Exhibit 99(a)
FIFTH ADDENDUM
TO THAT CERTAIN
EMPLOYMENT AGREEMENT
BETWEEN
FARMSTEAD TELEPHONE GROUP, INC.
AND
XXXXXX X. XXXXXX, XX.
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
AND
AS FURTHER AMENDED BY THAT CERTAIN FOURTH ADDENDUM DATED
AS OF OCTOBER 1, 2004
(the "Agreement")
This Fifth Addendum to the Agreement is effective as of the 12th day of
May, 2005 (the "Effective Date") and all terms and provisions of this Fifth
Addendum shall take effect on and as of the Effective Date, unless another
date is specifically indicated.
RECITALS
The Executive and Company are parties to the Agreement.
The parties wish to make additional modifications to certain provisions of
the Agreement for the purposes of governance and to further define
Executive's role as a member of the Company's management team.
For good and valuable consideration, the receipt and sufficiency of which
is acknowledged, the parties agree as follows.
1. Employment/Duties. As of the Effective Date, Executive shall become
Special Advisor to the Chief Executive Officer of the Company and shall
serve as a member of the Board of Directors of the Company subject to his
continued election to the Board of Directors by the Shareholders of the
Company. Executive during the Active Employment Period shall provide such
assistance as may be reasonably requested by the Chief Executive Officer
from time to time, such assistance to be related to executive management
and strategic initiatives of the Company and such assistance shall be
generally consistent with the role of a Senior Advisor. Executive will be
a W-2 employee of the Company during the Active Employment Period. As of
the Effective Date, executive will cease to serve as Chairman of the
Company.
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2. Annual Bonus. The provisions of Section 4(b) of the Fourth Addendum
are deleted and the following provisions are substituted:
"(b) Annual Bonus. For each calendar year during the remainder of
this Agreement commencing 2005, Executive shall be eligible for an
annual bonus of up to one hundred percent (100%) of Executive's Base
Salary for that calendar year, which shall be determined and paid in
accordance with subparagraphs (i) (ii) (iii) and (iv) below.
(i) At the outset of each subject year, the Board of
Directors will approve 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 EBITDA that is approved by
the Board of Directors for that year and the bonus shall
be equal to a prorated amount of from eighty five percent
(85%) to one hundred percent (100%) of Executive's Base
Salary for the subject year, and that percentage shall be
determined by and correspond to the percentage of the
target EBITDA that is attained by the Company, provided
the amount of any bonus earned pursuant to the provisions
of subsection (i) and this subsection (ii) shall be all
or that portion of the bonus so determined which the
Compensation Committee of the Board of Directors of the
Company in its sole discretion determines to be
attributable to the efforts of Executive, such
determination to be made on or before January 30 of the
year following the subject year.
(iii) For purposes of the bonus calculation, EBITDA will be
determined in accordance with accounting principles
generally accepted in the United States of America, and
will be subject to any adjustments arising from the
audit of the Company's financial statements. If earned
and approved by the Compensation Committee as provided in
Subsection (ii) above, the Company shall pay Executive
the annual bonus for the subject year within fifteen days
(15) days following the sign-off on the Company's
financial statements for that year.
(iv) In the event the Active Employment Period expires on
September 30, 2007 as scheduled, the Bonus that Executive
otherwise would have been paid had his employment
continued through the end of calendar year 2007 shall be
prorated accordingly.
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3. Section 5 of the Fourth Addendum is hereby deleted and the following
provision is substituted in its place:
(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 or any other material breach
of this Agreement by the Company.
4. The Agreement shall continue in full force and effect except as
specifically modified by this Fifth Addendum to the Agreement.
Executed by the parties as of the Effective Date.
FARMSTEAD TELEPHONE
GROUP, INC.
By: /s/ Xxxx-Xxxx Xxxxxxxxxxx
--------------------------------
Name: Xxxx-Xxxx Xxxxxxxxxxx
Title: CEO and President
/s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------------
Xxxxxx X. Xxxxxx, Xx.
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