[TALISMAN LETTERHEAD]
7 January 1999
Mr. Christian H. Bunger
9800 Huntcliff Trace
Atlanta, GA 30350
Re: EMPLOYMENT AGREEMENT
Dear Chris:
This letter defines our agreement regarding your appointment to the position
of Vice President, Sales - USA for Talisman Enterprises, Inc., and outlines
your compensation plan. We have agreed that you will join the company on
January 25, 1999.
1. SALARY - US $75,000 per year, payable twice monthly in arrears. You will
receive an annual performance evaluation and, based on both personal and
Company performance, an increase in base salary will be considered.
2. You will be included in the senior management bonus plan allowing you to
earn up to 35% of your base salary that is in effect at the end of each
calendar year. Bonus awards will be based on the attainment of
board-approved company profitability targets, as well as results from two
measurable personal objectives.
3. You will participate in the senior management earned equity plan, a copy
of which is attached to this letter.
4. You will be provided with a car allowance of US $600 per month. This
amount will be paid on the first day of each month starting February 1,
1999. All expenses related to your automobile, including insurance, will
be paid by you.
5. You are eligible for three weeks paid vacation per year after six months
of employment. No carry over of unused vacation is permitted.
6. In the event of your termination from the Company without cause, you will
be given six months' severance pay on the condition that you agree not to
compete or solicit Company employees or customers for a like period.
7. You are currently covered by a full benefits program from a previous
employer, and are therefore ineligible for Company-paid benefits.
Christian H. Bunger 7 January 1999
Re: EMPLOYMENT AGREEMENT Page 2
In your new position, you will have overall responsibility for the development
of the private label primary alkaline battery market in the United States.
Chris, we are very pleased to have you join Talisman and look forward to a
long and prosperous relationship.
If you accept the terms of this Agreement, including the attachment, please
sign in the space provided below and return one original to me.
Regards,
/s/ Norman R. Proulx
NORMAN R. PROULX
Acting President & CEO
NRP/j
Attachment
I hereby accept the terms of this Employment Agreement:
/s/ Christian H. Bunger 1-8-99
- ------------------------ ---------
Christian H. Bunger Date
EXHIBIT I
EQUITY ARRANGEMENT:
GENERAL. The Executive shall be granted options ("Options") on shares
of the common stock of the Company ("Shares") equal to two percent (1 1/2%)
fully diluted as of the Trigger Date, at an exercise price per Share equal
to 25% of the mean between the high bid and low asked prices per Share on the
Canadian Dealing Network (the "Market Price") on that date. Capitalized terms
not defined herein are as defined in the Attachment.
1. TIME VESTING OPTIONS. One third of the options (the "Time Vested
Options") shall become exercisable in equal monthly increments over a period
of 60 months beginning with the month in which the Trigger Date occurs. The
Time Vesting Options shall accelerate in the event of a Change of Control or
a Purchase of the Company.
2. ANNUAL TARGET OPTIONS. One third of the options (the "Annual Target
Options") shall become exercisable upon the achievement of specified levels
of annual performance to be established by the Board, in consultation with
the Executive, which levels shall be consistent with the levels applicable to
other senior managers of the Company (the "Annual Targets") over a five-year
period beginning with the Trigger Date. The following special rules shall
apply to exercisability of the Annual Target Options:
- ONE YEAR CATCH-UP. If an Annual Target is not achieved for a
particular year (the difference between the Annual Target and actual
performance being the "Shortfall"), but in the next following year the
Annual Target is exceeded by an amount equal to or
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greater than the Shortfall, the Annual Target Options that would have
become exercisable in the Shortfall year shall become exercisable.
- EARLY TRANSFER BY INVESTOR. If, after the first year, but on or
before the fifth anniversary of the Trigger Date, there is (i) a
Purchase, or (ii) a sale, transfer or other disposition of Shares by
Talisman Partners as a result of which Talisman Partners has sold,
transferred or otherwise disposed of more than half of the Shares it
held on the Trigger Date, taking into account Shares which were then
acquirable by Talisman Partners on exercise of conversion (or other
acquisition) rights then held by Talisman Partners, but only to the
extent that the conversion (or other acquisition) price per Share was
then equal to or less than the Market Price per Share on that Date
(either of the above being referred to as an "Investor Sale"), all or
a portion of the unexercisable Annual Target Options may become
exercisable in one of the following two ways:
(1) If the Annual Targets have been achieved for each of the years
ending prior to such "Measurement Date", as defined below, then all
unexercisable Annual Target Options will become exercisable.
(2) If the immediately prior year's Annual Target has been
achieved, but one or more previous periods' Annual Targets have not
been achieved, then a portion of the unexercisable Options shall
become exercisable. The percentage of unexercisable Annual Target
Options which will become exercisable is determined by dividing
(x) the number of Annual Target Options which have already become
exercisable by (y) the total number of Annual Target Options
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which would have been exercisable if all the Annual Targets had
been achieved. For example, if two out of three years' Targets were
achieved, 66.66% of the unexercisable Annual Target Options would
become exercisable.
- MINIMUM 50% VESTING FOR INVESTOR RETURN OF 30%. If there is an
Investor Sale, and the "Cumulative Compounded Return" is 30% or more,
then an additional number of Annual Target Options shall become
exercisable, if necessary, so that the total number of exercisable
Annual Target Options (including previously exercised Annual Target
Options) is at least equal to 50% of the original number of Annual
Target Options.
The Annual Target Options shall become exercisable upon the 7th
anniversary of the Trigger Date, so long as the Executive remains in
employment with the Company.
3. INVESTOR RETURN VESTING OPTIONS. One third of the options shall vest
and become exercisable based on achievement of investor returns as determined
by per share market price of the Company's stock on the date of an Investor
Sale compared with the market price per share on the Trigger Date.
Specifically, on the date of the Investor Sale (the "Measurement Date") the
Measurement Date Price, as defined below, will be measured against the
Trigger Date market price to calculate a cumulative return as per the
following formula:
A = B + ((1 + C) ^ (D/12))
WHERE:
A = THE MEASUREMENT DATE PRICE
B = THE EMPLOYMENT DATE MARKET PRICE
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C = THE CUMULATIVE COMPOUNDED RETURN
D = THE NUMBER OF WHOLE MONTHS FROM THE
EMPLOYMENT DATE THROUGH THE MEASUREMENT
DATE.
If the Cumulative Compounded Return is less that 28%, none of the
Investor Return Options shall become exercisable.
If the Cumulative Compounded Return is at least 28% but less than 29%,
one third of the Investor Return Options will become exercisable.
If the Cumulative Compounded Return is at least 29% but less than 30%,
two thirds of the Investor Return Options will become exercisable.
If the Cumulative Compounded Return is greater than 30%, all of the
Investor Return Options will become exercisable.
The "Measurement Date Price" is the price paid by the purchaser in
either transaction described immediately above. Provisions for valuation of
non-cash consideration will be reasonably agreed.
The Investor Return Options shall become exercisable upon the 7th
anniversary of the Trigger Date, so long as the Executive remains in
employment with the Company.
4. SPECIAL LOAN/BONUS PROVISION: If the Executive exercises the Option
while he is employed by the Company, the Company shall loan the Executive the
amount of the exercise price for the Option at an interest rate determined by
the Company to be reasonably favorable to the Executive, such loan to be
repaid six months and a day following exercise of the Option. If the
Executive remains in employment for six months following the exercise of the
Option or if the
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Executive's employment is terminated on account of death or disability, the
note shall be forgiven. If the Option is exercised on or after a Change of
Control or Purchase or otherwise on the occurrence of a Measurement Date, the
Company shall pay the Executive a bonus in an amount equal to the exercise
price.
5. TIMING OF ACCELERATED EXERCISABILITY UPON GOING PRIVATE TRANSACTION:
Notwithstanding the above, all Options which are exercisable as of, or
otherwise become exercisable (as provided above) upon, any transaction by
which the Shares cease to be publicly tradable shall be deemed to have become
exercisable immediately prior to such transaction.
6. GENERAL PROVISIONS: All options which are not exercisable, and do
not become exercisable, shall expire upon the termination of the employment
of the Executive with the Company, except as specified in Section 4 of this
Agreement. Options which are or become exercisable as of the date of
termination of employment shall remain exercisable for a period of ninety
(30) days following termination of employment. Exercise shall be by cash or
cash equivalent, unless the Board, in its sole discretion permits a form of
cashless exercise. Options are not transferable or assignable except for
estate planning purposes.
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ATTACHMENT
1. Company: Talisman Enterprises, Inc., an Ontario corporation.
2. Trigger Date: January 21, 1999.
3. Change of Control: any "Person" (as defined under Section 3(a)(9) of the
(United States) Securities Exchange Act of 1934, as amended (the "Exchange
Act")) or "Group" of persons (as provided under Rule 13d-3 of the Exchange
Act), other than Spencer-Trask is or becomes the "Beneficial Owners" (as
defined in Rule 13d-3 or otherwise under the Exchange Act), directly or
indirectly (including as provided in Rule 13d-3(d)(1) of the Exchange Act),
of voting stock of the Company ("Voting Stock"), giving effect to the
deemed ownership of securities by such person or group, as provided in Rule
13d-3(d)(1) of the Exchange Act (but not giving effect to any such deemed
ownership of securities by another person or group), equal to or greater
than the aggregate percentage of Voting Stock owned by (A) Spencer-Trask,
(B) any Affiliate of Spencer-Trask, (C) Talisman Partners, and (D) Kevin
Kimberlin (collectively the "Spencer-Trask Investment Group") as determined
at the time of such acquisition on a fully diluted basis.
4. Purchase: any "Person" (as defined under Section 3(a)(9) of the Exchange
Act) or "Group" of persons (as provided under Rule 13d-3 of the Exchange
Act), other than Spencer-Trask, is or
1
becomes the "Beneficial Owner" (as defined in Rule 13d-3 or otherwise under
the Exchange Act), directly or indirectly (including as provided in Rule
13d-3(d)(1) of the Exchange Act), of voting stock of the Company ("Voting
Stock"), giving effect to the deemed ownership of securities by such
person or group, as provided in Rule 13d-3(d)(1) of the Exchange Act, but
not giving effect to any such deemed ownership of securities by another
person or group, greater than fifty percent (50%) of all such Voting Stock.
5. Board: The Board of Directors of the Company.
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