CONSULTANT AGREEMENT

Exhibit 10(ii)

consultanT AGREEMENT

This Consultant Agreement (“Agreement”) is made and entered into on this 27th day of July, 2009 effective as of July 1, 2009 by and between Simple Tech Inc., a Nevada based corporation (the “Company”), and Costas Takkas (hereinafter, the “Consultant”).

W I T N E S S E T H:

WHEREAS, the Consultant has been appointed as an Officer and Director of the Company.

WHEREAS, the Consultant possesses intimate knowledge of the business and affairs of the Company, its policies, methods and personnel;

WHEREAS, the Board of Directors of the Company recognizes that the Consultant will contributed to the growth and success of the Company, and desires to assure the Company of the Consultant's continued expertise and to compensate him therefore;

WHEREAS, the Board has determined that this Agreement will reinforce and encourage the Consultant's continued attention and dedication to the Company; and

WHEREAS, the Consultant is willing to make his services available to the Company and on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and the Consultant hereby agree as follows:

1.      Definitions

When used in this Agreement, the following terms shall have the following meanings:

(a)     “Accrued Obligations” means:

(i)

all accrued but unpaid Base Fees through the end of the Term of Agreement;

 

(ii)

any unpaid or unreimbursed expenses incurred in accordance with Company policy, including amounts due under Article 5(a) hereof, to the extent incurred during the Term of Agreement;

 

(iii)

any benefits provided under the Company’s benefit plans, programs or arrangements in which the Consultant participates, in accordance with the terms thereof, including rights to equity in the Company pursuant to any plan or grant;

 

(iv)

any unpaid Bonus in respect to any completed fiscal year that has ended on or prior to the end of the Term of Agreement; and

 

(v)

rights to indemnification by virtue of the Consultant’s position as an officer or director of the Company or its subsidiaries and the benefits under any directors’ and officers’ liability insurance policy maintained by the Company, in accordance with its terms thereof.

 

(b)

“ Affiliate ” means any entity that controls, is controlled by, or is under common control with, the Company.

 

(c)

“ Base Fees” means the fees provided for in Article 4(a) hereof or any increased salary granted to Consultant pursuant to Article 4(a) hereof.

 

(d)

“ Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

 

(e)

“ Board” means the Board of Directors of the Company.

 

(f)

“ Bonus” means any bonus payable to the Consultant pursuant to Article 4(b) hereof.

 

(g)

“ Bonus Period” means the period for which a Bonus is payable. Unless otherwise specified by the Board, the Bonus Period shall be the fiscal year of the Company.

 

(h)

“ Cause” means:

 

(i)

a conviction of the Consultant, or a plea of nolo contendere, to a felony involving moral turpitude; or

 

(ii)

willful misconduct or gross negligence by the Consultant resulting, in either case, in material economic harm to the Company or any Related Entities; or

 

(iii)

a willful continued failure by the Consultant to carry out the reasonable and lawful directions of the Board; or

 

(iv)

fraud, embezzlement, theft or dishonesty of a material nature by the Consultant against the Company or any Affiliate or Related Entity, or a willful material violation by the Consultant of a policy or procedure of the Company or any Affiliate or Related Entity, resulting, in any case, in material economic harm to the Company or any Affiliate or Related Entity; or

 

(v)

a willful material breach by the Consultant of this Agreement.

 

An act or failure to act shall not be “willful” if (i) done by the Consultant in good faith or (ii) the Consultant reasonably believed that such action or inaction was in the best interests of the Company and the Related Entities.

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(i)     “Change in Control” means:

(i)

The acquisition by any Person of Beneficial Ownership of more than fifty percent (50%) of the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) (the foregoing Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change of Control: (v) any acquisition directly from the Company; (w) any acquisition by the Company; (x) any acquisition by any person that as of the Commencement Date owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below; or

 

(ii)

During any period of two (2) consecutive years (not including any period prior to the Commencement Date) individuals who constitute the Board on the Commencement Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Commencement Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(iii)

Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination:

 

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(A)      all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be;

(B)      no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or any Person that as of the Commencement Date owns Beneficial Ownership of a Controlling Interest beneficially owns, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and

(C)      at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv)

approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

(j)

“ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

 

(k)

“ Code” means the Internal Revenue Code of 1986, as amended.

 

(l)

“ Commencement Date” means July 1, 2009.

 

(m)

“ Common Stock” means the common stock of the Company, par value $0.0001 per share.

 

(n)

“ Competitive Activity ” means an activity that is in material or direct competition with the Company in any of the States within the United States, or countries within the world, in which the Company conducts business with respect to a business in which the Company engaged while the Consultant was employed by the Company.

 

(o)

“ Confidential Information” means all trade secrets and information disclosed to the Consultant or known by the Consultant as a consequence of or through the unique position of his employment with the Company or any Related Entity (including information conceived, originated, discovered or developed by the Consultant and information acquired by the Company or any Related Entity from others) prior to or after the date hereof, and not generally or publicly known (other than as a result of unauthorized disclosure by the Consultant), about the Company or any Related Entity or its business.

 

(p)

“ Disability” means the Consultant’s inability, or failure, to perform the essential functions of his position, with or without reasonable accommodation, for any period of three months or more in any 12 month period, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

 

(q)

“ Equity Awards” means any stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards granted by the Company or any of its Affiliates to the Consultant.

 

(r)

“ Excise Tax” means any excise tax imposed by Section 4999 of the Code, together with any interest and penalties imposed with respect thereto, or any interest or penalties are incurred by the Consultant with respect to any such excise tax.

 

(s)

“ Expiration Date” means the date on which the Term of Employment, including any renewals thereof under Article 3(b), shall expire.

 

(t)     “Good Reason” means

(i)

the assignment to the Consultant of any duties inconsistent in any material respect with the Consultant's position (including status, titles and reporting requirements), authority, duties or responsibilities as contemplated by Article 2(b) of this Agreement, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Consultant;

 

(ii)

any material failure by the Company to comply with any of the provisions of Article 6 of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Consultant;

 

(iii)

any purported termination by the Company of the Consultant's employment other than for Cause pursuant to Article 6(b), or by reason of the Consultant’s Disability pursuant to Article 6(c) of this Agreement, prior to the Expiration Date.

 

(u)

“ Group ” shall have the meaning ascribed to such term in Section 13(d) of the Securities Exchange Act of 1934.

 

(v)

“ Initial Term” means July1st 2009 to June 30 th 2010.

 

(w)

“ Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and 14(d) thereof.

 

(x)

“Related Entity” means any subsidiary, and any business, corporation, partnership, limited liability Company or other entity designated by Board in which the Company or a subsidiary holds a substantial ownership interest.

 

(y)

“ Restricted Period” shall be the Term of Agreement and if the Term of Agreement is terminated for any reason other than by the Company for Cause or by the Consultant for Good Reason, the two (2) year period immediately following termination of the Term of Agreement. Notwithstanding the foregoing, the Restricted Period shall end in the event that (i) the Company fails to make any payments or provide any Benefits required by Article 6 hereof with 15 days of written notice from the Consultant of such failure or (ii) the Company no longer has the rights to the confidential information.

 

(z)     “Severance Amount” shall mean

(i)

in the event of the termination of Consultant’s agreement with the Company by reason of the Consultant’s death or Disability, the amount of the Consultant’s annual Base Fee as in effect at the time of such termination payable in either cash or Common Stock at the discretion of the Company, based on the five day weighted trading average ending on the Termination Date, and

 

(ii)

in the event of termination of the Consultant’s agreement by the Company without Cause or by the Consultant with Good Reason, or upon the Expiration Date, an amount equal to one (1) times the Consultant’s annual Base Salary as in effect immediately prior to the Termination Date payable in either cash or Common Stock at the discretion of the Company, based on the five day weighted trading average ending on the Termination Date.

 

(aa)

“ Severance Term ” means the one (1) year period following the date on which the Term of Agreement ends.

 

(bb)

“ Stock Option” means a right granted to the Consultant under Article 5(e) hereof to purchase Common Stock under the Company’s Stock Option Plan.

 

(cc)

“ Stock Option Plan” means the Company’s Directors and Employees Incentive Stock Option Plan, as amended from time to time, and any successor plan thereto.

 

(i)

“ Term of Agreement ” means the period during which the Consultant shall provide to the Company pursuant to the terms of this Agreement

 

(ii)

“Termination Date” means the date on which the Term of Agreement ends.

 

2.     Services

(a)      Services and Term

The Company hereby agrees to retain the services of the Consultant and the Consultant hereby agrees to serve the Company during the Term of Agreement on the terms and conditions set forth herein.

(b)      Duties of Consultant

During the Term of Agreement, the Consultant shall be retained and serve as an Officer and Director of the Company, and shall have such duties typically associated with such title, including, without limitation supervising operations and management of the Company and its subsidiaries. The Consultant shall faithfully and diligently perform all services as may be assigned to him by the Chief Consultant Officer (the “CEO”) of the Company (if someone other than the Consultant) or the Board (provided that, such services shall not materially differ from the services currently provided by the Consultant), and shall exercise such power and authority as may from time to time be delegated to him by the CEO or the Board. The Consultant shall devote his full business time, attention and efforts to the performance of his duties under this Agreement, render such services to the best of his ability, and use his reasonable best efforts to promote the interests of the Company. The Consultant shall not engage in any other business or occupation, other than that declared and existing at the commencement date, during the Term of Agreement, including, without limitation, any activity that (i) conflicts with the interests of the Company or its subsidiaries, (ii) interferes with the proper and efficient performance of his duties for the Company, or (iii) interferes with the exercise of his judgment in the Company’s best interests. Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or violation of this Agreement for the Consultant to (x) serve on corporate, civic or charitable boards or committees, (y) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (z) manage personal investments, so long as such activities do not significantly interfere with or significantly detract from the performance of the Consultant’s responsibilities to the Company in accordance with this Agreement.

3.      Term

(a)      Initial Term

The initial Term of Agreement for the services of the Consultant hereunder, shall commence on the Commencement Date and shall expire on June 30 ^th 2010, unless sooner terminated in accordance with Article 6 hereof.

(b)

Renewal Terms

 

At the end of the Initial Term, the Term of Agreement shall automatically renew for successive one (1) year terms (subject to earlier termination as provided in Section 6 hereof), unless the Company or the Consultant delivers written notice to the other at least three (3) months prior to the Expiration Date of its or his election not to renew the Term of Agreement.

4.      Compensation

(a)      Base Fee

The Consultant shall receive a Base Fee at the annual rate of $96,000 during the Term of Agreement, with such Base Fee payable in installments consistent with the Company's normal schedule, subject to applicable withholding and other taxes (if applicable). The Base Fee shall be increased upon completion of certain milestones:

(i)      to $10,000 per month upon the Company raising a cumulative $1,000,000

(ii)     to $12,000 per month upon the Company raising a cumulative total of $2,500,000 for the development of the Technology;

(iii)      to $15,000 per month upon completion of (ii) above and having developed a business plan, approved by the Board of Directors of the Company, for the use of the technology in an application other than for the use of the Technology in fuel cells;

(iv)     to $20,000 per month upon completion of (iii) above and the Company raising a cumulative total of $10,000,000 for the development of the Technology;

(v)     The Base Salary shall be reviewed, at least annually, for merit increases and may, by action and in the discretion of the Compensation Committee of the Board, be increased at any time or from time to time, but may not be decreased from the then current Base Salary.

(b)      Bonuses

(i)

The Consultant shall receive such additional bonuses, if any, as the Board may in its sole and absolute discretion determine.

 

(ii)

Any Bonus payable pursuant to this Article 4(b) shall be paid by the Company to the Consultant within 2 ½ months after the end of the Bonus Period for which it is payable.

 

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5.      Expense Reimbursement and Other Benefits.

(a)      Reimbursement of Expenses

Upon the submission of proper substantiation by the Consultant, and subject to such rules and guidelines as the Company may from time to time adopt with respect to the reimbursement of expenses of Consultant personnel, the Company shall reimburse the Consultant for all reasonable expenses actually paid or incurred by the Consultant during the Term of Agreement in the course of and pursuant to the business of the Company. The Consultant shall account to the Company in writing for all expenses for which reimbursement is sought and shall supply to the Company copies of all relevant invoices, receipts or other evidence reasonably requested by the Company.

(b)

Compensation/Benefit Programs

 

During the Term of Agreement, the Consultant shall be entitled to participate in all medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans, and any and all other plans as are presently and hereinafter offered by the Company to its Consultant personnel, including savings, pension, profit-sharing and deferred compensation plans, subject to the general eligibility and participation provisions set forth in such plans. During the term of agreement the Company shall provide health insurance which shall include medical, dental and prescription coverage with a co-pay to be determined.

(c)

Working Facilities

 

During the Term of Agreement, the Company shall furnish the Consultant with an office and such other facilities and services suitable to his position and adequate for the performance of his duties hereunder.

(d)

Automobile

 

During the term of agreement, the Company shall provide the Consultant with an automobile.

(e)

Stock Options

 

The Company shall grant to the Consultant options to purchase up to 500,000 shares of the Company’s Common Stock, at an exercise price of $1.00 per shares, subject to the terms and conditions set forth in the Stock Option Agreement, and the provisions of the Stock Option Plan, such options to be set by July 31, 2009. During the Term of Agreement, the Consultant shall be eligible to be granted additional Stock Options under (and therefore subject to all terms and conditions of) the Stock Option Plan or such other plans or programs as the Company may from time to time adopt, and subject to all rules of regulation of the Securities and Exchange Commission applicable thereto. The number and type of additional Stock Options, and the terms and conditions thereof, shall be determined by the Compensation Committee of the Board, or by the Board in its discretion and pursuant to the Stock Option Plan or the plan or arrangement pursuant to which they are granted.

(f)

Other Benefits

 

The Consultant shall be entitled to four (4) weeks of paid vacation each calendar year during the Term of Agreement, to be taken at such times as the Consultant and the Company shall mutually determine and provided that no vacation time shall significantly interfere with the duties required to be rendered by the Consultant hereunder. Any vacation time not taken by Consultant during any calendar year may be carried forward into any succeeding calendar year or paid in lieu at the discretion of the CEO or the Board. The Consultant shall receive such additional benefits, if any, as the Board of the Company shall from time to time determine.

6.      Termination

(a)

General

 

The Term of Agreement shall terminate upon the earliest to occur of (i) the Consultant’s death, (ii) a termination by the Company by reason of the Consultant’s Disability, (iii) a termination by the Company with or without Cause, or (iv) a termination by Consultant with or without Good Reason. Upon any termination of Consultant’s services for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Consultant, the Consultant shall resign from any and all directorships, committee memberships or any other positions Consultant holds with the Company or any of its subsidiaries.

(b)

Termination By Company for Cause

 

The Company shall at all times have the right, upon written notice to the Consultant, to terminate the Term of Agreement, for Cause. In no event shall a termination of the Consultant’s services for Cause occur unless the Company gives written notice to the Consultant in accordance with this Agreement stating with reasonable specificity the events or actions that constitute Cause and providing the Consultant with an opportunity to cure (if curable) within a reasonable period of time. No termination of the Consultant’s services for Cause shall be permitted unless the Termination Date occurs during the 120-day period immediately following the date that the events or actions constituting Cause first become known to the Board. Cause shall in no event be deemed to exist except upon a decision made by the Board, at a meeting, duly called and noticed, to which the Consultant (and the Consultant’s counsel) shall be invited upon proper notice. If the Consultant’s services are terminated by the Company for Cause by reason of Article 6(b) hereof, and the Consultant’s conviction is overturned on appeal, then the Consultant’s employment shall be deemed to have been terminated by the Company without Cause in accordance with Article 6(e) below. For purposes of this Article 6(b), any good faith determination by the Board of Cause shall be binding and conclusive on all interested parties. In the event that the Term of Agreement is terminated by the Company for Cause, Consultant shall be entitled only to the Accrued Obligations.

(c)

Disability

 

The Company shall have the option, in accordance with applicable law, to terminate the Term of Agreement upon written notice to the Consultant, at any time during which the Consultant is suffering from a Disability. In the event that the Term of Agreement is terminated due to the Consultant’s Disability, the Consultant shall be entitled to:

(i)

the Accrued Obligations, payable as and when those amounts would have been payable had the Term of Agreement not ended;

 

(ii)

the Severance Amount, payable for the Severance Term; and

 

(iii)

Continuation of the health benefits provided to the Consultant’s covered dependents under the Company health plans as in effect from time to time after the Consultant’s death at the same cost applicable to dependents of active employees until the expiration of the Severance Term on the first anniversary of the Termination Date; provided, however, that as a condition of continuation of such benefits, the Company may require the covered dependents to elect to continue such health insurance pursuant to COBRA.

 

(d)      Death

In the event that the Term of Agreement is terminated due to the Consultant’s death, the Consultant shall be entitled to:

(i)

the Accrued Obligations, payable as and when those amounts would have been payable had the Term of Agreement not ended;

 

(ii)

the Severance Amount, payable for the Severance Term; and

 

(iii)

Continuation of the health benefits provided to the Consultant’s covered dependents under the Company health plans as in effect from time to time after the Consultant’s death at the same cost applicable to dependents of active employees until the expiration of the Severance Term on the first anniversary of the Termination Date; provided, however, that as a condition of continuation of such benefits, the Company may require the covered dependents to elect to continue such health insurance pursuant to COBRA.

 

(e)      Termination Without Cause

The Company may terminate the Term of Agreement at any time without Cause, by written notice to the Consultant not less than 30 days prior to the effective date of such termination. In the event that the Term of Agreement is terminated by the Company without Cause (other than due to the Consultant’s death or Disability) the Consultant shall be entitled to:

(i)

The Accrued Obligations, payab