SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
THINKPATH INC.
(Name of Registrant as specified in its charter)
(Name of Person(s) Filing Proxy Statement), if other than Registrant
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: (A)
(4) Proposed maximum aggregate value of transaction: (5) Total fee
paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THINKPATH INC.
201 WESTCREEK BOULEVARD
BRAMPTON, ONTARIO, CANADA L6T 5S6
-------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER ##, 2003
TO THE SHAREHOLDERS OF THINKPATH INC.:
NOTICE IS HEREBY GIVEN, that the Annual Meeting and Special Meeting
(the "Meeting") of shareholders of Thinkpath Inc. (the "Company") will be held
at 10:00 A.M. on October 2, 2003 at the Company's executive offices located at
201 Westcreek Boulevard, Brampton, Ontario, Canada, L6T 5S6, for the following
purposes:
1. To elect the Board of Directors of the Company for the ensuing year;
2. To ratify the appointment of Schwartz, Levitsky, Feldman, llp, as the
Company's independent chartered accountants for the ensuing year;
3. To ratify the adoption of the Company's 2003 Stock Option Plan, a copy
of which being attached hereto as Exhibit A;
4. To vote upon the proposal to amend the Company's Articles of
Incorporation to increase the authorized number of the shares of the
Company's common stock from 800,000,000 to an unlimited number in the
form of special resolution being attached hereto as Exhibit B; and
5. To transact such other business as may properly come before the Meeting
and any continuations and adjournments thereof.
Shareholders of record at the close of business on August 22, 2003 are
entitled to notice of and to vote at the Meeting.
In order to ensure a quorum, it is important that the shareholders
representing a majority of the total number of shares issued and outstanding and
entitled to vote be present in person or represented by their proxies.
Therefore, whether you expect to attend the Meeting in person or not, please
sign, fill out, date and return the enclosed proxy in the self-addressed,
postage-paid envelope also enclosed. If a shareholder attends the Meeting and
prefers to vote in person, such shareholder can revoke such shareholder's proxy.
In addition, please note that abstentions and broker non-votes are each
included in the determination of the number of shares present and voting for
purposes of determining the presence or absence of a quorum for the transaction
of business. Neither abstentions nor broker non-votes are counted as voted
either for or against a proposal.
By Order of the Board of Directors, August 22, 2003
/s/ Declan A. French
Chairman of the Board of Directors
THINKPATH INC.
201 WESTCREEK BOULEVARD
BRAMPTON, ONTARIO, CANADA L6T 5S6
-------------------------------
PROXY STATEMENT
-------------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 1, 2003
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of Thinkpath Inc. (the "Company") for use
at the Annual Meeting and Special Meeting (the "Meeting") of shareholders of the
Company to be held on October 1, 2003 at 10:00 A.M. at the Company's executive
offices located at 201 Westcreek Boulevard, Brampton, Ontario, Canada, L6T 5S6
and at any continuation and adjournment thereof. Anyone giving a proxy may
revoke it at any time before it is exercised by giving the Chairman of the Board
of Directors of the Company written notice of the revocation, by submitting a
proxy bearing a later date, or by attending the Meeting and voting. This
statement, the accompanying Notice of Meeting and form of Proxy have been first
sent to the shareholders on or about September __, 2003.
In addition, please note that abstentions and broker non-votes are
included in the determination of the number of shares present and voting for
purposes of determining the presence or absence of a quorum for the transaction
of business. Neither abstentions nor broker non-votes are counted as voted
either for or against a proposal.
All properly executed, unrevoked proxies on the enclosed form, which
are received in time will be voted in accordance with the shareholder's
directions, and unless contrary directions are given, will be voted for the
proposals described below.
Please note that all references to dollar amounts in this Proxy, unless
otherwise indicated, are to United States dollars.
OWNERSHIP OF SECURITIES
Only shareholders of record at the close of business on August 22,
2003, the date fixed by the Board of Directors in accordance with the Company's
By-Laws (the "Record Date"), are entitled to vote at the Meeting. As of the
Record Date there were 556,001,668 issued and outstanding shares of the
Company's common stock.
Each outstanding share of common stock is entitled to one vote on all
matters properly coming before the Meeting. A majority of the shares of the
outstanding common stock is necessary to constitute a quorum for the Meeting.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of August 22, 2003, the names and
beneficial ownership of the Company's common stock beneficially owned, directly
or indirectly, by: (i) each person who is a director or executive officer of the
Company; (ii) all directors and executive officers of the Company as a group;
and (iii) all holders of 5% or more of the outstanding shares of the common
stock of the Company:
Name and Address of Amount and Nature of Percentage of Shares
Beneficial Owner (1) Beneficial Ownership (2) Outstanding
Declan A. French 13,338,229 (3) 2%
Kelly Hankinson 180,167 (4) *
John Dunne 41,424 (5) *
Lloyd MacLean -- *
Arthur S. Marcus 30,500 (6) *
Alpha Capital 27,244,082 (7) 4.9%
Bristol Investment Fund 27,244,082 (8) 4.9%
Camden International 27,244,082 (9) 4.9%
All Directors and Officers as a
Group (6 persons) (3 - 7) 13,590,320 2%
* Less than 1%.
(1) Except as set forth above, the address of each individual is 201 Westcreek
Boulevard, Brampton, Ontario, Canada, L6T 5S6
(2) Based upon information furnished to us by the directors and executive
officers or obtained from our stock transfer books. We have been informed that
these persons hold the sole voting and dispositive power with respect to the
common stock except as noted herein. For purposes of computing "beneficial
ownership" and the percentage of outstanding common stock held by each person or
group of persons named above as of August 22, 2003, or 556,001,668 shares, any
security which such person or group of persons has the right to acquire within
60 days after such date is deemed to be outstanding for the purpose of computing
beneficial ownership and the percentage ownership of such person or persons, but
is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
(3) Includes 101,333 shares of common stock issuable upon the exercise of
options granted to Declan A. French that are currently exercisable or
exercisable within the next 60 days. Also includes 1,647,103 shares of common
stock issued to Declan A. French as a bonus pursuant to his employment agreement
and 11,589,793 shares of common stock issued to Declan A. French pursuant to an
amendment of his employment agreement dated January 27, 2003.
(4) Includes 1,333 shares of common stock issuable upon the exercise of options
that are currently exercisable or exercisable within the next 60 days.
(5) Includes 1,333 shares of common stock issuable upon the exercise of options
that are currently exercisable or exercisable within the next 60 days.
(6) Includes 27,500 shares of common stock issuable upon the exercise of options
that are currently exercisable or exercisable within the next 60 days. Excludes
347,902 shares of common stock issued in the name of Gersten, Savage, Kaplowitz,
Wolf & Marcus, LLP, our United States legal counsel, of which Mr. Marcus is a
partner.
(7) Includes 20,971,387 shares of common stock issuable upon the exercise of
warrants and 6,272,695 shares issued on the conversion of Series C 7% Preferred
Shares. Pursuant to the warrant agreement, in no event shall the holder be
permitted to exercise outstanding warrants to the extent that the number of
shares of common stock owned by such holder will be equal to or exceed 4.9% of
the number of shares of common stock then issued and outstanding. Does not
include up to 6,171,470 of warrants that may be exercised upon 60 days prior
notice or shares of common stock issuable upon the conversion of $380,000
principal amount convertible debentures.
(8) Includes 221,762,019 shares of common stock issuable upon the exercise of
warrants. Pursuant to the warrant agreement, in no event shall the holder be
permitted to exercise outstanding warrants to the extent that the number of
shares of common stock owned by such holder will be equal to or exceed 4.9% of
the number of shares of common stock then issued and outstanding. Does not
include up to 194,517,937 of warrants that may be exercised upon 60 days prior
notice or shares of common stock issuable upon the conversion of $377,800
principal amount convertible debentures.
(9) Includes 72,285,714 shares of common stock issuable upon the exercise of
warrants. Pursuant to the warrant agreement, in no event shall the holder be
permitted to exercise outstanding warrants to the extent that the number of
shares of common stock owned by such holder will be equal to or exceed 4.9% of
the number of shares of common stock then issued and outstanding. Does not
include up to 45,041,632 of warrants that may be exercised upon 60 days prior
notice or shares of common stock issuable upon the conversion of $465,000
principal amount convertible debentures.
Number of securities to Weighted-average Number of securities
be issued upon exercise exercise price of remaining available
of outstanding options, outstanding options, for future issuance
warrants and rights warrants and rights under equity
compensation plans
- --------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans 1,110,492 1.80 6,876,000
approved by security holders
- --------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total 1,110,492 1.80 6,876,000
- --------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SECURITIES
The Company's total authorized capital stock currently consists of
800,000,000 shares of common stock, with no par value, and 1,000,000 shares of
preferred stock, with no par value per share. The following descriptions contain
all material terms and features of the Company's securities and are qualified in
all respects by reference to the Company's Articles of Incorporation and Bylaws,
each as amended.
COMMON STOCK
The Company is currently authorized to issue up to 800,000,000 shares
of common stock, no par value per share, of which as of August 22, 2003,
556,001,668 shares of common stock are outstanding, excluding the shares of
common stock to be issued (i) upon conversion of the 12% Senior Secured
Convertible Debentures, and (ii) upon the exercise of all outstanding warrants
and options. All outstanding shares of common stock are, and all shares of
common stock to be outstanding upon the conversion of the outstanding shares of
12% Senior Secured Convertible Debenture, and the exercise of outstanding
warrants and options (assuming the approval of Proposal 1), validly authorized
and issued, fully paid, and non-assessable.
The holders of common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of shareholders. Holders of
common stock are entitled to receive ratably dividends as may be declared by the
Company's Board of Directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, holders of the
common stock are entitled to share ratably in all assets remaining, if any,
after payment of liabilities. Holders of common stock have no preemptive rights
and have no rights to convert their shares of common stock into any other
securities.
Pursuant to the Business Corporation Act, Ontario, a shareholder of an
Ontario Corporation has the right to have the corporation pay the shareholder
the fair market value for his shares of the corporation in the event such
shareholder dissents to certain actions taken by the corporation, such as
amalgamation or the sale of all or substantially all of the assets of the
corporation and such shareholder follows the procedures set forth in the
Business Corporation Act, Ontario.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of up to
1,000,000 shares of preferred stock with designations, rights and preferences
determined from time to time by its Board of Directors. Accordingly, the
Company's Board of Directors is empowered, without shareholder approval, to
issue preferred shares with dividend, liquidation, conversion, or other rights
that could adversely affect the rights of the holders of the common stock.
SERIES A 8% CONVERTIBLE PREFERRED STOCK
There were 17,500 shares of Series A 8% Convertible Preferred Stock
authorized and issued, none of which remain outstanding.
SERIES B 8% CONVERTIBLE PREFERRED STOCK
There were 1,500 shares of Series B 8% Convertible Preferred Stock
authorized and issued, none of which remain outstanding.
SERIES C 7% CONVERTIBLE PREFERRED STOCK
Pursuant to a share purchase agreement dated April 18, 2001, (the
"Series C Preferred Stock Purchase Agreement") as amended on June 6, 2001, the
Company issued 1,230 shares of Series C 7% Cumulative Convertible Preferred
Stock (the "Series C Preferred Stock"). Each share of Series C Preferred Stock
has a stated value of $1,000 per share. The shares of Series C Preferred Stock
are convertible into shares of the Company's common stock at the option of the
holders, at any time after issuance until such shares of Series C Preferred
Stock are manditorily converted or redeemed by the Company, under certain
conditions.
As of August 22, 2003, there were no Series C Preferred Stock
outstanding. All of the 1,230 shares of Series C preferred stock have been
converted into an aggregate of 25,267,242 shares of common stock. As of August
22, 2003, all 723,436 warrants issued in connection with the purchase of the
Series C Preferred Stock remain outstanding and none have been exercised.
12% SENIOR SECURED CONVERTIBLE DEBENTURE
Pursuant to a share purchase agreement dated December 5, 2002,
the Company entered into an agreement (the "12% Senior Secured Convertible
Debenture Agreement"), with a syndicate of investors for debentures of up to
$3,000,000. The first debenture of $800,000 was purchased together with
50,285,714 warrants on closing. The debenture will become due twelve months from
the date of issuance. The investors will have the right to acquire up to
$800,000 worth of the Company's common stock at a price the lesser of $.0175 or
50% of the average of the three lowest prices on three separate trading days
during the sixty-day trading period prior to conversion. The warrants are
exercisable at any time and in any amount until December 5, 2009 at a purchase
price of $.0175 per share. The Company is required to pay interest to the
debenture holder on the aggregate unconverted and outstanding principal amount
of the debenture at the rate of 12% per annum, payable on each conversion date
and maturity date in cash or shares of common stock. On July 22, 2003,
12,571,428 of these warrants were repriced from $.0175 to $.00137 per share.
On December 18, 2002, the Company entered into a share
purchase agreement with Tazbaz Holdings Limited for the issuance and sale by the
Company of a $100,000 principal amount Convertible Debenture and 5,625,000
warrants to purchase shares of the Company's common stock. The debenture will
become due twelve months from the date of issuance. Tazbaz Holdings Limited will
have the right to acquire up to $100,000 worth of our common stock at a price
the lesser of $.0175 or 50% of the average of the three lowest prices on three
separate trading days during the sixty-day trading period prior to conversion.
The warrants are exercisable at any time and in any amount until December 18,
2009 at a purchase price of $.0175 per share. The Company is required to pay
interest to Tazbaz Holdings Limited on the aggregate unconverted and outstanding
principal amount of the debenture at the rate of 12% per annum, payable on each
conversion date and maturity date in cash or shares of common stock.
During the six months ended June 30, 2003, the company sold an
additional $1,450,000 in convertible debentures along with 194,063,656 warrants.
The debentures will become due twelve months from the date of issuance. The
investors will have the right to acquire up to $1,450,000 worth of the Company's
common stock at a price the lesser of $.0175 or 50% of the average of the three
lowest prices on three separate trading days during the sixty-day trading period
prior to conversion. The warrants are exercisable at any time and in any amount
for a period of seven years from closing at purchase prices ranging from $.0175
to $.00137 per share. The Company is required to pay interest to the debenture
holder on the aggregate unconverted and outstanding principal amount of the
debenture at the rate of 12% per annum, payable on each conversion date and
maturity date in cash or shares of common stock. On June 30, 2003, 45,714,286 of
these warrants were repriced from $.0175 to $.00875 per share. On July 22, 2003,
22,857,143 of these warrants were repriced from $.0175 to $.00137 per share.
As of August 22, 2003, if the outstanding debentures of $1,582,800
were to be converted and all common stock warrants were to be exercised we would
be obligated to issue approximately 1,563,261,777 shares of our common stock.
COMMON STOCK PURCHASE WARRANTS
There are outstanding warrants to purchase an aggregate of
387,439,931 shares of the Company's common stock as follows:
475,000 of the warrants are exercisable at any time and in any amount
until December 30, 2004 at a purchase price of $3.24 per share;
250,000 of the warrants are exercisable at any time and in any amount
until April 16, 2005 at a purchase price of $3.71 per share;
500,000 of the warrants are exercisable at any time and in any amount
until March 15, 2005 at a purchase price of $3.25 per share;
100,000 of the warrants are exercisable at any time and in any amount
until June 1, 2004 at a purchase price of $3.25 per share;
225,000 of the warrants are exercisable at any time and in any amount
until July 6, 2005 at a purchase price of $3.25 per share;
532,534 of the warrants are exercisable at any time and in any amount
until August 22, 2005 at a purchase price of $2.4614 per share;
230,693 of the warrants are exercisable at any time and in any amount
until August 22, 2005 at a purchase price of $1.00 per share;
100,000 of the warrants are exercisable at any time and in any amount
until January 20, 2006 at $1.50 per share;
663,484 of the warrants are exercisable at any time and in any amount
until April 18, 2006 at a purchase price of $.5445 per share,
100,000 of the warrants are exercisable at any time and in any amount
until April 4, 2003 at a purchase price of $.17 per share;
100,000 of the warrants are exercisable at any time and in any amount
until April 4, 2004 at a purchase price of $.17 per share;
10,600,000 of the warrants are exercisable at any time and in any
amount until September 30, 2009 at a purchase price of $.025 per share;
12,571,428 of the warrants are exercisable at any time and in any
amount until December 5, 2009 at a purchase price of $.00137 per share;
37,714,285 of the warrants are exercisable at any time and in any
amount until December 5, 2009 at a purchase price of $.0175 per share;
5,625,000 of the warrants are exercisable at any time and in any amount
until December 17, 2009 at a purchase price of $.00137 per share;
10,000,000 of the warrants are exercisable at any time and in any
amount until January 21, 2010 at a purchase price of $.0175 per share;
45,714,286 of the warrants are exercisable at any time and in any
amount until February 14, 2010 at a purchase price of $.00875 per
share;
22,857,143 of the warrants are exercisable at any time and in any
amount until February 14, 2010 at a purchase price of $.00137 per
share;
5,714,286 of the warrants are exercisable at any time and in any amount
until March 14, 2010 at a purchase price of $.0175 per share;
12,857,143 of the warrants are exercisable at any time and in any
amount until April 8, 2010 at a purchase price of $.0175 per share;
5,714,286 of the warrants are exercisable at any time and in any amount
until May 2, 2010 at a purchase price of $.0175 per share;
2,285,714 of the warrants are exercisable at any time and in any amount
until May 8, 2010 at a purchase price of $.0175 per share;
3,428,571 of the warrants are exercisable at any time and in any amount
until May 29, 2010 at a purchase price of $.0175 per share;
85,492,228 of the warrants are exercisable at any time and in any
amount until June 30, 2010 at a purchase price of $.00137 per share;
2,857,142 of the warrants are exercisable at any time and in any amount
until July 17, 2010 at a purchase price of $.0175 per share; and,
120,731,708 of the warrants are exercisable at any time and in any
amount until July 22, 2010 at a purchase price of $.00137 per share.
The Company may call any unexercised portion of 963,239 of the
387,439,931 warrants and require their exercise as follows if the Company's
common stock, as reported on the Over-the-Counter Bulletin Board, closes above
the bid price indicated for any ten consecutive business days: (i) 1/3 of such
unexercised warrants at $6.00 per share, (ii) 1/3 of such unexercised warrants
at $7.50 per share; and (iii) 1/3 of such unexercised warrants at $9.00 per
share.
Warrant-holders are not entitled, by virtue of being
warrant-holders, to receive dividends, to vote at or receive notice of any
meeting of shareholders or to exercise any other rights whatsoever as
shareholders. In order to receive one share of the Company's common stock a
warrant-holder must surrender one warrant, accompanied by payment of the
aggregate exercise price of the warrants to be exercised, which payment may be
made, at the warrant-holder's election, in cash or by delivery of a cashiers or
certified check or any combination of the foregoing. Upon receipt of duly
executed warrants and payment of the exercise price, the Company will issue and
cause to be delivered to warrant-holders certificates representing the number of
shares of common stock so purchased.
THIS PROXY STATEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTITIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH BELOW AND ELSEWHERE IN THIS PROXY STATEMENT.
PROPOSAL 1
TO ELECT THE BOARD OF DIRECTORS OF THE COMPANY FOR THE ENSUING YEAR.
Five directors are to be elected at the Meeting to hold office until
the next annual meeting of shareholders or until their successors have been duly
elected and qualified. The election of directors requires the affirmative vote
of at least the majority of shares of common stock present or represented at an
annual meeting at which a quorum is present or represented.
The By-Laws of the Company provide that the authorized number of
directors shall be as set by the Board of Directors but shall not be less than
one. The Company has paid directors fees for service on the Board of Directors
by the issuance of options under the 1998 Stock Option Plan, 2000 Stock Option
Plan, 2001 Stock Option Plan and 2002 Stock Option Plan.
SHAREHOLDER VOTE REQUIRED
The election of the directors will require the affirmative vote of the
majority of the shares present in person or represented by proxy at the Meeting
and entitled to vote on the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION TO THE BOARD OF DIRECTORS
OF THE COMPANY EACH OF THE FOLLOWING DIRECTOR NOMINEES:
POSITION
NAME AGE POSITION WITH THE COMPANY HELD SINCE
Declan A. French 59 Chairman of the Board of 1994
Directors, Chief Executive
Officer and President
John Dunne 63 Director 1999
Arthur S. Marcus 37 Director 2000
Lloyd MacLean 50 Director 2003
Set forth below is a biographical description of each of the Company's
director nominees based on information supplied by each of them:
DECLAN A. FRENCH has served as the Company's Chairman of the Board of
Directors, Chief Executive Officer and President since its inception in February
1994. Prior to founding Thinkpath, Mr. French was President and Chief Executive
Officer of TEC Partners Ltd., an information technology recruiting firm in
Toronto, Canada. Mr. French has a diploma in Psychology and Philosophy from the
University of St. Thomas in Rome, Italy.
JOHN DUNNE has served on the Company's Board of Directors since
June 1998. Mr. Dunne has served as Chairman and Chief Executive Officer of the
Great Atlantic & Pacific Company of Canada, Ltd. since August 1997, where he
also served as President and Chief Operating Officer from September 1996 until
August 1997. From November 1995 until September 1996, Mr. Dunne was Chairman and
Chief Executive Officer of Food Basics Ltd.
ARTHUR S. MARCUS has served on the Company's Board of Directors
since April 2000. Mr. Marcus is a partner at the New York law firm of Gersten,
Savage, Kaplowitz, Wolf and Marcus, LLP, the Company's United States securities
counsel. Mr. Marcus joined Gersten, Savage & Kaplowitz, LLP in 1991 and became a
partner in 1996. Mr. Marcus specializes in the practice of United States
Securities Law and has been involved in approximately 50 initial public
offerings and numerous mergers and acquisitions. Mr. Marcus received a Juris
Doctorate from Benjamin N. Cardozo School of Law in 1989.
LLOYD MACLEAN has served on the Company's Board of Directors
since February 14, 2003. Mr. MacLean served as the Company's Chief Financial
Officer and a Director from September 1997 until May 2000, at which time he
departed to pursue other business opportunities. Mr. MacLean is the sole officer
and director of Globe Capital Corporation. From 1996 to 1997, Mr. MacLean was
Vice-President and Chief Financial Officer of ING Direct Bank of Canada. From
1994 until 1996, he was Vice-President and Chief Financial Officer of North
American Trust, Inc., where he also served as a Vice President from 1990 until
1994. Mr. MacLean has an MBA from Harvard University and is a member of the
Canadian Institute of Chartered Accountants.
COMMITTEES OF THE BOARD OF DIRECTORS
In July 1998, the Company's Board of Directors formalized the creation
of a Compensation Committee, which is currently comprised of John Dunne, Arthur
S. Marcus and Lloyd MacLean. The Compensation Committee has: (i) full power and
authority to interpret the provisions of, and supervise the administration of,
the Company's 1998 Stock Option Plan, 2000 Stock Option Plan, 2001 Stock Option
Plan and 2002 Stock Option Plan, as well as any stock option plans adopted in
the future; and (ii) the authority to review all compensation matters relating
to the Company. The Compensation Committee has not yet formulated compensation
policies for senior management and executive officers. However, it is
anticipated that the Compensation Committee will develop a company-wide program
covering all employees and that the goals of such program will be to attract,
maintain, and motivate the Company's employees. It is further anticipated that
one of the aspects of the program will be to link an employee's compensation to
his or her performance, and that the grant of stock options or other awards
related to the price of the shares of our common stock will be used in order to
make an employee's compensation consistent with shareholders' gains.
It is expected that salaries will be set competitively relative to the
information technology and engineering services and consulting industry and that
individual experience and performance will be considered in setting such
salaries.
In July 1998, the Company's Board of Directors also formalized the
creation of an Audit Committee, which currently consists of Lloyd MacLean and
John Dunne. The Audit Committee is charged with reviewing the following matters
and advising and consulting with the Company's entire Board of Directors with
respect thereto: (i) the preparation of the Company's annual financial
statements in collaboration with the Company's chartered accountants; (ii)
annual review of the Company's financial statements and annual reports; and
(iii) all contracts between the Company and the Company's officers, directors
and other of the Company's affiliates. The Audit Committee, like most
independent committees of public companies, does not have explicit authority to
veto any actions of our entire Board of Directors relating to the foregoing or
other matters; however, the Company's senior management, recognizing their own
fiduciary duty to the Company and the Company's shareholders, is committed not
to take any action contrary to the recommendation of the Audit Committee in any
matter within the scope of its review.
The Company has established an Executive committee, comprised of
certain of the Company's executive officers and key employees, which allows for
the exchange of information on industry trends and promotes "best practices"
among the Company's business units. Currently, the Executive Committee consists
of Declan A. French, Kelly Hankinson, and Robert Trick.
During the year ended December 31, 2002, the Board of Directors met
five times on the following dates: March 7, 2002, April 15, 2002, May 17, 2002,
August 28, 2002 and October 16, 2002, at which all of the directors were
present; and acted by written consent in lieu of a meeting five times on the
following dates: February 6, 2002, June 28, 2002, November 21, 2002, November
25, 2002 and December 11, 2002. During the year ended December 31, 2002, the
Compensation Committee met on August 28, 2002, the Audit Committee met on April
15, 2002 and the Executive Committee met monthly.
BOARD AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the Company's audited financial
statements for the fiscal year ended December 31, 2002 with management and has
received the written disclosures and the letter from Schwartz Levitsky Feldman
llp, the Company's independent auditors, required by Independence Standards
Board Standard No. 1 (Independent Discussions with Audit Committee). The Audit
Committee has also discussed with Schwartz Levitsky Feldman llp the Company's
audited financial statements for the fiscal year ended December 31, 2002,
including among other things the quality of the Company's accounting principles,
the methodologies and accounting principles applied to significant transactions,
the underlying processes and estimates used by management in its financial
statements and the basis for the auditor's conclusions regarding the
reasonableness of those estimates, and the auditor's independence, as well as
the other matters required by Statement on Auditing Standards No. 61 of the
Auditing Standards Board of the American Institute of Certified Public
Accountants.
Based on these discussions with Schwartz Levitsky Feldman llp and the results of
the audit of the Company's financial statements, the Audit Committee members
recommended unanimously to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002. The members of the Audit Committee are
Lloyd MacLean and John Dunne. Each of the above named Audit Committee members is
an independent director as defined by Rule 4200 (a)(14) of the National
Association of Securities Dealers, Inc.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors has a Compensation Committee comprised of John
Dunne, Arthur S. Marcus and Lloyd MacLean. Each of John Dunne and Lloyd MacLean
are independent pursuant to Rule 4200 (a)(14) of the National Association of
Securities Dealers, Inc. Arthur Marcus is a partner in the Law Firm of Gersten,
Savage, Kaplowitz, Wolf & Marcus, LLP, the Company's outside U.S. securities
counsel.
BOARD COMPENSATION REPORT
EXECUTIVE COMPENSATION POLICY
Thinkpath's executive compensation policy is designed to attract,
motivate, reward and retain the key executive talent necessary to achieve our
business objectives and contribute to our long-term success. In order to meet
these goals, Thinkpath's compensation policy for our executive officers focuses
primarily on determining appropriate salary levels and providing long-term
stock-based incentives. To a lesser extent, Thinkpath's compensation policy also
contemplates performance-based cash bonuses. Thinkpath's compensation principles
for the Chief Executive Officer are identical to those of Thinkpath's other
executive officers.
CASH COMPENSATION. In determining its recommendations for adjustments
to officers' base salaries for Fiscal 2002, we focused primarily on the scope of
each officer's responsibilities, each officer's contributions to Thinkpath's
success in moving toward its long-term goals during the fiscal year, the
accomplishment of goals set by the officer and approved by the Board for that
year, our assessment of the quality of services rendered by the officer,
comparison with compensation for officers of comparable companies and an
appraisal of our financial position. In certain situations, relating primarily
to the completion of important transactions or developments, we may also pay
cash bonuses, the amount of which will be determined based on the contribution
of the officer and the benefit to Thinkpath of the transaction or development.
EQUITY COMPENSATION. The grant of stock options to executive officers
constitutes an important element of long-term compensation for the executive
officers. The grant of stock options increases management's equity ownership in
us with the goal of ensuring that the interests of management remain closely
aligned with those of our stockholders. The Board believes that stock options in
Thinkpath provide a direct link between executive compensation and stockholder
value. By attaching vesting requirements, stock options also create an incentive
for executive officers to remain with us for the long term.
CHIEF EXECUTIVE OFFICER COMPENSATION
As indicated above, the factors and criteria upon which the
compensation of Declan French, our Chief Executive Officer, is based are
identical to the criteria used in evaluating the compensation packages of the
other executive officers of Thinkpath. The Chief Executive Officer's individual
contributions to Thinkpath include his leadership role in establishing and
retaining a strong management team, developing and implementing our business
plans and attracting investment capital to Thinkpath. In addition, we have
reviewed compensation levels of chief executive officers at comparable companies
within our industry.
Respectfully submitted:
By the Members of Thinkpath's Compensation Committee
John Dunne, Lloyd MacLean and Arthur Marcus
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's By-laws provide that the Company shall indemnify to
the fullest extent permitted by Canadian law the Company's directors and
officers (and former officers and directors). Such indemnification includes all
costs and expenses and charges reasonably incurred in connection with the
defense of any civil, criminal or administrative action or proceeding to which
such person is made a party by reason of being or having been the Company's
officer or director if such person was substantially successful on the merits in
his or her defense of the action and he or she acted honestly and in good faith
with a view to the Company's best interests, and if a criminal or administrative
action that is enforced by a monetary penalty, such person had reasonable
grounds to believe his or her conduct was lawful.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted, the Company's directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, the
Company has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses, incurred or paid by one of the Company's
directors, officers or controlling persons in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person, the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such issue.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid by the Company during each of the last three fiscal years to
the Company's Chief Executive Officer and to each of the Company's executive
officers who earned in excess of $100,000 during the year ended December 31,
2002:
SUMMARY COMPENSATION TABLE
Name and Restricted
Principal Annual Stock Other
Position Year Salary Bonus Awards Options/SARs Compensation
- -------- ---- ------ ----- ------ ------------ -------------
Declan A. French 2002 150,000 100,000(1) -0- -0- -0-
Chief Executive Officer 2001 150,000 100,000(1) -0- -0- -0-
and Chairman of the Board 2000 100,000 750,000(1) -0- 29,000 -0-
Laurie Bradley 2002 150,000(2) -0- -0- -0- -0-
President 2001 150,000(2) -0- -0- -0- -0-
2000 -0- -0- -0- -0- -0-
Tony French, 2002 100,000 -0- -0- -0- -0-
Executive Vice President 2001 94,500 -0- -0- -0- 25,000(3)
2000 94,500 -0- -0- 75,000 47,000(3)
Kelly Hankinson 2002 100,000 -0- -0- -0- -0-
Chief Financial Officer, 2001 100,000 -0- -0- -0- -0-
2000 75,000 -0- -0- 100,000 -0-
<FN>
(1) This reflects the dollar value of 588,235 shares of common stock issued to
Mr. French in lieu of cash bonuses for the fiscal year 2001 and 1,200,000
shares for the fiscal years of 1999 and 2000 pursuant to his employment
agreement. [WHAT ABOUT DESCRIPTION OF BONUS FOR 2002]
(2) This reflects salary paid pursuant to Ms. Bradley's employment agreement
which was terminated in January 2003.
(3) This reflects commissions paid pursuant to Mr. French's employment
agreement. Mr. French's employment agreement was terminated in June 2003,
pursuant to the sale of the Company's IT Recruitment division.
</FN>
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Declan
A. French whereby he will serve as Chairman of the Board, Chief Executive
Officer and President for a period of two years commencing on November 28, 2001.
Mr. French shall be paid a base salary of $150,000 and a bonus to be determined
by the Company's EBITDA (earnings before interest, taxes, depreciation and
amortization) as a percentage of annual gross revenue with a minimum guaranteed
bonus of $100,000. The bonus will be paid in cash or shares at the Company's
discretion. In April 2002, the Company issued 588,235 shares of its common stock
to Mr. French as payment in full for the bonus due for the fiscal year 2001. In
February 2001, the Company issued 1,200,000 shares of its common stock as
payment in full for the bonuses due to Mr. French for the fiscal years of 1999
and 2000 pursuant to the terms of his previous employment agreement. In January
2003, the Company issued an aggregate of 12,427,535 shares of its common stock
to Mr. French for extinguishment of certain indebtedness of the company to Mr.
French pursuant to the amendment to his employment agreement dated January 27,
2003. Mr. French continues to serve as Chairman, Chief Executive Officer and
President.
On January 29, 2001, the Company entered into an employment agreement
with Laurie Bradley whereby she served as President. Ms. Bradley was paid an
annual salary of $150,000 and a bonus based on performance. The employment
agreement was for an indeterminate period of time. Ms. Bradley's agreement was
terminated in January 2003.
On March 1, 2001, the Company entered into an employment agreement with
Tony French whereby he serve d as Executive Vice President. Mr. French was paid
an annual salary of $100,000 and a performance bonus. The employment agreement
was for an indeterminate period of time. Mr. French's agreement was terminated
in June 2003, pursuant to the sale of the Company's IT Recruitment division.
On March 1, 2001, the Company entered into an employment agreement with
Kelly Hankinson whereby she will serve as Chief Financial Officer. Ms. Hankinson
shall be paid an annual salary of $100,000. The employment agreement is for an
indeterminate period of time. In the event Ms. Hankinson is terminated for any
reason, including but not limited to, the acquisition of Thinkpath, Ms.
Hankinson shall be entitled to a severance payment equal to one year's salary.
No other officer or director has an employment contract with us.
COMPENSATION OF DIRECTORS
Effective August 28, 2002, each non-employee member of the Company's
Board of Directors shall receive the following annual compensation in
consideration for services rendered as a director: (i) 5 year option to purchase
up to 50,000 shares of our common stock exercisable at a price equal to fair
market value of our common stock as of the date of grant; (ii) a cash amount of
$4,000 per annum, paid on a quarterly basis; and, (iii) reimbursement of
reasonable and ordinary expenses in connection with such member's attendance at
Board or committee meetings. To date, the Company has not made any such payments
to its outside directors.
Directors who receive a salary from the company shall not be entitled
to receive any additional compensation for their services as a member of the
Company's Board of Directors.
Board of Directors and shareholders have adopted the 1998 Stock Option
Plan, 2000 Stock Option Plan, 2001 Stock Option Plan, and 2002 Stock Option
Plan, pursuant to which options have been or may be granted to officers,
directors, consultants, key employees, advisors and similar parties who provide
their skills and expertise to the Company.
OPTIONS, WARRANTS OR RIGHTS
On August 19, 1999, Declan A. French was issued an option to purchase
100,000 shares of the Company's common stock at an exercise price of $3.19 per
share. The option was issued in consideration for services rendered to the
Company in his capacity as Chairman of the Board and Chief Executive Officer.
The option is immediately exercisable and expires on August 19, 2004.
On August 19, 1999, Tony French was issued an option to purchase 50,000
shares of the Company's common stock at an exercise price of $3.19 per share.
The option was issued in consideration for services rendered to the Company in
his capacity as an employee. The option is immediately exercisable and expires
on August 19, 2004.
On August 19, 1999, John R. Wilson was issued an option to purchase
20,000 shares of the Company's common stock at an exercise price of $3.19 per
share. The option was issued in consideration for services rendered to the
Company in his capacity as President of Systemsearch Consulting Services Inc.
The option is immediately exercisable and expires on August 19, 2004.
On August 19, 1999, Kelly Hankinson was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $3.19 per
share. The option was issued in consideration for services rendered to the
Company in her capacity as Vice President, Finance and Administration and Group
Controller. The option is immediately exercisable and expires on August 19,
2004.
On August 19, 1999, Arthur S. Marcus was issued an option to purchase
2,500 shares of the Company's common stock at an exercise price of $3.19 per
share. The option was issued in consideration for services legal services
rendered to the Company. The option expires on August 19, 2004.
On January 1, 2000, Roger W. Walters was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $3.25 per
share. The option was issued in connection with the Company's acquisition of Cad
Cam, Inc. The option was immediately exercisable and expired on December 31,
2000. Such option was never exercised by Mr. Walters.
On March 22, 2000, Declan A. French was issued an option to purchase
4,000 shares of the Company's common stock at an exercise price of $3.19 per
share. The option was issued in consideration for services rendered to the
Company in his capacity as Chairman of the Board and Chief Executive Officer.
The option shall vest at a rate of 1,333 shares of common stock per year and
shall be fully vested on March 22, 2003. The option expires on March 22, 2005.
On March 22, 2000, Thomas E. Shoup, the Company's former President and
Chief Operating Officer, was issued an option to purchase 4,000 shares of the
Company's common stock at an exercise price of $3.19 per share. The option was
issued in connection with the Company's acquisition of Cad Cam, Inc. and in
consideration services rendered to the Company in his capacity as President and
Chief Operating Officer. The option was to vest at a rate of 1,333 shares of
common stock per year and was to be fully vested on March 22, 2003. The option
was to expire on March 22, 2005. Such option terminated on December 22, 2000,
the effective date of Mr. Shoup's resignation as an officer of the Company.
On March 22, 2000, Tony French was issued an option to purchase 4,000
shares of the Company's common stock at an exercise price of $3.19 per share.
The option was issued in consideration for services rendered to the Company in
his capacity as Executive Vice President. The option shall vest at a rate of
1,333 shares of common stock per year and shall be fully vested on March 22,
2003. The option expires on March 22, 2005.
On March 22, 2000, Kelly Hankinson was issued an option to purchase
3,500 shares of the Company's common stock at an exercise price of $3.19 per
share. The option was issued in consideration for services rendered to the
Company in her capacity as Vice President, Finance and Administration and Group
Controller. The option shall vest at a rate of 1,167 shares of common stock per
year and shall be fully vested on March 22, 2003. The option expires on March
22, 2005.
On March 22, 2000, Roger W. Walters was issued an option to purchase
4,000 shares of the Company's common stock at an exercise price of $3.19 per
share. The option was issued in consideration for services rendered to the
Company in his capacity as Executive Vice President of US Operations and as a
Director. The option shall vest at a rate of 1,333 shares of common stock per
year and shall be fully vested on March 22, 2003. The option expires on March
22, 2005.
On March 22, 2000, John R. Wilson was issued an option to purchase
4,000 shares of the Company's common stock at an exercise price of $3.19 per
share. The option was issued in consideration for services rendered to the
Company in his capacity as President of Systemsearch Consulting Services Inc.
The option shall vest at a rate of 1,333 shares of common stock per year and
shall be fully vested on March 22, 2003. The option expires on March 22, 2005.
On March 22, 2000, John A. Irwin was issued an option to purchase 4,000
shares of the Company's common stock at an exercise price of $3.19 per share.
The option was issued in consideration for services rendered to the Company in
his capacity as President of International Career Specialists Ltd. The option
shall vest at a rate of 1,333 shares of common stock per year and shall be fully
vested on March 22, 2003. The option expires on March 22, 2005.
On March 22, 2000, William J. Neil, a former director, was issued an
option to purchase 10,000 shares of the Company's common stock at an exercise
price of $3.19 per share. The option was issued in consideration for services
rendered to the Company in his capacity as a director. The option shall vest at
a rate of 3,333 shares of common stock per year and shall be fully vested on
March 22, 2003. The option expires on March 22, 2005.
On March 22, 2000, John Dunne was issued an option to purchase 10,000
shares of the Company's common stock at an exercise price of $3.19 per share.
The option was issued in consideration for services rendered to the Company in
his capacity as director. The option shall vest at a rate of 3,333 shares of
common stock per year and shall be fully vested on March 22, 2003. The option
expires on March 22, 2005.
On March 22, 2000, James Reddy, a former director, was issued an option
to purchase 10,000 shares of the Company's common stock at an exercise price of
$3.19 per share. The option was issued in consideration for services rendered to
the Company in his capacity as Director. The option shall vest at a rate of
3,333 shares of common stock per year and shall be fully vested on March 22,
2003. The option expires on March 22, 2005.
On March 31, 2000, Roger W. Walters was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $2.75 per
share. The option was issued in connection with the Company's acquisition of Cad
Cam, Inc. The option was immediately exercisable and expired on December 31,
2000. Such option was never exercised by Mr. Walters.
On May 9, 2000, Marilyn Sinclair, a former officer and director, was
issued an option to purchase 4,000 shares of the Company's common stock at an
exercise price of $3.25 per share. The option was issued in consideration for
services rendered to the Company in her capacity as Vice President and
President, Object Arts Inc. The option shall vest at a rate of 1,333 shares of
common stock per year and shall be fully vested on May 9, 2003. The option
expires on May 9, 2005
On June 30, 2000, Roger W. Walters was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $3.00 per
share. The option was issued in connection with the Company's acquisition of Cad
Cam, Inc. The option was immediately exercisable and expired on December 31,
2000. Such option was never exercised by Mr. Walters.
On September 30, 2000, Roger W. Walters was issued an option to
purchase 25,000 shares of the Company's common stock at an exercise price of
$2.12 per share. The option was issued in connection with the Company's
acquisition of Cad Cam, Inc. The option was immediately exercisable and expired
on December 31, 2000. Such option was never exercised by Mr. Walters.
On December 26, 2000, Declan A. French was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $0.70 per
share. Such option expires on December 26, 2005. The option was issued in
consideration for services rendered to the Company in his capacity as Chairman
of the Board. The option shall vest at a rate of 8,333 shares of common stock
per year and shall be fully vested on December 26, 2003. The option expires on
December 26, 2005
On December 26, 2000, Kelly Hankinson was issued an option to purchase
100,000 shares of the Company's common stock at an exercise price of $0.70 per
share. The option was issued in consideration for services rendered to the
Company in her capacity as director. Such option expires on December 26, 2005.
On December 26, 2000, John Dunne was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $0.70 per
share. Such option expires on December 26, 2005. The option was issued in
consideration for services rendered to the Company in his capacity as director.
The option shall vest at a rate of 8,333 shares of common stock per year and
shall be fully vested on December 26, 2003. The option expires on December 26,
2005
On December 26, 2000, Arthur S. Marcus was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $0.70 per
share. Such option expires on December 26, 2005. The option was issued in
consideration for services rendered to the Company in his capacity as director.
The option shall vest at a rate of 8,333 shares of common stock per year and
shall be fully vested on December 26, 2003. The option expires on December 26,
2005.
On December 26, 2000, Ronan McGrath was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $0.70 per
share. Such option expires on December 26, 2005. The option was issued in
consideration for services rendered to the Company in his capacity as director.
The option shall vest at a rate of 8,333 shares of common stock per year and
shall be fully vested on December 26, 2003. The option expires on December 26,
2005.
On December 26, 2000, Mike Reid was issued an option to purchase
100,000 shares of the Company's common stock at an exercise price of $0.70 per
share. Such option expires on December 26, 2005.
On December 26, 2000, Joel Schoenfeld was issued an option to purchase
25,000 shares of the Company's common stock at an exercise price of $0.70 per
share. Such option expires on December 26, 2005. The option was issued in
consideration for services rendered to the Company in his capacity as director.
The option shall vest at a rate of 8,333 shares of common stock per year and
shall be fully vested on December 26, 2003. The option expires on December 26,
2005.
On March 14, 2001, the Company repriced 100,000 options belonging to
Roger W. Walters to $1.00 per share in consideration of debt forgiveness of
$75,000 and restructuring of debt totaling $250,000 on the notes payable to Mr.
Walters in connection with the Company's purchase of Cad Cam, Inc. The options
shall be exercisable during the period April 1, 2001 to April 4, 2004.
No options were issued to any of the Company's officers or
directors during 2002.
INTERESTS OF MANAGEMENT IN CERTAIN TRANSACTIONS
In November 1998, the Company purchased certain assets of Southport
Consulting, Inc. from Michael Carrazza, one of the Company's former directors,
for an aggregate of $250,000.00 in cash and shares of the Company's common
stock. In February 2001, Mr. Carrazza instituted an action against the Company
in the Supreme Court of the State of New York alleging breach of contract and
unjust enrichment and seeking at least $250,000 in damages. Specifically, Mr.
Carrazza claimed that the Company failed to deliver cash or stock under an asset
purchase agreement, and that he was entitled to recovery of his attorney's fees.
The Company filed a counterclaim against Mr. Carrazza, seeking $162,000 in
damages, plus punitive damages and attorneys' fees, on the ground that Mr.
Carrazza, as then president and sole stockholder of Southport Consulting Co.,
fraudulently induced the Company into executing the asset purchase agreement by
misrepresenting the value of the assets being purchased. After the commencement
of discovery, Mr. Carrazza filed a motion for summary judgment, which was
granted in his favor in the sum of $264,602. On October 21, 2002, the Company
entered into a settlement agreement with Michael Carrazza, in the sum of
$330,000 to be paid $50,000 on October 31, 2002 and $17,500 per month thereafter
until paid in full, bearing interest at 9% per annum.
In September 1999, the Company completed the acquisition of all the
issued and outstanding capital stock of Cad Cam, Inc. for $2,000,000 in cash,
$2,500,000 pursuant to a promissory note and the issuance of $1,500,000 worth of
shares of the Company's common stock to Roger W. Walters, Cad Cam, Inc.'s former
president. As part of the transaction, Mr. Walters was elected to serve on the
Company's Board of Directors. The share purchase agreement was executed on
January 1, 1999 and the transaction was effective as of September 16, 1999. Mr.
Rogers was not affiliated with the Company prior to the acquisition.
On January 1, 2000, the share purchase agreement by and among the
Company, Cad Cam, Inc., and Roger W. Walters was amended. Pursuant to the
amendment, the parties agreed that $1,000,000 of the $2,000,000 cash payment to
be made to Mr. Walters was to be paid in 4 equal quarterly payments of $250,000
commencing on January 1, 2000. In consideration for accepting the cash payment
in installments, the Company issued Mr. Walters options to purchase an aggregate
of 100,000 shares of common stock at an exercise prices ranging from $2.12 to
$3.25 per share, which options expired on December 31, 2000. On March 14, 2001,
the Company repriced such options belonging to Roger W. Walters to an exercise
price of $1.00 per share in consideration of debt forgiveness of $75,000 and
restructuring of debt totaling $250,000 on the notes payable to Mr. Walters in
connection with the Company's purchase of Cad Cam, Inc. In addition, the term of
such option was extended to April 4, 2004.
In September 2001, the note payable to Rogers Walters was further
amended whereby the principal was reduced from $1,200,000 to $750,000 in
consideration of capital stock of $450,000 or 1,756,655 shares. In addition, all
principal payments were postponed until January 1, 2003, at which time, the
Company was to pay $12,500 per month plus interest at 4.5% until December 31,
2006. The balance of $150,000 was to be due on December 31, 2006.
On August 1, 2002, the Company further restructured its note payable
to Roger Walters, reducing the principal from $675,000 to $240,000 in
consideration of the issuance of 1,000,000 shares of its common stock. The
company agreed to issue and register the shares upon obtaining shareholder
approval of an amendment to its Articles of Incorporation increasing its
authorized capital stock. Principal payments of $4,000 were to be made monthly
beginning September 1, 2002 until August 1, 2007. This loan is non-interest
bearing.
In addition, the Company agreed to price protection on the 1,756,655
shares that were issued to Mr. Walters in January 2002. In the event that the
bid price is less than $.27 per share when Mr. Walters seeks to sell his shares
in an open market transaction, the Company will be obligated to issue additional
shares of unregistered common stock with a value equal to the difference between
$.27 per share and the closing bid price to a floor of $.14 per share. Pursuant
to this agreement, the Company issued Mr. Walters 1,631,185 shares of our common
stock in December 2002.
The price of the shares at the time of conversion of Mr. Walter's
debt on August 1, 2002 was 0.0942, representing approximately $340,800 in debt
forgiveness. In accordance with FAS 15, the gain was measured by the excess of
the carrying amount of the note payable settled less accrued interest, finance
charges or other debt obligations. On December 5, 2002, the shares were issued
to Roger Walters and the Company debited liabilities payable in capital stock
and credited capital stock in the amount of $247,858 and debt forgiveness in the
amount of $187,142.
The loan is subordinated to Morrison Financial Services Limited and
the 12% Senior Secured Convertible Debenture holders. The Company has not made
any principal payments to Mr. Walters since December 2002 and is currently in
default of the loan agreement. In the event of default, the principal balance
will bear interest at 12% per annum until payment is made.
On April 1, 2000, the Company completed the acquisition of all of the
issued and outstanding capital stock of Micro Tech Professionals, Inc., a
Massachusetts corporation in consideration of up to an aggregate of $4,500,000
in a combination of cash, notes payable and shares of our common stock, subject
to specific performance criteria be met. On April 25, 2000, the Company paid to
Denise Dunne-Fushi, the sole shareholder of Micro Tech Professionals, Inc.,
$2,500,000 of the aggregate of $4,500,000, which was paid in accordance with the
following schedule: (i) $1,250,000 in cash; (ii) the issuance of a $750,000
principal amount unsecured promissory note; and (iii) the issuance of 133,333
shares of the Company's common stock. As part of the transaction, the Company
entered into an employment agreement with Mrs. Dunne-Fushi, the former President
of Micro Tech Professionals, Inc. Such employment agreement was for a term of
one year commencing on April 25, 2000, the effective date of the acquisition,
with an annual salary of $125,000 per year and a bonus of $25,000. Mrs.
Dunne-Fushi was not affiliated with the Company prior to the acquisition.
On August 1, 2002, the Company restructured its note payable to
Denise Dunne-Fushi, reducing the principal from $1,740,536 to $600,000 in
consideration of the issuance of 4,000,000 shares of its common stock. In
addition a prior debt conversion of $225,000 that was to be paid in capital was
forgiven. The Company agreed to issue and register the shares upon obtaining
shareholder approval of an amendment to our Articles of Incorporation increasing
its authorized capital stock. Principal payments of $10,000 per month were to
begin November 1, 2002 bearing 5% interest until October 1, 2007. In addition,
the Company agreed to cover the monthly expense associated with Ms.
Dunne-Fushi's family health benefits and vehicle lease for a period of four
years.
The price of the shares at the time of conversion was 0.0942,
representing approximately $763,763 in debt forgiveness. In accordance with FAS
15, the gain was measured by the excess of the carrying amount of the note
payable settled less accrued interest, benefits and car lease payments as per
the settlement agreement. On December 5, 2002, the shares were issued to Denise
Dunne and the Company debited liabilities payable in capital stock and credited
capital stock in the amount of $475,787 and debt forgiveness in the amount of
$889,749.
The loan is secured under a general security agreement but is
subordinated to Morrison Financial Services Limited and the 12% Senior Secured
Convertible Debenture holders. The Company has not made any principal payments
to Ms. Dunne-Fushi since December 2002 and is currently in default of the loan
agreement. In the event of default, Ms. Dunne-Fushi has the option of enforcing
the security she holds.
During the fiscal year ended December 31, 2002, the Company paid
to Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, the Company's United States
legal counsel, approximately $113,000 and issued 158,635 shares of common stock
in consideration for legal services rendered. Arthur S. Marcus, one of the
Company's directors, is a partner of Gersten, Savage, Kaplowitz, Wolf & Marcus,
LLP. The 158,635 shares issued were pursuant to an agreement regarding prior
share issuances that in the event that our stock traded below $0.10 for ten
consecutive trading days or more, the Company would issue shares for the
differential.
During the fiscal year ended December 31, 2002, the Company issued
100,336 shares of common stock to Katherine Seto Evans, a former director, in
consideration for financial and accounting advisory services rendered.
On November 1, 2002, the Company entered into a series of
agreements with Thinkpath Training LLC, a New York company, for the sale of
certain assets of its New York training division for a nominal amount of cash
and the assumption of all prepaid training liabilities. As part of the
transaction, Thinkpath Training LLC assumed the New York training staff, some
assets and is subletting the classroom facilities. The owner of Thinkpath
Training LLC, is the daughter of Declan French, the Company's Chief Executive
Officer and President. As a result of this transaction, included in the Accounts
Receivable at December 31, 2002, is an amount of approximately $13,351 due to
the Company by Thinkpath Training LLC.
All future transactions between the Company and the Company's
officers, directors or 5% shareholders, and their respective affiliates, will be
on terms no less favorable than could be obtained from unaffiliated third
parties. In the event that the Company's enters into future affiliated
transactions, they will be approved by the Company's independent directors who
do not have an interest in the transactions and who have access, at the
Company's expense, to the Company's counsel or independent legal counsel.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF SCHWARTZ LEVITSKY FELDMAN, LLP,
CHARTERED ACCOUNTANTS AS THE COMPANY'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Subject to ratification by the shareholders, the Board of Directors appointed
Schwartz Levitsky Feldman LLP as independent auditors to audit the financial
statements of the Company for the fiscal year ending December 31, 2003.
AUDIT FEES. The Company engaged Schwartz Levitsky Feldman as its independent
accountants in 1999. In connection with the audit of the Company's annual
financial statements for fiscal year ended December 31, 2002, Schwartz Levitsky
Feldman billed the Company approximately $60,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES AND ALL OTHER FEES.
The aggregate fees billed by Schwartz Levitsky Feldman for professional services
rendered during fiscal year 2002 relating to the review of the Company's tax
returns, consultations on accounting standards and other miscellaneous services
was $100,000.
The Audit Committee has considered whether provision of the services described
above under the caption "Financial Information Systems Design and Implementation
Fees and All Other Fees" is compatible with maintaining the independent
accountants' independence and has determined that such services have not
adversely affected Schwartz Levitsky Feldman's independence.
A representative of Schwartz Levitsky Feldman is expected to be present at the
Annual Meeting and will have the opportunity to make a statement, and will be
available to respond to appropriate questions from shareholders.
STOCKHOLDER VOTE REQUIRED
Ratification of the appointment of Schwartz Levitsky Feldman as
independent certified public accountants requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
SCHWARTZ LEVITSKY FELDMAN, LLP, CHARTERED ACCOUNTANTS AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
PROPOSAL NO. 3
RATIFICATION OF THE ADOPTION OF THE COMPANY'S
2003 STOCK OPTION PLAN
At the Annual Meeting a vote will be taken on a proposal to ratify the
adoption of the Company's 2003 Stock Option Plan (the "2003 Stock Option Plan"),
which contains 20,000,000 shares of common stock underlying stock options
available for grant thereunder. The 2003 Stock Option Plan was adopted by the
Board of Directors on August 20, 2003. A COPY OF THE 2003 STOCK OPTION PLAN IS
ATTACHED HERETO AS EXHIBIT A. As of the date of this Proxy, no options to
purchase shares of the Company's common stock have been granted to the Company's
employees, directors and outside consultants under the 2003 Stock Option Plan.
DESCRIPTION OF THE 2003 PLAN
The 2003 Stock Option Plan will be administered by the Company's
Compensation Committee, which will determine among other things, those
individuals who shall receive options, the time period during which the options
may be partially or fully exercised, the number of shares of the Company's
common stock issuable upon the exercise of the options and the option exercise
price
The 2003 Stock Option Plan is effective for a period for ten years,
expiring in 2013. Options to acquire 20,000,000 shares of the Company's common
stock may be granted to officers, directors, consultants, key employees,
advisors and similar parties who provide the Company with their skills and
expertise. The 2003 Stock Option Plan is designed to enable management to
attract and retain qualified and competent directors, employees, consultants and
independent contractors. Options granted under the 2003 Stock Option Plan may be
exercisable for up to ten years, generally require a minimum three-year vesting
period, and shall be at an exercise price all as determined by the Company's
Compensation Committee provided that, the exercise price of any options may not
be less than the fair market value of the shares of the Company's common stock
on the date of the grant. Options are non-transferable, and are exercisable only
by the participant (or by his or her guardian or legal representative) during
his or her lifetime or by his or her legal representatives following death.
If: (i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity); (ii) the Company sells, leases or exchanges all or substantially all of
its assets to any other person or entity; (iii) the Company is to be dissolved
and liquidated; (iv) any person or entity, including a "group" as contemplated
by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires
or gains ownership or control (including, without limitation, power to vote) of
more than 50% of the outstanding shares of the Company's voting stock (based
upon voting power); or (v) as a result of or in connection with a contested
election of directors, the persons who were directors of the Company before such
election shall cease to constitute a majority of the Board of Directors (each
such event is referred to herein as a "Corporate Change"); no later than (a) ten
days after the approval by the shareholders of the Company of such merger,
consolidation, reorganization, sale, lease or exchange of assets or dissolution
or such election of directors or (b) 30 days after a change of control of the
type described in clause (iv), the Company's Compensation Committee, acting in
its sole discretion without the consent or approval of any optionee, shall act
to effect 1 or more of the following alternatives, which may vary among
individual optionees and which may vary among options held by any individual
optionee: (1) accelerate the time at which options then outstanding may be
exercised so that such options may be exercised in full for a limited period of
time on or before a specified date (before or after such Corporate Change) fixed
by the Company's Compensation Committee, after which specified date all
unexercised options and all rights of optionees thereunder shall terminate; (2)
require the mandatory surrender to the Company by selected optionees of some or
all of the outstanding Options held by such optionees (irrespective of whether
such options are then exercisable under the provisions of the 2003 Stock Option
Plan) as of a date before or after such Corporate Change, specified by the
Company's Compensation Committee, in which event the Company's Compensation
Committee shall thereupon cancel such options and the Company shall pay to each
optionee an certain amount of cash per share; (3) make such adjustments to
options then outstanding as the Company's Compensation Committee deems
appropriate to reflect such Corporate Change (provided, however, that the
Company's Compensation Committee may determine in its sole discretion that no
adjustment is necessary to options then outstanding); or (4) provide that the
number and class of shares covered by an option theretofore granted shall be
adjusted so that such option shall thereafter cover the number and class of
shares or other securities or property (including, without limitation, cash) to
which the optionee would have been entitled pursuant to the terms of the
agreement of merger, consolidation or sale of assets and dissolution if,
immediately prior to such merger, consolidation or sale of assets, and
dissolution, the optionee had been the holder of record of the number of shares
of common stock then covered by such option.
If a participant ceases affiliation with the Company by reason of
death, permanent disability or retirement at or after age 65, the option remains
exercisable for one year from such occurrence but not beyond the option's
expiration date. Other types of termination allow the participant 90 days to
exercise the option, except for termination for cause, which results in
immediate termination of the option.
Any unexercised options that expire or that terminate upon an
employee's ceasing to be employed by the Company become available again for
issuance under the 2003 Stock Option Plan, subject to applicable securities
regulation.
The 2003 Stock Option Plan may be terminated or amended at any time by
the Company's Board of Directors, except that the number of shares of the
Company's common stock reserved for issuance upon the exercise of options
granted under the 2003 Stock Option Plan may not be increased without the
consent of the Company's shareholders.
SHAREHOLDER VOTE REQUIRED
Approval of the Company's 2003 Stock Option Plan requires the
affirmative vote of the holders of a majority of the shares of common stock
present in person or represented by proxy at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE COMPANY'S 2003
STOCK OPTION PLAN.
PROPOSAL NO. 4
TO VOTE UPON THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK FROM
800,000,000 TO AN UNLIMITED NUMBER OF SHARES.
The Board has adopted a resolution unanimously approving and
recommending to the Company's shareholders for their approval an amendment to
the Company's Articles of Incorporation to provide for an increase in the
authorized number of shares of common stock from 800,000,000 to an unlimited
number of shares. IN THE FORM OF A SPECIAL RESOLUTION ATTACHED HERETO AS EXHIBIT
B.
As of August 22, 2003, there were 556,001,668 shares issued and
outstanding shares of common stock excluding: (i) 8,370,000 shares issuable upon
the exercise of options issued under the Company's 1998, 2000, 2001 and 2002
Stock Option Plans; (ii) 387,439,931 shares of common stock underlying warrants
issued in private transactions with exercise prices ranging between $0.00137 and
$3.71; (iii) up to approximately 1,189,698,557 shares of common stock issuable
upon the conversion of principal and interest on the 12% Senior Secured
Convertible Debenture.
The Board of Directors believes the increase in the authorized
number of shares of common stock is in the best interests of the Company to have
them available for, among other things, the possible issuance in connection with
future acquisitions or financing activities. In addition, it is necessary to
authorize such shares to have them available: (i) for issuance upon the
conversion of the outstanding shares of the 12% Senior Secured Convertible
Debenture; (ii) for issuance upon the exercise of the issued and outstanding
warrants; and, (iii) for issuance upon the exercise of the issued and
outstanding options. In addition, the additional shares of common stock would be
available for any proper corporate purpose including, without limitation, the
issuance in private or public sales as a means of raising working capital, as
consideration to be paid by the Company for the acquisition of other businesses
and properties, the issuance of stock splits or dividends and the implementation
of employee benefit plans.
The additional shares of common stock could be issued for any proper
corporate purpose by the Board of Directors at any time without further
shareholder approval and subject to applicable laws . Except as described above,
further authorization from the Company's shareholders will not be solicited
prior to the issuance of common stock. The voting and equity ownership rights of
the Company's shareholders will be diluted by such issuances. Shareholders will
not have preemptive rights to subscribe for shares of common stock, unless the
Company grants such rights at the time of issue. Except as contemplated herein,
the Company currently has no plans or proposals to issue any of the additional
shares of common stock.
The Board of Directors is required to make any determination to issue
shares of common stock based on its judgment as to the best interests of the
Company. Except as contemplated herein, the Company's Board of Directors has no
present intention of issuing additional shares of common stock. When in the
judgment of the Board of Directors such use would be in the best interest of the
Company, such shares could be used to create voting or other impediments or to
discourage persons seeking to gain control of the Company. Such shares could be
privately placed with purchasers favorable to the Board of Directors in opposing
such action. The issuance of new shares of common stock also could be used to
dilute the stock ownership of a person or entity seeking to obtain control of
the Company should the Board consider the action of such entity or person not to
be in the best interest of the Company. Any such issuance could also have the
effect of diluting the earnings per share, book value per share and/or voting
power of the common stock.
SHAREHOLDER VOTE REQUIRED
The ratification of the proposal to amend the Company's Articles of
Incorporation to increase the authorized number of the shares of the Company's
common stock from 800,000,000 to an unlimited number of shares will require the
affirmative vote of 2/3 of the shares of common stock in person or represented
by proxy at the Meeting and entitled to vote on the change of the corporate
name. If 2/3 of the shares of common stock present in person or represented by
proxy at the Meeting vote in favor of amending the Company's Articles of
Incorporation to increase the authorized number of shares of the Company's
common stock from 800,000,000 to an unlimited number of shares, the Company will
file with the Minister of Consumer and Business Services for the Province of
Ontario articles of amendment to effect such increase in the authorized shares
of the Company's common stock.
In the event the Company is unable to amend its Articles of
Incorporation to increase the authorized number of shares, it will be unable to
meet certain debt settlement obligations, the conversion of outstanding shares
of the 12% Senior Secured Convertible Debentures and the exercise of outstanding
warrants and options, which would have a materially adverse effect on the
Company's operations and financial condition.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE IN FAVOR OF THE
RATIFICATION OF THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK FROM
800,000,000 TO AN UNLIMITED NUMBER OF SHARES.
SECTION 16(A) REPORTING
Under the securities laws of the United States, the Company's
directors, its executive (and certain other) officers, and any persons holding
10% or more of the Company's common stock must report their ownership of the
Company's common stock and any changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established.
During the year ended December 31, 2002, the Company believes all reports
required to be filed under Section 16(a) were filed on a timely basis.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
referred to in the Notice of Meeting, which will be presented for consideration
at the Meeting. However, it is possible that certain proposals may be raised at
the Meeting by one or more shareholders. In such case, or if any other matter
should properly come before the meeting, it is the intention of the person named
in the accompanying proxy to vote such proxy with his or her or its best
judgement.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company.
Solicitations may be made by mail, personal interview, telephone, and telegram
by directors, officers and employees of the Company. The Company will reimburse
banks, brokerage firms, other custodians, nominees and fiduciaries for
reasonable expenses incurred in sending proxy material to beneficial owners of
the Company's capital stock.
SHAREHOLDER PROPOSALS
In order to be included in the proxy materials for the Company's next
Annual Meeting of shareholders, shareholder proposals must be received by the
Company on or before January 24, 2004.
FORM 10-K
A copy of the Company's annual report on Form 10-K for the fiscal year
ended December 31, 2002 as filed with the Securities and Exchange Commission is
available to shareholders free of charge by writing to:
Thinkpath Inc.
201 Westcreek Boulevard
Brampton, Ontario
Canada, L6T 5S6
Attention: Corporate Secretary
FINANCIAL STATEMENTS
The Company's audited consolidated financial statements for the fiscal
year ended December 31, 2002 and the related Management's Discussion and
Analysis of Financial Condition and Results of Operations are included in the
Company's Form 10-K and are incorporated by herein by reference.
By order of the Board of Directors, August 22, 2003
/s/ Declan A. French
Chairman of the Board of Directors
EXHIBIT A
THINKPATH INC.
2003 STOCK OPTION PLAN
I. PURPOSE OF THE PLAN
The THINKPATH INC. 2003 STOCK OPTION PLAN (the "Plan") is intended to
provide a means whereby certain employees of THINKPATH INC., an Ontario
corporation (the "Company"), and its affiliates may develop a sense of
proprietorship and personal involvement in the development and financial success
of the Company, and to encourage them to remain with and devote their best
efforts to the business of the Company, thereby advancing the interests of the
Company and its shareholders. Accordingly, the Company may grant to certain
service providers ("Optionees") the option ("Option") to purchase common shares
of the Company ("Shares"), as hereinafter set forth.
Options granted under the Plan may be either incentive stock options,
within the meaning of section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code") ("Incentive Stock Options"), or options which do not
constitute Incentive Stock Options.
II. ADMINISTRATION
(a) The Plan shall be administered by a committee (the "Committee") of,
and appointed by, the Board of Directors of the Company (the "Board"), and the
Committee shall be (a) comprised solely of two or more outside directors (within
the meaning of section 162(m) of the Code and applicable interpretive authority
thereunder), and (b) constituted so as to permit the Plan to comply with Rule
16b-3, as currently in effect or as hereinafter modified or amended ("Rule
16b-3"), promulgated under the United States Securities Exchange Act of 1934, as
amended (the "1934 Act"). The Committee shall have sole authority to select the
Optionees from among those individuals eligible hereunder and to establish the
number of shares which may be issued under each Option. The limitation set forth
in the preceding sentence shall be applied in a manner which will permit
compensation generated under the Plan to constitute "performance-based"
compensation for purposes of section 162(m) of the Code, including, without
limitation, counting against such maximum number of shares, to the extent
required under section 162(m) of the Code and applicable interpretive authority
thereunder, any shares subject to Options that are cancelled or repriced. In
selecting the Optionees from among individuals eligible hereunder and in
establishing the number of shares that may be issued under each Option, the
Committee may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the Company's success
and such other factors as the Committee in its discretion shall deem relevant.
(b) The Committee is authorized to interpret the Plan and may from time
to time adopt such rules and regulations, consistent with the provisions of the
Plan, as it may deem advisable to carry out the Plan. All decisions made by the
Committee in selecting the Optionees, in establishing the number of shares which
may be issued under each Option and in construing the provisions of the Plan
shall be final.
(c) The provisions of the Plan shall be interpreted and construed in accordance
with the laws of the Province of Ontario
III. OPTION AGREEMENTS
(a) Each Option shall be evidenced by a written agreement between the
Company and the Optionee ("Option Agreement") which shall contain such terms and
conditions as may be approved by the Committee. The terms and conditions of the
respective Option Agreements need not be identical. Specifically, an Option
Agreement may provide for the surrender of the right to purchase shares under
the Option in return for a payment in cash or Shares or a combination of cash
and Shares equal in value to the excess of the fair market value of the shares
with respect to which the right to purchase is surrendered over the option price
therefor ("Stock Appreciation Rights"), on such terms and conditions as the
Committee in its sole discretion may prescribe; provided that, except as
provided in subparagraph VIII(c) hereof, the Committee shall retain final
authority (i) to determine whether an Optionee shall be permitted, or (ii) to
approve an election by an Optionee, to receive cash in full or partial
settlement of Stock Appreciation Rights. Moreover, an Option Agreement may
provide for the payment of the option price, in whole or in part, by the
delivery of a number of Shares (plus cash if necessary) having a fair market
value equal to such option price.
(b) For all purposes under the Plan, the fair market value of a Share
on a particular date shall be equal to the mean of the high and low sales prices
of the Shares (i) reported by the Over-the-Counter Bulletin Board on that date
or (ii) if the Shares are listed or quoted on a national stock exchange or
quotation system, reported on the stock exchange composite tape on that date;
or, in either case, if no prices are reported on that date, on the last
preceding date on which such prices of the Shares are so reported. If the Shares
are traded over the counter at the time a determination of its fair market value
is required to be made hereunder, its fair market value shall be deemed to be
equal to the average between the reported high and low or closing bid and asked
prices of the Shares on the most recent date on which the Shares were publicly
traded. In the event the Shares are not publicly traded at the time a
determination of its value is required to be made hereunder, the determination
of its fair market value shall be made by the Committee in such manner as it
deems appropriate.
(c) Each Option and all rights granted thereunder shall not be
transferable and shall be exercisable during the Optionee's lifetime only by the
Optionee or the Optionee's guardian or legal representative.
(d) The Committee shall have the discretion to determine a vesting
schedule for any Option granted under the Plan. Unless otherwise determined by
the Committee, Options granted under the Plan shall vest at a rate of 1/3 per
year over three years and be exercisable prior to the day following the first
anniversary of the date on which the Options concerned are granted.
(e) The expiry date of an Option (the "Expiry Date") shall be the
earlier of the date fixed by the Committee, as set forth in the individual
Option Agreement, and the date established, if applicable, in clauses (i) to
(iii) below, provided that such date shall not be later than the tenth
anniversary of the date on which the Option is granted.
(i) If an Optionee ceases affiliation with the Company or an
affiliate by reason of death, permanent disability or
retirement at or after age 65, the Expiry Date shall be the
first anniversary of the occurrence.
(ii) If an Optionee ceases affiliation with the Company or an
affiliate for any other reason (other than termination of his
or her employment or other service for cause), the Expiry Date
shall be the date that is 90 days following the occurrence.
(iii) If an Optionee ceases affiliation with the Company or an
affiliate upon the termination of his or her employment or
other service for cause, then the Expiry Date shall be the
date on which the Company or its affiliate gives notice to the
Optionee of his or her termination.
IV. ELIGIBILITY OF OPTIONEE
(a) Options may be granted only to individuals who are employees
(including officers and directors who are also employees) of the Company or any
parent or subsidiary corporation (as defined in section 424 of the Code) of the
Company at the time the Option is granted; provided, however, that Options which
do not constitute Incentive Stock Options may be granted to individuals who are
directors (but not also employees) of the Company or any such parent or
subsidiary corporation. Subject to required regulatory approvals, Options may
also be granted to consultants, advisors and similar parties who provide their
skills and expertise to the Company or its affiliates. Options may be granted to
the same individual on more than one occasion.
(b) No Incentive Stock Option shall be granted to an individual if, at
the time the Option is granted, such individual owns shares possessing more than
10% of the total combined voting power of all classes of capital stock of the
Company or of its parent or subsidiary corporation, within the meaning of
section 422(b)(6) of the Code, unless (i) at the time such Option is granted the
option price is at least 110% of the fair market value of the Shares subject to
the Option and (ii) such Option by its terms is not exercisable after the
expiration of five years from the date of grant. To the extent that the
aggregate fair market value (determined at the time the respective Incentive
Stock Option is granted) of shares with respect to which Incentive Stock Options
are exercisable for the first time by an individual during any calendar year
under all incentive stock option plans of the Company and its parent and
subsidiary corporations exceeds US$100,000, such excess Incentive Stock Options
shall be treated as Options which do not constitute Incentive Stock Options. The
Committee shall determine, in accordance with applicable provisions of the Code,
Treasury Regulations and other administrative pronouncements, which of an
Optionee's Incentive Stock Options will not constitute Incentive Stock Options
because of such limitation and shall notify the Optionee of such determination
as soon as practicable after such determination.
(c) The aggregate number of Shares reserved for issuance pursuant to
Options granted to any one Optionee shall not exceed 5% of the number of Shares
outstanding (on a non-diluted basis) at the time of such grant.
V. SHARES SUBJECT TO THE PLAN
(a) The aggregate number of shares which may be issued under Options
granted under the Plan shall not exceed 20,000,000 Shares. Such shares may
consist of authorized but unissued Shares or previously issued Shares reacquired
by the Company. Any of such shares which remain unissued and which are not
subject to outstanding Options at the termination of the Plan shall cease to be
subject to the Plan but, until termination of the Plan, the Company shall at all
times make available a sufficient number of shares to meet the requirements of
the Plan. Should any Option hereunder expire or terminate prior to its exercise
in full, the shares theretofore subject to such Option may again be subject to
an Option granted under the Plan to the extent permitted under Rule 16b-3 and
applicable Canadian securities legislation.
(b) The aggregate number of shares which may be issued under the Plan
shall be subject to adjustment in the same manner as provided in Paragraph VIII
hereof with respect to Shares subject to Options then outstanding. Exercise of
an Option in any manner, including an exercise involving a Stock Appreciation
Right, shall result in a decrease in the number of Shares which may thereafter
be available, both for purposes of the Plan and for sale to any one individual,
by the number of shares as to which the Option is exercised. Separate share
certificates shall be issued by the Company for those shares acquired pursuant
to the exercise of an Incentive Stock Option and for those shares acquired
pursuant to the exercise of any Option which does not constitute an Incentive
Stock Option.
VI. OPTION PRICE
The purchase price of Shares issued under each Option shall be
determined by the Committee, but in no case shall such purchase price be less
than the fair market value of the Shares subject to the Option on the date the
Option is granted.
VII. TERM OF PLAN
The Plan, shall be effective upon the date of its adoption by the
Board, provided the Plan is approved by the shareholders of the Company within
twelve months thereafter. Notwithstanding any provision in this Plan or in any
Option Agreement, no Option shall be exercisable prior to such shareholder
approval. Except with respect to Options then outstanding, if not sooner
terminated under the provisions of Paragraph IX, the Plan shall terminate upon
and no further Options shall be granted after the expiration of ten years from
the date of its adoption by the Board.
VIII. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Options granted hereunder shall
not affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
(b) The shares with respect to which Options may be granted are Shares
as presently constituted, but, if and whenever, prior to the expiration of an
Option theretofore granted, the Company shall effect a subdivision or
consolidation of Shares or the payment of a stock dividend on Shares without
receipt of consideration by the Company, the number of Shares with respect to
which such Option may thereafter be exercised (i) in the event of an increase in
the number of outstanding shares shall be proportionately increased, and the
purchase price per share shall be proportionately reduced, and (ii) in the event
of a reduction in the number of outstanding shares shall be proportionately
reduced, and the purchase price per share shall be proportionately increased.
(c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure ( a "recapitalization"), the number and
class of Shares covered by an Option theretofore granted shall be adjusted so
that such Option shall thereafter cover the number and class of shares of stock
and securities to which the Optionee would have been entitled pursuant to the
terms of the recapitalization if, immediately prior to the recapitalization, the
Optionee had been the holder of record of the number of Shares then covered by
such Option. If:
(i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a
subsidiary of an entity);
(ii) the Company sells, leases or exchanges all or substantially
all of its assets to any other person or entity;
(iii) the Company is to be dissolved and liquidated;
(iv) any person or entity, including a "group" as contemplated by
Section 13(d)(3) of the 1934 Act, acquires or gains ownership
or control (including, without limitation, power to vote) of
more than 50% of the outstanding shares of the Company's
voting stock (based upon voting power); or
(v) as a result of or in connection with a contested election of
directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of
the Board (each such event is referred to herein as a
"Corporate Change");
no later than (a) ten days after the approval by the shareholders of the Company
of such merger, consolidation, reorganization, sale, lease or exchange of assets
or dissolution or such election of directors or (b) thirty days after a change
of control of the type described in clause (iv), the Committee, acting in its
sole discretion without the consent or approval of any Optionee, shall act to
effect one or more of the following alternatives, which may vary among
individual Optionees and which may vary among Options held by any individual
Optionee:
(1) accelerate the time at which Options then outstanding may be
exercised so that such Options may be exercised in full for a
limited period of time on or before a specified date (before
or after such Corporate Change) fixed by the Committee, after
which specified date all unexercised Options and all rights of
Optionees thereunder shall terminate;
(2) require the mandatory surrender to the Company by selected
Optionees of some or all of the outstanding Options held by
such Optionees (irrespective of whether such Options are then
exercisable under the provisions of the Plan) as of a date
before or after such Corporate Change, specified by the
Committee, in which event the Committee shall thereupon cancel
such Options and the Company shall pay to each Optionee an
amount of cash per share equal to the excess, if any, of the
amount calculated in subparagraph (d) below (the "Change of
Control Value") of the shares subject to such Option over the
exercise price(s) under such Options for such shares;
(3) make such adjustments to Options then outstanding as the
Committee deems appropriate to reflect such Corporate Change
(provided, however, that the Committee may determine in its
sole discretion that no adjustment is necessary to Options
then outstanding); or
(4) provide that the number and class of shares covered by an
Option theretofore granted shall be adjusted so that such
Option shall thereafter cover the number and class of shares
or other securities or property (including, without
limitation, cash) to which the Optionee would have been
entitled pursuant to the terms of the agreement of merger,
consolidation or sale of assets and dissolution if,
immediately prior to such merger, consolidation or sale of
assets, and dissolution, the Optionee had been the holder of
record of the number of Shares then covered by such Option.
(d) For the purposes of clause (2) in subparagraph (c) above, the
"Change of Control Value" shall equal the amount determined in clause (i), (ii)
or (iii), whichever is applicable, as follows:
(i) the per share price offered to shareholders of the Company in
any such merger, consolidation, reorganization, sale of assets
or dissolution transaction;
(ii) the price per share offered to shareholders of the Company in
any tender offer or exchange offer whereby a Corporate Change
takes place; or
(iii) if such Corporate Change occurs other than pursuant to a
tender or exchange offer, the fair market value per share of
the shares into which such Options being surrendered are
exercisable, as determined by the Committee as of the date
determined by the Committee to be the date of cancellation and
surrender of such Options.
In the event that the consideration offered to shareholders of the Company in
any transaction described in this subparagraph (d) or in subparagraph (c) above
consists of anything other than cash, the Committee shall determine the fair
cash equivalent of the portion of the consideration offered which is other than
cash.
(e) Any adjustment provided for in subparagraphs (b) or (c) above shall
be subject to any required shareholder action.
(f) Except as hereinbefore expressly provided, the issuance by the
Company of shares of any class or securities convertible into shares of any
class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
Shares subject to Options theretofore granted or the purchase price per share.
IX. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time, provided that no change in any Option theretofore granted may be
made which would impair the rights of the Optionee without the consent of such
Optionee, and provided further that the Board may not make any alteration or
amendment which would increase the aggregate number of shares which may be
issued pursuant to the provisions of the Plan or change the class of individuals
eligible to receive Options under the Plan without the approval of the
shareholders of the Company.
X. SECURITIES LAWS
(a) The issue of Shares by the Company pursuant to the exercise of an
Option is subject to this Plan and compliance with the laws, rules and
regulations of all regulatory bodies applicable to the issuance and distribution
of the Company's securities and to the listing requirements of any stock
exchange or market on which the Shares may then be listed or quoted. The Company
shall not be obligated to issue any Shares pursuant to any Option granted under
the Plan at any time when the offering of the Shares covered by such Option has
not been registered under the United States Securities Act of 1933 or otherwise
qualified for distribution under such other U.S. state and federal and Canadian
provincial laws, rules or regulations as the Company or the Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from applicable prospectus and registration requirements of such laws,
rules or regulations available for the offering and sale of such shares.
(b) It is intended that the Plan and any grant of an Option made to a
person subject to Section 16 of the 1934 Act meet all of the requirements of
Rule 16b-3 thereunder. If any provision of the Plan or any such Option would
disqualify the Plan or such Option under, or would otherwise not comply with,
Rule 16b-3, such provision or Option shall be construed or deemed amended to
conform to Rule 16b-3.
Additional Plan Provisions, if required:
In addition, until such time as the Plan has been approved by
a majority of the votes cast at a meeting of shareholders (other than votes
attaching to securities beneficially owned by (A) an insider (within the meaning
of the SECURITIES ACT (Ontario)) of the Company, other than a person who falls
within that definition solely by virtue of being a director or senior officer of
a subsidiary of the Company, and (B) an associate (within the meaning of the
SECURITIES ACT (Ontario)) of any person who is an insider by virtue of (A) above
(such persons herein referred to as "Insiders"):
(i) the number of Shares reserved for issuance pursuant to Options
granted to Insiders shall not exceed 10% of the number of
Shares outstanding at the time of the grant (on a non-diluted
basis), less the aggregate number of Shares reserved for
issuance under any other stock option, stock option plan,
employee stock purchase plan or any other compensation or
incentive mechanism involving the issuance or potential
issuance of Shares to one or more service providers, including
a share purchase from treasury that is financially assisted by
the Company by way of loan, guarantee or otherwise (a "Share
Compensation Arrangement") over the preceding one-year period;
(ii) the issuance to any one Insider and such Insider's Associates,
within a one-year period, of Shares on the exercise of Options
may not exceed 5% of the number of Shares outstanding at the
time of the grant (on a non-diluted basis), less the aggregate
number of Shares reserved for issuance under any other Share
Compensation Arrangement over the preceding one-year period;
and
(iii) the issuance to all Insiders, within a one-year period, of
Shares on the exercise of Options, may not exceed 10% of the
number of Shares outstanding at the time of the grant (on a
non-diluted basis) less the aggregate number of Shares
reserved for issuance under any other Share Compensation
Arrangement over the preceding one-year period.
EXHIBIT B
SPECIAL RESOLUTION OF THE SHAREHOLDERS
OF
THINKPATH INC.
(THE "CORPORATION")
RESOLVED THAT
RECITALS:
A. The Articles of the Corporation be amended as follows:
1. to change the authorized share capital of the Corporation by
increasing the number of common shares that the Corporation is
authorized to issue from 800,000,000 to an unlimited number of
shares
B. any one officer or director of the Corporation is hereby
authorized and directed on behalf of the Corporation to
deliver Articles of Amendment, in duplicate, to the Director
under the Business Corporations Act and to sign and execute
all documents and to do all things necessary or advisable in
connection with the foregoing; and
C. the board of directors of the Corporation is hereby authorized
to revoke this special resolution without further approval of
the shareholders of the Corporation at any time prior to the
endorsement by the Director under the Business Corporations
Act, of a certificate of amendment of articles in respect of
the amendments referred to above.
EXHIBIT C
GENERAL PROXY - ANNUAL MEETING OF SHAREHOLDERS OF THINKPATH.INC.
The undersigned hereby appoints Declan A. French, with full
power of substitution, proxy to vote all of the shares of common stock of the
undersigned and with all of the powers the undersigned would possess if
personally present, at the Annual Meeting of Shareholders of Thinkpath Inc. (the
"Company"), to be held at the principal executive offices of the Company located
at 201 Westcreek Boulevard, Brampton, Ontario, Canada on October 1, 2003 at
10:00 A.M. local time and at all adjournments thereof, upon the matters
specified below, all as more fully described in the Proxy Statement dated August
22, 2003 and with the discretionary powers upon all other matters which come
before the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THINKPATH INC.'S BOARD OF DIRECTORS.
1. To elect five directors to hold office for the term of one year:
Declan French Arthur Marcus
John Dunne Lloyd MacLean
_____ FOR ALL NOMINESS _____WITHELD FOR ALL NOMINEES
INSTRUCTION: To withhold authority to vote for any individual director
nominee, write that director nominee's name in the space provided
below.
2. To ratify the appointment of Schwartz, Levitsky, Feldman, llp, as the
Company's independent chartered accountants for the ensuing year:
_____ FOR _____AGAINST _____ABSTAIN
3. To adopt the Company's 2003 Stock Option Plan:
_____ FOR _____AGAINST _____ABSTAIN
4. To vote upon the proposal to amend the Company's Articles of
Incorporation to increase the authorized number of shares of the
Company's common stock from 800,000,000 to an unlimited number of
shares.
_____ FOR _____AGAINST _____ABSTAIN
5. In their discretion, upon such other matter or matters that may
properly come before the meeting, or any adjournments thereof.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
(CONTINUED FROM OTHER SIDE)
Every properly signed proxy will be voted in accordance with the specifications
made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS
1, 2, 3 and 4.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Annual Meeting and Special Meeting and Proxy Statement and hereby revokes any
proxy or proxies heretofore given.
Please mark, date, sign and mail your proxy promptly in the envelope provided.
Date: , 2003
--------------------------------
(Print name of Shareholder)
(Print name of Shareholder)
Signature
Signature
Number of Shares