NEOPATH, INC.
                                
           STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
          As Amended and Restated on February 27, 1997
                                
                                
                      SECTION 1    PURPOSES
     
     The purpose of the NeoPath, Inc. Stock Option Plan for
Nonemployee Directors (this "Plan") is to attract and retain the
services of experienced and knowledgeable nonemployee directors
for NeoPath, Inc. (the "Company") and to provide added incentive
to such directors by providing an opportunity for stock ownership
in the Company.
                                
                                
                   SECTION 2    ADMINISTRATION
     
     The administrator of this Plan (the "Plan Administrator")
shall be the Board of Directors of the Company (the "Board").
Subject to the terms of this Plan, the Plan Administrator shall
have the power to construe the provisions of this Plan, to
determine all questions arising thereunder and to adopt and amend
such rules and regulations for the administration of this Plan as
it may deem desirable.  No member of the Plan Administrator shall
participate in any vote by the Plan Administrator on any matter
materially affecting the rights of any such member under this
Plan.
                                
                                
             SECTION 3    SHARES SUBJECT TO THE PLAN
     
     Subject to adjustment in accordance with Section 6 hereof,
the total number of shares of the Company's common stock (the
"Common Stock") for which options may be granted under this Plan
is 400,000 as such Common Stock was constituted on the effective
date of this Plan (the "Shares").  The Shares shall be shares
currently authorized but unissued or subsequently acquired by the
Company and shall include shares representing the unexercised
portion of any option granted under this Plan which expires or
terminates without being exercised in full.
                                
                                
                    SECTION 4    ELIGIBILITY
     
     Each member of the Board elected or appointed (and each
person who has been nominated for election at the Annual Meeting
immediately prior to which options are to be granted pursuant to
this Plan) who is not otherwise an employee of the Company or any
parent or subsidiary corporation (an "Eligible Director") shall
be eligible to participate in this Plan.  Subsequent to
February 27, 1997, each Eligible Director (other

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than a director whose term expires on the date of the Annual Meeting prior to
which an option is to be granted pursuant to this Plan and who
has not been nominated for reelection at such Annual Meeting)
will be granted an option to purchase 7,000 shares of Common
Stock annually during his or her term of office on the last
business day prior to each Annual Meeting of
Shareholders (as described in the Company's Bylaws, the "Annual
Meeting").  Notwithstanding the foregoing, if an Eligible
Director is first elected or appointed by the Board on a date
other than the date of an Annual Meeting, such Eligible Director
shall receive a pro rata portion of such annual grant on the date
of such initial election or appointment determined by reference
to the number of calendar quarters by which the Eligible
Director's initial election or appointment, precedes the quarter
in which the next Annual Meeting is scheduled to occur, as
follows: nothing in the same quarter as the Annual Meeting, an
option to purchase 1,750 shares of Common Stock in the first
quarter preceding the Annual Meeting, an option to purchase
3,500 shares of Common Stock in the second quarter preceding
the Annual Meeting and an option to purchase 5,250 shares of
Common Stock in the third quarter preceeding the Annual Meeting.
                                
                                
          SECTION 5    TERMS AND CONDITIONS OF OPTIONS
     
     Each option granted to an Eligible Director under this Plan
and the issuance of Shares thereunder shall be subject to the
following terms:
     
     5.1  Option Agreement
     
     Each option shall be evidenced by an option agreement (an
"Agreement") duly executed on behalf of the Company.  Each
Agreement shall comply with and be subject to the terms and
conditions of this Plan.  Any Agreement may contain such other
terms, provisions and conditions not inconsistent with this Plan
as may be determined by the Plan Administrator.
     
     5.2  Option Exercise Price
     
     The option exercise price for an option shall be the closing
price, or if there is no closing price, the mean between the high
and the low sale price of shares of Common Stock on the NASDAQ
Stock Market on the day the option is granted or, if no Common
Stock was traded on such date, on the next succeeding day on
which Common Stock is so traded.
     
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     5.3  Vesting and Exercisability
     
     Each option granted to an Eligible Director shall vest and
become exercisable in full on the day immediately prior to the
Annual Meeting next following the date of grant (disregarding the
Annual Meeting being held immediately after the date of grant).
     
     5.4  Time and Manner of Exercise of Option
     
     Each option may be exercised in whole or in part at any time
and from time to time; provided, however, that no fewer than 20%
of the Shares purchasable under the option (or the remaining
Shares then purchasable under the option, if less than 20%) may
be purchased upon any exercise of any option hereunder and that
only whole Shares will be issued pursuant to the exercise of any
option.
     
     Any option may be exercised by giving written notice, signed
by the person exercising the option, to the Company stating the
number of Shares with respect to which the option is being
exercised, accompanied by payment in full for such Shares, which
payment may be in whole or in part (a) in cash or by check,
(b) in shares of Common Stock already owned for at least six
months by the person exercising the option, valued at fair market
value at the time of such exercise, or (c) by delivery of a
properly executed exercise notice, together with irrevocable
instructions to a broker, to properly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price, all in
accordance with the regulations of the Federal Reserve Board.
     
     5.5  Term of Options
     
     Each option shall expire ten years from the date of the
granting thereof, but shall be subject to earlier termination as
follows:
     
          (a)  In the event that an Optionee ceases to be a
director of the Company for any reason other than the death of
the Optionee, the unvested portion of the options granted to such
Optionee shall terminate immediately and the vested portion of
the options granted to such Optionee may be exercised by him or
her only within twelve months after the date such Optionee ceases
to be a director of the Company.
     
          (b)  In the event of the death of an Optionee, whether
during the Optionee's service as a director or during the twelve-
month period referred to in Section 5.5(a), the unvested portion
of the options granted to such Optionee shall terminate
immediately and the vested portion of the options granted to such
Optionee shall be exercisable, and such options shall expire
unless exercised within twelve months after the date of the
Optionee's death, by the legal representatives or the estate of
such Optionee, by any person or persons whom the Optionee shall
have designated in writing
on forms prescribed by and filed with
the Company or, if no such designation has been

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 made, by the
person or persons to whom the Optionee's rights have passed by
will or the laws of descent and distribution.
     
     5.6  Transferability
     
     During an Optionee's lifetime, an option may be exercised
only by the Optionee or a permitted assignee or transferee.
Options granted under this Plan and the rights and privileges
conferred thereby shall not be subject to execution, attachment
or similar process and may not be transferred, assigned, pledged
or hypothecated in any manner (whether by operation of law or
otherwise) other than (a) by will or by the applicable laws of
descent and distribution or (b) by gift or other transfer to
either (i) a spouse or other immediate family member or (ii) any
trust or partnership in which the original Optionee or such
person's spouse or other immediate family member has a
substantial beneficial interest; provided, however, that any
option so assigned or transferred shall be subject to all the
same terms and conditions contained in the instrument evidencing
the award.   An Optionee may also designate in writing during the
Optionee's lifetime a beneficiary to receive and exercise options
in the event of the Optionee's death (as provided in
Section 5.5(b)).  Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any option under this Plan or
of any right or privilege conferred thereby, contrary to the
provisions of this Plan, or the sale or levy or any attachment or
similar process upon the rights and privileges conferred hereby,
shall be null and void.
     
     5.7  Holding Period
     
     If an individual subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") sells
shares of Common Stock obtained upon the exercise of a stock
option within six months after the date the option was granted,
such sale may result in short-swing profit liability under
Section 16(b) of the Exchange Act.
     
     5.8  Participant's or Successor's Rights as Shareholder
     
     Neither an Optionee nor the Optionee's successor in interest
shall have any rights as a shareholder of the Company with
respect to any Shares subject to an option granted to such person
until such person becomes a holder of record of such Shares.
     
     5.9  Limitation as to Directorship
     
     Neither this Plan, nor the granting of an option, nor any
other action taken pursuant to this Plan shall constitute or be
evidence of any agreement or understanding, express or implied,
that an Optionee has a right to continue as a director for any
period of time or at any particular rate of compensation.

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     5.10 Regulatory Approval and Compliance
     
     The Company shall not be required to issue any certificate
or certificates for Shares upon the exercise of an option granted
under this Plan, or record as a holder of record of Shares the
name of the individual exercising an option under this Plan,
without obtaining to the complete satisfaction of the Plan
Administrator the approval of all regulatory bodies deemed
necessary by the Plan Administrator, and without complying, to
the Plan Administrator's complete satisfaction, with all rules
and regulations under federal, state or local law deemed
applicable by the Plan Administrator.
                                
                                
     SECTION 6    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
     
     6.1  Recapitalization
     
     The aggregate number and class of shares for which options
may be granted under this Plan, the number and class of shares
covered by each outstanding option and the exercise price per
share thereof (but not the total price), shall 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 or consolidation of shares or any like capital
adjustment, or the payment of any stock dividend.
     
     6.2  Effect of Liquidation, Reorganization or Change in
          Control
          
          6.2.1     Cash, Stock or Other Property for Stock
     
     Except as provided in subsection 6.2.2, 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, each option shall terminate, but the Optionee
shall have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, reorganization
or liquidation to exercise such option in whole or in part
whether or not the vesting requirements set forth in the option
agreement have been satisfied.

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          6.2.2     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,
consolidation, acquisition of property or stock, or
reorganization, all options shall be converted into options to
purchase shares of Exchange Stock unless the Company and the
corporation issuing the Exchange Stock, in their sole discretion,
determine that any or all such options shall not be converted
into options to purchase shares of Exchange Stock but instead
shall terminate in accordance with the provisions of sub
section 6.2.1.  The amount and price of converted options shall
be determined by adjusting the amount and price of the options
granted hereunder in the same proportion as used for determining
the number of shares of Exchange Stock the holders of shares of
the Common Stock receive in such merger, consolidation,
acquisition of property or stock, or reorganization.
     
     6.3  Fractional Shares
     
     In the event of any adjustment in the number of shares
covered by any option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover
only the number of full shares resulting from such adjustment.
                                
                                
                      SECTION 7    EXPENSES
     
     All costs and expenses of the adoption and administration of
this Plan shall be borne by the Company; none of such expenses
shall be charged to any Optionee.
                                
                                
             SECTION 8    COMPLIANCE WITH RULE 16b-3
     
     It is the intention of the Company that this Plan comply in
all respects with the requirements for a "formula plan" within
the meaning attributed to that term for purposes of  Rule 16b-3
promulgated under Section 16(b) of the Exchange Act.  Therefore,
if any Plan provision is later found not to be in compliance with
such requirements, that provision shall be deemed null and void,
and in all events this Plan shall be construed in favor of its
meeting such requirements.
                                
                                
             SECTION 9    AMENDMENT AND TERMINATION
     
     The Board may amend, terminate or suspend this Plan at any
time, in its sole and absolute discretion; provided, however,
that if required to qualify this Plan as a formula plan for
purposes of  Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act, 
no amendment may be made more than once every six
months that would change the
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 amount, price, timing or vesting of
the options, other than to comply with changes in the Internal
Revenue Code of 1986, as amended, or the rules and regulations
thereunder; provided further that no amendment that would:
          
          (a) materially increase the number of Shares that may
     be issued under this Plan, or
          (b)  otherwise require shareholder approval under any
     applicable law or regulation

shall be made without the approval of the Company's shareholders.
                                
                                
            SECTION 10    EFFECTIVE DATE AND DURATION
     
     This Plan shall be effective on February 2, 1995, the fifth
trading day after the effective date of the Company's
registration statement filed by the Company under the Securities
Act of 1933, as amended, in connection with the Company's initial
underwritten public offering.  A "trading day" shall be a day on
which Shares of Common Stock are traded on the Nasdaq Stock
Market.  This Plan shall continue in effect until it is
terminated by action of the Board or the Company's shareholders,
but such termination shall not affect the then-outstanding terms
of any options.
     
     Plan originally adopted by the Company's Board of Directors
on October 26, 1994 and approved by the Company's shareholders on
November 17, 1994.  Plan was amended and restated by the Board on
April 25, 1996 and approved by the Company's shareholders on June
25, 1996.  Amended and restated by the Board of Directors on
February 27, 1997.
     
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