EXHIBIT 10(dd)
LIMITED LIABILITY COMPANY AGREEMENT
of
INFINET SYSTEMS LLC
This Limited Liability Company Agreement (this "Agreement") is
effective as of the first day of February, 2001 by and among Farmstead
Telephone Group, Inc., a corporation formed under the laws of the State of
Delaware ("Farmstead"), and TriNET BUSINESS TRUST, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustees, a Massachusetts business unit formed
under the laws of the Commonwealth of Massachusetts ("TriNET").
EXPLANATORY STATEMENT
The parties have agreed to organize and operate a limited liability
company in accordance with the terms of, and subject to the conditions set
forth in, this Agreement.
NOW, THEREFORE, for good and valuable consideration, the parties,
intending to be bound legally, agree as follows:
Section I
Defined Terms
The capitalized terms set forth on Schedule A attached hereto shall
have the meanings specified therein. Other terms are defined in the text of
this Agreement; and, throughout this Agreement, those terms shall have the
meanings respectively ascribed to them.
Section II
Formation and Name: Office; Purpose; Term
2.1 Organization. The parties have organized a limited liability
company pursuant to the Act and the provisions of this Agreement and, for
that purpose, have caused a Certificate of Formation to be executed and
filed with the DST on the ____ day of February, 2001. The parties have
also caused an Application for Certificate of Registration, Foreign Limited
Liability Company to be executed and filed with the CST on the ____ day of
__________, 2001, and an Application for Authority to be executed and filed
with the NYSDS on the ____ day of ____________, 2001.
2.2 Name of the Company. The name of the Company is "InfiNet
Systems LLC".
1
2.3 Purpose. The Company is organized for the purpose of selling
new Avaya telecommunications systems (the "Product") to customers within
the State of Connecticut and the counties of New York, Queens, Richmond,
Bronx, Kings, Rockland, Nassau, Suffolk, Westchester, Putnam and Dutchess
in the State of New York (the "Territory"), and for any other lawful
purpose authorized by the laws of the State of Delaware.
2.4 Term. The term of the Company began upon the endorsement of the
Certificate of Formation by the DST and shall continue in existence until
its existence is terminated pursuant to Section VII of this Agreement.
2.5 Principal Office. The principal office of the Company shall be
located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at
such other place which the Managers(s) shall select. The registered office
of the Company in Delaware shall be located at Corporation Trust Center,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or at such other place which the
Managers(s) shall select.
2.6 Registered Agent. The name of the Company's registered agent in
the State of Delaware shall be The Corporation Trust Company, with a
business address at Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
2.7 Members. The name, present mailing address and Percentage of
each Member are set forth on Schedule B attached hereto.
Section III
Members; Capital; Capital Accounts
3.1 Initial Capital Contributions. Upon the execution of this
Agreement, the Members shall contribute to the Company the consideration in
the form and amounts respectively set forth on Schedule B attached hereto.
In addition as a condition to the execution of this Agreement, the parties
shall cause the execution of the following agreements simultaneously with
the execution of this Agreement:
a. A Sales Representative and Administrative Services
Agreement between Farmstead and the Company covering sales of Product
in the Territory in the form attached as Schedule C.
b. A Technical Assistance Agreement between TriNET and the
Company covering technical assistance for customer proposals and
installations of Product in the Territory in the form attached as
Schedule D.
c. Adoption Agreements by the Company adopting Farmstead's
employee welfare and pension benefit plans for the benefit of the
Company's W-2 employees in the Form attached as Schedule E.
2
3.2 Additional Capital Contributions.
3.2.1 The Company expects that the original Capital
Contributions of the Members and bank credit facilities provided to
the Company will provide sufficient capital for the Company's
operations. If the Managers at any time or from time to time
determine that the Company requires additional Capital Contributions,
then the Company shall give ten (10) days' advanced notice to each
Member of (i) the total amount of additional Capital Contributions
requested, (ii) the reason the additional Capital Contribution is
requested, (iii) each Member's proportionate share of the total
additional Capital Contribution (determined in accordance with this
Section), and (iv) the date each Member's requested additional
Capital Contribution is due and payable, which date shall be thirty
(30) days after the notice has been given. The total additional
Capital Contribution which the Company may request the Members to
contribute during the term of this Agreement shall not exceed
$200,000 in the aggregate. A Member's share of the total additional
Capital Contribution shall be equal to the product obtained by
multiplying the Member's Percentage and the total additional Capital
Contribution required. A Member's proportionate share shall be
payable by check. The provisions of this Section do not impose an
obligation upon a Member to make the requested additional Capital
Contribution.
3.2.2 Except as provided in Section 3.2.1 hereof and agreed to
by a Member, no Member shall be required to contribute any additional
capital to the Company, and no Member shall have any personal
liability for any obligation of the Company.
3.2.3 If a Member fails to pay when due all or any portion of
any Capital Contribution, the Managers shall request the non-
defaulting Member to pay the unpaid amount of the defaulting Member's
Capital Contribution (the "Unpaid Contribution"), which shall be
treated as a loan by the non-defaulting Member to the Company. The
Unpaid Contribution loaned to the Company by the non-defaulting
Member shall be repaid by the Company pursuant to the Company's
promissory note with interest at a rate equal to the prime rate as
stated in the Wall Street Journal ("Wall Street Journal Prime") in
effect on the date the loan is made, plus three (3) points,
compounded monthly, before any distribution of Cash Flow is made by
the Company to the Members pursuant to Section 4.1.2 hereof. This
remedy is in addition to any other remedies allowed by law or by this
Agreement.
3.3 No Interest on Capital Contributions. Interest Holders shall
not be paid interest on their Capital Contributions.
3.4 Return of Capital Contributions. Except as otherwise provided
in this Agreement, no Interest Holder shall have the right to receive the
return of any Capital Contribution.
3
3.5 Form of Return of Capital. If an Interest Holder is entitled
to receive a return of a Capital Contribution, the Interest Holder shall
not have the right to receive anything but cash in return of the Interest
Holder's Capital Contribution.
3.6 Capital Accounts. A separate Capital Account shall be
maintained for each Interest Holder.
3.7 Loans. Any Member may, at any time, make or cause a loan to be
made to the Company in any amount and on those terms upon which the Company
and the Member agree.
Section IV
Profit, Loss, and Distributions
4.1 Distributions of Cash Flow and Allocations of Profit or Loss.
4.1.1 Profit or Loss. Profit or Loss shall be allocated to
the Interest Holders in proportion to their Percentages.
4.1.2 Cash Flow. Subject to the provisions of Section 3.2.3
hereof, Cash Flow for each taxable year of the Company shall be
distributed to the Interest Holders as follows: (i) unless otherwise
determined by the Managers, on March 15 of each year in an amount
equal to the highest combined liability for federal and either
Massachusetts or Connecticut state income tax attributable to an
Interest Holders' percentage interest in the Company Profits (the
"Tax Distribution"); and (ii) unless otherwise determined by the
Managers, make cash distributions equal to forty percent (40%) of the
Profit of the Company after the Tax Distribution.
4.2 General.
4.2.1 Except as otherwise provided in this Agreement, the
timing and amount of all distributions shall be determined by the
Managers.
4.2.2 If any assets of the Company are distributed in kind to
the Interest Holders, those assets shall be valued by the Managers on
the basis of their fair market value at the time of distribution.
4.2.3 All Profit and Loss shall be allocated, and all
distributions shall be made to the Persons shown on the records of
the Company to have been Interest Holders as of the last day of the
taxable year for which the allocation or distribution is to be made.
4
4.2.4 The Managers are hereby authorized, upon the advice of
the Company's tax counsel, to amend this Section IV to comply with
the Code and the Regulations promulgated under Code Section 704(b)
from time to time; provided, however, that no amendment shall
materially affect distributions to an Interest Holder without the
Interest Holder's prior written consent.
4.3 Tax Allocations: Section 704(c) of the Code.
4.3.1 In accordance with Section 704(c) of the Code and the
Regulations thereunder, income, gain, loss and deduction with respect
to any property contributed to the capital of the Company shall,
solely for income tax purposes, be allocated among the Members so as
to take account of any variation between the adjusted basis of such
property to the Company for federal income tax purposes and its
initial Gross Asset Value.
4.3.2 In the event the Gross Asset Value of any Company asset
is adjusted pursuant to paragraph (ii) of the definition of "Gross
Asset Value", subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between
the adjusted basis of such asset for federal income tax purposes and its
Gross Asset Value in the same manner as under Section 704(c) of the Code
and the Regulations thereunder.
4.3.3 Any elections or other decisions relating to
allocations under this Section 4.3, including the selection of any
allocation method permitted under proposed Regulation Section 1.704-
1(c), shall be made by a Majority Vote of the Managers in any manner
that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 4.3 are solely for purposes of
federal, state and local taxes and shall not affect, or in any way be
taken into account in computing, any Member's Capital Account or
share of Profits, Losses, other items or distributions pursuant to
any provision of this Agreement.
Section V
Management: Rights, Powers, and Duties
5.1 Management.
5.1.1 Managers. The Company shall be managed by seven (7)
Managers, who shall be employees of Farmstead or TriNET. Farmstead
shall be entitled to appoint four (4) of the seven (7) Managers and
TriNET shall be entitled to appoint three (3) of the seven (7)
Managers. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇ are hereby designated to serve
as the initial Managers. Each of Farmstead and TriNET reserve the
right to replace and designate substitutes for those Manager
positions
5
to which they are entitled to designate appointees. A meeting of the
Managers may be called at any time by a majority of the Managers, and
meetings shall be held at least once every six months. Meetings of
Managers shall be held at the Company's principal place of business or
at any other place designated by the Managers. Not less than three (3)
nor more than ten (10) days before each meeting, the Person calling the
meeting shall give written notice of the meeting to each Manager
entitled to vote at the meeting. The notice shall state the time, place
and purpose of the meeting. Notwithstanding the foregoing provisions,
each Manager who is entitled to notice waives notice, if, before or
after the meeting, the Manager signs a waiver of the notice which is
filed with the records of Managers' meetings, or is present at the
meeting in person. Unless this Agreement provides otherwise, at a
meeting of Managers, the presence in person of five the Managers
constitutes a quorum, provided, if a quorum is not present at a duly
noticed meeting, and a second meeting is notices with at least five (5)
days prior notice, the quorum for the second duly noticed meeting will be
four (4) Managers. Except as otherwise provided in this Agreement,
the affirmative vote of a majority of the Managers shall be required
to approve any matter coming before the Managers. In lieu of holding
a meeting, the Managers may vote or otherwise take action by a
written instrument indicating the unanimous consent of the Managers.
Managers meetings may be held in person or telephonically.
5.1.2 General Powers. The Managers shall have full,
exclusive, and complete discretion, power, and authority, subject in
all cases to the other provisions of this Agreement and the
requirements of applicable law, to manage, control, administer, and
operate the business and affairs of the Company for the purposes
herein stated, and to make all decisions affecting such business and
affairs of the Company.
5.1.3 Extraordinary Transactions. Notwithstanding anything
to the contrary in this Agreement, the Managers shall not undertake
the admission of additional Members without the unanimous approval of
the Members.
5.1.4 Limitation on Authority of Members.
5.1.4.1 No Member is an agent of the Company solely by
virtue of being a Member, and no Member has authority to act
for the Company solely by virtue of being a Member.
5.1.4.2 Any Member who takes any action or binds the Company
in violation of this Section 5.1 shall be solely responsible for
any loss and expense incurred by the Company as a result of the
unauthorized action and shall indemnify and hold the Company
harmless with respect to the loss or expense.
6
5.2 Meetings of and Voting by Members.
5.2.1 To the extent the Company is managed by its Manager,
and the Managers are designated by Farmstead and TriNET, meetings of
the Members need only be called to consider the admission of a new
Member, the amendment of the Agreement, or as otherwise required
herein. Meetings of Members shall be held at the Company's principal
place of business or at any other place designated by the Managers.
Not less than ten (10) nor more than twenty (20) days before each
meeting, the Person calling the meeting shall give written notice of
the meeting to each Member entitled to vote at the meeting. The
notice shall state the time, place and purpose of the meeting.
Notwithstanding the foregoing provisions, each Member who is entitled
to notice waives notice, if, before or after the meeting, the Member
signs a waiver of the notice which is filed with the records of
Members' meetings, or is present at the meeting in person or by
proxy. Unless this Agreement provides otherwise, at a meeting of
Members, the presence in person or by proxy of a majority of the
Members constitutes a quorum. A Member may vote either in person or
by written proxy signed by the Member or by his/her/its duly
authorized Attorney-in-Fact.
5.2.2 In lieu of holding a meeting, the Members may vote or
otherwise take action by a written instrument indicating the consent
of a majority of the Percentages in interests held by Members.
5.3 Duties of Parties.
5.3.1 The Managers shall devote such time to the business and
affairs of the Company as is necessary to carry out the Managers'
duties set forth in this Agreement. The Managers shall not be
compensated by the Company, except to the extent a Manager may be an
employee of the Company, in which event such Manager's employee
compensation shall be his/her exclusive compensation for all
services.
5.3.2 Except as otherwise expressly provided in Section
5.3.3 hereof, nothing in this Agreement shall be deemed to restrict
in any way the rights of any Member or Manager, or of any Affiliate
of any Member, to conduct any other business or activity whatsoever,
and a Member shall not be accountable to the Company or to any Member
with respect to that business or activity even if the business or
activity competes with the Company's business. The organization of
the Company shall be without prejudice to their respective rights (or
the rights of their respective Affiliates) to maintain, expand or
diversify such other interests and activities and to receive and
enjoy profits or compensation therefrom. Each Member waives any
rights the Member might otherwise have to share or participate in
such other interests or activities of any other Member or the
Member's Affiliates.
7
5.3.3 Each Member understands and acknowledges that the
conduct of the Company's business will involve business dealings and
undertakings with Members and their Affiliates. In any of those
cases, those dealings and undertakings shall be at arm's length and
on commercially reasonable terms.
5.4 Liability. Except as otherwise provided by the Delaware Act,
the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company solely
by reason of being a Covered Person. Except as otherwise expressly
required by law, a Member, in his capacity as such, shall have no liability
in excess of:
5.4.1 the amount of his committed capital contribution
obligations to the extent not made;
5.4.2 his share of any assets and undistributed Profits of
the Company;
5.4.3 his obligation to make other payments expressly
provided for in this Agreement; and
5.4.4 the amount of any distributions wrongfully distributed
to him either as a result of a computational error or any amount in
excess of that permitted to be distributed by the Act.
5.5 Exculpation. No Covered Person shall be liable to the Company
or any other Covered Person for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such Covered Person
in good faith on behalf of the Company and in a manner reasonably believed
to be within the scope of authority conferred on such Covered Person by
this Agreement, except that a Covered Person shall be liable for any such
loss, damage or claim incurred by reason of such Covered Person's gross
negligence or willful misconduct, provided nothing herein shall relieve any
Covered Person from its obligations under any agreement between the Covered
Person and the Company or any agreement between Covered Persons.
5.6 Good Faith Reliance. A Covered Person shall be fully protected
in relying in good faith upon the records of the Company and upon such
information, opinions, reports or statements presented to the Company by
any Person as to matters the Covered Person reasonably believes are within
such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Company, including
information, opinions, reports or statements as to the value and amount of
the assets, liabilities, profits, losses or net cash flow or any other
facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
8
5.7 Indemnification. To the fullest extent permitted by applicable
law, a Covered Person shall be entitled to indemnification from the Company
for any loss, damage or claim incurred by such Covered Person by reason of
any act or omission performed or omitted by such Covered Person in good
faith on behalf of the Company and in a manner reasonably believed to be
within the scope of authority conferred on such Covered Person pursuant to
this Agreement, except that no Covered Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Covered Person by reason of gross negligence or willful misconduct with
respect to such acts or omissions; provided, however, that any indemnity
under this Section 5.7 shall be provided out of and to the extent of
Company assets only, and no Covered Person shall have any personal
liability on account thereof. A condition of the Company's obligation of
indemnification hereunder is that the Covered Person provide the Company
with immediate written notice of any claim for which indemnification is
sought, stating the identity of the claimant, the nature and basis of the
claim and the amount thereof, and copies of all notices, documents and
information obtained or received by the Covered Person (at the time of
notice and in the period following such notice until the claim is
resolved). Thereafter the Covered Person, as a condition of the Company's
obligation of indemnification, shall cooperate in the defense of the claim
by the Company, and shall provide the Company with all additional
information and copies of all documents related to the claim received or
obtained by the Covered Person, or otherwise in the possession of the
Covered Person. The Company promptly will notify the Covered Person of its
election to assume the defense of a claim against a Covered Person, in
which event the Company will defend utilizing counsel of the Company's
choice and at the Company's sole expense, and in the event the Company
makes such election, the Covered Person may also participate in the defense
utilizing his own counsel at his sole expense. In the event the Company is
obligated to indemnify hereunder, and the Company elects not to defend, the
Company will advance the Covered Person's reasonable expenses of counsel.
Covered Person will not independently consent to the settlement of any
claim without the prior written consent of the Company, which consent will
not be unreasonably withheld. Except as otherwise provided herein, the
Company's obligation to indemnify shall in all cases be the same, and
subject to the same conditions and limitations as a Delaware corporation's
obligation to indemnify an officer or director of a Delaware corporation
under [SECTION] 145 of the Delaware General Corporation Laws.
5.8 Expenses. Expenses (including legal fees) incurred by a
Covered Person in defending any claim, demand, action, suit or proceeding
may, from time to time, be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt
by the Company of an undertaking by or on behalf of the Covered Person to
repay such amount if it shall be determined that the Covered Person is not
entitled to be indemnified as authorized in Section 5.7 hereof.
Section VI
9
Election of Officers, Terms and Duties
6.1 Election of Officers. At any Managers' meeting, the Managers
shall elect any officers, the election of which the Managers deem expedient
or necessary.
6.2 Term of Office; Vacancies. Each officer shall serve until a
successor is duly elected and qualified. Any officer may be removed at any
time, with or without cause, and with or without notice, by resolution
adopted by the affirmative vote of a majority of the Managers, provided
that President shall at all times be an employee of Farmstead and the
General Manager shall at all times be an employee of TriNET. Vacancies
among the officers by reason of death, resignation or other cause shall be
filled for the unexpired term by majority vote of the Managers then in
office, though the number of such Managers may constitute less than a
quorum.
6.3 Duties of Officers. The duties of the officers of the Company
shall be as designated by this Agreement and/or from time to time
prescribed by the Managers. The officers shall devote such time to the
business and affairs of the Company as necessary to carry out the officer's
duties set forth in this Agreement. The President shall be the Chief
Executive Officer of the Company responsible to the Managers and the
General Manager shall be the Chief Operating Officer of the Company
responsible to the President.
6.4 Liability and Indemnification.
6.4.1 The officers shall not be liable, responsible, or
accountable, in damages or otherwise, to any Member or to the Company
for any act performed by the officers as provided in Sections 5.4,
5.5, and 5.6 hereof.
6.4.2 The Company shall indemnify the officers for any act
performed by the officers within the scope of the authority conferred
on the Managers as provided in Section 5.7 hereof.
Section VII
Transfer of Interests
and Withdrawals of Members
7.1 Transfer of Interests. Except as provided in Sections 8.2 and
12.3 hereof, no Member shall have the right to transfer his/her/its
Membership Interest.
7.2 Withdrawals of Members. No Member shall have the right or
power to Voluntarily Withdraw from the Company, except as otherwise
provided by this Agreement.
Section VIII
10
Dissolution, Liquidation, and
Termination of the Company
8.1 Events of Dissolution. The Company shall be dissolved upon the
occurrence of any of the following:
8.1.1 the unanimous written consent of all the Members;
8.1.2 the approved sale of all or substantially all of the
assets of the Company;
8.1.3 the approved sale of all of the Membership Interests of
the Company;
8.1.4 the entry of a decree of judicial dissolution under the
Act; or
8.1.5 by Farmstead pursuant to Section 8.2.3.
8.2 Right to Purchase Member's Membership Interest.
8.2.1 Each of the Members has the right to purchase the
Membership Interest of the other Member upon the occurrence of any of
the following:
8.2.1.1 upon advanced written notice by the non-breaching
Member if a Member fails to cure any material breach by the
breaching Member of any covenant or obligation under this
Agreement hereunder within thirty (30) calendar days after receipt
by the breaching Member of a written notice from the non-breaching
Member specifying such breach;
8.2.1.2 upon thirty (30) days advanced written notice by a
Member if Avaya changes its policy and permits an ARS/dealer to
sell both new and refurbished Avaya telecommunications systems or
if Avaya permits Farmstead to sell both new and refurbished Avaya
telecommunications systems; or
8.2.1.3 upon advanced written notice by a Member if the
other Member files a voluntary petition of bankruptcy, or an
involuntary petition of bankruptcy is filed against the other
Member and is not discharged within sixty (60) days.
Provided in the event each Member simultaneously exercises its
purchase rights, Farmstead's exercise shall prevail.
8.2.2 If a Member (the "Purchasing Member") initiates the
purchase of the Membership Interest of the other Member (the "Selling
Member") pursuant to Section 8.2.1 hereof, the Purchasing Member
shall purchase the Selling Member's Membership Interest as provided
in this Section 8.2.2.
11
8.2.2.1 The purchase price to be paid by the Purchasing
Member an amount equal to 5x the Company's Earnings Before
deduction for Interest, Taxes, Depreciation and Amortization
("EBITDA") for either (a) the taxable year preceding the effective
date of the purchase (the "Purchase Date"); or (b) EBITDA for the
12 months preceding the purchase date, whichever amount is
higher, multiplied by the Selling member's Percentage Interest.
EBITDA shall be determined in accordance with Federal income tax
principles.
8.2.2.2 The amount determined pursuant to Section 8.2.2.1
hereof shall be payable by the Purchasing Member as follows:
(a) one-third payable in cash upon the Purchase Date;
and
(b) the remaining two-thirds by the Purchasing
Member's unsecured promissory note payable in two
(2) equal annual installments of principal on the
first and second anniversaries of the Purchase
Date, plus interest at a rate equal to one (1)
point over the Wall Street Journal Prime in
effect on the Purchase Date.
8.2.3 In the event of an assignment by TriNET that otherwise
would be permitted under Section 12.3 hereunder, Farmstead shall have
the right to either: (I) to cause the Company to be dissolved; or
(II) purchase the Interest of TriNET during the ninety (90) day
period following the date of receipt of advanced notice of the
assignment as provided in Section 12.3 (the "Assignment Notice").
Farmstead shall exercise its right under subsection (I) by written
notice to TriNET or its successor within thirty (30) days following
its receipt of the Assignment Notice. Farmstead shall exercise its
right under subsection (II) by written notice to TriNET or its
successor within thirty (30) days following its receipt of the
Assignment Notice, and the purchase shall be accomplished as provided
by Section 8.2.2.
8.3 Liquidation. Upon dissolution of the Company, the Managers or
a liquidating trustee, if applicable, shall immediately commence to wind up
the Company's affairs; provided, however, that a reasonable time shall be
allowed for the orderly liquidation of the assets of the Company and the
satisfaction of liabilities to creditors so as to enable the Managers to
minimize the normal losses attendant upon a liquidation. The Members shall
continue to share Profits and Losses during liquidation in the same proportions
as before liquidation. The proceeds of liquidation shall be distributed, as
realized, in the following order and priority:
8.3.1 to creditors of the Company, including Members who are
creditors, to the extent otherwise permitted by law, in satisfaction
of the liabilities of the
12
Company (whether by payment or the making of reasonable provision for
payment thereof other than liabilities for distributions to Members);
8.3.2 to the establishment of reasonable reserves for
contingent obligations of the Company;
8.3.3 to distribute to the Members the remaining proceeds of
liquidation in accordance with their Capital Accounts, after giving
effect to any contributions, distributions and allocations for all
periods through the date of dissolution and for allocations that
would be made if all assets of the Company distributed in kind had
been sold for their fair market value; and
8.3.4 upon distribution in full of each Member's aggregate
Capital Account, the remaining proceeds shall be distributed in
accordance with each Member's Percentage Interest.
8.3.5 Except as otherwise provided in this Agreement, no
Interest Holder shall be obligated to restore a Negative Capital
Account to the Company, and such deficit shall not be considered a
debt owed to the Company or any other person for any purpose
whatsoever.
8.4 Termination. The Company shall terminate when all of the
assets of the Company, after payment of or due provision for all debts,
liabilities and obligations of the Company, shall have been distributed to
the Members in the manner provided for in this Agreement, and the
Certificate of Formation shall have been canceled in the manner required by
the Act. Upon the dissolution of the Company, the Person or Persons
designated to carry out the winding up of the Company (the "Liquidating
Trustee") shall promptly notify the Members of such dissolution.
8.5 Claims of the Members. The Members and assignees shall look
solely to the Company's assets for the return of their capital
contributions, and if the assets of the Company remaining after payment of
or due provision for all debts, liabilities and obligations of the Company
are insufficient to return such capital contributions, the Members and
assignees shall have no recourse against the Company or any other Member.
Section IX
Noncompetition
9.1 Noncompetition by the Company. During the term of the Company,
and for an additional period of one year measured from the effective date
of the Purchase Date pursuant to Section 8.2 hereof, the Company shall not
sell new Avaya telecommunications systems to any customers in the "TriNET
Territory" as defined in Schedule F. Farmstead may sell new and/or
refurbished Avaya telecommunications systems to Farmstead's and/or the
Company's
13
existing customers within the TriNET Territory and/or to branch offices of
existing customers whose principal place of business is outside the TriNET
Territory.
9.2 Noncompetition by TriNET. During the term of the Company, and
for an additional period measured from the effective date of the Purchase
Date pursuant to Section 8.2 hereof, and the longer of (i) one (1) year or
(ii) the period in which Farmstead is making payments to TriNET as provided
in Section 8.2.2 hereof, TriNET shall not sell new Avaya telecommunications
systems to any customers in the Territory, and TriNET shall within sixty
(60) days following the effective date of termination provide Farmstead
with a list of existing customers within the Farmstead Territory. A
customer shall be considered an existing customer if within the thirty-six
(36) months preceding the effective date of termination TriNET has sold an
aggregate of $25,000 in equipment to such customer. Upon Farmstead's
request, TriNET will verify a customer's qualifications as an "existing
customer".
Section X
Proprietary Information
10.1 Confidentiality. Except as may otherwise be agreed between the
Company and the Members, all proprietary information of a Member disclosed
to the Company and identified in writing and marked by the Member as
confidential, including without limitation, a Member's customer lists,
business plans, financial information, and any information regarding other
business opportunities available to a Member, will be treated by the
Company and/or the Member receiving it and their respective employees as
confidential for so long as such Member is a Member and for an additional
five (5) years thereafter. The receiving party shall: (i) treat and
safeguard such confidential information in the same manner as its own
proprietary information; and (ii) require all its employees having access
to such information to agree, in writing, with such Member to keep such
information confidential and to not use such information for any purpose
other than to evaluate the interest of the Member in the Company. The
above-mentioned obligation of confidentiality shall not apply to
information which:
10.1.1 was generally available to the public or was otherwise
part of the public domain at the time of its disclosure; or
10.1.2 becomes generally available to the public or otherwise
part of the public domain after its disclosure other than through an
act of omission or commission of the receiving party in breach of
this Agreement; or
10.1.3 becomes known to the receiving party by disclosure of a
third party under no obligation of confidentiality to the disclosing
Member; or
10.1.4 is or was at any time disclosed to the receiving party
pursuant or subject to any other agreement between the Company and
the Members.
14
10.2 Injunctive Relief. Each Member acknowledges that the injury to
the disclosing Member resulting from any violation by it of any of the
covenants contained in this Article X will be of such a character that it
cannot be adequately compensated by money damages, and, accordingly, the
disclosing Member may, in addition to pursuing its other remedies, obtain
an injunction from any court having jurisdiction of the matter restraining
any such violation; and no bond or other security shall be required in
connection with such injunction.
15
Section XI
Books, Records, Accounting, and Tax Elections
11.1 Bank Accounts. All funds of the Company shall be deposited in
a bank account or accounts maintained in the Company's name. The Managers
shall determine the institution or institutions at which the accounts will
be opened and maintained, the types of accounts, and the Persons who will
have authority with respect to the accounts and the funds therein.
11.2 Books and Records.
11.2.1 The Company shall keep or cause to be kept complete and
accurate books and records of the Company and supporting
documentation of the transactions with respect to the conduct of the
Company's business. The records shall include, but not be limited
to, complete and accurate information regarding the state of the
business and financial condition of the Company, a copy of the
Certificate of Formation and Limited Liability Company Agreement and
all amendments to the Certificate and Limited Liability Company
Agreement; a current list of the names and last known business,
residence, or mailing addresses of all Members and Managers; and the
Company's federal, state, or local tax returns and the Company's
financial statements for the three (3) most recent years.
11.2.2 The books and records shall be maintained in accordance
with sound accounting practices and shall be available at the
Company's principal office for examination by any Member or the
Member's duly authorized representative at any and all reasonable
times during normal business hours.
11.2.3 Each Member shall reimburse the Company for all costs
and expenses incurred by the Company in connection with the Member's
inspection and copying of the Company's books and records.
11.3 Annual Accounting Period. The annual accounting period of the
Company shall be its taxable year. The Company's taxable year shall end on
December 31 of each year.
11.4 Reports. Within seventy-five (75) days after the end of each
taxable year of the Company, the Company shall cause to be sent to each
Person who was a Member at any time during the accounting year then ended:
(i) an annual compilation report, prepared by the Company's independent
accountants in accordance with generally accepted accounting principles,
consistently applied; and (ii) a report summarizing the fees and other
remuneration paid by the Company to any Member, the Managers or any
Affiliate in respect of the taxable year. In addition, within seventy-five
(75) days after the end of each taxable year of the Company, the Managers
shall cause to be sent to each Person who was an Interest Holder at any
time during the taxable year then ended, that tax information concerning
the Company
16
which is necessary for preparing the Interest Holder's income tax returns for
that year. At the request of any Member, the Company shall cause an audit of
the Company's books and records to be prepared by independent accountants for
the period requested by the Member.
11.5 Tax Matters Partner. Farmstead shall be the Company's tax
matters partner ("Tax Matters Partner"). The Tax Matters Partner shall
have all powers and responsibilities provided in Code Section 6221, et seq.
The Tax Matters Partner shall keep all Members informed of all notices from
government taxing authorities which may come to the attention of the Tax
Matters Partner. The Company shall pay and be responsible for all
reasonable third-party costs and expenses incurred by the Tax Matters
Partner in performing those duties. A Member shall be responsible for any
costs incurred by the Member with respect to any tax audit or tax-related
administrative or judicial proceeding against any Member, even though it
relates to the Company. The Tax Matters Partner may not compromise any
dispute with the Internal Revenue Service without the approval of the
Members.
11.6 Tax Elections. The Managers shall have the authority to make
all Company elections permitted under the Code, including, without
limitation, elections of methods of depreciation and elections under Code
Section 754. The decision to make or not make an election shall be at the
Managers' sole and absolute discretion.
11.7 Title to Company Property. All real and personal property
acquired by the Company shall be acquired and held by the Company in its
name.
Section XII
General Provisions
12.1 Assurances. Each Member shall execute all such certificates
and other documents and shall do all such filing, recording, publishing and
other acts as the Managers deems appropriate to comply with the
requirements of law for the formation and operation of the Company and to
comply with any laws, rules, and regulations relating to the acquisition,
operation, or holding of the property of the Company.
12.2 Notifications. Any notice, demand, consent, election, offer,
approval, request, or other communication (collectively a "notice")
required or permitted under this Agreement must be in writing and either
hand delivered or sent by certified or registered mail, postage prepaid,
return receipt requested. Any notice to be given hereunder by the Company
shall be given by the Managers. A notice must be addressed to an Interest
Holder at the Interest Holder's last known address on the records of the
Company. A notice to the Company must be addressed to the Company's
principal office. A notice that is hand delivered shall be deemed given
upon delivery of such notice. A notice that is sent by mail will be deemed
given three (3) business days after it is mailed. Any party may designate,
by notice to all of the others, substitute addresses or addressees for
notices; and, thereafter, notices are to be directed to those substitute
addresses or addressees.
17
12.3 Assignment. The Interests of a Member are not assignable,
provided that subject to the provisions of Section 8.2.3 the rights and
obligations of Farmstead and/or TriNET under this Agreement may be freely
assigned at any time to any Person that acquires all or substantially all
of the assets of the Member in a bona-fide arms-length transaction,
provided such Person expressly assumes in writing all the obligations of
the assigning Member hereto, as applicable, and further provided that in
the case of any assignment, the provisions of Sections IX and X of this
Agreement shall continue to be binding upon the assignor. The Member
assigning shall give the other Member at least forty-five (45) days advance
written notice of any intended assignment pursuant to the immediately
preceding sentence. Such notice shall set forth: (A) the name of the
assignee and (B) the expected effective date of such intended assignment.
12.4 Arbitration. Except as expressly provided to the contrary in
Section X of this Agreement, any dispute, claim or controversy arising from
or related in any way to this agreement or the interpretation, application,
breach, termination or validity thereof, including any claims of inducement
of this Agreement by fraud or otherwise will be resolved by arbitration
before a single arbitrator in Hartford, Connecticut, pursuant to the
commercial rules then obtaining of the American Arbitration Association,
except to the extent such rules are inconsistent with the express
provisions of this Agreement, in which case the provisions of this
Agreement shall control. Judgment upon any such award rendered may be
entered by any court having jurisdiction thereof. Each party hereto waives
any claim to punitive or exemplary damages from the other. The parties
agree to cooperate to attempt to select an arbitrator within twenty (20)
days of initiation of the arbitration, to meet with the arbitrator within
thirty (30) days of selection, and to agree at that meeting, or before,
upon procedures for discovery and as to the conduct of the hearing which
will result in the hearing being concluded within no more than six (6)
months of initiation of arbitration and in the award being rendered within
thirty (30) days of the conclusion of the hearings. If the parties fail to
agree on such procedures, the arbitrator shall determine such procedures.
The arbitrator (i) shall not have any power or authority to add to, alter,
amend or modify the terms of this Agreement, (ii) shall have no power to
award punitive or exemplary damages, and (iii) shall interpret and construe
this Agreement in accordance with, and shall be bound by, the laws of the
State of Delaware (except that this Section shall be governed by the
Federal Arbitration Act). The arbitrator shall render an opinion setting
forth findings of fact and conclusions of law with the reasons therefor
stated. To the extent possible, the arbitration hearings and award will be
maintained in confidence.
12.5 Complete Agreement. This Agreement constitutes the complete
understanding of the parties hereto, and supersedes all prior written and
oral communications among them, including any prior representation,
statement, condition, or warranty. This Agreement may not be amended
without the written consent of all of the Members.
12.6 Applicable Law. All questions concerning the construction,
validity, and interpretation of this Agreement and the performance of the
obligations imposed by this
18
Agreement shall be governed by the internal law of the State of Delaware,
without regard to conflicts of law provisions.
12.7 Binding Provisions. This Agreement is binding upon, and shall
inure to the benefit of, the parties hereto and their respective heirs,
executors, administrators, personal and legal representatives, successors,
and permitted assigns.
12.8 Separability of Provisions. Each provision of this Agreement
shall be considered separable; and if, for any reason, any provision or
provisions herein are determined to be invalid and contrary to any existing
or future law, such invalidity shall not impair the operation of or affect
those portions of this Agreement which are valid.
12.9 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original and all
of which, when taken together, constitute one and the same document. The
signature of any party to any counterpart shall be deemed a signature to,
and may be appended to, any other counterpart.
12.10 Amendment. This Agreement may be amended by a Majority Vote of
the Managers, provided amendment to Sections III, IV, V, VII, VIII, IX and
X also shall require the unanimous approval of the Members.
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth above.
BEING ALL OF THE MEMBERS:
Farmstead Telephone Group, Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its CEO
Duly Authorized
TriNET BUSINESS TRUST, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Trustees
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Treasurer
Duly Authorized
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its President
Duly Authorized
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Clerk
Duly Authorized
20
SCHEDULE A
Definitions
"Act" means the Delaware Limited Liability Company Act, as amended from
time to time.
"Affiliate" means, with respect to any Member, any Person: (i) that owns
more than fifty percent (50%) of the voting interests in the Member; or
(ii) in which the Member owns more than fifty percent (50%) of the voting
interests; or (iii) in which more than fifty percent (50%) of the voting
interests are owned by a Person who has a relationship with the Member
described in Clause (i) or (ii) above.
"Agreement" means this Limited Liability Company Agreement, as amended from
time to time.
"Capital Account" means the account maintained by the Company for each
Interest Holder in accordance with the following provisions:
(i) an Interest Holder's Capital Account shall be credited with the
Interest Holder's Capital Contributions, the amount of any Company
liabilities assumed by the Interest Holder (or which are secured by Company
property distributed to the Interest Holder), and the Interest Holder's
distributive share of Profit; and
(ii) an Interest Holder's Capital Account shall be debited with the
amount of money and the fair market value of any Company property
distributed to the Interest Holder, the amount of any liabilities of the
Interest Holder assumed by the Company (or which are secured by property
contributed by the Interest Holder to the Company), and the Interest
Holder's distributive share of Losses.
If any Interest is transferred pursuant to the terms of this
Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent the Capital Account is attributable to the
transferred Interest. It is intended that the Capital Accounts of all
Interest Holders shall be maintained in compliance with the provisions of
Regulation Section 1.704-1(b)(2)(iv), and all provisions of this Agreement
relating to the maintenance of Capital Accounts shall be interpreted and
applied in a manner consistent with that Regulation.
"Capital Contribution" means the total amount of cash and the fair market
value of any other assets contributed (or deemed contributed under
Regulation Section 1.704-1(b)(2)(iv)(d)) to the Company by a Member, net of
liabilities assumed or to which the assets are subject.
"Cash Flow" means all cash funds derived from operations of the Company
(including interest received on reserves), without reduction for any non-
cash charges, but less cash funds used to pay current operating expenses
and to pay or establish reasonable reserves for future expenses, debt
payments, capital improvements and replacements as determined by the
Managers. Cash
21
Flow shall not include Capital Proceeds but shall be increased by the
reduction of any reserve previously established.
"Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision of any succeeding law.
"Company" means the limited liability company formed in accordance with
this Agreement.
"Covered Person" means Members, Managers, officers and employees of the
Company.
"CST" means the Connecticut Secretary of State.
"DST" means the Delaware Secretary of State.
"Gross Asset Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by an
Interest Holder to the Company shall be the gross fair market value of such
asset, as determined by the contributing Member and the Manger(s), provided
that the initial Gross Asset Values of the assets contributed to the
Company pursuant to Section 3.1 hereof shall be as set forth in Exhibit B
attached hereto, and provided further that, if the contributing Member is a
Manager, the determination of the fair market value of any other
contributed asset shall require the consent of the other Member (determined
without regard to the voting interest of such contributing Member);
(ii) The Gross Asset Values of all Company assets shall be adjusted
to equal their respective gross fair market values, as reasonably
determined by the Manager(s) as of the following times:
(a) the acquisition of an additional interest by any new or
existing Interest Holder in exchange for more than a de minimis
contribution of property (including money);
(b) the distribution by the Company to an Interest Holder of
more than a de minimis amount of property as consideration for an
Interest; and
(c) the liquidation of the Company within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g); provided, however, that
adjustments pursuant to clauses (a) and (b) above shall be made only
if the Manager(s) reasonably determine(s) that such adjustments are
necessary or appropriate to reflect the relative economic interests
of the Interest Holders in the Company;
(iii) The Gross Asset Value of any Company asset distributed to any
Interest Holder shall be adjusted to equal the gross fair market value of
such asset on the date of distribution as
22
reasonably determined by the distributee and the Manager(s), provided that, if
the distributee is a Manager, the determination of the fair market value of the
distributed asset shall require the consent of the other Members owning a
majority of the Percentages (determined without regard to the voting interest
of the distributee Interest Holder); and
(iv) The Gross Asset Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the
extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m) and Section IV
of this Agreement; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this definition to the extent the Manager(s)
reasonably determine(s) that an adjustment pursuant to subparagraph (ii) of
this definition is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparagraph (i), (ii), or (iv) of this definition, then such
Gross Asset Value shall thereafter the adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Profits
and Losses.
"Interest" means a Person's share of the Profits and Losses of, and the
right to receive distributions from, the Company.
"Interest Holder" means any Person who holds an Interest, whether as a
Member, a disassociated Member or as an unadmitted assignee of a Member.
"Involuntary Withdrawal" means, with respect to any Member, the occurrence
of any of the following events:
(i) the Member makes an assignment for the benefit of creditors;
(ii) the Member files a voluntary petition in bankruptcy;
(iii) the Member is adjudged bankrupt or insolvent or there is
entered against the Member an order for relief in any bankruptcy or
insolvency proceeding;
(iv) the Member files a petition or answer seeking for the Member
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law, or regulation;
(v) the Member seeks, consents to, or acquiesces in the appointment
of a trustee for, receiver for, or liquidation of the Member or of all or
any substantial part of the Member's properties;
23
(vi) the Member files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Member in any proceeding described in Subsections (i) through (v);
(vii) any proceeding against the Member seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any statute, law, or regulation, continues for one
hundred twenty (120) days after the commencement thereof, or the
appointment of a trustee, receiver, or liquidator for the Member or all or
any substantial part of the Member's properties without the Member's
agreement or acquiescence, which appointment is not vacated or stayed for
one hundred twenty (120) days or, if the appointment is stayed, for one
hundred twenty (120) days after the expiration of the stay during which
period the appointment is not vacated;
(viii) if the Member is an individual, the Member's death, permanent
disability or adjudication by a court of competent jurisdiction as
incompetent to manage the Member's person or property;
(ix) if the Member is acting as a Member by virtue of being a
trustee of a trust, the termination of the trust;
(x) if the Member is a partnership or another limited liability
company, the dissolution and commencement of winding up of the partnership
or limited liability company;
(xi) if the Member is a corporation, the dissolution of the
corporation or the revocation of its charter;
(xii) if the Member is an estate, the distribution by the fiduciary
of the estate's entire interest in the limited liability company; or
(xiii) if the Member is expelled pursuant to the provisions of this
Agreement.
"Manager" is a Person(s) designated as such in Section V of this Agreement.
"Member" means each Person signing this Agreement and any Person who
subsequently is admitted as a member of the Company.
"Membership Interest" means all of the rights of a Member in the Company,
including a Member's: (i) Interest; (ii) right to inspect the Company's
books and records; (iii) right to participate in the management of and vote
on matters coming before the Company; and (iv) unless this Agreement or the
Certificate of Formation provide to the contrary, right to act as an agent
of the Company.
"Negative Capital Account" means a Capital Account with a balance of less
than zero.
24
"NYSDS" means the New York State Department of State.
"Percentage" means, as to a Member, the percentage set forth after the
Member's name on Exhibit B attached hereto, as amended from time to time,
and as to an Interest Holder who is not a Member, the Percentage of the
Member whose Interest has been acquired by such Interest Holder, to the
extent the Interest Holder has succeeded to that Member's Interest.
"Person" means and includes any individual, corporation, partnership,
association, limited liability company, trust, estate, or other entity.
"Positive Capital Account" means a Capital Account with a balance greater
than zero.
"Profit" and "Loss" means, for each taxable year of the Company (or other
period for which Profit or Loss must be computed) the Company's taxable
income or loss determined in accordance with Code Section 703(a), with the
following adjustments:
(i) all items of income, gain, loss, deduction, or credit required
to be stated separately pursuant to Code Section 703(a)(1) shall be
included in computing taxable income or loss;
(ii) any tax-exempt income of the Company, not otherwise taken into
account in computing Profit or Loss, shall be included in computing taxable
income or loss;
(iii) any non-deductible expenditures of the Company described in
Code Section 705(a)(2)(B) (or treated as such pursuant to Regulation
Section 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profit or Loss, shall be subtracted from taxable income or loss;
(iv) gain or loss resulting from any taxable disposition of Company
property shall be computed by reference to the adjusted book value of the
property disposed of, notwithstanding the fact that the adjusted book value
differs from the adjusted basis of the property for federal income tax
purposes; and
(v) in lieu of the depreciation, amortization, or cost recovery
deductions allowable in computing taxable income or loss, there shall be
taken into account the depreciation computed based upon the adjusted book
value of the asset.
"Regulation" means the income tax regulations, including any temporary
regulations, from time to time promulgated under the Code.
"Transfer" means, when used as a noun, any voluntary sale, hypothecation,
pledge, assignment, attachment, or other transfer, and, when used as a
verb, means, voluntarily to sell, hypothecate, pledge, assign, or otherwise
transfer.
25
"Voluntary Withdrawal" means a Member's dissociation with the Company by
means other than by a Transfer or an Involuntary Withdrawal.
26
SCHEDULE B
List of Members, Capital,
Contributions and Percentages
Name Capital Contribution Percentages
---- -------------------- -----------
Farmstead Telephone Group, Inc. $25,001 50.1%
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TRINET Systems, Inc. $24,999 49.9%
27
SCHEDULE C
Sales Representative and Administrative Services Agreement
The following represents the essential business terms of a Sales
Representative and Administrative Services Agreement between InfiNet
Systems LLC (the "JV") and Farmstead Telephone Group, Inc. ("FTG").
1. Agency. FTG will serve as the exclusive sales agent for the JV
for the sale of new Avaya telecommunications systems ("Products").
2. Administration. FTG will provide to the JV the administrative
services set forth on Schedule 1 attached.
3. Compensation. FTG's compensation for services as sales
representative shall be the actual cost to Farmstead of commissions and
associated payroll taxes paid to its sales force for the sale of Products
and compensation for administration will be the actual cost of services
that Farmstead provides to Infinet. This compensation will be paid
monthly, on or before the 15th day of each month. Net Sales generally
means the invoiced sales price for new Avaya Telephone systems, less
adjustments for returns actually credited and shall exclude sales taxes,
shipping expenses and similar additional changes separately stated on the
invoice.
4. Customers/contacts. The customer/contact list of FTG will be
considered confidential and proprietary to FTG.
A definitive agreement consistent with the terms hereof will be
executed by the JV and FTG.
28
SCHEDULE D
Technical Assistance Agreement
Trinet will provide labor to Infinet at 75% of the GES configured labor.
When labor is supplied on non-configured orders an agreed Quote will be
supplied and signed by both parties.
29
SCHEDULE E
Adoption Agreements for Farmstead's employee welfare and pension benefit
plans
30
SCHEDULE F
TriNET Territory
All the counties in Mass. And R.I.
31