<PAGE> 1
As filed with the Securities and Exchange Commission on February 7, 2000
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
N2H2, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Washington 91-1686754
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
John F. Duncan
900 Fourth Avenue, Suite 3400 900 Fourth Avenue, Suite 3400
Seattle, Washington 98164 Seattle, Washington 98164
(Address of Principal Executive Offices, (206) 336-1501
including zip code) (Name, address and telephone number,
including area code, of agent for service)
</TABLE>
1997 Stock Option Plan, as amended
1999 Stock Option Plan
1999 Nonemployee Director Stock Option Plan
1999/2000 Transition Stock Option Plan
Nonqualified Stock Option Agreement
for David W. Arnold
Nonqualified Stock Option Agreement
for Eric H. Posner
Nonqualified Stock Option Agreement
for William A. Golding
Nonqualified Stock Option Agreement
for A. Farzeen Mohazzabfar
Nonqualified Stock Option Agreement
for Richard P. Giacchetti
Nonqualified Stock Option Agreement
for Mathew F. Highsmith
(Full Title of Plans)
Copies to:
Gregory L. Anderson
Lane Powell Spears Lubersky LLP
1420 Fifth Avenue, Suite 4100
Seattle, Washington 98101-2338
CALCULATION OF REGISTRATION FEE
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Maximum Proposed Maximum Proposed Maximum
Title of Securities Amount To Be Offering Price Aggregate Amount of
To Be Registered Registered (1) Per Share Offering Price Registration Fee
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997 Stock Option Plan, as amended
Common stock, no par value 900,691 $ 0.5254 (2) $ 473,223(2) $ 125
Common stock, no par value 49,918 $ 15.0315 (3) $ 750,342(3) $ 198
1999 Stock Option Plan
Common stock, no par value 1,226,124 $ 3.2979 (2) $ 4,043,634(2) $ 1,068
Common stock, no par value 67,001 $ 15.0315 (3) $ 1,007,126(3) $ 266
1999/2000 Transition Stock Option Plan, as amended
Common stock, no par value 837,800 $ 12.3604 (2) $10,355,543(2) $ 2,734
Common stock, no par value 412,200 $ 15.0315 (3) $ 6,195,984(3) $ 1,636
1999 Nonemployee Director Stock Option Plan
Common stock, no par value 3,750 $ 11.00 (2) $ 41,250(2) $ 11
Common stock, no par value 83,750 $ 15.0315 (3) $ 1,258,888(3) $ 332
Nonqualified Stock Option Agreements
Common stock, no par value 600,000 $ 9.0625 $ 5,437,500 $ 1,436
Common stock, no par value 150,000 $ 10.28125 $ 1,542,188 $ 407
Common stock, no par value 150,000 $ 10.3125 $ 1,546,875 $ 408
Common stock, no par value 130,000 $ 9.125 $ 1,186,250 $ 313
Common stock, no par value 150,000 $ 10.2815 $ 1,542,225 $ 407
Common stock, no par value 180,000 $ 20.7188 $ 3,729,384 $ 985
Total 4,941,234 $39,110,412 $ 10,326
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</TABLE>
(1) Together with an indeterminate number of additional shares of common stock
which may be necessary to adjust the number of shares of common stock reserved
for issuance pursuant to the Plans as the result of any future stock split,
stock dividend or similar adjustment of the outstanding common stock of the
N2H2.
<PAGE> 2
(2) Computed pursuant to Rule 457(h) under the Securities Act of 1933, as
amended (the "Securities Act"), based upon the prices at which the options
granted as of the filing date of this registration statement may be exercised.
With respect to the 1997 Stock Option Plan, as amended, the per share offering
price of $0.5254 represents the weighted average of the exercise prices of
currently outstanding grants. With respect to the 1999 Stock Option Plan, the
per share offering price of $3.2979 represents the weighted average of the
exercise prices of currently outstanding grants. With respect to the 1999/2000
Transition Stock Option Plan, the per share offering price of $12.3604
represents the weighted average of the exercise prices of currently outstanding
grants. With respect to the 1999 Nonemployee Director Stock Option Plan, the
per share offering price of $11.00 represents the exercise price of each of the
3,700 shares that have been granted to date.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act for shares of common stock
reserved under N2H2's 1997 Stock Option Plan, as amended, 1999 Stock Option
Plan, 1999 Nonemployee Director Stock Option Plan and 1999/2000 Transition Stock
Option Plan. The price per share is estimated to be $15.0315 based on the
average of the high ($15.750) and low ($14.313) sales prices for the Common
Stock on February 2, 2000 as reported on the Nasdaq National Market.
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PART II
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission (the
"Commission") are hereby incorporated by reference in this registration
statement:
(a) N2H2's latest Annual Report on Form 10-K for the fiscal year
ended September 30, 1999 filed with the Commission on December
30, 1999.
(b) The description of N2H2's common stock contained in the
Registration Statement on Form 8-A filed under Section 12(g) of
the Exchange Act, including any amendment or report filed for
the purpose of updating such description (File No. 000-26825).
All documents subsequently filed by N2H2 pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment
which indicates that the securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this registration statement and to be a part
hereof from the date of filing such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The legality of the common stock being registered is being passed upon by Lane
Powell Spears Lubersky LLP. On January 19, 2000, members of that firm owned
directly or indirectly an aggregate of approximately 61,687 shares of common
stock of N2H2.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
N2H2's restated articles of incorporation include a provision that limits the
liability of directors to the fullest extent permitted by the Washington
Business Corporation Act as it currently exists or as it may be amended in the
future. Consequently, subject to the Washington Business Corporation Act, no
director will be personally liable to N2H2 or its shareholders for monetary
damages resulting from his or her conduct as a director of N2H2, except
liability for:
- acts or omissions involving intentional misconduct or knowing
violations of law,
- unlawful distributions, or
- transactions from which the director personally receives a
benefit in money, property or services to which the director is
not legally entitled.
The restated articles of incorporation also provide that N2H2 will indemnify any
individual made a party to a proceeding because that individual is or was a
director of N2H2. N2H2 will also advance or reimburse reasonable expenses
incurred by that individual prior to the final disposition of the proceeding to
the fullest extent permitted
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by applicable law. In addition, N2H2 maintains director and officer liability
insurance coverage under which its directors and officers may be indemnified
against any liability they may incur for serving as directors and officers of
N2H2.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
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<CAPTION>
Exhibit
Number Description
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<S> <C>
5.1 Opinion of Lane Powell Spears Lubersky LLP
10.1 1997 Stock Option Plan, as amended (incorporated by reference to
Exhibit 10.5 to N2H2's Registration Statement on Form S-1 (File
No. 333-78495))
10.2 1999 Stock Option Plan (incorporated by reference to Exhibit 10.6
to N2H2's Registration Statement on Form S-1 (File No. 333-78495))
10.3 1999 Nonemployee Director Stock Option Plan (incorporated by
reference to Exhibit 10.7 to N2H2's Registration Statement on
Form S-1 (File No. 333-78495))
10.4 1999/2000 Transition Stock Option Plan (filed herewith)
10.5 Option to purchase Common Stock issued August 24, 1999 to David
W. Arnold. (incorporated by reference to Exhibit 10.5 to N2H2's
Quarterly Report for the period ended June 30, 1999 on form 10-Q)
10.6 Option to purchase Common Stock issued September 30, 1999 to
Eric H. Posner. (incorporated by reference to Exhibit 10.22 of
N2H2's Annual Report for the period ended September 30, 1999
on Form 10-K)
10.7 Option to purchase Common Stock issued September 30, 1999 to
William A. Golding. (incorporated by reference to Exhibit 10.24
of N2H2's Annual Report for the period ended September 30, 1999
on Form 10-K)
10.8 Option to purchase Common Stock issued November 5, 1999 to
A. Farzeen Mohazzabar. (filed herewith)
10.9 Option to purchase Common Stock issued November 11, 1999 to
Richard P. Giacchetti. (filed herewith)
10.10 Option to purchase Common Stock issued December 2, 1999 to
Mathew F. Highsmith. (filed herewith)
23.1 Consent of Independent Accountants
23.2 Consent of Lane Powell Spears Lubersky LLP (included in Exhibit
5.1)
24.1 Power of Attorney (see signature page)
</TABLE>
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act,
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this registration
statement, and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement,
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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(3) 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.
That, for purposes of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
[Signature Pages Follow]
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SIGNATURES
Pursuant to the requirements of the Securities Act, 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 duly authorized, in the City
of Seattle, State of Washington, on the 25th day of January, 2000.
N2H2, INC.
/s/ John F. Duncan
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By: John F. Duncan, Vice President --
Chief Financial Officer, Secretary
and Treasurer
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POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Peter H.
Nickerson and John F. Duncan, or either of them, as attorney-in-fact with full
power of substitution, to execute in the name and on the behalf of each person,
individually and in each capacity stated below, and to file, any and all
amendments to this registration statement, including any and all post-effective
amendments, and any related Rule 462(b) registration statement and any amendment
thereto.
Pursuant to the requirements of the Securities Act, this registration statement
has been signed by the following persons in the capacities indicated below on
the 25th day of January, 2000.
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<CAPTION>
SIGNATURE TITLE
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<S> <C>
/s/ Peter H. Nickerson Chief Executive Officer, President and Chairman of the
- ------------------------------- Board (Principal Executive Officer)
Peter H. Nickerson
/s/ John F. Duncan Vice President -- Chief Financial Officer, Secretary
- ------------------------------- and Treasurer (Principal Accounting and
John F. Duncan Financial Officer)
/s/ Hollis R. Hill Director
- -------------------------------
Hollis R. Hill
/s/ Mark A. Segale Director
- -------------------------------
Mark A. Segale
/s/ Richard R. Rowe Director
- -------------------------------
Richard R. Rowe
</TABLE>
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INDEX TO EXHIBITS
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Exhibit
Number Description
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<S> <C>
5.1 Opinion of Lane Powell Spears Lubersky LLP
10.1 1997 Stock Option Plan, as amended (incorporated by reference to
Exhibit 10.5 to N2H2's Registration Statement on Form S-1)
10.2 1999 Stock Option Plan (incorporated by reference to Exhibit 10.6
to N2H2's Registration Statement on Form S-1)
10.3 1999 Nonemployee Director Stock Option Plan (incorporated by
reference to Exhibit 10.7 to N2H2's Registration Statement on
Form S-1)
10.4 1999/2000 Transition Stock Option Plan (filed herewith)
10.5 Option to purchase Common Stock issued August 24, 1999 to David
W. Arnold. (incorporated by reference to Exhibit 10.5 to N2H2's
Quarterly Report for the period ended June 30, 1999 on form 10-Q)
10.6 Option to purchase Common Stock issued September 30, 1999 to
Eric H. Posner. (incorporated by reference to Exhibit 10.22 of
N2H2's Annual Report for the period ended September 30, 1999
on Form 10-K)
10.7 Option to purchase Common Stock issued September 30, 1999 to
William A. Golding. (incorporated by reference to Exhibit 10.24
of N2H2's Annual Report for the period ended September 30, 1999
on Form 10-K)
10.8 Option to purchase Common Stock issued November 5, 1999 to
A. Farzeen Mohazzabar. (filed herewith)
10.9 Option to purchase Common Stock issued November 11, 1999 to
Richard P. Giacchetti. (filed herewith)
10.10 Option to purchase Common Stock issued December 2, 1999 to
Mathew F. Highsmith. (filed herewith)
23.1 Consent of Independent Accountants
23.2 Consent of Lane Powell Spears Lubersky LLP (included in Exhibit
5.1)
24.1 Power of Attorney (see signature page)
</TABLE>
8
<PAGE> 1
EXHIBIT 5.1
February 2, 2000
N2H2, Inc.
900 Fourth Avenue, Suite 3400
Seattle, Washington 98164
Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the registration statement on Form S-8 (the
"Registration Statement") filed by you with the Securities and Exchange
Commission (the "Commission") on January 25, 2000 in connection with the
registration under the Securities Act of 1933, as amended, of a total of
5,630,873 shares of your common stock (the "Shares") issued or reserved for
issuance under the 1997 Stock Option Plan, as amended, the 1999 Stock Option
Plan, the 1999 Nonemployee Director Stock Option Plan, the 1999/2000 Transition
Stock Option Plan, the Nonqualified Stock Option Agreement for William A.
Golding, the Nonqualified Stock Option Agreement for Eric H. Posner, the
Nonqualified Stock Option Agreement for David W. Arnold, the Nonqualified Stock
Option Agreement for A. Farzeen Mohazzabfar, the Nonqualified Stock Option
Agreement for Richard P. Giacchetti and the Nonqualified Stock Option Agreement
for Mathew F. Highsmith. As your counsel in connection with this transaction,
we have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale and issuance of the
Shares.
It is our opinion that upon conclusion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, and upon completion of the proceedings being taken in order to permit
such transactions to be carried out in accordance with the securities laws of
the various states where required, the Shares when issued and sold in the manner
described in the Registration Statement will be legally and validly issued,
fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including any Prospectus constituting a part thereof,
and in any amendment thereto.
Very truly yours,
/s/ Lane Powell Spears Lubersky LLP
Lane Powell Spears Lubersky LLP
<PAGE> 1
EXHIBIT 10.4
N2H2, INC.
1999/2000 TRANSITION STOCK OPTION PLAN*
1. Purpose of the Plan. The purpose of this Stock Option Plan (the "Plan")
is to promote the long-term success of N2H2, Inc. (the "Company") by
creating a long-term mutuality of interests between the shareholders of
the Company and the participants under this plan.
2. Definitions. As used herein, the following definitions shall apply:
a. "Plan" shall mean this Stock Option Plan, as the same may be
amended from time to time.
b. "Board" shall mean the Board of Directors of the Company.
c. "Taxable Year" shall mean the fiscal year of the Company.
d. "Common Stock" shall mean the common stock of the Company.
e. "Company" shall mean N2H2, Inc., a Washington corporation.
"Parent" shall mean any parent corporation or other form of
business association that is treated as a corporation for tax
purposes owning, directly or indirectly, 50% or more of the
voting power of the shares of the corporation so as to qualify as
a "parent" within the meaning of Section 424(e) of the Code.
"Subsidiary" shall mean any subsidiary defined as any corporation
or other form of business treated as a corporation for tax
purposes if 50% or more of the voting power of the shares of such
entity are owned, directly or indirectly, by the Company so as to
qualify as a "subsidiary" corporation within the meaning of
Section 424 (f) of the Code.
f. "Committee" shall mean the Stock Option Committee appointed by
the Board in accordance with Section 4(a) of the Plan.
g. "Option" shall mean a non-qualified stock option granted pursuant
to the Plan.
h. "Optioned Shares" shall mean stock subject to an Option granted
pursuant to this Plan.
i. "Participant" shall mean an individual who receives a Stock
Option.
j. "Share" shall mean the Common Stock of the Company.
k. "Fair Market Value" shall be determined by the Committee.
<PAGE> 2
l. "Code" shall mean the Internal Revenue Code of 1986, as amended.
3. Stock Subject to Options. Except as otherwise provided in Section 13,
the maximum aggregate number of Shares which may be optioned and sold
pursuant to the Plan is One Million Two Hundred and Fifty Thousand
(1,250,000) Shares, which will be authorized, but unissued.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unissued Shares which were
subject thereto shall become available for other Options under the Plan,
unless the Plan shall have been terminated.
Stock issued upon exercise of options granted under this Plan may be
subject to restrictions on transfer, repurchase rights, or other
restrictions as determined by the Committee.
4. Administration of the Plan.
a. Appointment of Committee. The Plan shall be administered by the
Board, or a Stock Option Committee consisting of one or more
members. Members of the Committee shall be appointed by the Board
and shall serve until their resignation or removal. The Board may
remove members, with or without cause, at any time, and may also
fill any vacancies. All references to the Committee in this Plan
shall relate to the Board if no Committee is established.
b. Procedure. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action
of the Committee. In addition, any decision or determination
reduced to writing and signed by all of the members of the
Committee shall be fully as effective as if it has been made by a
majority vote at a meeting duly called and held. The Committee
may appoint a Secretary to keep minutes of its meetings and may
make such rules and regulations for the conduct of its business
as it shall deem advisable.
c. Powers of the Committee. Subject to the provisions of the Plan,
the Committee shall have authority:
(1) To determine the fair market value (exercise price) of the
Shares covered by an Option, the participants to whom and
the time or times at which Options shall be granted, and
the number of Shares to be represented by each Option;
(2) To interpret the Plan;
(3) To prescribe, amend and rescind rules and regulations
relating to the Plan;
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(4) To determine the terms and provisions of each Option
granted under the Plan (which need not be identical), and
with the consent of the holder thereof, to modify or amend
each Option;
(5) To determine whether the Option price is payable in money
or in stock of the Company or other acceptable form;
(6) To authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of
an Option previously granted by the Committee; and
(7) To make all other determinations deemed necessary or
advisable for the administration of the Plan.
d. Securities Exchange Act of 1934. At any time that the Company has
a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the Plan shall be administered by the Board of Directors or the
Committee in accordance with Rule 16b-3 adopted under the
Exchange Act, as such Rule may be amended from time to time.
e. Liability. No member of the Committee shall be personally liable
by reason of any contract or other instrument executed by him or
her on his or her behalf or in his or her capacity as a member of
the Committee or for any mistake of judgment made in good faith,
and the Company shall indemnify and hold harmless each member of
the Committee and each other officer, employee, or director of
the Company to whom any duty or power relating to the
administration or interpretation of the Plan has been delegated,
against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the
approval of the Committee) arising out of any act or omission to
act in connection with the Plan unless arising out of such
person's own fraud or bad faith.
f. Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and binding on
all Participants and any other holders of any Options granted
under this Plan.
5. Eligibility. The Committee may award options to any present or future
employee or consultant who is not also a director or officer of the
Company or any Parent or Subsidiary of the Company (sometimes
hereinafter collectively referred to as "Participants").
6. Grants, Awards and Sales.
(a) The Committee may, from time to time, grant
Options as provided in this Section 6.
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(b) The Committee shall select the Participants to
whom awards shall be made. The Committee shall specify the action
taken with respect to each person granted any option under this
Plan.
(c) The option price shall be equal to the fair
market value of the shares covered by the Option on the date the
option is granted, as determined by the Committee.
(d) Unless otherwise established by the Committee,
any Option shall terminate 10 years after the date it is granted.
7. Term of Plan. The Plan shall become effective upon its adoption by the
Board or its approval or ratification by vote of the holders of a
majority of the outstanding Shares entitled to vote on the adoption of
the Plan, whichever is earlier. It shall continue in effect for a term
of one (1) year unless sooner terminated under Section 12 of the Plan.
8. Term of Option. The term of each Option granted under the Plan shall be
determined by the Committee, however, it shall not exceed ten (10) years
from the date of grant. In the case of an optionee who is an employee of
the Company or a Parent or Subsidiary of the Company, if the optionee's
employment is terminated by retirement or for any reason, voluntarily or
involuntarily, with or without cause, other than in the circumstances
specified in Section 9 below relating to death or disability, any option
held by such optionee may be exercised at any time prior to the earlier
of its expiration date or the 90th day after the date of such
termination (or, if such is not a regular business day, on the last
preceding business day), but only if and to the extent the optionee was
entitled to exercise the option on the date of such termination. Subject
to such terms and conditions as the Committee may determine, the
Committee may extend the exercise period any length of time not later
than the expiration date of the option and may increase the portion of
the option that may be exercised on termination.
9. Vesting of Option. The Option shall vest in accordance with a schedule
established by the Committee. The vested portion of an Option award
shall be exercisable at any time (but no later than the end of the
option period determined pursuant to Section 8 above), subject, however,
to all other terms of the Plan and of the Option granted to Participant.
An Option may not be exercised for fractional shares of the Company.
In the event the Company or the shareholders of the Company enter into
an agreement to dispose of all or substantially all of the assets of the
Company by means of a sale, reorganization, liquidation, or otherwise,
or if there is a change in more than 50% of the voting power of the
Shares or other ownership interest by means of a sale, merger,
reorganization, liquidation or otherwise, all Options granted under the
Plan that would otherwise vest pursuant to their terms within a period
of fifteen (15) months from the date of such agreement or change, as the
case may be, shall vest immediately and fully. All Options not exercised
prior to consummation of any such agreement shall terminate.
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<PAGE> 5
If a Participant dies or his or her employment is terminated due to his
or her permanent disability (as determined by the Committee) his or her
Optioned Shares shall become 100 percent vested, if not already so
vested, and the Committee may extend the exercise period any length of
time not later than the expiration date of the option.
10. Exercise of Option.
Procedure for Exercise. An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in
accordance with the Option and full payment for the Shares with respect
to which the Option is exercised has been received by the Company in
such form as may be approved by the Committee. Until the issuance of the
stock certificates (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company),
no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Optioned Shares notwithstanding
the exercise of the Option. No adjustment will be made for a dividend or
other rights for which the record date is prior to the date of exercise
of the Option except as provided in Section 13 of the Plan.
Notwithstanding any provision to the contrary contained herein,
Options may with approval of the Committee be exercised by means of (i)
an exchange of Shares previously held by the Participant for the
Optioned Shares, or (ii) broker-assisted cashless exercise transactions
involving brokers with which the Company has a formal understanding
regarding such transactions. In addition, a Participant may with
approval of the Committee satisfy his or her requirement for federal
income tax withholding by means of (i) delivery to the Company of Shares
previously held by the Participant with a Fair Market Value equal to the
Withholding obligation, or (ii) allowing the Company to withhold
Optioned Shares with a Fair Market Value equal to the withholding
obligation. Any Participant subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended, who elects to exchange Shares to be
issued upon exercise of the Option for the Optioned Shares, or allows
the Company to withhold Optioned Shares with Fair Market Value equal to
the withholding obligation must do so either (i) during the periods
which begin on the third business day following the Company's regular
release of its quarterly and annual statements of sales and earnings and
ending on the 12th business day following such date, or (ii) pursuant to
an irrevocable election made by the Participant at least six months in
advance of the date the Option exercised becomes taxable. For purposes
of an exchange, a delivery, or withholding, Shares held by a Participant
and Optioned Shares shall be valued at their Fair Market Value as of the
date of delivery which value shall be credited on a dollar for dollar
basis toward payment of the Option price for the Optioned Shares or the
associated tax withholding obligation.
11. Nontransferability.
a. Options under the Plan may not 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
Participant's lifetime only by the Participant.
5
<PAGE> 6
b. Stock issued upon exercise of an option under this Plan may have,
in addition to restrictions on transfer imposed by law, any
restrictions on transfer determined by the Committee.
12. Amendment or Termination of the Plan.
a. The Board may amend the Plan from time to time in such respects
as the Board deems advisable, and
b. The Board may at any time terminate the Plan, except that no
amendment or termination of the Plan shall diminish or otherwise
adversely affect the rights of a Participant with respect to a
previously granted Option.
13. Adjustment Upon Changes in Capitalization. The number and kind of Shares
of Company stock subject to an 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 or exchange of
Shares, however accomplished. An appropriate adjustment shall also be
made with respect to the aggregate number and kind of shares remaining
available to be optioned and sold under the Plan.
14. Agreement and Representations of Employee. As a condition to the
exercise of any portion of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of exercise
that the Shares are being purchased or acquired only for investment and
without any present intention to resell or distribute the Shares if, in
the opinion of counsel for the Company, such a representation is
required under the Securities Act of 1933 or any other applicable
federal or state law, regulation or rule of any governmental agency.
Appropriate legends restricting the transfer of the Shares, unless such
Shares are registered under appropriate federal and state securities
laws or unless exemptions are available therefrom, will be placed on
Share certificates issued pursuant to this Plan.
15. Reservations of Shares of Common Stock. The Company, during the term of
this Plan, will at all times reserve and keep available, and will seek
or obtain from any regulatory body having jurisdiction any requisite
authority in order to issue and sell, such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the
Company to obtain from any regulatory body having jurisdiction the
authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of
any liability with respect to the non-issuance or sale of Shares as to
which such requisite authority shall not have been obtained.
16. General Limitations and Provisions. Nothing contained in the Plan shall
give any Participant the right to be retained in the employment of the
Company or affect the right of the Company to dismiss any Participant.
Whether or not any Options are to be granted hereunder shall be
exclusively within the discretion of the Committee, and nothing
contained herein shall be construed as giving any Participant any right
to participate
6
<PAGE> 7
hereunder. No Option shall be considered as compensation under any other
employee benefit plan of the Company except as otherwise determined by
the Committee.
- ---------------------
* As amended and restated on November 8, 1999.
7
<PAGE> 1
EXHIBIT 10.8
TRIPLICATE ORIGINAL
November 5, 1999
NONQUALIFIED STOCK OPTION AGREEMENT
A STOCK OPTION for a total of 130,000 shares of common stock (hereinafter the
"Option"), of N2H2, Inc., a Washington corporation (the "Company"), is hereby
granted to Farzeen Mohazzabfar (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 100% of the fair market value as
determined by the Board of Directors and measured by the average of the
high and low trading price of the Company's Common Stock on November
5th, 1999.
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:
<TABLE>
<CAPTION>
Years Percent of Number of
Following Grant Option Vested Shares Exercisable
- --------------- ------------- ------------------
<S> <C> <C>
After One Year 25% 32,500
After Two Years 50% 65,000
After Three Years 75% 97,500
After Four Years 100% 130,000
</TABLE>
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;
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 President or Secretary of the Company.
<PAGE> 2
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. An 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, but in no event later than (10) years after its grant.
5. Term of Option. No Option may be exercised more than 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.
<PAGE> 3
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 any provision to the contrary, in
the event the Company or the shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or Shares
by means of a sale, reorganization, liquidation, or otherwise, this
Option shall become immediately exercisable with respect to the full
number of Shares subject to this Option. If this Option is not exercised
prior to consummation of any such agreement, it shall terminate. In
addition, this Option shall vest and become exercisable upon certain
terminations of employment set forth in that certain Executive
Employment Agreement dated November 5th between the Optionee and the
Company.
DATED : November 5, 1999 N2H2, Inc.
By /s/ PETER H. NICKERSON
--------------------------------
Peter Nickerson, President
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: November 5, 1999
/s/ A. FARZEEN MOHAZZABFAR
-----------------------------------
Farzeen Mohazzabfar, Optionee
<PAGE> 1
EXHIBIT 10.9
TRIPLICATE ORIGINAL
November 11, 1999
NONQUALIFIED STOCK OPTION AGREEMENT
A STOCK OPTION for a total of 150,000 shares of common stock (hereinafter the
"Option"), of N2H2, Inc., a Washington corporation (the "Company"), is hereby
granted to Richard Giacchetti (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 100% of the fair market value as
determined by the Board of Directors and measured by the average of the
high and low trading price of the Company's Common Stock on November
11th, 1999.
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:
<TABLE>
<CAPTION>
Years Percent of Number of
Following Grant Option Vested Shares Exercisable
- --------------- ------------- ------------------
<S> <C> <C>
After One Year 25% 37,500
After Two Years 50% 75,000
After Three Years 75% 112,500
After Four Years 100% 150,000
</TABLE>
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;
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 President or Secretary of the Company.
<PAGE> 2
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. An 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, but in no event later than (10) years after its grant.
5. Term of Option. No Option may be exercised more than 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.
<PAGE> 3
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 any provision to the contrary, in
the event the Company or the shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or Shares
by means of a sale, reorganization, liquidation, or otherwise, this
Option shall become immediately exercisable with respect to the full
number of Shares subject to this Option. If this Option is not exercised
prior to consummation of any such agreement, it shall terminate. In
addition, this Option shall vest and become exercisable upon certain
terminations of employment set forth in that certain Executive
Employment Agreement dated November 5th between the Optionee and the
Company.
DATED : November 11, 1999 N2H2, Inc.
By /s/ Peter H. Nickerson
--------------------------------
Peter Nickerson, President
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: November 11, 1999
/s/ Richard P. Giacchetti
-----------------------------------
Richard Giacchetti, Optionee
<PAGE> 1
EXHIBIT 10.10
TRIPLICATE ORIGINAL
December 2, 1999
NONQUALIFIED STOCK OPTION AGREEMENT
A STOCK OPTION for a total of 180,000 shares of common stock
(hereinafter the "Option"), of N2H2, Inc., a Washington corporation (the
"Company"), is hereby granted to Matt Highsmith (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 100% of the fair market value as
determined by the Board of Directors and measured by the average of the high and
low trading price of the Company's Common Stock on December 2, 1999.
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:
<TABLE>
<CAPTION>
Years Percent of Number of
Following Grant Option Vested Shares Exercisable
- --------------- ------------- ------------------
<S> <C> <C>
After One Year 25% 45,000
After Two Years 50% 90,000
After Three Years 75% 135,000
After Four Years 100% 180,000
</TABLE>
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;
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
<PAGE> 2
President or 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. An 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,
but in no event later than ten (10) years after its grant.
5. Term of Option. No Option may be exercised more than 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.
2
<PAGE> 3
7. Accelerated Vesting. Notwithstanding any provision to the contrary,
in the event the Company or the shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or Shares by
means of a sale, reorganization, liquidation, or otherwise, this Option shall
become immediately exercisable with respect to the full number of Shares subject
to this Option. If this Stock Option is not exercised prior to consummation of
any such agreement, it shall terminate. In addition, this Option shall vest and
become exercisable upon certain terminations of employment as set forth in that
certain Executive Employment Agreement of even date herein between the Optionee
and the Company
DATED: December 2, 1999 N2H2, Inc.
By /s/ PETER H. NICKERSON
Peter Nickerson
President
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: December 2, 1999
/s/ MATHEW F. HIGHSMITH
Matt Highsmith, Optionee
3
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated November 8, 1999 relating to the
financial statements appearing in N2H2 Inc.'s Annual Report on Form 10-K for the
year ended September 30, 1999.
/s/ PricewaterhouseCoopers LLP
Seattle, Washington
January 25, 2000
