Exhibit 10.17

 

TURNSTONE SYSTEMS, INC.

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Agreement is entered into as of October 10, 2003 (the “Effective Date”) by
and between Turnstone Systems, Inc. (the ”Company”), and Eric S. Yeaman
(“Executive”).

 

1. Duties and Scope of Employment.

 

(a) Position and Duties. Executive has served and will continue to serve as
Chief Executive Officer and Chief Financial Officer of the Company. Executive
will render such business and professional services in the performance of his
duties, consistent with Executive’s position within the Company, as shall
reasonably be assigned to him by the Company’s Board of Directors (the “Board”)
and/or as are contemplated by the Company’s bylaws.

 

(b) Board Membership. While employed by the Company and if requested by the
Board, Executive agrees to serve as a member of the Board without any additional
compensation, subject to any required Board and/or stockholder approval.

 

(c) Obligations. While employed by the Company, Executive will perform his
duties faithfully and to the best of his ability and will devote all business
efforts and time as required by the Company.

 

2. At-Will Employment. The parties agree that Executive’s employment with the
Company will be “at-will” employment and may be terminated at any time with or
without cause or notice by either party. Executive understands and agrees that
neither his job performance nor promotions, commendations, bonuses or the like
from the Company give rise to or in any way serve as the basis for modification,
amendment, or extension, by implication or otherwise, of his employment with the
Company.

 

3. Place of Employment. The Executive’s services shall be performed at the
Company’s principal executive offices in Santa Clara, California, and upon the
Company’s exit from such executive offices, at the Executive’s home office.

 

4. Compensation. For all services to be rendered by the Executive pursuant to
this Agreement, the Company agrees to pay the Executive a base salary (the “Base
Salary”) at an annual rate of not less than US$165,000. The Base Salary shall be
paid in periodic installments in accordance with the Company’s regular payroll
practices.

 

5. Employee Benefits. The Executive shall be entitled to participate in employee
benefit plans or programs of the Company, if any, to the extent that his
position, tenure, salary, age, health and other qualifications make him eligible
to participate, subject to the rules and regulations applicable thereto. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.

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6. Vacation. Due to the nature of this engagement, Executive will not be
entitled to any paid vacation.

 

7. Expenses. The Executive shall be entitled to prompt reimbursement by the
Company for all reasonable ordinary and necessary expenses incurred by the
Executive in the performance of his duties and responsibilities under this
Agreement; provided, that the Executive shall properly account for such expenses
in accordance with Company policies and procedures.

 

8. Other Activities. The Executive shall devote all time and efforts necessary
to the business and affairs of the Company and its subsidiaries and to the
diligent and faithful performance of the duties and responsibilities duly
assigned to him pursuant to this Agreement. Provided that the obligations to the
business and affairs of the Company and its subsidiaries have been satisfied,
the Executive may engage in other employment, occupation or consulting activity
for any direct or indirect remuneration without the prior approval of the Board.

 

9. Termination Benefits. If the Executive’s employment with the Company is
terminated by the Company (or its successors or assigns) without Cause or by the
Executive’s death or disability, then the Executive shall be entitled to
receive, on the employment termination date, a lump sum severance payment equal
to six months of his Base Salary. “Cause” shall mean:

 

  (i) the willful or grossly negligent failure by Executive to substantially
perform his duties hereunder,

 

  (ii) Executive’s commission of gross misconduct which is injurious to the
Company,

 

  (iii) breach by Executive of a material provision of this agreement or the
agreements incorporated herein by reference,

 

  (iv) a material violation of a federal or state law or regulation applicable
to the business of the Company,

 

  (v) misappropriation or embezzlement of Company funds or an act of fraud or
dishonesty upon the Company made by Executive,

 

  (vi) Executive’s conviction of, or plea of nolo contendre to, a felony; or

 

  (vii) Executive’s continued failure to comply with directives of the Board

 

No act, or failure to act, by the Executive shall be considered “willful” unless
committed without good faith or without a reasonable belief that the act or
omission was in the Company’s best interest.

 

10. Proprietary Information. During the course of his employment with the
Company and thereafter, the Executive shall not, without the prior written
consent of the Board of Directors, disclose or use for any purpose (except in
the course of his employment under this Agreement and in furtherance of the
business of the Company or any of its affiliates or subsidiaries) any
confidential information or proprietary data of the Company. The Executive
agrees that the Company’s

 

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Confidential Information and Invention Assignment Agreement, previously executed
by the Executive, shall remain in full force and effect.

 

11. Severance Agreement. Upon the termination of his employment and in exchange
for the termination benefits provided in Paragraph 9, the Executive agrees to
execute a severance agreement and release of claims against the Company and to
abide by the terms thereunder.

 

12. Right to Advice of Counsel. The Executive acknowledges that he has consulted
with counsel and is fully aware of his rights and obligations under this
Agreement.

 

13. Successors. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption agreement
prior to the effectiveness of any such succession shall entitle the Executive to
the benefits described in paragraph 9 of this Agreement, subject to the terms
and conditions therein.

 

14. Assignment. This Agreement and all rights under this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees, successors and assigns.
This Agreement is personal in nature, and neither of the parties to this
Agreement shall, without the written consent of the other, assign or transfer
this Agreement or any right or obligation under this Agreement to any other
person or entity; except that the Company may assign this Agreement to any of
its affiliates or wholly-owned subsidiaries, provided, that such assignment will
not relieve the Company of its obligations hereunder. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive’s devisee, legatee, or other designee
or, if there be no such designee, to the Executive’s estate.

 

15. Notices. All notices, requests, demands and other communications called for
hereunder shall be in writing and shall be deemed given (i) on the date of
delivery, or, if earlier, (ii) one (1) day after being sent by a well
established commercial overnight service, or (iii) three (3) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at such addresses as the parties
shall furnish to each other in writing.

 

16. Waiver. Failure or delay on the part of either party hereto to enforce any
right, power, or privilege hereunder shall not be deemed to constitute a waiver
thereof. Additionally, a waiver by either party or a breach of any promise
hereof by the other party shall not operate as or be construed to constitute a
waiver of any subsequent waiver by such other party.

 

17. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in

 

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such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

 

18. Arbitration.

 

(a) Arbitration. In consideration of Executive’s employment with the “Company”,
its promise to arbitrate all employment-related disputes and Executive’s receipt
of the compensation, pay raises and other benefits paid to Executive by the
Company, at present and in the future, Executive agrees that any and all
controversies, claims, or disputes with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company in their
capacity as such or otherwise) arising out of, relating to, or resulting from
Executive’s employment with the Company or the termination of Executive’s
employment with the Company, including any breach of this agreement, shall be
subject to binding arbitration under the arbitration rules set forth in
California Code of Civil Procedure Section 1280 through 1294.2, including
Section 1283.05 (the “Rules”) and pursuant to California law. Disputes which
Executive agrees to arbitrate, and thereby agrees to waive any right to a trial
by jury, include any statutory claims under State or Federal law, including, but
not limited to, claims under Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act of 1990, the Age Discrimination in Employment
Act of 1967, the Older Workers Benefit Protection Act, the California Fair
Employment and Housing Act, the California Labor Code, claims of harassment,
discrimination or wrongful termination and any statutory claims. Executive
further understands that this agreement to arbitrate also applies to any
disputes that the Company may have with Executive.

 

(b) Procedure. Executive agrees that any arbitration will be administered by the
American Arbitration Association (“AAA”) and that a neutral arbitrator will be
selected in a manner consistent with its national rules for the resolution of
employment disputes. The arbitration proceedings will allow for discovery
according to the rules set forth in the National Rules for the Resolution of
Employment Disputes. Executive agrees that the arbitrator shall have the power
to decide any motions brought by any party to the arbitration, including motions
for summary judgment and/or adjudication and motions to dismiss and demurrers,
prior to any arbitration hearing. Executive agrees that the arbitrator shall
issue a written decision on the merits. Executive also agrees that the
arbitrator shall have the power to award any remedies, including attorneys’ fees
and costs, available under applicable law. Executive understands the Company
will pay for any administrative or hearing fees charged by the arbitrator or
AAA. Executive agrees that the arbitrator shall administer and conduct any
arbitration in a manner consistent with the rules and that to the extent that
the AAA’s National Rules for the Resolution of Employment Disputes conflict with
the rules, the rules shall take precedence.

 

(c) Remedy. Except as provided by the rules, arbitration shall be the sole,
exclusive and final remedy for any dispute between Executive and the Company.
Accordingly, except as provided for by the rules, neither Executive nor the
Company will be permitted to pursue court action regarding claims that are
subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or require the Company to adopt a policy not
otherwise required by law which the Company has not adopted.

 

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(d) Availability of injunctive relief. In accordance with Rule 1281.8 of the
California Code of Civil Procedure, Executive agrees that any party may also
petition the court for injunctive relief where either party alleges or claims a
violation of the employment, confidential information, invention assignment
agreement between Executive and the Company or any other agreement regarding
trade secrets, confidential information, nonsolicitation or Labor Code §2870. In
the event either party seeks injunctive relief, the prevailing party shall be
entitled to recover reasonable costs and attorneys’ fees.

 

(e) Administrative relief. Executive understands that this agreement does not
prohibit Executive from pursuing an administrative claim with a local, state or
federal administrative body such as the department of fair employment and
housing, the equal employment opportunity commission or the workers’
compensation board. This agreement does, however, preclude Executive from
pursuing court action regarding any such claim.

 

19. Voluntary Nature of Agreement. Executive acknowledges and agrees that
Executive is executing this agreement voluntarily and without any duress or
undue influence by the Company or anyone else. Executive further acknowledges
and agrees that Executive has carefully read this agreement and that Executive
has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this agreement and fully understand it,
including that Executive is waiving Executive’s right to a jury trial. Finally,
Executive agrees that he/she has been provided an opportunity to seek the advice
of an attorney before signing this agreement.

 

20. Integration. This Agreement, together with the Confidential Information
Agreement, the D&O Indemnification Agreement and the option agreements
previously entered into between the Executive and the Company, represents the
entire agreement and understanding between the parties as to the subject matter
herein and supersedes all prior or contemporaneous agreements whether written or
oral. No waiver, alteration, or modification of any of the provisions of this
Agreement will be binding unless in writing and signed by the Company.

 

21. Headings. The headings of the paragraphs contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.

 

22. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of California.

 

23. Cooperation. Executive shall, without further remuneration, provide
Executive’s reasonable cooperation in connection with (i) any action or
proceeding (or any appeal from any action or proceeding) that relates to events
occurring during Executive’s employment hereunder or (ii) assisting the Company
in patenting, registering, maintaining, enforcing and perfecting any of the
Company’s intellectual property rights. If Executive’s cooperation is needed
under this paragraph, the Company shall use reasonable best efforts to schedule
Executive’s participation at a mutually convenient time, and shall reimburse
Executive for reasonable travel and out-of–pocket expenses (following
presentment of reasonable substantiation). This provision shall survive any
termination of this Agreement or Executive’s employment.

 

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24. Counterparts. This Agreement may be executed in one or more counterparts,
none of which need contain the signature of more than one party hereto, and each
of which shall be deemed to be an original, and all of which together shall
constitute a single agreement.

 

25. Tax Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.

 

26. Acknowledgment. Executive acknowledges that he has had the opportunity to
discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by their duly authorized officers, as of the day and year first
above written.

 

COMPANY:

       

TURNSTONE SYSTEMS, INC.

        By:   /s/    ALBERT Y. LIU                 Date:   10/10/03     

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Title:

 

General Counsel & Director of HR

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EXECUTIVE:

                             

/s/    ERIC S. YEAMAN

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Date:

 

10/10/03

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    Eric S. Yeaman            

 

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