April 3, 1995
Jules Firetag
c/o Cruse, Firetag & Bock , P.C
5611 North 16th Street
Phoenix, Arizona 85016
Dear Mr. Firetag:
I am happy to advise you that you have been selected by the Board of
Directors (the "Board") of H.E.R.C. Products Incorporated (the "Company"), to
receive a non-incentive stock option and that on March 23, 1995, you were
granted an option to purchase One Hundred Thousand (100,000) shares of the
Company's Common Stock, $.01 par value (the "Stock"),at a price of $2.50 per
share with respect to the first 50,000 shares of Stock, and at a price of $4.00
per share with respect to the second 50,000 shares of Stock. The option granted
to you is subject to the terms and conditions set forth in this letter (the
"Agreement").
The Board has imposed the following terms and conditions relating to
your option and its exercise:
1. You may exercise your option in whole or in part from time to time,
only in accordance with Paragraph 3 below, by delivery to the Company (in care
of its Secretary) at the principal offices of the Company, presently located at
3622 North 34th Avenue, Phoenix, Arizona 85017, written irrevocable notice of
exercise in the form attached to this letter as Exhibit A. specifying the number
of shares of Stock with respect to which the option is being exercised, together
with payment of the exercise price for those shares of Stock in cash or by
check. Any other form of exercise or tender may be refused by the Company,
acting through the Board or otherwise, in its discretion.
2. Your option is not transferable other than by will or the laws of
descent and distribution and is exercisable, during your lifetime, only by you.
You may not assign or otherwise transfer or encumber your option or any interest
in your option to any person in any way.
3. (a) Your options shall vest on December 1, 1995 provided
you are still a Director of the Company at such time, unless you are
not re-elected to the Board.
(b) Notwithstanding any other provision of this Agreement
(other than Paragraph 3(c) below), your option, to the extent not
previously exercised, shall automatically terminate and be of no
further force or effect as to all remaining shares of Stock as of five
o'clock p.m., M.S.T., on December 1, 1999.
(c) In its sole discretion, the Board may waive or accelerate
vesting of options, or waive or extend expiration dates, other than the
final expiration date.
4. The Company will reserve or keep available at all times sufficient
shares of Stock to permit the exercise of your option and all other options
granted or to be granted.
5. It is contemplated that the Stock in the Company to be issued to you
upon exercise of your option will not be registered under the Securities Act of
1933, as amended (the "Act") or any applicable state securities laws, or in
reliance on exemptions from registration thereunder. If in the opinion of
counsel satisfactory to the Company no exemption from registration is then
available, or if such issuance is otherwise in violation of applicable law at
the time purchase rights are exercised under this option, then the Company's
obligation to issue shares of its Stock upon exercise of your option shall
terminate. If such an exemption is available in the opinion of such counsel, and
such issuance is not otherwise in violation of applicable law you (or your
personal representative(s), devisee(s), or heir(s)) will deliver to the Company
as a condition precedent to giving notice of each exercise, an investment letter
agreement in form and substance satisfactory to the Company to enable the
Company to comply with the Act or other applicable securities laws and which
may, among other things, limit or condition the right to dispose of shares of
Stock acquired by exercise of your option and will be permitted only if in the
opinion of counsel satisfactory to the Company, such disposition is not in
violation of the Act, any applicable state securities laws or any other
applicable law, regulation or rule, and you (or your personal representative(s),
devisee(s), or heirs(s)) deliver to the Company a letter agreement in form and
Jules Firetag
April 3, 1995
Page 2
substance satisfactory to the Company whereby your successor(s) or assigns
agrees to be bound by the terms and conditions of this Paragraph 5. You (and
your personal representative(s), devisee(s), or heirs(s)) agree to pay all costs
of obtaining any legal opinions and all costs in connection with proposed
exercise of your option or dispositions of shares of Stock acquired pursuant to
your option.
6. You agree to pay to the Company or to make arrangements satisfactory
to the Board to pay to the Company, at such time as any income is recognized by
you with respect to this option, any Federal, state, or local taxes of any kind
required by law to be withheld on such income by the Company. In the event of
disposition or other transfer by you of Stock issued to you upon exercise of
your options, you agree to provide to the Company promptly written notice
describing in reasonable detail the disposition or transfer, including without
limitation the sale price, if any, and date of transfer or disposition.
7. In the event of any merger, reorganization, consolidation,
recapitalization, dividend (other than a cash dividend), stock split, reverse
stock split, or other change in corporate structure affecting the Stock, such
substitution or adjustment shall be made in the number and exercise price of
shares of Stock subject to this Agreement, as may be determined to be
appropriate by the Board in order to prevent dilution or enlargement of your
rights under this Agreement, provided that the number of shares of Stock subject
to your award shall always be a whole number.
8. This option granted to you is governed by, and shall be interpreted
according to, the laws of the State of Arizona.
9. Each party hereto agrees to do all such things and take all such
actions, and to make, execute and deliver such other documents and instruments,
as shall be reasonably requested to carry out the provisions, intent and purpose
of this Agreement.
This letter only grants the options described above and is not an
employment agreement or a promise or assurance of continued employment for any
period of time including any period of time necessary to permit full exercise of
the options under Paragraph 1 above.
Please acknowledge your receipt of this letter, together with the
materials referred to herein and your agreement to the terms and conditions of
your option as set forth herein by signing the enclosed copy of this letter and
returning it promptly to the Secretary of the Company at the address set forth
in Section 1 of this letter. Any questions concerning any matter relating to
your non-incentive stock option should also be addressed to the Secretary.
Very truly yours,
H.E.R.C. Products Incorporated
By /s/ Gary S. Glatter
--------------------------------
Its President
----------------------------
ACCEPTED AND AGREED:
/s/ Jules Firetag
- -------------------------------
Jules Firetag
EXHIBIT "A"
Jules Firetag
April 3, 1995
Page 3
NOTICE OF EXERCISE OF OPTION
TO PURCHASE SHARES OF H.E.R.C. PRODUCTS INCORPORATED
AND RECORD OF STOCK TRANSFER
I hereby exercise my Stock Option granted pursuant to a letter dated
April 3, 1995 (the "Agreement") subject to all the terms and provisions referred
to in the Agreement, and notify you of my desire to purchase _______________
shares of Common Stock of H.E.R.C. Products Incorporated (the "Company") which
were offered to me pursuant to said Option. Enclosed is my check in the sum of
$______________ in full payment for such shares.
I hereby represent that the __________ shares of the Company's Common
Stock to be delivered to me pursuant to the above-mentioned exercise of the
Option granted to me on March 23, 1995 are being acquired by me as an investment
and not with a view to, or for sale in connection with, the distribution of any
such shares. I also represent that I have read and fully understand the
Agreement, including without limitation the restrictions on transfer of the
shares hereby being acquired. I agree to indemnify the Company and its
subsidiaries, together with their respective officers and directors, against any
and all liabilities, losses, damages and expenses (including reasonable attorney
fees) arising from or in connection with any disposition of the shares hereby
being acquired, or any interest therein, in violation of applicable securities
laws or regulations. I further represent that I have been given access to all
information necessary to allow me to make a decision as to the advisability of
an investment in the Company's stock and the value of such stock, and that I
have the skill and experience necessary to make such decision.
DATED:_____________________________, 19 ___ .
____________________________________
Jules Firetag
Receipt is hereby acknowledged of the delivery to me by _____________________ on
_______________ of stock certificates for _______ shares of Common Stock
purchased by me pursuant to the terms and conditions of the Agreement referred
to above, which shares were transferred to me on H.E.R.C. Products Incorporated
stock record books on _______________, 19___.
____________________________________
Jules Firetag