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EXHIBIT 4.4
TURNSTONE SYSTEMS INC.
FOUNDERS RESTRICTED STOCK PURCHASE AGREEMENT
This Founders Restricted Stock Purchase Agreement (the "Agreement") is
made as of the 2nd day of January 1998, between Turnstone Systems, Inc., a
Delaware corporation (the "Company "), and ______________________ (the
"Purchaser").
RECITALS
A. The Purchaser is an employee of the Company, and the Purchaser's
continued participation with the Company is considered by the Company to be
important for the Company's growth.
B. In order the give the Purchaser an opportunity to acquire an equity
interest in the Company as an incentive for the Purchaser to continue to provide
services to the Company, the Company is willing to sell to the Purchaser and the
Purchaser desires to purchase shares of the Company's Common Stock according to
the terms and conditions hereof.
C. Whereas in consideration of the Company's sale to the Purchaser of
its Common Stock, the Purchaser has assigned to the Company all his or her
right, title, and interest in and to certain assets which are necessary to the
Company's business (the "Assignment") pursuant to the Assignment Agreement
between the Company and the Purchaser of even date herewith (the "Assignment
Agreement").
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. PURCHASE AND SALE OF THE COMMON STOCK.
(a) The Company hereby sells to the Purchaser, and the Purchaser
hereby purchases from the Company, ___________ shares of the Company's Common
Stock (the "Shares") at a price of $.001 per share, payable (i) for an aggregate
cash purchase price of $_________ and (ii) by assignment to the Company of
certain intellectual property and other assets of the Purchaser, which the
Company has deemed necessary to its business and prospects. Subject to the
provisions of Section 8 hereof, the Company will promptly, after delivery of
this Agreement, issue a certificate representing the Shares registered in the
name of the Purchaser.
(b) The purchase price for the Shares shall be paid at the time of
delivery of this Agreement by delivery of (i) a check made payable to the
Company in the amount of the aggregate cash purchase price and (ii) by delivery
of the Assignment Agreement between the Company and the Purchaser, in
substantially the form attached hereto as Exhibit A, pursuant to which the
Purchaser will assign to the Company all his or her right, title, and interest
in the assets designated therein.
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2. REPURCHASE OPTION.
(a) All of the Shares shall be subject to the right of the Company
to repurchase the Shares as set forth in this Section 2 (the "Repurchase
Option"). In the event the Purchaser shall cease to be employed by the Company,
including any parent or subsidiary of the Company, for any reason, with or
without cause, including involuntary termination, death, or temporary or
permanent disability (a "Termination"), the Repurchase Option shall come into
effect. Following a Termination, the Company shall have the right, as provided
in subsection (c) of this Section 2, to repurchase from the Purchaser or his
successor, as the case may be, at the purchase price per share originally paid
as set forth in Section 1 ("Option Price"), a portion of the Shares computed as
follows:
(i) All of the Shares shall be deemed subject to the Repurchase
Option effective as of October 1, 1997;
(ii) Subject to the Purchaser's continued employment with the
Company, the Repurchase Option shall lapse with respect to 1/48th of the Shares
on the first day of each calendar month following _____________________ (the
"Commencement Date"), such that, subject to continued employment with the
Company, all the Shares shall be released from the Repurchase Option effective
________________.
(iii) In the event of (A) a merger or consolidation of the
Company with or into any other corporation or corporations (but excluding any
transaction or series of transactions effected solely for the purpose of
reincorporating the Company into another jurisdiction and any transaction(s) in
which the stockholders of the Company immediately prior to such transaction(s)
control, immediately after consummation of the transaction(s), more than 50% of
the voting power of the surviving entity) or (B) a sale of all or substantially
all the assets of the Company, then, immediately upon the closing of such
transactions or series of transactions, (the "Transaction Closing"), the
Repurchase Option shall lapse as to 75% of the Shares then subject to the
Repurchase Option (subject to adjustments for stock splits, stock dividends and
the like). In the event of the involuntary termination of the Purchaser's
employment (other than by death or disability) with the Company (or any parent,
subsidiary, or other related corporation of any surviving entity or any acquiror
or related party of an acquiror of all or substantially all of the assets of the
Company) within twelve months of the date of the Transaction Closing, the
Repurchase Option shall immediately lapse with respect to any Shares then
subject thereto. For purposes only of this section 2(a)(iii), "involuntary
termination" shall mean (i) without the Purchaser's express written consent, a
significant reduction of the Purchaser's duties, position, or responsibilities,
as an employee of the Company or the removal of the Purchaser from such position
and responsibilities, unless the Purchaser is provided with a comparable
position (i.e., a position of equal or greater organizational level, duties,
authority, compensation and status); (ii) a significant reduction by the Company
in the base salary of the Purchaser as in effect immediately prior to such
reduction; (iii) a material reduction by the Company in the kind or level of
employee benefits to which the Purchaser is entitled immediately prior to such
reduction with the result that the Purchaser's overall benefits package is
significantly reduced; or (iv) without the Purchaser's express written consent,
the relocation
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of the Purchaser to a facility or a location more than fifty (50) miles from the
Company's offices immediately prior to the date of the Transaction Closing.
(b) Within 90 days following a Termination, the Company may exercise
the Repurchase Option by written notice delivered or mailed as provided in
Section 14 (with a copy to the Escrow Holder referred to in Section 8). At the
Company's option, the Option Price for the Shares repurchased may be paid (i) by
delivery with such notice of a check to the Purchaser or his executor in the
amount of the purchase price for the Shares being repurchased, (ii) by
cancellation by the Company of an amount of the Purchaser's indebtedness to the
Company equal to the purchase price for the Shares being repurchased, or (iii)
by a combination of (i) and (ii) so that the combined payment and cancellation
of indebtedness equals such repurchase price. Upon delivery of such notice and
payment of the repurchase price, the Shares being repurchased and all rights and
interests therein shall be canceled, and the Purchaser shall no longer be
considered the owner of the Shares repurchased for record or any other purposes.
3. STOCK SPLITS, ETC. If, from time to time during the term of this
Agreement:
(a) there is any stock dividend or liquidating dividend of cash
and/or property, stock split, or other change in the character or amount of any
of the outstanding securities of the Company; or
(b) there is any liquidation or consolidation;
then, in such event, any and all new, substituted or additional
securities, or other property to which the Purchaser is entitled by reason of
his ownership of Shares shall be immediately subject to this Agreement and be
included in the word "Shares" for all purposes with the same force and effect as
the Shares presently subject to the Repurchase Option, right of first refusal,
and other terms of this Agreement. While the aggregate Option Price shall remain
the same after each such event, the Option Price per Share upon execution of the
Repurchase Option shall be appropriately adjusted. In the event of any cash
dividend or liquidating distribution made with respect to the Shares, the
Company may apply the amount thereof against any indebtedness owed by Purchaser
to the Company.
4. RESTRICTION ON TRANSFER. The Purchaser shall not sell, transfer,
pledge, or otherwise dispose of any Shares which remain subject to the
Repurchase Option other than a pledge in connection with indebtedness owed to
the Company.
5. RIGHT OF FIRST REFUSAL. Before any Shares registered in the name of
the Purchaser or of any transferee thereof, that are no longer subject to the
Repurchase Option, may be sold or transferred (including transfer by operation
of law), such Shares shall first be offered to the Company as follows:
(a) The Purchaser shall deliver a notice to the Company stating (i)
the Purchaser's bona fide intention to sell or transfer such Shares, (ii) the
number of such Shares to be sold or
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transferred, (iii) the price for which the Purchaser proposes to sell or
transfer such Shares, and (iv) the name of the proposed purchaser or transferee.
(b) Within thirty (30) days after receipt of such notice, the
Company or its assignee may elect to purchase all or part of the Shares to which
the notice refers, at the price per share specified in the notice. Full payment
for all the Shares to be purchased by the Company shall be made by cash, check,
or cancellation of indebtedness by the Company or its assignee to the Purchaser
within thirty (30) days after receipt of the notice.
(c) If the Shares to which the notice refers are not elected to be
purchased as provided in Section 5(b), the Purchaser may sell the Shares to any
person named in the notice at the price specified in the notice or at a higher
price, provided that such sale or transfer is consummated within 60 days of the
date of the notice to the Company, and, provided further, that any such sale is
in accordance with all the terms and conditions hereof.
(d) Any shares so transferred will continue to be subject to the
right of first refusal provided in this Section 5.
The provisions of this Section 5 shall terminate on (i) the
effective date of a registration statement filed by the Company under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to an
underwritten public offering of Common Stock of the Company or (ii) the closing
date of a sale of assets or merger of the Company or other acquisition
transaction pursuant to which stockholders of the Company receive securities of
a buyer whose shares are publicly traded.
The provisions of Sections 5(a), 5(b) and 5(c) shall not apply to a
transfer of any Shares by the Purchaser, either during his lifetime or on death
by will or intestacy, to his ancestors, descendants, or spouse, or any custodian
or trustee for the account of the Purchaser or the Purchaser's ancestors,
descendants, or spouse; provided that, in each such case, any such transferee
shall receive and hold such Shares subject to the provisions of this Section 5,
and that there shall be no further transfer of such Shares except in accordance
herewith.
The Company shall not be required (i) to transfer on its share
register any Shares which shall have been purportedly sold or transferred if
such transfer would be in violation of this Agreement, or (ii) to treat as owner
of such Shares, to accord the right to vote as such owner, or to pay dividends
to any purported transferee to whom such Shares shall have purportedly been so
transferred.
6. LEGENDS. All certificates representing any of the Shares shall have
endorsed thereon legends in substantially the following form:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER, INCLUDING A RIGHT OF FIRST REFUSAL ON
TRANSFERS, SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE
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REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."
(b) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) Any legend required to be placed thereon by the California
Commissioner of Corporations or required by the applicable blue sky laws of any
state.
7. PURCHASER'S REPRESENTATIONS. In connection with his or her purchase
of the Shares, the Purchaser hereby represents and warrants to the Company as
follows:
(a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. The Purchaser
is purchasing the Shares solely for investment and not with any present
intention of selling or otherwise disposing of the Shares or any portion thereof
in any transaction other than a transaction exempt from registration under the
Securities Act. The Purchaser also represents that the entire legal and
beneficial interest of the Shares is being purchased, and will be held, for the
Purchaser's account only, and neither in whole nor in part for any other person
except to the extent held jointly with Purchaser's spouse.
(b) RESIDENCE. The Purchaser's principal residence is located at the
address indicated beneath the Purchaser's signature below.
(c) INFORMATION CONCERNING COMPANY. The Purchaser has had the
opportunity to discuss the plans, operations, and financial condition of the
Company with its officers and has received all information the Purchaser has
deemed appropriate to enable the Purchaser to evaluate the financial risk
inherent in investing in the Shares. Purchaser either has a preexisting business
or personal relationship with the Company or any of its officers, directors, or
controlling persons or by reason of Purchaser's business or financial experience
or the business or financial experience of Purchaser's professional advisors who
are unaffiliated with and who are not compensated by the Company, directly or
indirectly, could be reasonably assumed to have the capacity to evaluate the
merits and risks of an investment in the Company and to protect Purchaser's own
interests in connection with these transactions.
(d) ECONOMIC RISK. The Purchaser realizes that the purchase of the
Shares involves a high degree of risk, and the Purchaser is able, without
impairing his or her financial condition, to hold the Shares for an indefinite
period of time and to suffer a complete loss of their value.
(e) RESTRICTED SECURITIES. The Purchaser acknowledges that the sale
of the Shares has not been registered under the Securities Act. The Shares must
be held indefinitely unless
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subsequently registered under the Securities Act or an exemption from such
registration is available, and the Company is under no obligation to register
the Shares.
(f) DISPOSITION UNDER RULE 144. The Purchaser understands:
(i) that the Shares are restricted securities within the meaning
of Rule 144 promulgated under the Act which limits the sale of the Shares in a
public market transaction;
(ii) that (unless Rule 701 promulgated under the Act is
available) the exemption from registration under Rule 144 will not be available,
in any event, for at least one year from the date of purchase of and actual
payment for the Shares, and even then will not be available unless (A) a public
trading market then exists for the Common Stock of the Company, (B) adequate
information concerning the Company is then available to the public, and (C)
other terms and conditions of Rule 144 are complied with; and
(iii) that certain sales of the Shares may be made only in
limited amounts in accordance with such terms and conditions.
(iv) that the resale provisions of Rule 701, if available, will
not apply until 90 days after the Company becomes subject to the reporting
obligations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(v) that there can be no assurance that the requirements of Rule
144 or Rule 701 will be met, or that the stock will ever be saleable.
(g) FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
the representations set forth above, the Purchaser further agrees that he shall
in no event make any disposition of any portion of the Shares unless and until:
(i) (A) there is in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with said registration statement; (B) the resale provisions of
Rule 701 or Rule 144 are available in the opinion of counsel to the Company; or
(C)(1) the Purchaser shall have notified the Company of the proposed disposition
and shall have furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, (2) the Purchaser shall have
furnished the Company with an opinion of the Purchaser's counsel, reasonably
acceptable to the Company to the effect that such disposition will not require
registration of such shares under the Act, and (3) such opinion of the
Purchaser's counsel shall have been concurred in by counsel for the Company and
the Company shall have advised the Purchaser of such concurrence; and,
(ii) the Shares proposed to be transferred are no longer subject
to the Repurchase Option and the Purchaser shall have complied with the right of
first refusal set forth in Section 5.
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(h) VALUATION OF SHARES. The Purchaser understands that the Shares
have been valued by the Company's Board of Directors for the purpose of this
sale and that the Company believes this valuation represents a fair attempt at
reaching an accurate appraisal of its worth. The Purchaser also understands,
however, that the Company cannot give any assurances that such price is in fact
the fair market value of the Shares.
(i) SECTION 83(b) ELECTION. The Purchaser understands that Section
83 of the Internal Revenue Code of 1986, as amended (the "Code"), taxes as
ordinary income the difference between the amount paid for the Shares and the
fair market value of the Shares as of the date any restrictions on the Shares
lapse. In this context, "restriction" means the right of the Company to buy back
the Shares pursuant to the Repurchase Option. The Purchaser understands that he
or she may elect to be taxed at the time the Shares are purchased rather than
when and as the Repurchase Option expires, by filing an election under Section
83(b) of the Code with the Internal Revenue Service within 30 days from the date
of purchase. Even if the fair market value of the Shares equals the amount paid
for the Shares, the election must be made to avoid adverse tax consequences in
the future. The Purchaser understands that failure to make this filing in a
timely manner will result in the recognition of ordinary income by the
Purchaser, as the Repurchase Option lapses on any difference between the
purchase price and the fair market value of the Shares at the time such
restrictions lapse.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
(j) Responsibility for Tax Consequences. Each Purchaser has reviewed
the federal, state, local and foreign tax consequences of this investment and
the transactions contemplated by this Agreement (including any tax consequences
that may result now or in the future under recently enacted tax legislation) and
has had the opportunity to consult with his or her tax advisors, if any,
regarding such consequences. Each Purchaser acknowledges that he or she is not
relying on any statements or representations of the Company or any of its agents
in regard to such tax consequences and understands that he or she (and not the
Company) shall be responsible for his or her own tax liability that may arise as
a result of this investment or the transactions contemplated by this Agreement.
Each Purchaser acknowledges that the Company has no obligation in regard to the
future conduct of its business, to act or refrain from acting in any manner,
regardless of the loss of any tax benefit to Purchaser in connection with the
purchase, ownership, or sale of the Stock, which may result from such action or
inaction.
8. ESCROW. As security for the faithful performance of the terms of
this Agreement and to insure the availability for delivery of unvested Shares
upon exercise of the Repurchase Option, the Purchaser hereby pledges and
delivers for deposit with the Secretary of the Company, or such other person
designated by the Company, as escrow agent in this transaction ("Escrow Agent"),
two stock assignments duly endorsed (with date and number of shares blank)
together with the certificates evidencing the Shares. Such documents are to be
held by the Escrow Agent and delivered by the Escrow Agent pursuant to the
following instructions of the Company and the Purchaser:
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(a) In the event the Company and/or any assignee of the Company
exercises the Repurchase Option, Purchaser and the Company hereby irrevocably
authorize and direct the Escrow Agent to execute the transaction contemplated by
the notice of repurchase in accordance with the terms of such notice.
(b) In connection with such transaction, the Escrow Agent is
directed (i) to date the stock assignment necessary for the transfer in
question, (ii) to fill in the number of shares being transferred, and (iii) to
deliver such assignment, together with the certificate evidencing the Shares to
be transferred, to the Company against the delivery of the purchase price for
the number of shares of stock being purchased pursuant to the exercise of the
Repurchase Option.
(c) Purchaser irrevocably authorizes the Company to deposit with the
Escrow Agent any certificates evidencing the Shares to be held by the Escrow
Agent hereunder and any additions and substitutions to said shares as defined
herein. Purchaser irrevocably constitutes and appoints the Escrow Agent as his
attorney-in-fact and agent for the term of this escrow to execute all documents
appropriate to make such securities negotiable and to complete any transaction
herein contemplated.
(d) Upon written request of the Purchaser, but no more than once per
calendar year, unless the Repurchase Option has been exercised, the Escrow Agent
will deliver to the Purchaser a certificate or certificates representing so many
of the Shares as are not then subject to the Repurchase Option. Within 180 days
after Purchaser is no longer employed by the Company or any parent or subsidiary
of the Company, the Escrow Agent will deliver to Purchaser a certificate or
certificates representing the aggregate number of Shares sold pursuant to this
Agreement and not repurchased by the Company or its assignees pursuant to
exercise of the Repurchase Option.
(e) If at the time of termination of this escrow, the Escrow Agent
has in his possession any documents, securities, or other property belonging to
the Purchaser, the Escrow Agent shall deliver such property to the Purchaser and
be discharged of all further obligations hereunder.
(f) The responsibilities of the Escrow Agent hereunder shall
terminate if he shall cease to be Secretary of the Company or if he shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent. In the absence of such
appointment, the President of the Company shall be the Escrow Agent.
(g) It is understood and agreed that should any dispute arise with
respect to the delivery, ownership, or right of possession of the Shares held by
the Escrow Agent hereunder, the Escrow Agent is authorized to retain without
liability to anyone all or any part of said Shares until such disputes shall
have been settled either by mutual written agreement or by a final order,
decree, or judgment of the arbitrator, if applicable, or of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but the Escrow Agent shall be under no duty whatsoever to institute
or defend such proceedings.
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(h) By signing this Agreement, the Escrow Agent becomes a party
hereto only for the purpose of executing the instructions set forth in this
Section 8 and does not otherwise become a party to this Agreement.
9. MARKET STANDOFF AGREEMENT. In the event that the Company should
propose to offer its securities to the general public in an initial public
offering, the Purchaser agrees, at the option of the managing underwriters of
such offering, not to sell any securities of the Company, other than securities
registered in such offering, for a period specified by the Company not to exceed
180 days from the effective date of the registration statement filed with the
Securities and Exchange Commission, pursuant to which such offering is to be
made. The Purchaser agrees that the Company may assign his or her obligations
hereunder to any managing underwriter of such offering. The Purchaser further
agrees, upon the request of such managing underwriter or underwriters, to
execute and deliver such further agreements and instruments, consistent
herewith, as it or they may reasonably request to effect this limitation.
10. ARBITRATION. At the option of either party, any and all disputes or
controversies, whether of law or fact, and of any nature whatsoever arising from
or respecting this Agreement, unless otherwise expressly provided herein, shall
be decided by arbitration by the American Arbitration Association in accordance
with the rules and regulations of that Association.
(a) The arbitrators shall be selected as follows: In the event the
Company and Purchaser agree on one arbitrator, the arbitration shall be
conducted by such arbitrator. In the event the Company and Purchaser do not so
agree, the Company and Purchaser shall each select one independent, qualified
arbitrator and these two arbitrators shall select a third arbitrator. The
Company reserves the right to reject any individual arbitrator who shall be
employed by or affiliated with a competing organization.
(b) Arbitration shall take place at Palo Alto, California, or any
other location mutually agreeable to the parties. At the request of either
party, arbitration proceedings will be conducted in secrecy. In such case all
documents, testimony, and records shall be received, heard, and maintained by
the arbitrators in secrecy under seal, available for inspection only by the
Company and the Purchaser and their respective attorneys and their respective
experts who shall agree in advance and in writing to receive all such
information confidentially and to maintain such information in secrecy until
such information shall become generally known. The arbitrator, who shall act by
majority vote, shall be able to decree any and all relief of an equitable
nature, including but not limited to such relief as a temporary restraining
order, a temporary or a permanent injunction, or both, and shall also be able to
award damages, with or without an accounting, costs, and reasonable attorneys'
fees. The decree or judgment of an award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.
(c) Reasonable notice of the time and place of arbitration shall be
given to all persons, other than the parties, as shall be required by law, in
which case such persons or their authorized
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representatives shall have the right to attend and participate in all the
arbitration hearings to the extent and in such manner as the law shall require.
11. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applied to agreements among California residents entered
and to be performed entirely within California.
12. RIGHTS AS STOCKHOLDERS. Subject to the provisions and limitations
hereof, Purchaser may, during the term of this Agreement, exercise all rights
and privileges of a stockholder of the Company with respect to the Shares.
13. ADDITIONAL ACTIONS. The parties will execute such further
instruments and take such further action as may reasonably be necessary to carry
out the intent of this Agreement.
14. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by regular or certified mail with
postage and fees prepaid, addressed, if to Purchaser, at his address shown on
the Company's records and, if to the Company, at the address of its principal
corporate offices (Attention: Chief Financial Officer) or at such other address
as such party may designate by ten days' advance written notice to the other
party.
15. ASSIGNMENT. The Company may assign its rights and delegate its
duties under this Agreement. If any such assignment or delegation requires
consent of the California Commissioner of Corporations, the parties agree to
cooperate in requesting such consent. This Agreement shall inure to the benefit
of the successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon Purchaser, his or her heirs,
executors, administrators, successors, and assigns.
16. EMPLOYMENT AT WILL. The Purchaser acknowledges that Purchaser's
employment relationship with the Company is at the will of either the Purchaser
or the Company, unless otherwise agreed in writing, and that nothing in this
Agreement shall affect in any manner whatsoever the right or power of the
Purchaser or the Company, or a parent or subsidiary of the Company, to terminate
Purchaser's employment, for any reason, with or without cause. This Agreement
does not constitute an express or implied promise of continued employment for
the vesting period or any other period.
THE VESTING OF SHARES PURSUANT TO THIS AGREEMENT IS EARNED BY CONTINUED
EMPLOYMENT, AND THE COMPANY'S RIGHT TO REPURCHASE UNVESTED SHARES UPON
TERMINATION OF SUCH EMPLOYMENT, IS ABSOLUTE, WHETHER THE TERMINATION IS
VOLUNTARY OR INVOLUNTARY, OR WITH OR WITHOUT CAUSE.
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IN WITNESS WHEREOF, the parties hereto have executed this Founder's
Stock Purchase Agreement as of the day and year first above written.
"COMPANY" TURNSTONE SYSTEMS, INC.
BY:
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NAME:
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TITLE:
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"PURCHASER"
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Address:
"ESCROW AGENT"
BY:
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NAME:
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TITLE:
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[Turnstone Systems, Inc. Founder's Stock Purchase Agreement Signature Page]
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EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT
This Founder's Assignment Agreement (the "Agreement") is made by and
between Turnstone Systems, Inc., a Delaware corporation (the "Company"), and
____________________ (the "Founder") and is effective as of January 2, 1998.
RECITALS
A. The Company and the Founder are parties to the Founder's Restricted
Stock Purchase Agreement dated January 2, 1998 (the "Purchase Agreement")
pursuant to which the Company agrees to sell and the Founder agrees to purchase
shares of the Company's Common Stock (the "Shares").
B. As consideration for the Company's selling and issuing the Shares to
the Founder, the Founder has agreed to assign to the Company all of his or her
right, title, and interests in certain assets and properties set forth on
EXHIBIT A attached hereto, which the Company has deemed necessary to the conduct
of and prospects for its business (the "Assets").
NOW, THEREFORE, in consideration of the mutual representations
contained herein and for other good and valuable consideration, the parties
hereby agree as follows:
1. ASSIGNMENT OF PROPERTY INTERESTS. For value received pursuant to
this Agreement and the Purchase Agreement, the Executive hereby assigns to the
Company all of his or her right, title, and interests in and to the Assets.
2. GOOD AND MARKETABLE TITLE. The Founder hereby represents and
warrants to the Company that, other than such interests as may be held by P.
Kingston Xxxxxx and M. Xxxxxx Xxxxxx, whose interests are being conveyed to the
Company pursuant to substantially similar agreements simultaneously with the
execution and delivery of this Agreement, the Founder has good and marketable
title to the Assets, subject to no mortgage, pledge, lien, lease, encumbrance or
charge. The Founder knows of no adverse claim that would interfere with its
right to assign or the Company's right to use the Assets. The Founder has no
known obligation to compensate any person for the use of any of the Assets, and
the Founder has not knowingly granted any person or entity any license or other
right to use in any manner any of the Assets, whether requiring the payment of
royalties or not.
3. GENERAL PROVISIONS.
(a) GOVERNING LAW. This Agreement is governed by the laws of the State
of California as applied to agreements between California residents entered and
to be performed entirely within California.
13
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding between the parties hereto relating to the subject matter
herein and merges all prior discussions between them. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement,
will be effective unless in writing signed by the party to be charged.
(c) SEVERABILITY. If one or more of the provisions of this Agreement is
deemed void by law, the remaining provisions will continue in full force and
effect.
(d) SUCCESSORS AND ASSIGNS. This agreement is binding upon and inures
to the benefit of the Founder and the Company and any successor organization or
organizations which will succeed to substantially all of the business and
property of the Company, whether by means of merger, consolidation, acquisitions
of substantially all of the assets of the Company or otherwise, including by
operation of law.
(e) LEGAL EXPENSES. The prevailing party in any legal action between
the parties hereto, arising out of this Agreement, will be entitled, in addition
to any other rights and remedies it may have, to reimbursement for its legal
expenses, including court costs and reasonable attorneys' fees.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and all such counterparts together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
"COMPANY" TURNSTONE SYSTEMS, INC.
BY:
----------------------------------------
NAME:
--------------------------------------
TITLE:
-------------------------------------
"FOUNDER"
-----------------------------------
14
EXHIBIT A
ASSETS ASSIGNED TO TURNSTONE SYSTEMS, INC.
Signature of Founder:
-----------------------------
Print Name of Founder:
----------------------------
Date: January __, 1998
15
CONSENT OF SPOUSE
The undersigned spouse of Purchaser has read and hereby approves the
foregoing Founder's Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of the grant by Turnstone Systems, Inc. to my spouse of the right
to purchase the Shares as set forth in the Agreement, the undersigned hereby
agrees to be irrevocably bound by the Agreement and further agrees that any
community property interest shall be similarly bound by the Agreement. I hereby
irrevocably appoint my spouse as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.
Dated: January __, 1998
-----------------------------------
(signature of spouse)
-----------------------------------
(print name)
16
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ___________________________ hereby sells, assigns,
and transfers unto _________________________, (_________) shares of the Common
Stock of ________________, Inc., standing in the undersigned's name on the books
of said corporation, represented by Certificate No. ______, and does hereby
irrevocably constitute and appoint attorney to transfer the said stock on the
books of the said corporation with full power of substitution in the premises.
Dated: _____________, 19__
-----------------------------------
(signature)
-----------------------------------
(print name)
[This assignment may only be completed and delivered in accordance with
the terms of the Restricted Stock Purchase Agreement between the signatory
hereof and the above-mentioned corporation.]
17
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _________________________ hereby sells, assigns,
and transfers unto ______________________, _______________ (___________) shares
of the Common Stock of _______________, Inc., standing in the undersigned's name
on the books of said corporation, represented by Certificate No. ______, and
does hereby irrevocably constitute and appoint _______________________ attorney
to transfer the said stock on the books of the said corporation with full power
of substitution in the premises.
Dated: _____________, 19__
-----------------------------------
(signature)
-----------------------------------
(print name)
[This assignment may only be completed and delivered in accordance with
the terms of the Restricted Stock Purchase Agreement between the signatory
hereof and the above-mentioned corporation.]
18
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in his gross income for
the current taxable year, the amount of any compensation taxable to him in
connection with his receipt of the property described below:
1. The name, address, taxpayer identification number, and taxable year of the
undersigned and his or her spouse, if applicable, are as follows:
TAXPAYER SPOUSE
NAME
--------------------- ---------------------
ADDRESS
--------------------- ---------------------
--------------------- ---------------------
IDENTIFICATION
NUMBER --------------------- ---------------------
TAXABLE YEAR: ---------------------
2. The property with respect to which the election is made is described as
follows: __________ shares of Common Stock of Turnstone Systems, Inc., a
Delaware corporation (the "Company").
3. The date on which the property was transferred is: _____________________.
4. The property is subject to the following restrictions: The right of the
Company to repurchase the shares, or a portion thereof, at the original
purchase price of the shares.
5. The fair market value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms will never
lapse, of such property is: $_______ ($_______ per share).
6. The amount (if any) paid for such property: $________ ($______ per share).
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: ______________________, 19__
----------------------------------
Taxpayer
The undersigned spouse of taxpayer joins
in this election.
Dated: ______________________, 19__
----------------------------------
Spouse of Taxpayer
