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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 1, 2004
FARMSTEAD TELEPHONE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-15938 06-1205743
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
22 Prestige Park Circle, East Hartford, CT 06108-3728
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 610-6000
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS
On October 4, 2004, Farmstead Telephone Group, Inc. issued a press
release announcing the appointment of Jean-Marc Stiegemeier as the
Company's new President and Chief Executive Officer, succeeding George J.
Taylor, Jr., the Company's founder. Mr. Stiegemeier was also appointed to
the Company's Board of Directors. Mr. Taylor will continue to serve as
Chairman of the Board. The press release is attached hereto as Exhibit
99(a).
On October 1, 2004, the Company entered into an employment agreement
(the "Agreement") with Mr. Stiegemeier (the "Executive") through December
31, 2009. The Agreement includes the following key provisions: (i) an
annual base salary of $300,000, which may be increased by the Board in its
discretion or decreased by the Board under certain defined circumstances;
(ii) a one-time special bonus of $37,500, $25,000 of which was payable
October 1, 2004, with the balance payable in January 2005; (iii) an annual
bonus of up to 100% of Executive's base salary based upon the attainment of
a Board-approved earnings target for that year; and (iv) as an incentive to
reduce the Company's "acquisition" costs, Executive would receive an
"acquisition incentive bonus" equal to one percent (1%) of the Purchase
Price, as defined in the Agreement) for each acquisition that is concluded
during the term of this Agreement without any obligation by the Company to
pay any fees, commissions or any other cash or equity-based compensation to
any third party(ies) for or in connection with (a) the identification of
the entity that is the subject of the acquisition; (b) the valuation of the
acquisition or (c) the negotiation of the purchase price and other key
business terms of the acquisition with the selling party or its
representatives. Concurrent with the effective date of the Agreement,
Executive was issued a Warrant to purchase up to Four Hundred Thousand
(400,000) shares of common stock at fair market value. The Warrant is
exercisable immediately and expires five years from the date of grant. The
underlying common stock is unregistered as of the date of issuance of the
warrant. The Executive was also granted an option to purchase up to Six
Hundred Thousand (600,000) shares of common stock under the 2002 Stock
Option Plan at an exercise price equal to the fair market value of the
common stock. Three Hundred Thousand (300,000) shares are exercisable one
year after the grant date, with the remainder exercisable two years after
the grant date. The options expire ten years after the grant date.
The Agreement also provides severance pay for the Executive during
the term of the Agreement under certain circumstances. Should the Company
terminate the agreement without "cause", or if the Executive terminates the
Agreement "for good reason", or in the event the Executive resigns after a
"change in control", as all are defined in the Agreement, then severance
pay will equal three times the "Executive Compensation Amount" as defined.
From August 16, 2004 to October 1, 2004, the Executive provided business
consulting services to the Company for which the Executive earned $50,000
in fees.
Mr. Stiegemeier has extensive executive management experience in the
telecommunications industry. From 2002 to 2004 he was a business
consultant, advising companies on strategic redirections and turnarounds.
He also served on the board of directors for certain of these companies.
From 1997-2002, he served as President, Founder and Director of Exp@nets
Inc., a voice and data solutions provider. Prior thereto, Mr. Stiegemeier
served as Chairman and CEO of Franklin Industries Inc., Lucht, Inc., Ships
Entertainment, Inc, California-Telamerica Inc., Morrow Optical, Inc., and
Telamerica, Inc. He was also the President of Honeywell-Telamerica.
On October 1, 2004, Mr. Taylor's employment agreement with the
Company was modified ("Modified Agreement"), extending his "Active"
employment period through December 31, 2007 and eliminating his "Limited"
employment period. The Modified Agreement includes the following major
provisions: (i) a base salary of $200,000 for 2005, increasing to $250,000
in 2006 and $300,000 in 2007; (ii) an annual bonus of up to 100% of
Executive's base salary based upon the attainment of a Board-approved
earnings target for that year; and (iii an "acquisition incentive bonus" as
described above for Executive.
ITEM 9. 01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4(a) Warrant to Purchase common stock of Farmstead Telephone Group, Inc.
issued to Jean-Marc Stiegemeier
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October 1, 2004
10(a) Employment Agreement dated October 1, 2004 between Farmstead
Telephone Group, Inc. and Jean-Marc Stiegemeier.
10(b) Fourth Addendum to that Certain Employment Agreement Between
Farmstead Telephone Group, Inc. and George J. Taylor, Jr. Dated as
of January 1, 1998 as Amended by that Certain Restated First
Addendum Dated as of August 1, 2001; as Further Amended by that
Certain Second Addendum Dated as of January 1, 2003; and as Further
Amended by that Certain Third Addendum Dated as of January 1, 2004
99(a) Press release dated October 1, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FARMSTEAD TELEPHONE GROUP, INC.
By: /s/Robert G. LaVigne
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Robert G. LaVigne
Executive Vice President &
Chief Financial Officer
Date: October 5, 2004
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