SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FARMSTEAD TELEPHONE GROUP, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date Filed:
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[FARMSTEAD LOGO]
1999 Notice of Annual Meeting
and
Proxy Statement
April 29, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Farmstead Telephone Group, Inc. to be held on Thursday,
June 17, 1999, at 10:00 a.m. local time, at the Company's offices located
at 22 Prestige Park Circle, East Hartford, Connecticut. Your Board of
Directors and management look forward to greeting those stockholders who
are able to attend.
The Notice of Annual Meeting of Stockholders and Proxy Statement
containing information pertaining to the business to be transacted at the
Meeting appear on the following pages.
Whether or not you plan to attend, it is important that your shares
be represented and voted at the Meeting. Please sign, date, and mail the
enclosed proxy at your earliest convenience.
On behalf of the Board of Directors and management, I would like to
thank you for your interest and participation in the affairs of the
Company.
Sincerely,
George J. Taylor, Jr.
Chairman and CEO
<PAGE>
FARMSTEAD TELEPHONE GROUP, INC.
22 Prestige Park Circle
East Hartford, Connecticut 06108
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 17, 1999
To the Stockholders:
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders of
Farmstead Telephone Group, Inc. (the "Meeting") will be held at 10:00 a.m.
local time on Thursday, June 17, 1999 at the Company's offices located at
22 Prestige Park Circle, East Hartford, Connecticut 06108 for the
following purposes:
* To elect a board of five directors to serve until the next annual
meeting or until their successors are duly elected and qualified;
* To ratify the appointment, by the Board of Directors, of
independent auditors to audit the Company's books and records for
the year ending December 31, 1999;
* To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
Only holders of common shares of record as of the close of business
on April 27, 1999 will be entitled to notice of, and to vote at, the
Meeting, or any adjournments or postponements thereof.
Stockholders are cordially invited to attend the Meeting. It is
important that your shares be represented and voted at the Meeting.
Because many of our stockholders cannot personally attend the Meeting, it
is necessary that a large number be represented by proxy. Therefore, if
you do not expect to attend the Meeting, but wish your stock to be voted
for the business to be transacted thereat, please fill in, sign and date
the enclosed proxy and return it by mailing it in the accompanying postage-
paid envelope.
By Order of the Board of Directors,
Robert G. LaVigne
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
East Hartford, CT
April 29, 1999
IF YOU CANNOT BE PRESENT, PLEASE SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
<PAGE>
[FARMSTEAD LOGO]
Farmstead Telephone Group, Inc.
22 Prestige Park Circle
East Hartford, CT 06108
PROXY STATEMENT
This Proxy Statement and the accompanying Proxy Card are being
furnished in connection with the solicitation by the Board of Directors of
Farmstead Telephone Group, Inc., a Delaware corporation (the "Company"), of
proxies to be voted at the Annual Meeting of Stockholders of the Company
(the "Meeting") to be held on Thursday, June 17, 1999 at 10:00 a.m. local
time at the Company's offices located at 22 Prestige Park Circle, East
Hartford, Connecticut 06108, or any adjournments or postponements thereof,
for the purposes set forth in the attached Notice of Annual Meeting of
Stockholders.
Only the holders of record of the Company's common stock, par value
$.001 per share, as of the close of business on April 27, 1999 (the "Record
Date"), are entitled to notice of, and to vote on, all matters brought
before the Meeting or any adjustments or postponements thereof. As of
February 26, 1999, there were 3,272,579 common shares outstanding.
Each stockholder is entitled to one vote for each share of common
stock held by him or her at the close of business on the Record Date. The
election of directors, the appointment of auditors and the approval of such
other business as may properly come before the Meeting or any adjournments
or postponements thereof, requires the affirmative vote of at least the
majority of shares of common stock present in person or represented by
proxy at a meeting at which a quorum (one-third of the outstanding shares
of common stock) is present or represented. When proxies in the enclosed
form are returned properly executed, the shares represented thereby will be
voted at the Meeting and, where instructions have been given by the
stockholder, will be voted in accordance therewith. If the stockholder
does not otherwise specify, the stockholder's shares will be voted FOR each
of the nominees for director and FOR the proposal to ratify the appointment
of the independent auditors, all as set forth in this Proxy Statement. As
to any other business which may come before the Meeting, the proxy holders
will vote in accordance with their best judgment. Votes will be counted
manually. Abstentions will be considered "no votes" (other than the
election of directors), and broker non-votes will not be counted at all. A
stockholder executing the accompanying proxy has the power to revoke it at
any time prior to the exercise thereof by appearing at the Meeting and
voting in person or by filing with the Secretary of the Company, (i) a duly
executed proxy bearing a later date, or (ii) a written instrument revoking
the proxy.
This Proxy Statement and the accompanying Proxy Card are first being
mailed to stockholders on or about April 30, 1999. A copy of the Company's
Annual Report for the year ended December 31, 1998, is included with this
Proxy Statement.
The solicitation of proxies in the accompanying form is made by, and
on behalf of, the Board of Directors, and no compensation will be paid
therefore. There will be no solicitation by officers and employees of the
Company. The Company will make arrangements with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of proxy
materials to the beneficial owners of shares held of record by such
persons, and such persons will be reimbursed for reasonable expenses
incurred by them in connection therewith.
PROPOSAL 1 - ELECTION OF DIRECTORS
Five directors are to be elected at the Meeting to hold office until
the next Meeting or until their successors have been duly elected and
qualified. It is the intention of the persons named in the accompanying
Proxy Card to vote FOR the election of the five persons named in the table
below as directors of the Company, unless authority to do so is withheld.
All of the nominees are currently Directors of the Company and were elected
to their present term
<PAGE> 1
of office at the June 1998 Meeting. All of the nominees have consented to
being nominated and named herein, and to serve as directors if elected at
the Meeting. In the event that any of the below listed nominees for director
should become unavailable for election for any presently unforeseen reason,
the persons named in the accompanying Proxy Card have the right to use their
discretion to vote for a substitute.
The Board of Directors recommends a vote "FOR" the election of each
of the Nominees as Director.
For each nominee, and for each executive officer of the Company other
than such nominees, there follows a brief listing of their principal
occupation for at least the past five years, other major affiliations, and
age as of January 1, 1999.
Nominees:
George J. Taylor, Jr. , Chairman of the Board of Directors and Chief
Executive Officer of the Company (including its predecessors) since 1984,
and President since 1989. Member of the Compensation Committee of the Board
of Directors until February 24, 1998. Director of the Company's affiliate,
Beijing Antai Communication Equipment Company, Ltd. ("ATC"). President of
Lease Solutions, Inc. (formerly Farmstead Leasing, Inc.) from 1981 to 1993.
Vice President - Marketing and Sales for National Telephone Company from
1977 to 1981. Mr. Taylor, Jr. was one of the founders of the National
Association of Telecommunication Dealers, has been a member of, or advisor
to, its Board of Directors since its inception in 1986, and for two years
served as its President and Chairman. Brother of Mr. Hugh M. Taylor.
Age: 56.
Robert G. LaVigne, Director of the Company since 1988. Executive
Vice President since July 1997. Chief Financial Officer, Corporate
Secretary and Treasurer since 1988. Vice President-Finance & Administration
from 1988 until July 1997. General Manager of the domestic telephone
equipment division from January 1994 until October 1994. Controller of
Economy Electric Supply, Inc., a distributor of electrical supplies and
fixtures, from 1985 to 1988. Corporate Controller of Hi-G, Inc., a
manufacturer of electronic and electromechanical components, from 1982 to
1985. Certified Public Accountant. Director of ATC. Age: 47.
Harold L. Hansen, Director of the Company since 1992. An independent
management consultant since January 1997. Chairman of the Audit Committee,
member of the Compensation Committee. President of Hansen Associates, a
management and financial consulting firm from 1995 to 1997. President of
H2O Environmental, Inc., an environmental and geotechnical services
company, from 1994 to 1995. President of Hansen Associates. from 1993 to
1994. Prior to 1983 Mr. Hansen served in various corporate executive
capacities including Executive Vice President and Chief Operating Officer
of Gestetner Corporation, Vice President and General Manager of the Office
Products Division of Royal Business Machines and Vice President and General
Manager of the Business Products Group of Saxon Industries. Age: 68.
Hugh M. Taylor, Director of the Company since 1993. A member of the
Audit and Compensation Committees. Managing Director of Newbury, Piret &
Co., an investment banking firm located in Boston, MA since 1994. CEO,
President and a director of the Berlin City Bank, Berlin, New Hampshire,
from 1993 to 1994. Executive Vice President of Fleet Bank of Massachusetts
from 1992 to 1993. Executive Vice President and Chief Operating Officer of
Fleet Bank of Boston from 1990 to 1992. From 1973 to 1990 he was
employed by the New England Merchants Bank, later the Bank of New England,
where he held various executive management positions within the Commercial
Banking Division, and the bank's venture capital subsidiary. Brother of
Mr. George J. Taylor, Jr. Age: 54.
Joseph J. Kelley, Director of the Company since April 1995. Chairman
of the Compensation Committee and a member of the Audit Committee.
President of East Haven Associates of Wellesley, in Wellesley,
Massachusetts, from 1995 to the present. This company provides executive
and technical support for European and Asian based communication companies
seeking to expand market share in the U.S., as well as for U.S. companies
seeking to expand internationally. Group Vice President of NYNEX, in 1994,
responsible for the State of Massachusetts operations. From 1985 to 1994
he served in various executive level positions with NYNEX , or associated
companies including Vice President - Operations of New England Telephone
(1991 - 1993), Vice President - New England Telephone, Network Department
(1990 - 1991), Corporate Director of Business Development, NYNEX
<PAGE> 2
Marketing (1988 - 1990) and Vice President of New England Telephone - Maine
(1985 - 1988). Mr. Kelley has been involved in the telecommunications
industry since 1963. Age: 59.
Other Executive Officers:
Alexander E. Capo, Vice President - Sales since July 1997. Vice
President - Sales & Marketing from 1987 until July 1997. Director of Sales
for The Farmstead Group, Inc. from 1985 to 1987. Sales Manager for the
National Telephone Company from 1972 to 1983. Age: 48.
Joseph A. Novak, Jr., Vice President - Operations since 1993.
General Manager of Farmstead Asset Management Services, LLC from 1996 to
1997. Prior to 1990, he was employed by AT&T for 28 years, serving in
various operational and sales management capacities. Vice General Manager
and a Director of ATC. Age: 55.
Neil R. Sullivan, Vice President - Accounting & Administration since
July 1997. Vice President and General Manager of the domestic telephone
equipment division from August 1996 to July 1997. Corporate Controller
from October 1994 to August 1996. Assistant Corporate Secretary since
1994. From 1981 to 1994 he was employed by Zero Corporation ("Zero"), a
manufacturer of cabinets, cooling equipment and containers for the
electronics industry. Mr. Sullivan was Controller of various divisions of
Zero from 1981 to 1991, and was Vice President/General Manager of the Zero-
East division from 1991 to 1994. Age: 47.
Robert L. Saelens, Vice President - Marketing since June 1997.
Director of Marketing from May 1996 through May 1997. President of Saelens
& Associates, a marketing consulting firm, from 1989 to 1997. President of
Baker, Bateson & Saelens, Inc., a marketing consulting firm, from 1982 to
1989. Prior thereto, Mr. Saelens served for ten years in the Creative and
Strategic planning departments of the J. Walter Thompson Corporation. Age:
53.
Meetings and Committees of the Board of Directors
During 1998, the Board of Directors held six meetings and all
Directors attended all of the meetings held. In addition, a number of
actions were approved by unanimous written consent resolutions of the
directors. During 1998, the Board of Directors had two ongoing committees:
an Audit Committee and a Compensation Committee. The Company does not have
a standing Nominating Committee.
The Audit Committee, consisting of Directors Hansen, H. Taylor and
Kelley, consults with the independent auditors and management with respect
to the adequacy of internal controls, and to make a recommendation to the
Board regarding the appointment of independent auditors for the following
year. The Audit Committee met once during 1998.
The Compensation Committee, consisting of Directors Hansen, H. Taylor
and Kelley (and G. Taylor, Jr. until February 24, 1998), determines the
compensation and benefits of the Chief Executive Officer and reviews and
approves, or modifies if deemed appropriate, the recommendations of the
Chief Executive Officer with respect to the compensation and benefits of
the other executive officers. The Compensation Committee also approves the
issuance of grants pursuant to the Company's stock option plans. The
Compensation Committee held four meetings during 1998.
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Stockholders will be asked at the Meeting to ratify the appointment
of Deloitte & Touche LLP, who have been approved by the Board to be the
independent auditors of the Company for the year ending December 31, 1999.
Deloitte & Touche LLP has audited the books and financial records of the
Company since 1993. A representative of Deloitte & Touche LLP is expected
to be present at the Meeting, will be available to respond to appropriate
questions, and will be afforded the opportunity to make a statement if he
or she desires to do so.
The Board of Directors recommends a vote "FOR" the ratification of
the appointment of Deloitte & Touche LLP as independent auditors of the
Company for the year ending December 31, 1999.
<PAGE> 3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock, $.001 par value, as of February
26, 1999 by (i) each person known by the Company to own beneficially more
than five percent of the Company's outstanding shares of Common Stock, (ii)
all directors of the Company, (iii) each Named Executive Officer (as
defined below in "Compensation of Officers and Directors") and (iv) all
directors, and executive officers of the Company as a group. In addition
to being a beneficial owner of more than five percent of the Company's
outstanding shares of Common Stock, Mr. George J. Taylor, Jr. is a
director of the Company.
<TABLE>
<CAPTION>
Percentage of
Number of Shares Outstanding
Name and Address of Beneficial Owner (1) Beneficially Owned (2) Common Stock
- ---------------------------------------- ---------------------- -------------
<S> <C> <C>
Five Percent Stockholders:
George J. Taylor, Jr 870,391(3) 22.3%
Other Directors:
Robert G. LaVigne 165,500(4) 4.8%
Harold L. Hanson 20,490(5) *
Hugh M. Taylor 26,964(6) *
Joseph J. Kelley 9,490(5) *
Other Named Executive Officers:
Alexander E. Capo 74,081(7) 2.2%
Robert L. Saelens 47,000(5) 1.4%
Directors and Executive Officers
as a Group (9) Persons 1,401,781(8) 31.8%
<FN>
<F*> Less than 1%.
<F1> Unless otherwise indicated, the address of each named beneficial
owner is c/o the Company, 22 Prestige Park Circle, East Hartford, CT
06108.
<F2> Except as otherwise indicated, the Company believes each person named
in the table has sole voting and investment power with respect to all
shares beneficially owned by him. Information with respect to
beneficial ownership is based upon information furnished by such
stockholder.
<F3> Includes 635,782 shares issuable upon exercise of currently
exercisable stock options and 307 shares issuable upon exercise of
currently exercisable warrants. Also includes 27,020 shares held by
his children.
<F4> Includes 155,500 shares issuable upon exercise of currently
exercisable stock options and 3,000 shares issuable upon exercise of
currently exercisable warrants.
<F5> Consists of shares issuable upon exercise of currently exercisable
stock options.
<F6> Includes 23,577 shares issuable upon exercise of currently
exercisable stock options and 2,000 shares held by his children.
<F7> Includes 71,280 shares issuable upon exercise of currently
exercisable stock options, 700 shares held by his spouse and 311
shares issuable upon exercise of currently exercisable warrants.
<F8> Includes 1,114,919 shares issuable upon exercise of currently
exercisable stock options and 15,528 shares issuable upon exercise of
currently exercisable warrants.
</FN>
</TABLE>
<PAGE> 4
COMPENSATION OF OFFICERS AND DIRECTORS
The following table sets forth all compensation paid or accrued by
the Company for services rendered during the three years ended December 31,
1998 to the Chief Executive Officer ("CEO") and to each executive officer
whose total annual compensation exceeded $100,000 in 1998 (the "Named
Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation All Other
Fiscal ----------------------------- Awards (2) Compen-
Name and Principal Position Year Salary ($) (1) Bonus ($) Options (#) sation ($)
- --------------------------- ------ -------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
CEO:
George J. Taylor, Jr. 1998 200,000 75,000 500,000 4,207(4)
1997 150,000 30,000 385,782 -
1996 150,000 75,000 300,782(3) -
Named Officers:
Alexander E. Capo 1998 228,345 23,846 90,000 15,396(4)
1997 256,528 - 11,280 -
1996 293,138 - 6,280(3) -
Robert G. LaVigne 1998 100,000 25,000 90,000 8,154(4)
1997 94,924 20,000 78,000 -
1996 84,000 42,000 50,500(3) -
Robert L. Saelens 1998 75,000 36,000 60,000 6,831(4)
1997 73,750 21,000 10,000 -
1996 36,400 - 10,000(3) -
<FN>
<F1> Includes base salary and, for Mr. Capo, also includes sales
commissions.
<F2> The Company did not grant any restricted stock awards or stock
appreciation rights ("SARS") or make any long-term incentive plan
payments during the fiscal years presented. There was no other
compensation earned by the above listed persons which aggregated the
lesser of $50,000 or 10% of their total salary and bonus reported
during each of the years presented.
<F3> These options were cancelled during 1997 in exchange for the grant of
replacement options.
<F4> During 1998, the Company established split-dollar life insurance
programs for the CEO and the Named Officers. For Mr. Taylor, the
amount shown represents the dollar value of insurance premiums paid
1998, and the program is designed for the Company to recover
substantially all of its aggregate premium cost. For the Named
Officers, the amounts shown represent the total premiums paid in
1998. Under the insurance program for the Named Officers, the
Company may make discretionary contributions of up to 10% of each
participant's annual compensation. The accumulated value of each
participant's account vests with the participant over a ten year
period, based on years of service, with each participant 100% vested
upon the later of the attainment of age 65 or five years of service
with the Company.
</FN>
</TABLE>
Effective January 1, 1998, the Company adopted a Supplemental
Executive Retirement Plan ("SERP") for the benefit of the CEO. The SERP is
a "target" benefit plan, structured to provide the CEO with an annual
retirement benefit, payable over 15 years beginning at age 65, in an amount
equal to one-third of the COE's average final three-year salary, however in
no event less than $100,000 per year. The SERP is funded through a
Company-owned life insurance plan to provide a source of cash for the SERP
and recover all costs upon the death of the CEO.
<PAGE> 5
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning individual grants of
options to purchase shares of the Company's Common Stock made to the CEO
and each Named Officer during the year ended December 31, 1998:
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/SH) (1) Date
- ---- ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
George J. Taylor, Jr. 500,000 54.4% 1.94 1/2/2008
Alexander E. Capo 90,000 9.8% 1.94 2/2/2008
Robert G. LaVigne 90,000 9.8% 1.94 2/2/2008
Robert L. Saelens 60,000 6.5% 1.94 2/2/2008
</FN>
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
The following table provides information on the number and value of
unexercised options held at December 31, 1998, by the CEO and each Named
Officer.
<TABLE>
<CAPTION>
No. of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Market Options at
Shares 12/31/98 (#) 12/31/98 ($)
Acquired on Value ---------------------------- ---------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
George J. Taylor, Jr. - - 635,782 250,000 333,516 140,625
Alexander E. Capo - - 41,280 60,000 22,515 33,750
Robert G. LaVigne - - 114,000 64,000 63,275 35,750
Robert L. Saelens - - 27,000 43,000 14,750 24,000
</TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year: None.
Compensation of Directors
Non-employee directors currently receive a $5,000 annual retainer,
$1,000 for each attended board meeting, $500 for each attended committee
meeting, plus a non-qualified option to purchase an amount of Common Stock
determined by dividing $6,000 by the closing market price of the Company's
Common Stock on the date of election or reelection to the board for each
one year term. Directors are also reimbursed for their expenses in
attending each meeting.
Employment Contracts and Termination of Employment
and Change-in-Control Arrangements
Mr. George J. Taylor, Jr. entered into a ten year employment
agreement with the Company effective January 1, 1998. The agreement
provides for five years of full-time employment (the "Active Period"), and
five years of limited employment (the "Limited Period") commencing January
1, 2003. During the Active Period, Mr. Taylor, Jr. will be paid a minimum
annual base salary of $200,000 in 1998, $250,000 in 1999, and $300,000 for
years 2000 to 2002 (subject to increases in the Board's discretion).
During the Limited Period, Mr. Taylor, Jr. will be paid an annual amount
equal to one-third of the base salary rate in effect at the commencement of
the Limited Period, as consideration for up to fifty days of active service
per year. The agreement also provides for (i) an annual bonus of up to 50%
of base salary during the term of the agreement, based upon the attainment
of performance objectives set by the Board of Directors, (ii) an option to
purchase up to 500,000 shares of common stock at fair market value on the
date of grant, and (iii) $1,500,000 in life insurance for the benefit of
Mr. Taylor, Jr.'s named designee. The agreement provides for severance pay
during the term of the agreement should the Company terminate the agreement
without cause, or in the event of a change in control of the Company, as
defined, or in the event Mr. Taylor, Jr. terminates the agreement for good
reason (as defined). During the Active Period, Mr. Taylor, Jr.'s
<PAGE> 6
severance pay will equal three times (i) the amount of his then-current base
pay, plus (ii) the average bonus paid him during the three most recent years.
In addition, if the event was a change in control (as defined), all unvested
stock options vest immediately. During the Limited Period, severance pay
will equal the total amount that would have been due for the time remaining
in the Limited Period. In addition, the Company is obligated to provide
supplemental retirement benefits, payable at age 65 to 80, in an amount
equal to one-third of Mr. Taylor, Jr.'s average final three year salary,
currently estimated to be $100,000 per year. The agreement also contains
provisions regarding confidentiality and a non-compete covenant which
prohibits him from competing with the Company during his employment and for
up to two years thereafter. Mr. Taylor, Jr.'s compensation agreements were
established by the Compensation Committee and approved by the Board of
Directors.
Messrs. Capo, LaVigne and Saelens do not have formal employment
agreements with the Company. At the discretion of the Compensation
Committee, they are eligible to participate in a bonus pool up to a maximum
of 50% of their salary. Bonus awards are based upon the attainment of
certain Company and individual performance objectives as determined
annually by the Board of Directors and the CEO.
Compliance with Section 16 (a) of the Exchange Act: The Company is not
aware of any delinquent reports required by Section 16 (a) of the
Securities Exchange Act of 1934, as amended, to be filed with the
Securities and Exchange Commission ("SEC") during the fiscal year ended
December 31, 1998.
Certain Business Relationships and Transactions with Management: None.
ANNUAL REPORT/FORM 10-KSB
The Company's 1998 Annual Report to its stockholders is a
reproduction of its Form 10-KSB filed with the SEC, excluding the Index to
Exhibits and any filed exhibits, and is being mailed to all stockholders
concurrently with this proxy statement. Copies of the Company's Form 10-
KSB (without exhibits) as filed with the SEC may be obtained at no cost by
writing to the Corporate Secretary, Farmstead Telephone Group, Inc., 22
Prestige Park Circle, East Hartford, CT 06108.
STOCKHOLDERS' PROPOSALS FOR YEAR 2000 ANNUAL MEETING OF STOCKHOLDERS
Proposals intended for inclusion in next year's proxy statement in
connection with the year 2000 Annual Meeting of Stockholders should be sent
to: Corporate Secretary, Farmstead Telephone Group, Inc., 22 Prestige Park
Road, East Hartford, CT 06108, and must be received not later than January
2, 2000. Such proposals must meet the requirements set forth in the rules
and regulations of the SEC in order to be eligible for inclusion.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors know
of no other business to be presented at the Meeting. However, if any other
matters properly come before the Meeting, the persons named in the enclosed
form of proxy are expected to vote the proxy in accordance with their best
judgment on such matters.
By Order of the Board of Directors,
Robert G. LaVigne
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
East Hartford, Connecticut
April 29, 1999
<PAGE> 7
FORM OF PROXY
FARMSTEAD TELEPHONE GROUP, INC.
22 Prestige Park Circle, East Hartford, CT 06108 (860) 610-6000
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - June 17, 1999
The undersigned, as a Stockholder of FARMSTEAD TELEPHONE GROUP, INC. (the
"Company"), hereby appoints George J. Taylor, Jr. and Robert G. LaVigne or
any one of them, the true and lawful proxies and attorneys-in-fact of the
undersigned to attend the Annual Meeting of the Stockholders of the Company
to be held June 17, 1999, at 10:00 a.m. local time at the Company's offices
located at 22 Prestige Park Circle, East Hartford, CT 06108 and any
adjournments or postponements thereof, and any of them to vote, as
designated below, the number of shares which the undersigned would be
entitled to vote, as fully and with the same effect as the undersigned
might do if personally present, on the following matters as set forth in
the Proxy Statement and Notice dated April 29, 1999.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE, LLP.
[X] Please mark votes as shown in this example
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. Election of Directors
Nominees: George J. Taylor, Jr., Robert G. LaVigne,
Harold L. Hansen, Hugh M. Taylor, and Joseph J. Kelley
[ ] FOR [ ] WITHHELD [ ] For all nominees except as noted below:
_________________________________________________________________________
[CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE]
2. Ratification of the Appointment of Deloitte & Touche LLP as
independent auditors of the Company for the year ending December 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting or any
adjournments or postponements thereof.
This Proxy is revocable and the undersigned reserves the right to attend
the meeting and vote in person. The undersigned hereby revokes any proxy
heretofore given in respect of the shares of the Company. Please sign
exactly as the name(s) appear on your Stock Certificate. When attorney,
executor, administrator, trustee, or guardian, please give full title as
such. If more than one name is shown, as in the case of joint tenancy,
each party should sign.
THE BOARD OF DIRECTORS URGES THAT YOU FILL IN, SIGN AND DATE THE PROXY AND
RETURN IT PROMPTLY BY MAIL IN THE ENCLOSED ENVELOPE.
Mark here if you plan to attend the Meeting [ ]
Mark here for address change and note new address below [ ]
Signature:_______________ Date:_____ Signature:_______________ Date:_____
