EXHIBIT 10.22
FARMSTEAD TELEPHONE GROUP, INC.
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ALFRED STEIN
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EMPLOYMENT AGREEMENT
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This Agreement is made as of the 15th day of January 2005 between
Farmstead
Telephone Group, Inc., a Delaware corporation (the "Company"),
Alfred Stein
(the "Executive").
RECITALS
The Company is engaged in the sale of new and refurbished
business
communications products (the "Business").
The Company desires to employ the Executive and to ensure the
continued
availability to the Company of the Executive's services, and the
Executive
is willing to accept such employment and render such services, all
upon and
subject to the terms and conditions contained in this
Agreement.
NOW, THEREFORE, in consideration of the mutual and dependent
promises
hereinafter set forth, the parties intending to be legally bound do
hereby
agree as follows:
ARTICLE I
Employment
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Section
1.1 Employment.
The Company agrees to
employ Executive
during the Employment Period (referred to in Section 2.1 (a) below)
as an
Executive Vice President of the Company. Executive shall begin his
employment with the Company (the "Commencement Date) on January
15th, 2005.
Section
1.2 The Executive
shall serve as an Executive Vice President
of the Company, or in such other equal or superior capacity as may
be
designated by the president and Chief Executive Officer of the
company.
Executive shall perform such duties and services consistent with
such a
position as may be assigned to him from time to time by the
President and
CEO. During the
Employment Period, Executive shall devote substantially
all of his working time, attention and skill during the normal
business
week to the business and affairs of the Company and shall
perform
faithfully and diligently his duties as Executive Vice President.
Notwithstanding the above, during the Term, Executive may serve on
the
boards of directors of other corporations so long as the business
of such
corporations is not competitive with the business of the
Company.
<PAGE>
Section
1.3 Compensation.
(a)
Base Salary.
The Company shall pay
to Executive during each
calendar year during the Employment Period (as referred to in
Section
2.1(a) below) an annual base salary (the "Base Salary").
The initial rate
of Base Salary effective as of March 1, 2005 is $175,000 and
Executive
shall continue to be paid at that annual rate unless and until such
rate is
increased by the Board in its discretion, provided that the Board
shall not
be entitled to decrease Executive's Base Salary except in the case
of
"Permissible Base Salary Reduction" that is implemented on or after
January
1, 2006. For purposes
of this Agreement a "Permissible Base Salary
Reduction" shall occur when the Board in its discretion reduces
Executive's
Base Salary in response to unsatisfactory Company performance;
provided
that the reduction is accompanied by (i) a reduction of at least
equal
proportion to the annual base salary of the Chairman of the Board
(if that
position is held by an individual other than the Executive) and
(ii) the
authorization of the Board for the Executive to implement
reductions to the
annual base salaries of other senior executives of the Company.
(b)
Annual Bonus.
For each calendar year
during the Term of this
Agreement commencing 2005, Executive shall be eligible for an
annual bonus
of up to one hundred percent of Executive's Base Salary for that
year,
which shall be determined and paid in accordance with subsections
(i) (ii)
and (iii) below.
(Pro-rated in first year for ten months)
(i) At the
outset of each subject year, Executive shall
present for approval by the President/CEO an annual pro-
forma operating plan that includes the target earnings
before interest, taxes, depreciation and amortization
("EBITDA") for the Company for that subject year.
(ii) A bonus for the
subject year shall be paid to Executive
in the event the Company attains at least eighty five
percent (85%) of the target EBIDTA that is approved by
the Board of Directors for that year. The bonus pool
will be created at 100% of Executive's base and paid on a
sliding scale with a minimum attainment of 85%. That
percentage shall be determined by and correspond to the
percentage of the target EBITDA that is attained by the
Company.
(iii) If earned, the Company shall pay Executive the annual
bonus for the subject year within fifteen days (15) days
following the closing by the Company of its books for
that year.
<PAGE>
Section
1.4 Equity
Compensation.
(a)
Warrant.
Executive
simultaneously with the execution of this
agreement has been issued a Warrant entitling Executive to
purchase 250,000 shares at the fair market value of the Stock
The Executive's rights under the Warrant are fully vested and
non-forfeitable.
The Warrant is
exercisable, in whole or in
part, at any time and from time to time on or before the
Expiration Date set forth in the Warrant. The Warrant shall be
freely transferable in accordance with Article 4 of the
Warrant. The Warrant
is not subject to the Plan. Executive
acknowledges that neither the Warrant or the underlying Shares
will be registered under the Federal Securities Act of 1933 and
any
applicable state securities laws as of the date o this
Employment Agreement. Warrants will vest as follows:
50,000 exercisable July 15th, 2005
100,000 exercisable January 15th, 2006
100,000 exercisable January 15th 2007
(b)
General.
Executive is an
experienced businessperson very
familiar with the business in which the Company is engaged.
Executive has been provided with all information regarding the
business and financial circumstances of the Company which he
has requested.
Further, the Executive has been advised by his
independent professional advisors in connection with this
Agreement.
Section
1.5 Benefits.
(a)
Standard
Benefits. The
Executive shall be entitled during the
Term of this Agreement to participate in any Company benefits
for executive officers, including but not limited to four (4)
weeks paid annual vacation (which shall be administered in
accordance with the Company's standard vacation policy), health
insurance and other benefits generally provided to such
executive officers.
(b) Other Benefits. In addition, Executive also shall
be entitled
to the following other benefits during the Term of this
Agreement:
(i) The Company
shall pay provide the Executive a company
car. The company shall be responsible for car insurance
and maintenance.
(ii) Executive can
reside in Norfolk Virginia, but will be in
East Hartford as required. While traveling, company will
pay for reasonable hotel and expenses.
<PAGE>
(c)
Upon submission
of appropriate invoices and vouchers, the
Company shall pay or reimburse Executive for all reasonable
expenses that he incurs in the performance of his duties.
ARTICLE II
Term and Termination
--------------------
Section
2.1 Employment Period.
Subject to the terms
of Section 2.2
below, the Company agrees to employ the Executive from the
Commencement
Date until December 31, 2007 (the "Term").
Section
2.2 Expiration or
Termination of Employment. Employment
under this Agreement will be terminated upon the earlier to occur
of:
(a)
expiration of
the Term;
(b)
upon Executive's
death;
(c)
upon Executive's
permanent disability; or
(d)
upon the date
the Employment Period is terminated by the
Company or Executive as provided in Sections 2.3 or 2.4.
Section
2.3 Termination by the
Company. The Term of
this Agreement
shall end if the Company determines to terminate Executive either
"for
cause" or "without cause" at any time during the Term of this
Agreement.
Except in the case of termination "for cause," the termination by
the
Company will not be effective until thirty (30) days after the
Company has
given written notice to the Executive of such termination.
Section
2.4 Termination by
Executive. The Term of
this Agreement
shall end if, at any time during the Term, the Executive determines
to
terminate his employment either "voluntarily" or "with good
reason." The
Executive may terminate his employment voluntarily upon ninety (90)
days
written notice to the Company, provided that the Company may
require
Executive to vacate the Company's premises prior to the expiration
of such
ninety (90) day period so long as the Company continues to provide
the
applicable then-current compensation and benefits to Executive for
the
employment upon written notice to the Company, effective
immediately, upon
the occurrence of "good reason" as defined below, provided that
such notice
must be given by Executive within thirty (30) days after the
event
constituting good reason.
Section
2.5 Defined Terms.
The following terms
shall have the
meanings prescribed:
(a)
"For cause"
shall mean (i) a conviction of Executive for the
willful
<PAGE>
commission of a felony or the willful perpetration by Executive of
a
material dishonest act against the Company, or (ii) the willful
failure of
Executive to act in accordance with any reasonable instruction of
the Chief
Executive Officer or the Board relating to the performance of
Executive's
employment duties in accordance with this Agreement, if such
failure is not
corrected within seven business days after Executive's receipt of
written
notice of the Chief Executive Officer of such failure; provided
however,
that the provisions of this Section 2.5 (a) (ii) shall not
constitute "for
cause" if an event constituting "good reason" (as defined below)
has
occurred within 60 days prior to such notice.
(b)
"Good reason"
shall mean a reduction in Base Salary other than
a Permissible Base Salary Reduction, a material adverse change
in the method of determining Executive's bonus, a material
reduction in Executive's responsibilities or benefits, any
other material breach of this Agreement by the Company.
Section
2.6 Severance Pay.
(a) If the Company terminates
this Agreement without cause as
referred to in Section 2.3, the Executive shall be entitled to
severance
equal to three times the Executive Compensation Amount (as defined
below).
For purposes of this Agreement, the "Executive Compensation Amount"
at any
time shall mean the total of the Executive's then current Base
Salary plus
the average amount of the annual bonuses paid to Executive under
Section
1.3 (b) for the three most recent calendar years, including the
Assumed
Bonus, as defined below, for the calendar year in which the
termination
without cause becomes effective. In the event the termination
without
cause is effective on or before December 31, 2005, such severance
shall be
paid in equal weekly installments over the twelve (12) months
following the
effective date of the termination. In the event the termination
without
cause is effective any time from January 1 through December 31,
2006, such
severance shall be paid as fo
