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Exhibit 10.2
STOCK OPTION AGREEMENT
DATED MAY 18, 2001
A STOCK OPTION for a total of 600,000 shares of common stock
(hereinafter the "Option"), of N2H2, Inc., a Washington corporation (the
"Company"), is hereby granted to Xxxxxx Xxxx (the "Optionee"), at the price and
subject to the terms and provisions set forth below. For purposes of this
Agreement the term "shares" shall be deemed to apply to shares of common stock
of the Company as of the date hereof.
1. OPTION PRICE. The option price is $0.355 for each share, being the
average of the high and low price of the Company's Common Stock on May 18, 2001,
the date of grant of this Option.
2. VESTING AND EXERCISE OF OPTION. The Option shall vest and be
exercisable in accordance with the following provisions:
a. Schedule of Vesting and Rights to Exercise. The Option shall be
vested and exercisable as follows:
Percent of Number of
Vesting Date Option Vested Shares Exercisable
June 18, 2001 8.3% 50,000
July 18, 2001 16.6% 100,000
August 18, 2001 25.0% 150,000
September 18, 2001 33.3% 200,000
October 18, 2001 41.6% 250,000
November 18, 2001 50.0% 300,000
December 18, 2001 58.3% 350,000
January 18, 2002 66.6% 400,000
February 18, 2002 75.0% 450,000
March 18, 2002 83.3% 500,000
April 18, 2002 91.6% 550,000
May 18, 2002 100.0% 600,000
b. Method of Exercise. The Option shall be exercisable by a written
notice which shall:
i. state the election to exercise the Option, the number of shares
in respect of which it is being exercised;
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ii. contain such representations and agreements as to the holder's
investment intent with respect to such shares of common stock, acquired by
exercise of the Option, as may be satisfactory to the Company;
iii. be signed by the person entitled to the Option; and
iv. be in writing and delivered in person or by certified mail to
the Secretary of the Company.
Payment of the purchase price of any shares with respect to which
an Option is being exercised shall be by check. The certificate or certificates
for shares of common stock as to which the Option shall be exercised shall be
registered in the name of the person exercising the Option. Options hereunder
may not at any time be exercised for a fractional number of shares.
c. Restrictions on Exercise. No Option may be exercised if the
issuance of the shares upon exercise would constitute a violation of any
applicable federal or state securities or other law or valid regulation. As a
condition to the exercise of this Option the Company may require the person
exercising the Option to make any representation and warranty to the Company as
the Company's counsel believes may be required by any applicable law or
regulations.
The following legend will appear on all certificates for option shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE ACQUIRED BY THE
REGISTERED HOLDER PURSUANT TO REPRESENTATION THAT THE HOLDER IS
ACQUIRING THESE SHARES FOR THE HOLDER'S OWN ACCOUNT, FOR INVESTMENT.
THESE SHARES MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN
EXEMPTION FROM SUCH REGISTRATION STATEMENT.
3. Non-Transferability of Option. Except as otherwise provided herein,
no Option may be sold, pledged, assigned or transferred in any manner, other
than by will or the laws of descent and distribution, and may be exercised
during the lifetime of the Optionee only by the Optionee or by the guardian or
legal representative of the Optionee. The terms of the Option shall be binding
upon the executors, administrators, heirs, successors, and assigns of the
Optionee.
4. Termination of Service to Company. The Option may only be exercised,
to the extent vested on the employee's last day of service to the Company as an
employee, for a period of one hundred (100) days after such last day of service.
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5. Term of Option. The Option may be exercised within ten (10) years
from the date of original grant, and may be exercised during such term only in
accordance with the terms of this agreement.
6. Adjustments Upon Changes in Capitalization. The number and kind of
shares of common stock subject to this Option shall be appropriately adjusted
along with a corresponding adjustment in the Option price to reflect any stock
dividend, stock split, split-up or any combination, exchange or change of
shares, however accomplished.
7. Accelerated Vesting. Notwithstanding the above vesting schedule, if
Mr. Welt's employment is terminated as a result of a merger or other transaction
pursuant to which more than 50% of the voting control of the Company's
securities is transferred, an additional 100,000 shares will immediately vest
upon such termination.
DATED: June 27, 2001 N2H2, Inc.
By /s/ J. Xxxx Xxxxx
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J. Xxxx Xxxxx
Chief Financial Officer
Optionee acknowledges and represents that he is familiar with the terms
and provisions of this Nonqualified Stock Option Agreement as set forth above
and hereby accepts this Option subject to all the terms and provisions hereof.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
of the Compensation Committee of the Company's Board of Directors with respect
to the interpretation of any provision under this Nonqualified Stock Option
Agreement.
DATED: June 26, 2001
/s/ Xxxxxx Xxxxxx Welt
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Xxxxxx Xxxx, Optionee
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