Document:

EXHIBIT
10.5

 

[Certain portions of
this exhibit have been omitted pursuant to Rule 24b-2 and are subject to a
confidential treatment request.  Copies
of this exhibit containing the omitted information have been filed separately with
the Securities and Exchange Commission.  
The omitted portions of this document occur on the last page hereof and
are marked with a **. ]

 

INTERNET ACCESS
AGREEMENT

 

The party
signing below (“Customer”) acknowledges that this Internet Access Agreement
(“Agreement”) is between Customer and Verio Inc. (d/b/a NTT/VERIO)
(“NTT/VERIO”) and that it governs the Internet access services set forth on the
Service Order Form executed by Customer (the “Services”), a copy of which is
attached hereto as Exhibit A and which is incorporated herein by this reference
(the “Service Order Form”).  Customer
can not resell the Services without the express written consent of an officer
of NTT/VERIO.

 

1.     Customer
shall pay the fees for the Services that are set forth on the Service Order
Form.  Payment is due 30 days after date
of invoice.   Accounts unpaid 30 days
after date of invoice are in default and are subject to an interest charge on
the outstanding balance of the lesser of 1.5% per month or the maximum rate
permitted by law.  NTT/VERIO reserves the
right to suspend or terminate Service to any account in default, but any such
suspension does not relieve Customer of the obligation to pay the monthly fees
for the Services.  Stated fees are
exclusive of any taxes which may be levied or assessed upon the Equipment (as
defined below) or Services provided hereunder, all of which shall be paid by
Customer. In the event Customer considers ordering additional Internet access
services pursuant to separate Service Order Form(s), NTT/VERIO agrees to work
with Customer through NTT/VERIO’s Billing Department, if Customer so requests
at the time Customer inquires about such additional services, to determine what
Customer’s tax liability will be for such additional services. Customer
acknowledges that it shall be responsible for such taxes, and for any
additional taxes assessed by governmental authorities after NTT/VERIO has
calculated Customer’s expected tax liabilities.

 

2.     This
Agreement shall be for the term specified on the Service Order Form (the
“Initial Term”).  At the conclusion of
the Initial Term, this Agreement shall continue in effect on a month-to-month
basis at the same prices in effect during the Initial Term until either party
gives at least 30 days advance written notice to the other (prior to the end of
the then current term) of termination of this Agreement.  The Initial Term and billing for the
Services shall begin as of the date on which a NTT/VERIO hub and a functioning
telephone circuit are prepared to route IP packets to Customer’s site.  Notwithstanding the foregoing, Customer may
terminate this Agreement during the Initial Term by giving NTT/VERIO at least
60 days advance written notice, except that Customer remains obligated to pay
all fees due and owing for the balance of the Initial Term, including, without
limitation, fees with respect to any Equipment purchased at Customer’s request
or pursuant to Customer’s order.

 

3.     NTT/VERIO
is acting only as a reseller with respect to the hardware and software offered
under this Agreement (“Equipment”), which was manufactured by a third
party.  Customer’s sole remedies for any
malfunction or defect in the Equipment are set forth in Section 10 below.  If NTT/VERIO provides Equipment to Customer
free of charge, within 10 business days following termination of this Agreement
for any reason, Customer must either (i) at Customer’s expense, return the
Equipment to NTT/VERIO in its original condition, normal wear and tear
excepted, or (ii) purchase the Equipment at the rate of 75% of its original
retail value.  Customer will be invoiced
(at the above-referenced 75% rate) for any Equipment not purchased or returned
within such time period. In the event Customer relocates its Internet access
services to another NTT/VERIO Point of Presence (“POP”), NTT/VERIO will pass
through to Customer third party-provided (i.e. Bell local loops) circuit move
expenses at cost.

 

4.     NTT/VERIO
exercises no control over, and specifically rejects any responsibility for, the
content, accuracy or quality of information passing or obtained through
NTT/VERIO’s host computers, network hubs and points of presence (the “NTT/VERIO
Network”).  Use of any information
obtained via the NTT/VERIO Network is strictly at Customer’s own risk.

 

5.     All
use of the NTT/VERIO Network, the Services and any related services must at all
times comply with the then-current version of the NTT/VERIO Acceptable Use
Policy (the “AUP”), which is expressly made a part of this Agreement and is
available at www.verio.com.  NTT/VERIO
reserves the right to amend the AUP from time to time.  Any amendments to the AUP shall be effective
upon posting at the URL.  NTT/VERIO
reserves the right to suspend the Services or terminate this Agreement in the
event of notice of a possible violation of the AUP.  Customer agrees to indemnify and hold harmless NTT/VERIO and its
affiliates from any losses, damages, costs or expenses (collectively “Claims”)
arising out of or relating to Customer’s use of the NTT/VERIO Network or the
Services in any way, including any Claim which, if true, would constitute a
violation of the AUP. Customer acknowledges and agrees that NTT/VERIO will
provision the Services hereunder subject to its Privacy Policy, as amended from
time to time, a copy of which is available at www.verio.com.

 

6.     NTT/VERIO
reserves the right to monitor customer’s bandwidth usage and to utilize
technology to limit Customer’s bandwidth usage to ordered amounts.

 

7.     EXCEPT
AS EXPRESSLY SET FORTH IN SECTION 10 BELOW, NTT/VERIO PROVIDES THE
SERVICES AND EQUIPMENT “AS IS”; MAKES NO EXPRESS WARRANTIES OF ANY KIND
WITH RESPECT TO THE SERVICES OR EQUIPMENT; AND DISCLAIMS ALL OTHER
WARRANTIES WITH RESPECT TO THE SERVICES AND EQUIPMENT, INCLUDING, BUT NOT
LIMITED TO, THE WARRANTIES OF TITLE, MERCHANTABILITY, NON-INFRINGEMENT OR
FITNESS FOR A PARTICULAR PURPOSE. 
NTT/VERIO shall not be liable for any failure or delay in performance
due to circumstances beyond its reasonable control, which shall include,
without limitation, acts of God, earthquakes, labor disputes, changes in law,
regulation or government policy, riots, war, fire, epidemics, acts or omissions
of vendors or suppliers, equipment failures, transportation difficulties, or

 

 

any other such occurrences. 
Customer may terminate this Agreement if any such event of Force Majeure
continues for a continuous period of 10 days.

 

8.     NEITHER
PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES THAT ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE
SERVICES PROVIDED HEREUNDER, INCLUDING WITHOUT LIMITATION ANY SUCH DAMAGES FOR
LOSS OF DATA RESULTING FROM DELAYS, NON-DELIVERIES, MISDELIVERIES OR SERVICE
INTERRUPTIONS.  Notwithstanding anything
to the contrary stated in this Agreement, Customer’s sole remedies for any claims
relating to the Services or the NTT/VERIO Network are set forth in
Section 10 below.  In no event will
NTT/VERIO’s and it affiliates’ collective liability for any Claims or causes of
action, whether in contract or tort, exceed the amount paid by Customer for the
Services during the 12-month period prior to the date the Claim occurred or the
cause of action arose.

 

9.     Any
Internet Protocol numbers (“IP Numbers”) assigned to Customer by NTT/VERIO in
connection with the Services shall be used only in connection with the
Services.  In the event Customer
discontinues use of the Services for any reason, or this Agreement terminates
for any reason, Customer’s right to use the IP Numbers shall terminate.  NTT/VERIO reserves the right to change the
IP Numbers upon notice to Customer.

 

10.   The
Service Level Agreement (“SLA”) for the Services, which is made a part of this
Agreement, is set forth at http://sla-info.verio.net.  The SLA sets forth Customer’s sole remedies for any claim
relating to the Services or the NTT/VERIO Network, including any failure to
meet any guarantee set forth in the SLA. In the event that Customer experiences
six (6) or more unrelated Network Outages (as defined in the SLA), which are
more than twenty four hours apart, in any 2-month period (“Chronic Outage”) and
Customer’s use of the Services is materially adversely affected by such Chronic
Outage, Customer may terminate this Agreement without termination liability or
fees upon thirty (30) days’ written notice and explanation to NTT/VERIO
detailing how such Chronic Outage has materially adversely affected its use of
the Services.

 

11.   This
Agreement may be terminated immediately upon written notice by either party if
the other party becomes insolvent or involved in a liquidation or termination
of its business, files a bankruptcy petition, has an involuntary bankruptcy
petition filed against it (if not dismissed within 30 days of filing), becomes
adjudicated bankrupt, or becomes involved in an assignment for the benefit of
its creditors.  In the event this
Agreement is terminated pursuant to this paragraph, Customer shall be
responsible only for payment of all charges incurred through the effective date
of termination.

 

12.   Neither
party may use the other party’s name, trademarks, tradenames or other
proprietary identifying symbols without the prior written approval of the other
party.

 

13.   Either
party may assign this Agreement either to an affiliate or as part of a
corporate reorganization, consolidation, merger or sale of all or substantially
all of its assets; provided, however, that, in order for such
assignment to be effective (i) the assigning party shall give written notice to
the non-assigning party of any such assignment and (ii) NTT/VERIO must confirm
that Customer’s assignee meets NTT/VERIO’s standard credit requirements for
customers of the applicable Services. 
Except as set forth in the preceding sentence, neither party may assign
this Agreement, in whole or in part, without the prior written consent of the
other party, which consent will not be unreasonably withheld or delayed.  No failure on the part of either party to
exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right or remedy granted hereby or by law.

 

14.   The
validity, interpretation, enforceability and performance of this agreement
shall be governed by and construed in accordance with the laws of the State of
Colorado.  This Agreement may not be
amended except upon the written consent of Customer and an officer of
NTT/VERIO.

 

15.   This
Agreement supersedes all previous and contemporaneous written and oral
representations, understandings or agreements related to the subject matter
herein and shall prevail notwithstanding any variance with terms and conditions
of any order submitted.  Acceptance of
this Agreement by NTT/VERIO may be subject, in NTT/VERIO’s absolute discretion,
to satisfactory completion of a credit check. 
Activation of Service shall indicate NTT/VERIO’s acceptance of this
Agreement.  CUSTOMER REPRESENTS AND
WARRANTS THAT CUSTOMER (I) IS NOT LOCATED IN A COUNTRY SUBJECT TO U.S.
EMBARGOES, OR LISTED ON THE U.S. TREASURY DEPARTMENT’S LIST OF SPECIALLY DESIGNATED
NATIONALS, OR LISTED ON THE U.S. COMMERCE DEPARTMENT’S DENIED PERSONS LIST OR
ENTITIES LIST AND (II) IF AN INDIVIDUAL, IS AT LEAST 18 YEARS OF AGE.

 

AGREED AND ACCEPTED
BY CUSTOMER:

 

	
  Signature: 

  	
  /s/ Philip
  N. Kaplan

  	
   

  	
  Company
  Name: VitalStream Holdings, Inc.

  
	
   

  
	
  Printed
  Name: Philip N. Kaplan

  	
  Address:  One Jenner, Suite 100, Irvine, CA  92618

  
	
   

  	
   

  
	
  Title: Chief
  Operating Officer

  	
   

  
	
   

  	
   

  
	
  Date:
  08/30/02

  	
  Telephone
  (949) 743-2000     Fax: (949) 453-8686

  

 

2

 

	
   NTT/VERIO Rep

   Jeff Pieters

  	
   Email

   jpieters@verio.net

  	
   Lead
  Pass

  

   YES o       NO  
  o

  	
   Lead
  Pass NTT/VERIO Rep

  
	
   Lead
  Source

  
	
   Promo
  Source

  

 

	
   Date
  Submitted

  	
   8/1/02

  	
   Existing
  Arbor Number

  	
   

  
	
  New  o

  	
  Relocation  o

  	
  Change of Service  o

  	
  Renewal o

  	
  Upgrade  ý

  	
  Add-On o

  
	
   Partner
  Info

  	
   None o

  	
   VRP o

  	
   VSP o

  	
   EReseller
  o

  	
   MSP o

  
	
   Partner
  Name

  	
   

  	
   

  
												

 

	
  Company  

  	
   Vital
  Stream

  	
  Verio Rep  

  	
   Jeff
  Pieters

  	
  Reseller  

  	
   

  
	
  Contact  

  	
  Dave Williams  

  	
  Billing  
  Contact  

  	
  Dave Williams  

  	
  Tech  
  Contact  

  	
  Dave Williams  

  
	
  Phone  

  	
  949-678-0291  

  	
  Phone  

  	
  949-678-0291  

  	
  Phone  

  	
  949-678-0291  

  
	
    Fax  

  	
   

  	
  Fax  

  	
   

  	
  Fax  

  	
   

  
	
  Mobile/

  Pager  

  	
   

  	
  Mobile/  

  Pager  

  	
   

  	
  Mobile/  

  Pager  

  	
   

  
	
  Email  

  	
  dwilliams@vitalstream.com  

  	
  Email  

  	
  dwilliams@vitalstream.com  

  	
  Email  

  	
  dwilliams@vitalstream.com  

  
	
  Install Address  

  	
  
  One Jenner, Suite 100

    Irvine, CA 92618

  	
  Billing Address  

   

  	
    One Jenner, Suite 100

    Irvine, CA 92618

  
	
  City  

  	
    Irvine

  
	
  Demarc location  

  	
   

  	
  State  

  	
    CA

  
	
  Onsite Phone Number  

  	
   

  	
  COUNTY  

  	
   

  
	
    PO
  o

  	
    #

  	
    Check
  o

  	
    #

  	
    Visa o

  	
    MC o

  	
    Amex o

  	
    #

  	
    Exp

  
	
  Company Type

  	
    L.L.C.     
  Corporation    
  Partnership     
  Proprietorship      Other
  (Please State)

  
																	

 

Technical Information

	
  Who is ordering your telco circuit? (select one)  

  	
    
  NTT/VERIO  o           Telco Agent  o         Self  o

  
	
    Telco
  Quote Date:

  	
    E-Rate
  Funding     Proposed   o          Approved   o

    GSA Funding        
  Proposed   o          Approved   o

  
	
    Agent
  Name

  	
   

  	
    Agent
  Contact and Phone #

  	
   

  
	
    How
  many IP addresses do you need? (select one) 

  	
    o
  2   ý
  6   o
  14    o
  30    o
  62    o
  126    o
  254    o
  Other 

  
	
    Term
  Commitment: Beginning on Date NTT/VERIO Begins Billing Customer 

  	
    12
  mos.  o

  	
    24 mos. o

  	
    36
  mos. ý

  	
    Other
  o

  	
   

  
										

 

For Internal Use Only

	
   

  	
   

  	
   

  
	
    Sales Director Verification:

  	
  /s/ JC

  	
  /s/ 
  John Chapman

  	
   

  
	
   

  	
   

  	
   

  
				

 

3

 

NTT/VERIO
Services

 

	
  Product ID

  	
  Product
  Description

  	
  Product
  Name

  	
  Plan Code

  	
  Setup Code

  	
  QTY

  	
  Monthly

  Charge

  	
  Total

  Setup

  Charge

  	
  Usage

  Charge

  Mbps

  
	
  Oc12
  frac

  	
  OC12
  Access

  	
  Flat
  rate OC12, 622 megs

  	
  OC12 Unlimited

  	
   

  	
  622 megs

  	
  **

  	
   

  	
  **00

  
	
   

  	
  Local Loop

  	
   

  	
   

  	
   

  	
   

  	
  **

  	
  NA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subtotals

  	
  **

  	
   

  	
   

  

 

[**Pricing
Information in the foregoing table is omitted pursuant to Rule 24b-2,
filed separately with the Securities and Exchange Commission and is subject to
a confidential treatment request. ]

 

PNK        I,
the customer, acknowledge that data backup and restore services are an
important component of any internet-related service and that the benefits of
backing up my data have been explained by the NTT/VERIO sales
representative.  Notwithstanding the
foregoing, I the customer elect not to purchase the Data Backup and Restore
Services offered by NTT/VERIO at this time.

 

PNK        I,
the customer, acknowledge that security services are an important component of
any internet-related service and that the benefits of securing my
Internet-connected service have been explained by the NTT/VERIO sales
representative.  Notwithstanding the
foregoing, I the customer elect not to purchase the IntelliSecurity Services offered
by NTT/VERIO at this time.

 

Notes and Special Instructions

	
  New Contract pricing shall be retroactive to August 1, 2002.  Billing cycle shall be adjusted so that
  customer is billed based on calendar months. 
  Upon entering this contract, it is the intent of the parties to
  negotiate a new contract in the next 90 days which:  (i) allows connections to the Verio network at multiple
  locations (which may change from time-to-time) with the bill aggregated
  across all locations, (ii) is scalable subject to the minimum dollar
  commitment above, (iii) is billed at the committed rate above the minimum
  commitment based on actual usage.   

  

 

Equipment and Software

	
  Router Purchased Through
  NTT/VERIO (Select One):

  	
  Yes  o    
  No  o

  
	
  Item #

  	
  Description

  	
  Mfr. Part #

  	
  Price

  	
  Qty

  	
  Extend
  Price

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Hardware
  Subtotal  

  	
  $
  0.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  To Begin Service
  (hardware fees, set-up fees)  

  	
   

  
									

 

Please review
and sign the attached Terms and Conditions. 
This Service Order is not effective until the Terms and Conditions have
been signed by customer and accepted by NTT/VERIO as provided in the Terms and
Conditions.  In the event of a conflict
between the Service Order and the Terms and Conditions, the Terms and Conditions
shall govern.

 

	
  Customer Signature:

  	
  /s/ Philip N. Kaplan

  	
   

  	
  Printed
  Name:  Philip N. Kaplan

  
	
   

  	
   

  
	
  Title:  Chief Operating Officer

  	
  Date:
  08/30/02

  

 

4Exhibit
10.9

 

SIMPLETECH, INC.

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is dated November 11, 2002,
between SimpleTech, Inc. (“Employer”), a California Corporation, and Thomas A.
Beaver (“Employee”).

 

In consideration of the mutual promises and covenants
contained in this Agreement, the parties agree as follows:

 

1.                                       Employment Duties.  Employer agrees to employ Employee in the
position of Senior Vice President and General
Manager of Xiran, beginning on November 11, 2002, and Employee
agrees to serve in that position or in such other positions as Employee may be
assigned from time to time by Employer. 
In such initial position, Employee shall report to Manouch Moshayedi or,
to such other person as management designates. Employee shall have such duties
as are assigned from time to time by Employer. 
In connection with Employee’s employment by Employer, Employee shall be
based at Employer’s place of business 17770 Cartwright Road, Suite 200, Irvine,
California.

 

2.                                       Time and Effort, Exclusivity of
Employment. 
Employee shall faithfully, honestly and diligently serve Employer,
devote all of Employee’s working time, attention, knowledge and skill to
Employee’s employment hereunder and use Employee’s best efforts to promote the
business and interests of Employer and to perform the duties and
responsibilities that are assigned to Employee.  Employer shall be entitled to all of the benefits and profits
arising from or incident to the duties of Employee pursuant to this Agreement.  During Employee’s employment, Employee shall
not, directly or indirectly, engage or participate in any business that is in
competition in any manner whatsoever with the business of Employer.

 

3.                                       Compensation.  As compensation for the services to be
rendered by Employee, Employer shall pay Employee in equal semi-monthly
installments of $ see offer letter (less normal withholding for state
and federal income taxes and employee portions of FICA, SDI, and any other
required or Employee-authorized deductions), together with such additional
terms of compensation, if any, as set forth in Employee’s employment offer
letter and/or in this Agreement. 
Employee shall also be entitled to participate in such employee benefit
programs as may be offered from time to time by Employer, subject to the terms
and eligibility requirements established by Employer for such programs.  The parties contemplate that compensation
adjustments and changes in benefits, may be made from time to time at the
discretion of Employer.  Such
adjustments shall be incorporated into and form a part of this Agreement.

 

4.                                       Term and Termination.  Employee’s employment under this Agreement
is for no specified period of time and shall continue until terminated by
either party.  Employee’s employment
with Employer is “at will,” meaning that either Employee or Employer may
terminate the employment relationship at any time on notice to the other, with
or without cause, for any reason or no reason, and with no liability of
Employer to Employee other than for wages accrued to the date of termination.  Employer may also discipline, demote or
alter the terms of employment of Employee at any time, with or without cause or
advance notice.

 

 

5.                                       Observance of Rules and Regulations.  Employee agrees to abide by all Employer’s
policies, rules and regulations as adopted or amended from time to time by
Employer in its discretion.

 

6.                                       Employee Nondisclosure and Invention
Assignment Agreement. 
Employee’s employment is subject to the requirement that Employee sign,
observe, and agree to be bound, both during and after Employee’s employment, by
the provisions of the Employer’s Employee Nondisclosure and Invention
Assignment Agreement, a copy of which is attached hereto as Exhibit “A.”  Employee represents and warrants to the Employer
that he has returned all property and confidential information belonging to any
prior employers.  Employee’s execution
of the Employee Nondisclosure and Invention Assignment Agreement is an express
condition precedent to Employee’s commencement of employment with Employer.

 

7.                                       Non-Solicitation.  Employee shall not, either during Employee’s
employment by Employer or for a period of one (1) year thereafter, directly or
indirectly, solicit, induce or attempt to induce any of the employees of
Employer or any of its affiliates, to leave their employment.

 

8.                                       Remedies.  Employee acknowledges that a breach or
threatened breach by Employee of the provisions of Sections 6 and 7 of this
Agreement, and Sections 2 and 4 of the Employee Nondisclosure and Invention
Assignment Agreement will result in Employer and its affiliates suffering
irreparable harm which cannot be calculated or fully or adequately compensated
by recovery of damages alone. 
Accordingly, Employee agrees that Employer shall be entitled to temporary
and permanent injunctive relief, specific performance and other equitable
remedies, in addition to any other relief to which Employer may become
entitled.

 

9.                                       Notices.  Any notice or other communication required
or permitted to be given under this Agreement shall be in writing and shall be
given by prepaid first class mail, or by hand-delivery.  Any such notice or other communication, if
mailed by prepaid first class mail shall be deemed to have been received on the
fourth business day after the postmarked date, or if delivered by hand, shall
be deemed to have been received by Employer at the time it is delivered to the
applicable address noted below or by Employee at the time it is received by
Employee or at the time it is delivered to the applicable address noted below.  Notices and other communications shall be
addressed as follows:

 

	
  (a)

  	
   

  	
  If to
  Employer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SimpleTech, Inc.

  3001 Daimler St.

  Santa Ana, CA  92705

  Attn:  Human Resources Dept.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  If to
  Employee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

2

 

Either party may change its address for the purposes of this Agreement
by giving written notice of such change to the other party.

 

10.                                 Invalidity of Provisions.  If any provision of this Agreement should be
declared to be void or unenforceable by a court of competent jurisdiction from
which no further appeal lies or is taken, that provision shall be deemed to be
severed from this Agreement and the remaining provisions shall not be affected
and shall remain valid and enforceable.

 

11.                                 Entire Agreement, Amendment, Waiver.  This Agreement, together with the Employee
Nondisclosure and Invention Assignment Agreement and the Employee’s employment
offer letter, if any, to Employee (each of which is incorporated herein),
constitute the entire agreement between the parties with respect to the subject
matter contained in such documents, and supersede all prior agreements relating
to the same subject matter.  There are
no other representations, warranties, conditions, agreements or
acknowledgments, which form a part of or affect this Agreement.  Except as provided in this Agreement, no
waiver or termination shall be binding unless accepted in writing by both
parties.  No waiver of any provision of
this Agreement shall constitute a waiver of any other provision and no waiver
of any provision of this Agreement shall constitute a continuing waiver unless
otherwise expressly provided.

 

12.                                 Governing Law and Forum Selection.  This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of
California (excluding any conflict of law, rule or principle, which might refer
such construction to the laws of another jurisdiction).  Employer and Employee irrevocably submit to
jurisdiction of the courts of Orange County, California, for the purpose of
obtaining an order to compel submission to binding arbitration pursuant to
Section 13 below.

 

13.                                 Binding Arbitration.  Employer and Employee agree to submit to
final and binding arbitration before J•A•M•S/ENDISPUTE in Orange County,
California, all past, present, and future claims or disputes in any way arising
out of or relating to Employee’s employment with Employer, including, without
limitation (except as expressly excluded below in this Section), any claims or
disputes concerning the separation of that employment; any other adverse
personnel action by Employer; any claims by Employee against Employer, or by
Employer against Employee, arising out of or related to any federal, state or
local law, statute or regulation prohibiting employment discrimination or
harassment; any public policy, and any other claim for personal, emotional,
physical or economic injury (individually or collectively, “Covered
Claims”).  The only claims or disputes
excluded from binding arbitration under this Agreement are the following:  any claim by Employee for workers’
compensation benefits or for benefits under an Employer plan that provides its
own arbitration procedure; and any claim by Employer for equitable relief,
including but not limited to, a temporary restraining order, preliminary
injunction or permanent injunction against Employee.  The arbitration shall be conducted in accordance with the
then-existing Rules and Procedures of J•A•M•S/ENDISPUTE for Arbitration of Employment
Disputes, except that the mediation and optional appeal procedures of
J•A•M•S/ENDISPUTE shall not be required. 
The Arbitrator shall not have the power to commit errors of law or legal
reasoning, or to grant relief, which would not be legally available in a
California court.

 

3

 

This agreement to submit all Covered Claims to binding arbitration in
no way alters Employee’s at-will employment with Employer and does not require
Employer to provide Employee with any type of progressive discipline.

 

14.                                 Attorney’s Fees and Costs.  Should any legal action (other than binding
arbitration under Section 13 above, in which each party shall bear its, his or
her own fees and costs) be required to resolve any dispute over the meaning or
enforceability of this Agreement or to enforce the terms of this Agreement, the
prevailing party shall be entitled to recover its, his or her reasonable
attorneys’ fees and costs incurred in such action, in addition to any other
relief to which that party may be entitled.

 

15.                                 No Assignment.  This Agreement and all rights and
obligations of Employee hereunder are personal to Employee and may not be
transferred or assigned by Employee at any time.  The Employer may assign its rights under this Agreement to any
entity that assumes the Employer’s obligations hereunder in connection with any
sale or transfer of all or a substantial portion of the Employer’s assets to
such entity.

 

16.                                 Acknowledgments and Representations.  Employee acknowledges, represents and agrees
that:

 

(a)                                  Employee has read and understands
the terms of this Agreement and Employee’s obligations hereunder, and Employee
agrees to abide by the terms of this Agreement;

(b)                                 Employer has made no promises or
representations concerning future promotions, compensation, or other terms and
conditions of employment other than as expressly stated in this Agreement; and,

(c)                                  By accepting employment under this
Agreement, Employee has not relied upon or been induced to accept employment
with Employer on the basis of any such promises or representations.

 

IN WITNESS WHEREOF, the parties have
executed this Agreement.

 

EMPLOYEE

 

 

	
  /s/ THOMAS A. BEAVER

  	
   

  	
  November 11, 2002

  	
   

  
	
  Signature

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIMPLETECH,
  INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ CAROLYN HOFFMAN

  	
   

  	
  Name:

  	
  Carolyn Hoffman

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Director of Human Resources

  	
   

  	
   

  	
   

  
							

 

4

 

[LETTERHEAD OF
SIMPLETECH]

 

November 6, 2002

 

Mr. Thomas A. Beaver

234 Monarch Bay Drive

Dana Point, CA 92629

 

Dear Tom:

 

I am very pleased to extend you an offer to join SimpleTech as a Senior
Vice President and General Manager of Xiran, reporting to Mark Moshayedi and
the undersigned.  Your initial base
salary will be $10,416.67 semi-monthly which is equivalent to $250,000.00 annually.  After Xiran becomes profitable, your salary
will be increased to $350,000.00 annually. 
For days worked from the 1st through the 15th of
the month, you will be paid on the 20th day of the same month.  For days worked from the 16th
through the last day of the month, you will be paid on the 5th day
of the following month.

 

As a SimpleTech employee, you will be eligible to participate in all
current employee benefit and incentive programs as described below.

 

Restricted Stock Option Grant

 

You will be granted a stock option to purchase 150,000
shares of SimpleTech common stock at an exercise price equal to the closing
price of SimpleTech common stock as reported on the Nasdaq national market on
the date of your grant.  The option will
become exercisable in a series of annual installments over a four-year period
of service measured from your grant date. Your grant will be made as soon as
possible following your commencement of employment.  The terms of your grant will be more fully described in the
option documentation available to you on-line shortly after your grant is
effective.  After Xiran becomes
profitable, you will receive an additional 100,000 options exercisable in a
series of annual installments over a four year period and priced at the time of
the grant.

 

Medical
and Dental

 

Medical and dental benefits will be extended to you the first day of
the  month
followingcommencement of employment. 
SimpleTech pays 100% of the employee premium for the standard medical
and dental plans.  You will be
responsible for any extra coverage that you select.

 

401(k)
Profit Sharing Plan

 

After completing six months of service, you will be eligible to
participate in the SimpleTech 401(k) Profit Sharing Plan.  You may invest up to 75% of your pay in the
plan on a pre-tax basis, up to a maximum of $11,000.00 annually.  SimpleTech will match 50% of your
contribution to the plan each semi-monthly pay period up to the annual maximum
of $11,000.00.  Vesting for the company
contribution occurs over a six-year period. 
The 401(k) Profit Sharing Plan is subject to all applicable federal tax
regulations.  Further information
regarding the plan may be found in the Summary Plan Description.

 

5

 

Employee Stock Purchase Plan

 

SimpleTech’s Stock Purchase Program allows regular full-time employees
the opportunity to acquire shares of SimpleTech common stock at periodic
intervals through accumulated payroll deductions.  These deductions will be applied at semiannual intervals to
purchase shares of common stock at a discount from the then-current market
price.

 

Paid
Time-Off

 

You will accrue vacation time at a rate of 6.66 hours every
semi-monthly pay period, which is equivalent to twenty days per 12-month
period. After five years of employment, you will accrue vacation at the rate of
8.32 hours every semi-monthly pay period, which is equivalent to twenty-five
days per 12-month period.  In addition,
you will accrue five sick days annually and one personal day every six months.

 

Severance

 

If you are terminated during the first year of your employment,
SimpleTech will pay you a severance payment of $125,000.00 (equivalent to six
months’ initial salary) and fully vest 37,500 shares of your stock option grant
provided such termination is based on other than for cause as described in Schedule
A below.  You will not be eligible for
severance after completing the first year of employment.

 

In the event SimpleTech or its Xiran division is sold, discontinued, or
there is a change in ownership, and if the new owners terminate your employment
without cause, all of your remaining stock options that were granted at the
beginning of your employment will immediately vest.

 

Additional
Benefits

 

SimpleTech provides short-term and long-term disability insurance,
travel accident insurance, and a $20,000.00 life/accidental death and
dismemberment insurance policy for all employees.

 

*    *    *    *    *

 

In consideration of this offer of employment, you agree to complete and
return the necessary documentation in order to complete your personnel file
with SimpleTech.  You also acknowledge
that your employment with SimpleTech is “at will.”  You recognize that both SimpleTech and you have the right to
terminate your employment at any time, with or without advance notice, and with
or without cause.  This offer letter,
and the “Employment Agreement” constitute the entire agreement between
SimpleTech and you concerning your terms and conditions of employment and your
employee relationship with SimpleTech.

 

6

 

This offer will remain open until November 8, 2002, and is contingent
upon your passing a background investigation and drug screen which SimpleTech
conducts on all prospective new employees and establishing a mutually
acceptable start date.  To confirm your
acceptance of this offer, please sign and return a copy of this letter to Human
Resources by facsimile [(949) 476-0852] or mail. We look forward to your
acceptance of our offer and having you join the SimpleTech team.  If you have any questions, please feel free
to call me at (949) 476-1180.

 

Sincerely,

 

 

	
  /s/ MANOUCH MOSHAYEDI

  	
   

  
	
  Manouch Moshayedi

  
	
  CEO

  

 

 

Acceptance

 

I accept the terms of this offer and will report to work on November
11, 2002.

 

 

	
  /s/ THOMAS A. BEAVER

  	
   

  	
  November 11, 2002

  	
   

  
	
  Signature

  	
  Date

  

 

7

 

SCHEDULE A

 

 

For purposes of this Employment Offer Letter, “cause”
shall mean i) any act of dishonesty on your part in connection with your
responsibilities as an employee of SimpleTech, ii) your commission of a felony
or an act of fraud against SimpleTech, iii) a willful act by you that
constitutes gross misconduct, or iv) continued violations by you of your
employment duties or responsibilities to SimpleTech, which are willful and
deliberate.

 

8

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