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.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -----------------------------------------------------------------------------
(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):
---------------------------------------------------------------
(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]
Notice of 2000 Annual Meeting
and
Proxy Statement
April 28, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Meeting") of Farmstead Telephone Group, Inc. (the "Company") to be
held on Thursday, June 15, 2000, 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 complete, sign, date, and mail
the enclosed proxy card 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 of the Board and
Chief Executive Officer
<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 15, 2000
To the Stockholders:
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders (the
"Meeting") of Farmstead Telephone Group, Inc. (the "Company") will be held
at 10:00 a.m. local time on Thursday, June 15, 2000 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, 2000;
* 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 24, 2000 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 complete, sign and date the
enclosed proxy card 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
April 28, 2000
IF YOU CANNOT BE PRESENT, PLEASE SIGN THE ENCLOSED PROXY CARD 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 (the
"Board") 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 15, 2000 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 24, 2000 (the "Record
Date"), are entitled to notice of, and to vote on, all matters properly
brought before the Meeting or any adjustments or postponements thereof. As
of March 3, 2000, 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 28, 2000. A copy of the Company's
Annual Report for the year ended December 31, 1999, 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 of office at the June 17, 1999 Meeting. All of the
nominees have consented to being nominated and named herein,
<PAGE> 1
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, 2000.
Nominees:
George J. Taylor, Jr., Chairman of the Board 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:
57.
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: 48.
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: 69.
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 to1994. 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: 55.
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 US, as well as for US 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 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:
60.
<PAGE> 2
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: 49.
Joseph A. Novak, Jr., Vice President - Operations since 1993, and
until February 29, 2000. 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: 56. Mr. Novak retired from
the Company on February 29, 2000, and is currently providing consulting
services to the Company.
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: 48.
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:
54.
Meetings and Committees of the Board of Directors
During 1999, the Board held four meetings and all Directors attended
all of the meetings held. In addition, certain actions were approved by
unanimous written consent resolutions of the directors. During 1999, the
Board 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 held one meeting during 1999.
The Compensation Committee, consisting of Directors Hansen, H. Taylor
and Kelley, 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 one meeting during 1999.
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, 2000.
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, 2000.
<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 March 3,
2000 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 195,500(4) 5.6%
Harold L. Hansen 24,329(5) *
Hugh M. Taylor 30,803(6) *
Joseph J. Kelley 13,329(5) *
Other Named Executive Officers:
Alexander E. Capo 104,080(7) 3.1%
Robert L. Saelens 68,000(5) 2.0%
Directors and Executive Officers
as a Group (9 persons) 1,541,097(8) 33.9%
<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 185,500 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 27,416 shares issuable upon exercise of currently exercisable
stock options and 2,000 shares held by his children.
<F7> Includes 101,280 shares issuable upon exercise of currently
exercisable stock options, 700 shares held by his spouse and 310
shares issuable upon exercise of currently exercisable warrants.
<F8> Includes 1,253,936 shares issuable upon exercise of currently
exercisable stock options and 15,727 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, 1999
to the Chief Executive Officer ("CEO") and to each executive officer whose
total annual compensation exceeded $100,000 in 1999 (the "Named Executive
Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation All Other
--------------------------- Awards (2) Compen-
Name and Principal Position Year Salary ($) (1) Bonus ($) Options (#) sation ($)
- --------------------------- ---- -------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
George J. Taylor, Jr. 1999 250,000 31,250 - 1,917(3)
Chairman of the Board, President 1998 200,000 75,000 500,000 4,207(3)
and Chief Executive Officer 1997 150,000 30,000 385,782 -
Named Executive Officers:
Alexander E. Capo 1999 200,000 50,000 - 21,447(3)
Vice President - Sales 1998 228,345 23,846 90,000 15,396(3)
1997 256,528 - 11,280 -
Robert G. LaVigne 1999 110,000 27,500 7,500 11,846(3)
Executive Vice President, Chief 1998 100,000 25,000 90,000 8,154(3)
Financial Officer, Secretary and 1997 94,924 20,000 78,000 -
Treasurer
Robert L. Saelens 1999 75,000 45,000 - 10,242(3)
Vice President - Marketing 1998 75,000 36,000 60,000 6,831(3)
1997 73,750 21,000 10,000 -
<FN>
<F1> Includes base salary and, for Mr. Capo, also includes sales
commissions in 1997 and 1998.
<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> During 1998, the Company established split-dollar life insurance
programs for the CEO and the Named Executive Officers. For Mr. Taylor,
the amounts shown represents the dollar value of insurance premiums
paid, and the program is designed for the Company to recover
substantially all of its aggregate premium cost. For the Named
Executive Officers, the amounts shown represent the total premiums
paid. Under the insurance program for the Named Executive 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 CEO's average final three-year salary, however in
no event less than $100,000 per year. The SERP is funded through a Company-
owned life insurance plan to provide a source of cash for the SERP and
recover all costs upon the death of the CEO.
<PAGE> 5
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning individual grants of
options to purchase shares of the Company's Common Stock made to the CEO and
each Named Executive Officer during the year ended December 31, 1999:
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/SH) Date
- ---- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
George J. Taylor, Jr. - - - -
Alexander E. Capo - - - -
Robert G. LaVigne 7,500 8.2% 2.25 1/13/2009
Robert L. Saelens - - - -
</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, 1999, by the CEO and each Named
Executive Officer.
<TABLE>
<CAPTION>
No. of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Market Options at
Shares 12/31/99 (#) 12/31/99 ($)
Acquired on Value ---------------------------- ----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George J. Taylor, Jr. - - 635,782 250,000 - -
Alexander E. Capo - - 71,280 30,000 - -
Robert G. LaVigne - - 155,500 30,000 - -
Robert L. Saelens - - 48,000 22,000 - -
</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.'s contractual minimum annual base salary
is $200,000 for 1998, $250,000 for 1999, and $300,000 annually for years
2000 to 2002 (subject to increases in the Board's discretion). During the
Limited Period, the agreement calls for an annual salary 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
<PAGE> 6
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 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.
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, 1999.
Certain Business Relationships and Transactions with Management: None.
ANNUAL REPORT/FORM 10-KSB
The Company's 1999 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. Additional 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. The Company's Form 10-KSB may
also be accessed on the Internet at http://www.farmstead.com. Exhibits
listed in the Company's Form 10-KSB are available upon request to the
Corporate Secretary at a nominal charge for printing and mailing.
STOCKHOLDERS' PROPOSALS FOR YEAR 2001 ANNUAL MEETING OF STOCKHOLDERS
Proposals intended for inclusion in next year's Proxy Statement in
connection with the year 2001 Annual Meeting of Stockholders should be sent
to: Corporate Secretary, Farmstead Telephone Group, Inc., 22 Prestige Park
Circle, East Hartford, CT 06108, and must be received not later than January
4, 2001. Such proposals must meet the requirements set forth in the rules
and regulations of the SEC in order to be eligible for inclusion. If notice
of a matter intended to be presented at the 2001 Annual Meeting but not
included in the Company's Proxy Statement and proxy is received by the
Company after March 14, 2001, then management named in the Company's Proxy
form for the 2001 Annual Meeting will have discretionary authority to vote
shares represented by such proxies on such matters, if presented at the
meeting, without including information about the matters in the Company's
proxy materials.
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows 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.
George J. Taylor, Jr.
Chairman of the Board and
Chief Executive Officer
April 28, 2000
<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 15, 2000
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 (the "Meeting") of the
Stockholders of the Company, to be held June 15, 2000, 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 28, 2000.
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 AS SET FORTH ON
THE REVERSE SIDE.
[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,
2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the 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 COMPLETE, 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:______
