EXHIBIT 5.22
[LETTERHEAD OF RECONNAISSANCE TECHNOLOGIES INC. APPEARS HERE]
January 25, 1999
Xxxx Xxxx & Associates
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Dear Sirs/Mesdames:
Re: Amendment to Consulting Agreement dated June 1, 1998 (the "Consulting
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Agreement")
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This letter amends the Consulting Agreement between Xxxx Xxxx & Associates (the
"Consultant") and Reconnaissance Technologies Inc. (the "Company") dated June 1,
1998. This letter supercedes all written and verbal commitments for services
between the Consultant (including Xxxx Xxxx and Xxx Xxxxx) and the Company. The
Consulting Agreement is amended as follows:
1. Section 3 - "Compensation" is deleted in its entirety and replaced with the
following:
"3 Compensation
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3.1 The Company shall pay the Consultant a fee of $35,000 plus G.S.T.,
together with reasonable and customary out-of-pocket expenses, for the
period commencing on June 1, 1998 and expiring on December 31, 1998. Such
compensation shall be paid on the closing of the financing (the "Initial
Financing") disclosed in the Company's Offering Memorandum dated September
30, 1998, as amended.
3.2 For the period commencing January 1, 1999 and expiring on the
termination of this Agreement, the Company shall pay the Consultant a fee
of $3,500 per month, plus G.S.T., together with reasonable and customary
out-of-pocket expenses. Of this $3,500, $2,500 will be paid in cash at the
end of each month, and the remaining $1,000 will be deferred until the
closing of a Major Financing. A "Major Financing" is considered to be a
financing (other than the Initial Financing) whether conducted privately or
publically, whether brokered or non-brokered, which results in aggregate
gross proceeds to the Company of more than $400,000.
3.3 The Company shall reimburse the Consultant for all reasonable and
customary out-of-pocket expenses incurred by the Consultant in performing
its duties in accordance with the terms of this Agreement on the submission
by the Consultant to the Company of documentation evidencing such
expenses."
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2. Section 4 - "Financing" is deleted in its entirety and replaced with the
following:
"4 Financing
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4.1 The Company shall pay a cash bonus equal to 2% of the Net Proceeds (as
hereinafter defined) of the Initial Financing and any Major Financing upon
the closing of each such financing.
4.2 The Company agrees to issue to the Consultant 150,000 common shares of
the Company upon completion of the Initial Financing. In connection
therewith, the Company hereby grants the Consultant option (the "Initial
Financing Option") to acquire, for no additional consideration on the day
of the completion of the Initial Financing, 150,000 common shares of the
Company.
4.3 Upon completion of the first Major Financing completed after the
Initial Financing, the Company agrees that it will issue to the Consultant
30,000 common shares of the Company and warrants (the "Warrants") to
acquire such number of common shares of the Company equal in value to 4% of
the net proceeds of such Major Financing. In connection therewith, the
Company hereby grants to the Consultant the option (the "Major Financing
Option") to acquire, for no additional consideration, on the day of the
next completion of each Major Financing, 30,000 common shares of the
Company and Warrants to acquire common shares of the Company equal in value
to 4% of the net proceeds of such Major Financing. Each Warrant will
entitle the Consultant to acquire one common share of the Company at a
price at which common shares are sold by the Company in such Major
Financing. The Warrants shall be exercisable for a period expiring two
years after an Initial Public Offering.
4.4 In the event that the applicable regulatory authorities require the
Company to cancel, change or amend the terms of the Warrants or any other
aspect of this Agreement, the Company will use its best efforts to
compensate the Consultant in a manner which is acceptable to the Consultant
and to the Company.
4.5 For the purposes of this Agreement, "Net Proceeds" of a particular
financing means the aggregate gross proceeds of such financing less the
cash portion of any finder's fees or commissions payable by the Company on
such financing."
3. Section 5 is deleted in its entirety and replaced with the following:
"5 Termination
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5.1 This Agreement may be terminated by the Company by notice in writing
to the Consultant at any time during the term hereof for cause, in which
case the Consultant shall be entitled to seven (7) days notice or, at the
sole discretion of the Company, to be paid the equivalent of amount of
termination pay in lieu of such notice. For the purposes hereof, "Cause"
shall include fraud, misappropriation, debt or embezzlement of any of the
Company's property or any of its subsidiary's property, a breach of the
provisions of this Agreement by the Consultant, lack of competence by the
Consultant including gross or chronic misconduct or gross or chronic
neglect of duties by the Consultant or public conduct of the Consultant
which causes substantial detriment to the Company's reputation.
5.2 This Agreement may be terminated by the Consultant by notice in
writing to the Company at any time prior to March 1, 1999. In the event
that the Consultant terminates this Agreement prior
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to March 1, 1999, the Consultant will be owed no further compensation with
the exception of any part of the monthly retainer that has been billed to
the date of the notice advising the Company of the Consultant's termination
of this Agreement.
5.3 Except as provided for in subsections 5.1 and 5.2, this Agreement may
be terminated at the option of either party upon ten (10) days written
notice to the other party.
5.4 If this Agreement is terminated in accordance with the provisions of
subsection 5.3 before a competitive offer to finance the Company is
presented to the Company by the Consultant, the Consultant shall be
entitled to receive 30,000 common shares of the Company, plus the portion
of the monthly retainer that has been billed and not yet paid. In
connection therewith the Company hereby grants to the Consultant the option
(the "Pre-Offer Termination Option") to acquire, for no additional
consideration, 30,000 common shares of the Company.
5.5 If this Agreement is terminated in accordance with the provisions of
subsection 5.3 after a competitive offer to finance the Company is
presented to the Company by the Consultant (except for an offer to finance
the Company by Xxx Xxxxxxxx and his associates), but before a Major
Financing has been completed, the Company will pay to the Consultant a cash
bonus equal to 2% of the projected Net Proceeds of the best of the
competitive offers (if more than one), and will issue to the Consultant
30,000 common shares of the Company and Warrants to acquire common shares
of the Company equal in value to 2% of the projected net proceeds of the
best of the competitive offers (if more than one). In connection therewith,
the Company hereby grants to the Consultant the option (the "Post-Offer
Termination Option") to acquire, for no additional consideration, 30,000
common shares of the Company and Warrants to acquire common shares of the
Company equal in value to 2% of the projected Net Proceeds of the best
competitive offer to finance the Company.
5.6 If the Company terminates this Agreement pursuant to subsection 5.3
then, in addition to the compensation to which the Consultant will receive
under subsection 5.4 or 5.5, as the case may be, the Company will pay to
the Consultant a $7,000 severance fee."
4. Except as herein amended, all of the terms and conditions of the Consulting
Agreement shall remain in full force and effect.
If you are in agreement with the amendments noted above, please execute this
amendment by signing in the space provided below. Upon execution by you, this
letter will constitute a binding amendment to the Consulting Agreement.
RECONNAISSANCE TECHNOLOGIES INC. The Amended terms of the Consulting
Agreement are accepted and agreed to
Per: this _______ day of _________________,
1999.
Xxxxxx X. Xxxxxxx XXXX XXXX & ASSOCIATES
Chief Executive Officer
Per: ______________________________
