon termination of a Participant's employment for any reason,
including death, disability or retirement, the payroll deductions
credited to such Participant's Account shall be returned to the
Participant. A Participant shall have no right to acquire shares upon
termination of his or her employment.
11. INTEREST. No interest shall accrue on the payroll deductions of a
Participant in the Plan.
12. STOCK.
12.1 The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be [300,000]
400,000 shares, subject to adjustment upon changes in capitalization
of the Company as provided in Section 18. If on a given Purchase Date
the number of shares of Common Stock eligible to be purchased exceeds
the number of shares then available under the Plan, the Company shall
make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it
shall determine to be equitable.
12.2 The Participant will have no interest or voting right in shares
covered by his or her option until such shares of Common Stock have
been purchased.
12.3 Common Stock to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the
Participant and his or her spouse.
13. ADMINISTRATION.
13.1 Administrative Body. The Plan shall be administered by the Committee.
Subject to the terms of the Plan, the Committee shall have the power
to construe the provisions of the Plan, to determine all questions
arising thereunder, and to adopt and amend such rules and regulations
for administering the Plan as the Committee deems desirable.
6 - PROTOCOL SYSTEMS, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
13.2 Rule 16b-3 Limitations. Notwithstanding the provisions of Subsection
13.1, in the event that Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or any successor provision ("Rule
16b-3") provides specific requirements for the administrators of
plans of this type, the Plan shall be only administered by such a
body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3.
14. DESIGNATION OF BENEFICIARY.
14.1 A Participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the Participant's
account under the Plan in the event of such Participant's death
subsequent to a Purchase Date on which the option is exercised but
prior to delivery to such Participant of such shares and cash. In
addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant's account
under the Plan in the event of such Participant's death prior to a
Purchase Date.
14.2 Such designation of beneficiary may be changed by the Participant at
any time by written notice as provided in Section 20 below. In the
event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living at the
time of such Participant's death, the Company shall deliver such
shares and/or cash to the executor or administrator of the estate of
the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to
any one or more dependents or relatives of the Participant, or if no
spouse, dependent or relative is known to the Company, then to such
other person as the Company may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a Participant's
account nor any rights with regard to the exercise of an option or to
receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent
and distribution or as provided in Section 14 hereof) by the Participant.
Any such attempt at assignment, transfer, pledge or other disposition shall
be without effect, except that the Company may treat such act as an
election to withdraw funds from an Offering Period in accordance with
Section 10.
16. USE OF FUNDS. All payroll deductions received or held by the Company under
the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. REPORTS. Individual accounts will be maintained for each Participant in
the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE.
18.1 Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves, as well as the price per
share of Common Stock covered by each
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option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification
of the Common Stock, or any other increase or decrease in the number
of shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option. The
Board may, if it so determines in the exercise of its sole
discretion, make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option,
in the event the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or reductions
of shares of its outstanding Common Stock.
18.2 Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board.
18.3 Consolidation or Merger. In the event of the consolidation or merger
of the Company with or into any other business entity, or the sale by
the Company of substantially all of its assets, the successor may
continue the Plan by adopting the same by resolution of its board of
directors or agreement of its partners or proprietors. If, within 90
days after the effective date of a consolidation, merger or sale of
assets, the successor corporation, partnership or proprietorship does
not adopt the Plan, the Plan shall be terminated in accordance with
Section 19.
19. AMENDMENT OR TERMINATION.
19.1 The Board may at any time and for any reason terminate or amend the
Plan. Except as provided in Section 18, no such termination can
affect options previously granted, provided that an Offering Period
may be terminated by the Board on any Purchase Date if the Board
determines that the termination of the Plan is in the best interests
of the Company and its stockholders. Except as provided in Section
18, no amendment may make any change in any option theretofore
granted which adversely affects the rights of any Participant. To the
extent necessary to comply with Section 423 of the Code (or any
successor rule or provision or any other applicable law or
regulation), the Company shall obtain stockholder approval in such a
manner and to such a degree as required.
19.2 Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely
affected," the Committee shall be entitled to change the Offering
Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars,
permit payroll withholding in excess of the amount designated by a
Participant in order to adjust for delays or mistakes in the
Company's
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processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the
purchase of Common Stock for each Participant properly correspond
with amounts withheld from the Participant's Compensation, and
establish such other limitations or procedures as the Board (or its
committee) determines in its sole discretion advisable which are
consistent with the Plan.
19.3 If required to qualify the Plan under Rule 16b-3, no amendment shall
be made more than once every six months that would change the amount,
price or timing of the options, other than to comport with changes in
the Code, or the rules and regulations promulgated thereunder; and
provided, further, that if required to qualify the Plan under Rule
16b-3, no amendment shall be made without the approval of the
Company's stockholders that would:
19.3.1 materially increase the number of shares of Common Stock that
may be issued under the Plan;
19.3.2 materially modify the requirements as to eligibility for
participation in the Plan; or
19.3.3 otherwise materially increase the benefits accruing to
participants under the Plan.
20. NOTICES. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company by the
Company's Administration Department at the Company's corporate
headquarters.
21. CONDITIONS. Upon Issuance of Shares of Common Stock. Common Stock shall
not be issued with respect to an option unless the exercise of such option
and the issuance and delivery of such shares pursuant thereto shall comply
with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the purchase of Common Stock, the Company may require the
person purchasing such Common Stock to represent and warrant at the time of
any such purchase that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares if, in
the opinion of counsel for the Company, such a representation is required
by any of the aforementioned applicable provisions of law.
22. TERM OF PLAN.
22.1 The Plan shall become effective upon the earlier to occur of its
adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term
of ten (10) years unless sooner terminated pursuant to Section 19.
22.2 Notwithstanding the above, the Plan is expressly made subject (i) to
the approval of the holders of a majority of the outstanding shares
of the Company within 12 months after the
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date the Plan is adopted and (ii) at its election, to the receipt by
the Company from the Internal Revenue Service of a ruling in scope
and content satisfactory to counsel to the Company, affirming the
qualification of the Plan within the meaning of Section 423 of the
Code. If the Plan is not so approved by the stockholders within 12
months after the date the Plan is adopted, and if, at the election of
the Company a ruling from the Internal Revenue Service is sought but
is not received on or before one year after the Plan's adoption by
the Board, this Plan shall not come into effect. In that case, the
Account of each Participant shall forthwith be paid to him or her.
23. ADDITIONAL RESTRICTIONS OF RULE 16B-3. The terms and conditions of options
granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions
of Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to,
such additional conditions and restrictions as may be required by Rule 16b-
3 to qualify for the maximum exemption from Section 16 of the Exchange Act
with respect to Plan transactions.
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