<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.
NONQUALIFIED STOCK OPTION AGREEMENT DATED MARCH 6, 1998
________________________
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>
=============================================================================================================================
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE (1) AGGREGATE OFFERING PRICE (1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share (2)........ 80,000 shares $9.4375 $755,000 $223
=============================================================================================================================
</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
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated by reference into this
Registration Statement:
(a) Annual Report on Form 10-K for the year ended December 31, 1997
of Protocol Systems, Inc. (the "Company") filed with the Securities and Exchange
Commission (the "SEC") on March 30, 1998.
(b) Quarterly Report on Form 10-Q of the Company for the quarter
ended March 31, 1998 filed with the SEC on May 15, 1998.
(c) Registration Statement on Form 8-A of the Company filed with the
SEC on March 16, 1992.
(d) All documents filed by the Company with the SEC pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after
the date of this Registration Statement and before the date of filing of a post-
effective amendment to this Registration Statement stating that all securities
offered have been sold or deregistering all securities then remaining unsold.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As an Oregon corporation the Company is subject to the Oregon Business
Corporation Act (the "OBCA") and the exculpation from liability and
indemnification provisions contained therein. Pursuant to Section 60.047(2) of
the OBCA, Article VI of the Company's Restated Articles of Incorporation (the
"Restated Articles") eliminates the liability of the Company's directors to the
Company or its shareholders, except for any liability related to breach of the
duty of loyalty, actions not in good faith and certain other liabilities.
Section 60.387 et seq. of the OBCA allows corporations to indemnify their
directors and officers against liability where the director or officer has acted
in good faith and with a
-2-
<PAGE>
reasonable belief that actions taken were in the best interests of the
corporation or at least not adverse to the corporation's best interests and, if
in a criminal proceeding, the individual had no reasonable cause to believe the
conduct in question was unlawful. Under the OBCA, corporations may not indemnify
against liability in connection with a claim by or in the right of the
corporation but may indemnify against the reasonable expenses associated with
such claims. Corporations may not indemnify against breaches of the duty of
loyalty. The OBCA mandates indemnifications against all reasonable expenses
incurred in the successful defense of any claim made or threatened whether or
not such claim was by or in the right of the corporation. Finally, a court may
order indemnification if it determines that the director or officer is fairly
and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the director or officer met the good faith and
reasonable belief standards of conduct set forth in the statute.
The OBCA also provides that the statutory indemnification provisions are
not deemed exclusive of any other rights to which directors or officers may be
entitled under a corporation's articles of incorporation or bylaws, any
agreement, general or specific action of the board of directors, vote of
shareholders or otherwise.
The Restated Articles require the Company to indemnify its directors and
officers to the fullest extent not prohibited by law. The Restated Bylaws of the
Company (the "Bylaws") also require the Company to indemnify its directors and
officers to the fullest extent permitted by the OBCA. In addition, the Bylaws
deem that all rights to indemnification under the Bylaws are deemed to be
contractual rights and are to be effective to the same extent as if provided for
in a contract between the Company and the director or officer who serves in such
capacity.
The Company has entered into indemnity agreements with each of its
executive officers and directors. Each agreement provides for indemnification of
the indemnitee to the fullest extent by law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
Number Description
------ -----------
5.1 Opinion of Ater Wynne LLP as to the legality of the
securities being registered
-3-
<PAGE>
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 Nonqualified Stock Option Agreement dated March 6, 1998
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:
i. to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
ii. 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 thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
iii. 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.
-4-
<PAGE>
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.
-5-
<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.
/s/ David F. Bolender
By: _________________________________________
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]
-6-
<PAGE>
Signature Title Date
--------- ----- ----
/s/ David F. Bolender 8/12/98
- -------------------------- Chairman of the Board
David F. Bolender and Chief Executive Officer
(Principal Executive Officer)
/s/ James B. Moon 8/12/98
- -------------------------- President, Chief Technical Officer
James B. Moon and Director
/s/ Craig M. Swanson 8/12/98
- -------------------------- Vice President, Finance, Chief
Craig M. Swanson Financial Officer and Secretary
(Principal Financial Officer)
/s/ Frank E. Samuel, Jr. 8/12/98
- -------------------------- Director
Frank E. Samuel, Jr.
/s/ Ronald S. Newbower 8/12/98
- -------------------------- Director
Ronald S. Newbower
/s/ Steven E. Wynne 8/12/98
- -------------------------- Director
Steven E. Wynne
/s/ Curtis M. Stevens 8/12/98
- -------------------------- Director
Curtis M. Stevens
-7-
<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 Nonqualified Stock Option Agreement dated March 6, 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 80,000 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 Nonqualified Stock Option Agreement Dated March 6, 1998 (the
"Agreement"), 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 Agreement when such shares have been delivered against payment
therefor as contemplated by the Agreement, 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 80,000 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>
EXHIBIT 99.1
PROTOCOL SYSTEMS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
TO: David F. Bolender Date of Grant: March 6, 1998
We are pleased to inform you that you have been selected by the Board of
Directors (the "Board") of Protocol Systems, Inc. (the "Company") to receive a
nonqualified stock option for the purchase of 80,000 shares of the Company's
Common Stock at an exercise price of $9.4375 per share.
1. TERM: The term of the option is ten years from date of grant, unless
sooner terminated.
2. VESTING: The option will vest and become exercisable according to the
following schedule:
Date on and After Which Exercisable Portion
Option is Exercisable of Total Option
- ----------------------- -------------------
April 6, 1998 6,674 shares
May 6, 1998 13,340 shares
June 6, 1998 20,006 shares
July 6, 1998 26,672 shares
August 6, 1998 33,338 shares
September 6, 1998 40,004 shares
October 6, 1998 46,670 shares
November 6, 1998 53,336 shares
December 6, 1998 60,002 shares
January 6, 1999 66,668 shares
February 6, 1999 73,334 shares
March 6, 1999 80,000 shares
3. EXERCISE: During your lifetime only you can exercise the option. The
option may be exercised by the personal representative of your estate, by the
beneficiary you have designated on forms prescribed by and filed with the
Company, or the beneficiary of your estate following your death. You may use the
Notice of Exercise of Nonqualified Stock Option in the form attached to this
Agreement when you exercise the option.
4. PAYMENT FOR SHARES: The option may be exercised by the delivery of:
1
<PAGE>
a. Cash, personal check (unless, at the time of exercise, the Company
determines otherwise), bank certified or cashier's check;
b. Unless the Board in its sole discretion determines otherwise, shares
of the capital stock of the Company held by you for a period of at least six
months having a fair market value at the time of exercise, as determined in good
faith by the Board, equal to the exercise price; or
c. A properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price.
5. WITHHOLDING TAXES: As a condition to the exercise of the option, you must
make such arrangements as the Company may require for the satisfaction of any
federal, state or local withholding tax obligations that may arise in connection
with such exercise.
6. TERMINATION:
a. If your relationship with the Company ceases because both your
employment with the Company and your membership on the Company's Board of
Directors terminates, and unless by its terms the option sooner terminates or
expires, then you may exercise, for a twelve-month period following the later of
the termination of your employment or the termination of your Board membership,
that portion of the option which is exercisable at the time of such termination,
but the option will terminate at the end of such period following such
termination as to all shares for which it has not theretofore been exercised.
b. If your relationship with the Company ceases because of your death or
"total disability," and unless by its terms the option sooner terminates or
expires, then you or your personal representative may exercise, for a 12-month
period, that portion of the option which is exercisable at the time of such
cessation, but the option will terminate at the end of such period following
such cessation as to all shares for which it has not theretofore been exercised.
7. DEATH OF OPTIONEE: If you die while having a relationship with the Company
or within the three-month period (or 12-month period in the case of total
disability) following cessation of such relationship, this option (to the extent
that you would have been entitled to exercise this option) may be exercised
within one year after your death by the personal representative of your estate
or by the person or persons to whom your rights under the option pass (i) by
will or by the applicable laws of descent and distribution or (ii) by a
designation or transfer.
8. TRANSFERABILITY OF OPTION: This option and the rights and privileges
conferred hereby may not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by
the applicable laws of
2
<PAGE>
descent and distribution and shall not be subject to execution, attachment or
similar process. This option is personal to you and is exercisable solely by
you. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose
of this option or of any right or privilege conferred hereby, contrary to the
provisions hereof, or the sale or levy or any attachment or similar process upon
the rights and privileges conferred hereby will be null and void.
Notwithstanding the foregoing, to the extent permitted by applicable law and
regulation, the Company, in its sole discretion, may permit you to (i) during
your lifetime, designate a person who may exercise the option after your death
by giving written notice of such designation to the Company (such designation
may be changed from time to time by you by giving written notice to the Company
revoking any earlier designation and making a new designation) or (ii) transfer
the option and the rights and privileges conferred hereby.
9. NO STATUS AS SHAREHOLDER: Neither you nor any party to whom your rights
and privileges under the option pass will be, or have any of the rights or
privileges of, a shareholder of the Company with respect to any of the shares
issuable upon the exercise of this option unless and until this option has been
exercised.
10. CONTINUATION OF RELATIONSHIP: Nothing in this option will confer upon you
any right to continue in the employ or other relationship of the Company, or to
interfere in any way with the right of the Company to terminate your employment
or other relationship with the Company at any time.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION: The aggregate number and class
of shares covered by this option and the exercise price per share thereof (but
not the total price), will all be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a split-up or consolidation of shares or any like capital adjustment, or
the payment of any stock dividend.
12. EFFECT OF LIQUIDATION OR REORGANIZATION
(1) Cash, Stock or Other Property for Stock. Except as provided in
subsection (2), upon a merger (other than a merger of the Company in which the
holders of shares of Common Stock immediately prior to the merger have the same
proportionate ownership of shares of Common Stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or stock,
separation, reorganization (other than a mere reincorporation or the creation of
a holding company) or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for or in connection with their shares of Common Stock, this option will
terminate, but you will have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to exercise your option in whole or in part whether or not the
vesting requirements set forth in this agreement have been satisfied.
3
<PAGE>
(2) Conversion of Options on Stock for Stock Exchange. If the
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation
or reorganization (other than a mere reincorporation or the creation of a
holding company), this option will be converted into an option to purchase
shares of Exchange Stock. The amount and price of converted options will be
determined by adjusting the amount and price of this option in the same
proportion as used for determining the number of shares of Exchange Stock the
holders of the shares of Common Stock receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. The converted
option will be fully vested whether or not the vesting requirements set forth in
this agreement have been satisfied; provided that such acceleration will not
occur if, in the opinion of the Company's outside accountants, such acceleration
would render unavailable "pooling of interests" accounting treatment for any
reorganization, merger or consolidation of the Company for which pooling of
interests accounting treatment is sought by the Company.
13. FRACTIONAL SHARES: In the event of any adjustment in the number of shares
covered by this option, any fractional shares resulting from such adjustment
will be disregarded and the option will cover only the number of full shares
resulting from such adjustment.
14. DETERMINATION OF BOARD TO BE FINAL: All adjustments referred to herein
will be made by the Board, and its determination as to what adjustments will be
made, and the extent thereof, will be final, binding and conclusive.
15. SECURITIES REGULATION: Shares will not be issued with respect to this
option unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto complies with all relevant provisions of law, including,
without limitation, any applicable state securities laws, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may
then be listed.
As a condition to the exercise of this option, the Company may require you
to represent and warrant at the time of any such exercise 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 relevant provision of the aforementioned laws.
At the option of the Company, a stop-transfer order against any shares of stock
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred, unless an opinion of counsel is provided (concurred in by counsel
for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The
4
<PAGE>
Company may also require such other action or agreement by you as may from time
to time be necessary to comply with the federal and state securities laws. THIS
PROVISION SHALL NOT OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THIS
OPTION OR THE SHARES ISSUABLE HEREUNDER.
Please execute the Acceptance and Acknowledgment set forth below on the
enclosed copy of this Agreement and return it to the undersigned.
Very truly yours,
PROTOCOL SYSTEMS, INC.
By:
------------------------------------
5
<PAGE>
ACCEPTANCE AND ACKNOWLEDGMENT
I, David F. Bolender, a resident of the State of Oregon, accept the
nonqualified stock option described herein. I have read and understand the
Agreement.
Dated:
----------------------- --------------------------------------
David F. Bolender
Taxpayer I.D. Number:
-------- --------------------------------------
--------------------------------------
Address
By her signature below, the spouse of the Optionee, if such Optionee is
legally married as of the date of his execution of this Agreement, acknowledges
that she has read this Agreement and is familiar with the terms and provisions
thereof, and agrees to be bound by all the terms and conditions of this
Agreement.
Dated:
-----------------------
--------------------------------------
Spouse's Signature
--------------------------------------
Printed Name
By his signature below, the optionee represents that he is not legally
married as of the date of execution of this Agreement.
Dated:
-----------------------
--------------------------------------
Optionee's Signature
6
<PAGE>
NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION
To: Protocol Systems, Inc.
I, David F. Bolender, a resident of the State of Oregon, hereby exercise my
nonqualified stock option granted by Protocol Systems, Inc. (the "Company") on
March 6, 1998, and notify the Company of my desire to purchase shares of Common
Stock of the Company (the "Securities") at the exercise price of $_____ per
share which were offered to me pursuant to said option.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Securities; (2) I have had the opportunity to ask questions and
receive answers concerning the information received about the Securities and the
Company; and (3) I have been given the opportunity to obtain any additional
information I deem necessary to verify the accuracy of any information obtained
concerning the Securities and the Company.
Dated:
----------------------- --------------------------------------
David F. Bolender
Taxpayer I.D. Number:
-------- --------------------------------------
--------------------------------------
Address
7
<PAGE>
RECEIPT
_____________________ hereby acknowledges receipt from David F. Bolender in
payment for ________ shares of Common Stock of Protocol Systems, Inc., an Oregon
corporation, of $_________ in the form of
[ ] Cash
[ ] Check (personal, cashier's or bank certified)
[ ] ___________ shares of the Company's Common Stock, fair market value
$_______ per share held by the Optionee for a period of at least six
months
Copy of irrevocable instructions to Broker
Date:
----------------------------
PROTOCOL SYSTEMS, INC.
By:
------------------------------------
8
