LICENSING AGREEMENT

Exhibit 10(i)   

   LICENSING AGREEMENT

THIS AGREEMENT is dated for reference July 27, 2009,
 
AMONG:
 

P.T. GROUP LTD. , a corporation incorporated pursuant to the laws of the British Virgin Islands registered under BVI Company Number 1057655 having an address of PO Box 0830-01906 Calle B Marbella, Edificio Sol Marina 11B, Panama City, Panama;

          (the “Licensor”)

AND:
 

SONNEN CORPORATION , a company incorporated pursuant to the laws of the State of Nevada, with an address of 2829 Bird Avenue, Suite 12, Miami, Florida 33133 as a wholly owned subsidiary of the Parent (defined below);

          (the “Licensee”)

AND:

      SIMPLE TECH, INC. , a company incorporated pursuant to the laws of the State of Nevada, with an address of 2829 Bird Avenue, Suite 12, Miami, Florida 33133;

          (the “Parent”)

WHEREAS:
 

A.     Except as provided the Licensor holds all rights, title and interest to a certain invention entitled “PTG Technology” as further described in Schedule "A" attached hereto (the “Technology”);

B.     The Licensor wishes to enter into a formal licensing agreement with Licensee on the terms set forth below;

THIS AGREEMENT WITNESSES THAT in consideration of US$10.00 (the receipt and sufficiency of which is hereby acknowledged), the parties agree as follows:
 

ARTICLE 1
INTERPRETATION

1 .1     Construction and Interpretation. In this Agreement, unless inconsistent with or excluded by the context:

          (a)     any heading, index, table of contents or marginal note used in this Agreement is for convenience only and will not limit or affect the interpretation or construction of this Agreement;

(b)     singular words will include the plural and plural words will include the singular;

(c)     a reference to a person will include a company or other corporation and a reference to a company or other corporation will include a person;

(d)     a word importing a particular gender will include each other gender; and

     (e)     a reference to a party to this Agreement includes that party's heirs, executors, administrators, successors and permitted assigns.

1.2     Definitions. In this Agreement, unless inconsistent with or excluded by the context:

(a)     “Affiliate” means, with respect to any entity, any other entity which directly or indirectly controls or is controlled by or is under direct or indirect common control with such first mentioned entity;

     (b)     “Agreement” means this Agreement and all schedules to this Agreement and all specifications referred to in this Agreement;

     (c)     “Improvements” means all improvements to the Original Invention developed within or by the Licensee;

(d)     “Intellectual Property” includes the Technology and any intellectual property relating to the Technology, including any patent, patent application, copyright, industrial design, trademark, any rights to patent, copyright, industrial design or trademark in any country, engineering designs, concepts, models, trade secrets, know how and show how, and includes any new technology or the products as may hereafter be developed or acquired by the Licensee or any of its subsidiaries;

(e)     “License” means an exclusive, non-transferable, license (with a limited right of sublicense) to allow the Licensee to make, have made, use, lease, sell and import Licensed Products in the Territory;

(f)     “Licensed Products” means products which, in the absence of the License, would infringe the Licensor’s intellectual property rights in the Technology;

(g)     “Original Invention” means a certain invention entitled “PTG Technology” as further described in Schedule "A" attached hereto;

(h)      “Technology” means certain technology known as “PTG Technology” and includes the Original Invention, any improvements thereof and any devices which embody the PTG Technology and any improvements thereof;

     (i)     “Territory” means the United States, Canada and Mexico; and

(j)     “Trade-Mark” means and trade-mark or trade-name as may be adopted for use on the Licensed Products from time to time.

1.3     Variation of Agreement. Any variation or modification or waiver of the terms or conditions of this Agreement will be in writing and will be duly executed by the Licensor, Licensee and Parent respectively.

1.4     Severance. Each word, phrase, sentence, paragraph and section of this Agreement is severable and if a court in any jurisdiction determines that any such provision is unenforceable, illegal or void in that jurisdiction the court may sever that provision which becomes inoperative and such severance will not affect the operation of any other provisions of this Agreement nor the operation of that provision in any other jurisdiction.

1.5     Waiver. The failure of either party hereto at any time to enforce any provision of this Agreement will not affect its rights thereafter to require complete performance by the other party, nor will the waiver of any breach of any provision be taken or held to be a waiver of any subsequent breach of any such provision or be a waiver of the provision itself. In order for any waiver to be effective, it must be in writing and signed by an authorized officer of the party. !

1.6     Laws. This Agreement will be governed by, and construed in accordance with, the laws of the State of Florida, and both parties agree to submit to the exclusive jurisdiction of the courts of the State of Florida.

ARTICLE 2
LICENSE

2.1     Grant of License:

     (a)     The Licensor hereby grants to the Licensee an exclusive, non-transferable, license for use in the Territory, with a limited right of sublicense as set forth in Section 2.1(e) below to allow the Licensee to use the Intellectual Property to make, have made, use, lease, sell and import Licensed Products, which, in the absence of the License, would infringe the Licensor’s intellectual property;

(b)     Except for the rights granted pursuant to the License, the Licensor shall retain all rights, title and interest to the Technology;

(c)     The Licensee shall be responsible for all of the testing and improvements to the Technology;

(d)     The Licensor shall retain all rights to the Improvements, but such Improvements shall also be a part of the License;

     (e)     The Licensee shall have the right to offer limited royalty-bearing sublicenses to third parties where such third parties are in a position to commercialize the Technology in ways that the Licensee cannot accomplish in a competitive manner. The Licensee shall pay the Licensor twenty five percent (25%) of all royalties and fees received from such third parties. If Licensee receives any non-cash consideration as part of the sublicense consideration (including equity in sublicensee or other entities), Licensor shall have the option to take its portion of the sublicense consideration in kind or in cash based on the fair market value of the non-cash consideration as of the date of receipt by Licensee wherein the fair market value as determined by Licensee’s independent accounting advisors shall equal the cash consideration an unaffiliated, unrelated buyer would pay in an arm’s length sale of a substantially identical item sold in the same quantity, under the same terms, and at the same time and place . Such right to sublicense is subject to the following conditions:

(i)     In each sublicense agreement, the sublicensee will be subject to the terms and conditions of the license granted to Licensee under this Agreement, and the sublicensee will be prohibited from granting further sublicenses, without first obtaining approval from Licensor; provided, however, that in the event that such further sublicense is approved, any fee or other consideration paid to sublicensee in consideration of such sub-sublicense will be treated as sublicense consideration as if the sub-sublicensee were a sublicensee. Nevertheless, Licensee may set royalty or other payments at its discretion for its sublicensees, as long as the applicable royalties or other payments of its sublicensees are not more favorable to the sublicensee than the corresponding terms of this Agreement.

(ii)     Licensee will forward to Licensor, within thirty (30) days following its execution, a fully executed, complete, and accurate copy written in the English language of each sublicense agreement granted under this Agreement. Licensor’s receipt of such sublicense agreement will not constitute a waiver of any of Licensor’s rights or Licensee’s obligations under the Agreement.

(iii)     Notwithstanding any such sublicense agreement, Licensee will remain primarily liable to Licensor for all of the Licensee’s duties and obligations contained in the Agreement, and any act or omission of a sublicensee that would be a breach of the Agreement if performed by Licensee will be deemed to be a breach by Licensee of the Agreement. Each sublicense agreement will contain a right of termination by Licensee in the event that the sublicensee breaches the payment obligations affecting Licensor or any other material terms and conditions of the sublicense agreement that would constitute a breach of the terms and conditions of the Agreement if such acts were performed by Licensee. In the event of such sublicensee breach, and if after a reasonable opportunity to cure as provided in any such sublicense agreement, such sublicensee fails to cure such sublicensee breach, then the Licensee will terminate the sublicense agreement unless Licensor agrees in writing that such sublicense agreement need not be terminated.

(iv)     Upon termination of the Agreement for any reason, all sublicense agreements will, at Licensor’s option, be (i) assigned to and assumed by Licensor, or (ii) terminated.
 

     (f)     The Licensee shall pay the Licensor a royalty of 1% of all gross sales of Licensed Products by the Licensee, except as otherwise modified in writing.

2.2     Exclusive Rights. The rights of the Licensee to the License in accordance with Section 2.1 will be sole and exclusive, and the Licensor will not directly or indirectly compete with the Licensee, nor the license, authorize or permit any third party to compete with the Licensee with respect to the manufacture, use, lease, sale, export and import of the Licensed Products.

2.3     Assignment of Rights. The Licensor and the Licensee acknowledge that the respective rights and obligations pursuant to this Agreement are personal to the parties and that the Licensee, except in the event of the acquisition of the Licensee, by any means, or the sale or merger of substantially all of the Licensee’s assets to or with a third party, will not assign this Agreement or assign or delegate any or all rights, duties, or obligations under this Agreement without the prior consent in writing of the Licensor, which consent the Licensor may not withhold unreasonably. If the Licensor consents to such assignment or delegation, the Licensee will remain jointly and severally liable with the assignee or delegate for the obligations of the Licensor under this Agreement. Subject to the limitations hereinbefore expressed, this Agreement will inure to the benefit of and be binding upon the parties and their respective successors and assigns.

2.4     Reorganization of Rights. The Licensor may choose to reorganize its worldwide licensing strategy, including delegation of certain commercialization rights to a separate entity, with the prior written consent of the Licensee, which may not be unreasonably withheld, provided that the full beneficial terms to the Licensee(s) embodied in the Agreement shall not be diminished due to such actions.

2.5     Effect of Assignment. Unless otherwise agreed upon between the parties, no assignment of this Agreement, the benefit of this Agreement or any rights, licenses or authorities pursuant to this Agreement will relieve the assigning party from any liability under this Agreement, whether absolute, contingent, due or accruing, which exists as of the date of assignment.

2.6     No Sublicense. Except pursuant to Section 2.1(e), the Licensee will not sublicense the benefit of this Agreement or any rights, licenses or authorities pursuant to this Agreement and any attempted violation of this section, whether voluntarily or by operation of law, will be void and of no force and effect.

2.7     Confidential Information. The Licensee acknowledges that its entire knowledge of the Technology and the business of the Licensor, including, without limitation, the contents of any Documents (defined as all drawings, specifications, blueprints, programs and other material in electronic form or otherwise relating in any manner to the Intellectual Property or the Technology) and periodic updates or revisions, in effect from time to time and the designs, plans, prototypes, specifications, standards and operating procedures for the Technology, will be derived from information disclosed to the Licensee by the Licensor in confidence and that the Documents and such other information are confidential information and/or trade secrets of the Licensor (all of which is herein collectively called the "Licensor Confidential Information") except where such information is in the public domain or is information describing generally accepted business, engineering or manufacturing practices. Accordingly, the Licensee agrees that it will maintain the absolute confidentiality of the Intellectual Property, the Documents and such other information, both during and after the term of this Agreement, disclosing same to other employees of the Licensee only to the extent necessary for compliance with this Agreement.

All Licensor Confidential Information obtained by the Licensee shall be considered confidential and will not be disclosed by the Licensee to any person without the prior written consent of the Licensor. The Licensor will provide reasonable confidentiality agreements in the form attached hereto as Schedule C to be signed by the Licensee and all employees or sub-contractors of the Licensee to whom any Licensor Confidential Information will be disclosed, and the Licensee will provide or obtain signatures of such confidentiality agreements as the case may be.

During the course of its relationship with the Licensor, the Licensee or its subsidiaries or associates or their employees, agents or consultants may disclose certain proprietary or confidential information to the Licensor or its subsidiaries or associates or their employees, agents or consultants. The proprietary or confidential information may be oral or written, may be of a technical or commercial nature, may take the form of plans, drawings, processes, formulae, schedules, reports, projections, analyses, programs, prints, recordings, lists or other compilations of information, and may relate to the Licensee, its vendors, employees, stockholders or customers. All of such proprietary information and confidential information is herein collectively called the “Licensee Confidential Information”.

Any Licensee Confidential Information obtained by the Licensor will be considered confidential and will not be disclosed by the Licensor to any person without the prior written consent of the Licensee. The Licensee agrees that the Licensor Confidential Information, and all rights to the Licensor Confidential Information, which has been or will be disclosed to the Licensee, as well any improvement or technology using, relating to or incorporating the Licensor Confidential Information shall remain the exclusive property of the Licensor, and shall be held in trust for the benefit of the Licensor. The Licensee agrees that it will not, directly or indirectly, deal with, use, or exploit the Licensor Confidential Information without the Licensor's prior written consent. With regard to any improvement or new technology using, relating to or incorporating the Licensor Confidential Information, the Licensee agrees to assign to the Licensor all right, title and interest in such improvements or technology, any copyright, trademark, industrial design, patent applications and copyrights, trademarks, industrial designs, patents granted thereto, the sole right to file such applications and the Licensee agrees to assist the Licensor in obtaining reissues, divisions, renewals or extensions of any such applications and to do any act required to aid the Licensor in obtaining and enforcing proper intellectual property protection.

     The foregoing restrictions do not apply to information which:

(a)     at the time of disclosure was in the public domain as evidenced by a printed publication or otherwise;

(b)     after disclosure becomes part of the public domain by publication or otherwise, other than by action of the disclosing party;

(c)     was in the possession of the disclosing party at the time of disclosure by the disclosing party and was not acquired, directly or indirectly, from the non-disclosing party; or

(d)     the disclosing party rightfully receives from an independent third party who did not receive such information, directly or indirectly, from the other party with limitation or restriction on its use.
 

     The obligations contained in this Article will continue notwithstanding the termination of this Agreement or any confidentiality agreements.

The products or proceeds of the services performed by the Licensee under this Agreement including, but not limited to, documents, written materials, programs, documentation, designs, discs and tapes shall be and remain the property of the Licensor and the Licensee shall be able to use such written materials, programs, documentation, designs, discs and tapes for the purposes of carrying out its obligations under this Agreement while the Agreement is in effect.

     The Licensee will, however, notify the Licensor immediately of any alleged, possible, or suspected infringement, passing off, or challenge to the use of any of the Intellectual Property or claim by any person to any rights in any similar trade marks or names of which the Licensee is or becomes aware. The Licensor agrees to execute any and all instruments and documents, render such assistance and do such acts and things as may, in the opinion of the Licensee, acting reasonably, be necessary or advisable to protect and maintain the interests of the Licensor in any such litigation or proceedings or to otherwise protect and maintain the interest of the Licensor in the Intellectual Property.

Licensee will have the right, but not the obligation, to prosecute infringement of any of the intellectual property related to the Technology at its own expense. Licensee will not settle or compromise any such suit in a manner that imposes any obligations or restrictions on Licensor or grants any rights to any intellectual property of the Technology, without Licensor’s prior written consent. At the time of filing any infringement enforcement action against a third party, Licensor and Licensee will determine how any damages awarded will be distributed between Licensor and Licensee; provided, however, that in no event will Licensor’s distribution be less than an amount that would have been due to Licensor as sublicense fees as if the litigation recovery had been sublicense consideration. In such a situation Licensee will recoup 100% of its entire litigation expenses first before any calculation is made with regard to the division of damages awarded. In the event that Licensee is not successful in winning a litigation case, Licensee may deduct from future royalty and sublicense fees fifty percent of such litigation costs.

2.8     No Agency or Joint Venture. Nothing in this Agreement constitutes or deems the parties to be partners or joint venturers in relation to the distribution or marketing of the Products, nor to create the relationship of principal and agent or master and servant between the parties, or any other form of legal association which would impose liability upon one party for any act or failure to act by the other party.

2.9     Term. The term (the "Term") of this Agreement and of the rights, authorities and licenses granted to the Licensee pursuant to this Agreement for (i) the Technology, (ii) any improvements of the Technology, or (iii) any devices which embody the Technology or such improvements shall commence upon execution of this Agreement and continue until the expiry of protections afforded the Technology, provided that the Licensee is not in breach or default of any of the terms or conditions contained in this Agreement.

2.10     Renewal. Subject to written mutual agreement between the Licensor and the Licensee, this Agreement may be renewed.

ARTICLE 3

RESEARCH, DEVELOPMENT AND COMMERCIALIZATION FUNDING REQUIREMENTS

3.1     The License shall become effective on signing and continue until the end of the Term if the Licensee has funded, notwithstanding terms set forth in section 12.1, a minimum of US$10,000,000 for "qualifying research, development and commercialization expenses" in accordance with the following schedule:

     (a)     a minimum of US$1,000,000 during the period commencing from the date of execution of this Agreement by all parties (the "Execution Date") and ending on the first anniversary of the Execution Date (the "First Anniversary");

(b)     a minimum of US$3,000,000 during the period commencing immediately after the First Anniversary and ending on the second anniversary of the Execution Date (the "Second Anniversary"); and

     (c)     a minimum of US$6,000,000 during period commencing immediately after the Second Anniversary and ending on the third anniversary of the Execution Date,

It is understood and agreed that any funding in excess of the minimum funding requirement for a particular period shall be automatically credited against the minimum funding requirement for the following funding period. For greater certainty, "qualifying research, development and commercialization expenses" shall be those expenses that have been pre-approved by the parties hereof as contributing to the research, development and commercialization of the Technology, improvements and devices embodying the Technology and improvements thereof as mutually agreed upon by the parties to this Agreement, including without limitation, those expenditures comprising the first year US$1,000,000 expenditures attached as Schedule "B".
 

Research and development funding may be extended under terms and conditions mutually agreed between the parties.

ARTICLE 4

LICENSEE’S COMMERCIALIZATION OBLIGATIONS

4.1     The Licensee shall perform as follows:

          (a)     The Licensee shall fund payments immediately as they become due for:

(i)    reasonable relocation and resettlement costs of a scientific advisor ("Scientific Advisor") and other necessary personnel agreed upon between the two parties, to the testing and development locale including the acquisition and transport of prototype materials and required documents or plans;

(ii)    development costs for a demonstration prototype including the use of suitable laboratory and fabrication facilities and the purchase of necessary materials and consumables;

(iii)    legal expenses to a patent attorney firm, mutually agreed upon among the parties, who will provide necessary assistance in due diligence for the patentability of the technology;
 
(iv)    a program of tests to be conducted by the Scientific Advisor and Project Manager, to be completed by August 15, 2009, for the purpose of providing proof of concept of the Technology and appropriate documents are produced (including a report by the NRC Institute of Fuel Cell Innovation or other equivalent third party) which describe and evidence the proof of concept, to the satisfaction of the Licensee (it is understood and agreed that the above mentioned August 15 ^th date may be extended by the Licensee due to unforeseen delays) and within seven (7) days subsequent to testing results be deemed satisfactory by the Licensee;

(v)         the immediate ramp-up and uninterrupted continuation of the research and development for the Technology after the report mentioned in Section 4.1(iv) is produced; and
 

(vi)     fund the ongoing research, development and commercialization of the Technology and the research, development and commercialization of devices using the Technology;

          All of the above expenditures shall be credited to the funding requirements set out in Article 3 and are to be considered immediately available upon need irrespective of terms set forth in Section 12.1.

     (b)     Provide assistance to the Licensor with the procurement of patent protection, including cooperating in registered user application of such other applications or filings as are required to effect necessary patent protection with respect to the Technology. Licensee shall pay p atent costs and expenses related to United States and foreign filings, including patent filing, translation, search, prosecution and maintenance costs and fees. Licensee will be billed and will pay directly to patent counsel all documented costs and fees and other charges incident to the preparation, prosecution, and maintenance of any patents, copyrights or trademarks related to the Technology within thirty (30) days after receipt of invoice. Licensee at its option may register this Agreement with any patent office having jurisdiction. Licensor will work closely with Licensee to develop a suitable strategy for the prosecution and maintenance of all patents, industrial design, trademarks and copyrights. It is intended that Licensee may interact directly with the selected patent counsel in all phases of patent prosecution, such as preparation, office action responses, filing strategies for continuation or