-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KAExuq/4gWmftYM7UbI+sM+NOZBnlqBCIw09jWW51qXtqf40XTkkkentjWdn8C9o 0NUHynLFy3Hw/68FhA1Nxg== 0000909012-07-000738.txt : 20070509 0000909012-07-000738.hdr.sgml : 20070509 20070509113335 ACCESSION NUMBER: 0000909012-07-000738 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070503 ITEM INFORMATION: Entry into a Material Definitive Agreement FILED AS OF DATE: 20070509 DATE AS OF CHANGE: 20070509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: THINKPATH INC CENTRAL INDEX KEY: 0001070630 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 52209027 STATE OF INCORPORATION: A6 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14813 FILM NUMBER: 07831044 BUSINESS ADDRESS: STREET 1: 55 UNIVERSITY AVE STE 505 STREET 2: TORONTO, ONTARIO, CANADA CITY: M5J 2H7 BUSINESS PHONE: 4163648800 MAIL ADDRESS: STREET 1: 55 UNIVERSITY AVE STE 505 STREET 2: TORONTO, ONTARIO, CANADA CITY: MCJ 2H7 FORMER COMPANY: FORMER CONFORMED NAME: THINKPATH COM INC DATE OF NAME CHANGE: 20000414 FORMER COMPANY: FORMER CONFORMED NAME: IT STAFFING LTD DATE OF NAME CHANGE: 19980917 8-K 1 t303397.txt 5/3/07 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: May 9, 2007 Date of Earliest Event Reported May 3, 2007 Thinkpath, Inc. (Exact name of Registrant as specified in its charter) Ontario 001-14813 52-209027 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) 16 Four Seasons Place, Suite 215 Toronto, Ontario M9M 6E5 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (416) 622-5200 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. The Company entered into an agreement (the "Agreement") with John Kennedy and Cecelia Kennedy (the "Holders") for the purpose of amending the Agreement and Plan of Merger dated June 29, 2006 by and among the Company, the Company's owned subsidiary Thinkpath, Inc. (the "Subsidiary"), an Ohio corporation, The Multitech Group, Inc. and the Holders. Pursuant to the Agreement, the Holders returned to the Company for cancellation, an aggregate of 4,065,820 shares of the Company's common stock, 595 shares of the Company's Preferred Stock and promissory notes in the aggregate amount of $475,788 (the "Original Notes"), all of which were issued in connection with the June 29, 2006 agreement. The Agreement also provided that it cancelled any payments previously due and payable to the Holders, including all penalties and obligations imposed upon the Company in relation to the Original Notes. In exchange for the cancellation, the Subsidiary issued the Holders a new note for $800,000 payable in 60 equal monthly installments commencing January 15, 2008. The new note bears interest at 6% per annum and is guaranteed by the Company and is secured by all of the Subsidiary and Company's assets. The Agreement was consummated on May 3, 2007 upon cancellation of the shares. - ------------------------------------------------------------- (c) Exhibits EXHIBIT NUMBER DESCRIPTION - -------- ----------- 4.2 Agreement by and among Thinkpath, Inc., Cecelia and John Kennedy and Thinkpath Inc., an Ohio corporation. 4.3 Promissory Note issued a favor of John and Cecelia Kennedy 4.4 Security Agreement SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THINKPATH, INC. By: /s/ Declan French - ------------------------------------ Declan French Chief Executive Officer Dated: May 9, 2007 EX-4.2 2 exh4-2.txt AGREEMENT BETWEEN THINKPATH INC. & THE KENNEDYS This Agreement (the "Agreement") is made and entered into effective as of the 19th day of April 2007, among Thinkpath Inc., an Ontario corporation ("Issuer"), Thinkpath, Inc., an Ohio corporation and wholly-owned subsidiary of Issuer ("Maker"), and John Kennedy and Cecelia Kennedy (the "Holders") (collectively, the "Parties"). The purpose of this Agreement is to amend certain elements of the provision governing merger consideration in Section 2.7 of the Agreement and Plan of Merger (the "Merger Agreement") dated as of June 29, 2006 among Issuer, Maker, The Multitech Group, Inc., the Holders, and other parties. In consideration of the mutual promises and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto expressly agree as follows: (A) TERMS AND CONDITIONS (1) Upon the execution of this Agreement, Holders shall (a) surrender and return to the Issuer for cancellation all of their 4,065,820 shares of the Issuer's common stock, of which 1,718,286 shares are owned by Cecelia Kennedy, 1,145,525 shares are owned by John Kennedy and 1,202,009 shares are jointly owned by the Holders; (b) surrender and return all of their 595 shares of the Issuer's preferred stock to the Issuer for cancellation, of which 357 shares are owned by Cecelia Kennedy and 238 shares are owned by John Kennedy; (c) return to the Maker for cancellation the Non-Negotiable Promissory Notes (the "Merger Notes") with an aggregate amount of $475,788 received and executed between the Maker and the Holders on June 29, 2006 pursuant to the Merger Agreement; and -1- (d) further cancel any payments due and payable to the Holders and all penalties and obligations imposed upon the Maker or Issuer in relation to the Merger Notes. (2) Upon the execution of this Agreement, Maker shall (a) be obligated to pay the aggregate amount of Eight Hundred Thousand Dollars (U.S.) ($800,000) to the Holders as follows: (i) installments of Thirteen Thousand Three hundred and Thirty-Three Dollars and thirty-three cents ($13,333.33)(U.S.) per month for 60 months (the "Monthly Payments"); and (ii) the Monthly Payments shall be made on the fifteenth day of each month, starting in January 2008, as memorialized in a promissory note (the "New Note") attached thereto, as Exhibit A. (b) pay interest at the annual rate of six percent (6%) on the principal amount owned to Holders; (c) have Issuer guarantee the Monthly Payment owed to the Holders. The guarantee shall be in the form attached hereto as EXHIBIT B. The Holders, subject to subordination as set forth in this subsection, shall also have a security interest in all of the Maker's and Issuer's assets. The security interest shall be subordinated only to Laurus Master Fund, Ltd. and any subsequent institutional financiers for any institutional debt up to an aggregate of $8,000,000 (in the event that the Maker or Issuer seeks institutional financing in excess of $8,000,000, such additional institutional debt shall be subordinated to the Holders unless the Holders otherwise agree to subordinate). Issuer further agrees that until the principal and interest owed under the New Note are paid in full, the New Note will be secured by a security agreement attached hereto as EXHIBIT C, and Uniform Commercial Code Financing statement attached hereto as EXHIBIT D, giving Holders a security interest in all the patents, fixtures, inventory, accounts receivable, and other assets of the Issuer and/or any of its subsidiaries. -2- (d) reaffirm and continue to be bound by the terms and conditions set forth in the Employment Agreements executed pursuant to section 9.1(c) of Article IX and entered into between the Holders and the Maker. (e) pay any legal fee associated with disputes under the Merger Agreement or Merger Notes or the negotiation and execution of the New Note or this Agreement, provided that the aggregate amount of such legal fees does not exceed Fifteen Thousand Dollars (U.S.) ($15,000). (B) RIGHT TO SERVE ON THE BOARD Until the New Note is paid in full, the Holders shall have the right to and the Board of Directors shall have the obligation to include one designee, reasonably acceptable to the Issuer, as a nominee to serve on the Issuer's Board of Directors. Promptly upon execution of this Agreement, the Issuer will appoint such nominee to serve as a Director until the next annual meeting of shareholders. (C) ENTIRE AGREEMENT The Agreement contains all of the terms and conditions agreed upon between the parties with respect to the subject matter hereof, and this Agreement fully and completely expresses the Agreement of said parties on the subject matter hereof. Further, in the event of any conflict between the terms and provisions of this Agreement and the Merger Agreement, the terms and provisions of this Agreement shall prevail and govern the obligations of the Issuer and the Holders. -3- (D) NO INFERENCE It is specifically understood and agreed by and between the parties that this Agreement and any exhibits annexed hereto are the result of extensive negotiations between the parties. It is understood and agreed that both parties shall be deemed to have drawn these documents in order to avoid any negative inference by any court as against the preparer of the document. (E) AMENDMENTS The Agreement may not be changed, modified, supplemented or terminated, nor may any obligations hereunder be waived, except by an instrument executed by the parties hereto who are or will be affected by the terms of such change, modification, supplementation or termination. (F) NO WAIVER No waiver by either party of any failure or refusal by the other party to comply with its obligations shall be deemed a waiver of any other or subsequent failure or refusal to so comply. (G) SUCCESSORS AND ASSIGNS Subject to the terms of the Agreement, the covenants, agreements and representations, herein contained stipulations shall inure to the benefit of, and shall bind, the heirs, administrators, successors and assigns of the respective Parties hereto. The obligations of Issuer and Maker may not be assigned without the consent of the Holders. (H) GOVERNING LAW The Agreement shall be governed by, interpreted under, and construed and enforced in accordance with, the laws of the State of New Jersey applicable to agreements made and to be performed wholly within said state. (I) BINDING EFFECT Facsimile signatures of the Issuer and Holders shall be deemed to be originals and binding upon the parties. (J) PARTIAL INVALIDITY If any term or provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by applicable law. -4- (K) MUTUAL LEGAL RELEASE The Issuer, Maker, and the Holders, for themselves and anyone claiming through them, hereby expressly release any and all of their respective legal rights against each other or their respective representatives, heirs, administrators, successors and assigns for any legal liabilities and claims that may be currently existing, including but not limited to any claims arising out of or related to fraud or misrepresentation of either party or breach of contract arising out of or related to the Merger Agreement or Merger Notes. However, this provision shall not release the Issuer, Maker or the Holder from any of their obligations under this Agreement, the New Note, the guarantee of the New Notes, or the other exhibits hereto. IN WITNESS WHEREOF, the Issuer, Maker, and Holders have caused this instrument to be duly executed by the undersigned. DATE: APRIL __, 2007 ISSUER: THINKPATH INC., AN ONTARIO CORPORATION By: _____________________________ Declan French Chief Executive Officer MAKER: THINKPATH INC., AN OHIO CORPORATION By: _____________________________ Declan French Chief Executive Officer HOLDERS: JOHN KENNEDY AND CECELIA KENNEDY By: ________________________________ John Kennedy By: ________________________________ Cecelia Kennedy -5- EX-4.3 3 exh4-3.txt PROMISSORY NOTE New York, New York April 19, 2007 $800,000.00 FOR VALUE RECEIVED, THINKPATH INC., an Ohio corporation, ("Maker"), promises to pay to the order of JOHN KENNEDY AND CECELIA KENNEDY, New Jersey residents ("Holders"), the principal sum of Eight Hundred Thousand Dollars (U.S.) ($800,000.00) subject to Section 3 set forth below as follows: 1. COMMENCEMENT Commencing on January 15, 2008 and continuing monthly thereafter on the fifteenth day of each such month until January 15, 2013 ("Maturity Date," unless the Maturity Date is accelerated to an earlier date pursuant to Section 4 below), the Issuer shall make monthly payments in the amount of Thirteen Thousand Three Hundred Thirty-Three dollars and thirty-three cents ($13,333.33)(U.S.) (the "Monthly Payments") for sixty (60) consecutive months. 2. PAYMENTS All payments in respect of this Note shall be made by valid check payable to: JOHN KENNEDY & CECELIA KENNEDY, 198 KINGS ROAD, MADISON, NJ 07940, in immediately available funds, or at such other place as the Holders may designate in writing. Payments must be RECEIVED by the Holders by the due date. 3. INTEREST The outstanding Principal Amount shall bear interest at an annual rate of six percent (6%). Interest shall be due and payable on a monthly basis with the first payment due with the principal payment on January 15, 2008. If any Event of Default (as defined in Section 4 below) has occurred and is continuing, the outstanding Principal Amount of this Note, together with any accrued and unpaid Interest, and all other amounts provided for herein (collectively, the "Note Amount") shall bear interest from and after such Event of Default at an annual rate of eight percent (8%). All computations of Interest hereunder shall be made based on the actual number of days elapsed in a year of 365 days (including the first day but excluding the last day during which any such Principal Amount is outstanding). The Note Amount shall be due and payable in full on the Maturity Date. 4. EVENT OF DEFAULT; ACCELERATION. The Maturity Date shall be accelerated and the Note Amount shall become immediately due and payable upon the occurrence of any of the following events (each an "Event of Default"): (a) the dissolution of the Maker or Thinkpath, Inc., an Ontario corporation (the "Guarantor"); (b) the admission in writing of the Maker's or the Guarantor's inability to pay its debts as they become due; (c) any assignment by the Maker or the Guarantor for the benefit of creditors; (d) any application by the Maker or the Guarantor for appointment of a receiver; (e) the commencement by the Maker or the Guarantor of a voluntary case under any provision of the Federal Bankruptcy Code (the "Code") or amendments thereto or any other federal or state law or Canadian law affording relief to debtors; -1- (f) there shall be commenced against the Maker or the Guarantor any such proceeding, application or an involuntary case under the Code or Canadian law, which proceeding, application or case is not dismissed or withdrawn within ninety (90) days of commencement or filing, as the case may be; (g) failure of the Maker to pay an installment of Interest or Principal when due; (h) if, at any time while this Note is outstanding, Holders' designee is not a member of the Board of Directors of Thinkpath Inc., Maker's parent company; or (i) upon a Change of Control (as defined immediately below) of the Maker or the Guarantor. For purposes hereof, "Change of Control" means the occurrence of any of the following events: (i) Ownership. After the date of this Note, any "Person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) who is not an owner of the Maker's (or, if applicable, Guarantor's) outstanding voting securities as of the date of this Note becomes the "Beneficial Owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, in a single transaction or series of related transactions, of securities of the Maker (or, if applicable, Guarantor) representing more than 50% of the total voting power represented by the Maker's (or, if applicable, Guarantor's) then outstanding voting securities or more than 50% of the value of all outstanding securities of the Maker (or, if applicable, Guarantor), excluding for this purpose the Maker, the Guarantor, their Affiliates (as that term is defined under Rule 405 of the Securities Act of 1933, as amended, including, without limitation, executive officers and directors of the Maker or the Guarantor), senior management of the Maker or the Guarantor as of the date of this Note, or any employee benefit plan of the Maker or the Guarantor (including, without limitation, an Employee Stock Ownership Plan as defined in Section 4975 of the Internal Revenue Code of 1986, as amended); or (ii) Merger/Sale of Assets. A merger or consolidation of the Maker or the Guarantor, other than a merger or consolidation that would result in the voting securities of the Maker or the Guarantor outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of the Maker or the Guarantor or such surviving entity or parent of such corporation outstanding immediately after such merger or consolidation, or the stockholders of the Maker or the Guarantor approve an agreement for the sale or disposition by the Maker or the Guarantor of all or substantially all of the Maker's or the Guarantor's assets. In the event of a default under subsection 4(g) above, the Company will have five (5) days to cure such default to avoid acceleration. Any such cure must be RECEIVED by Holders within five (5) days of the original due date of the payment. -2- (5) COLLECTION COSTS; ATTORNEY'S FEES In the event this Note is turned over to an attorney for collection, or the Holders otherwise seek advice of an attorney in connection with the exercise or enforcement of its rights hereunder, Maker agrees to pay all reasonable costs of collection, including reasonable attorney's fees and expenses and all out-of-pocket expenses incurred by the Holders in connection with such collection efforts, which amounts may, at the Holders' options, be added to the principal hereof. (6) OBLIGATION TO PAY PRINCIPAL AND INTEREST; COVENANTS No provision of this Note shall alter or impair the obligation of Maker, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, at the rates, and in the currency herein prescribed. (7) NO SET-OFF RIGHT All payments by the Maker pursuant to this Note shall be made without set-off or counterclaim. (8) MISCELLANEOUS (a) BENEFIT. This Note shall be binding upon and inure to the benefit of the Maker, the Holders, and their legal representatives, successors or assigns. (b) GOVERNING LAW. This Note and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed by and Construed in accordance with the laws of the State of New Jersey without regard to its conflicts of law principles. Maker and Holders consent to the exclusive jurisdiction of the state and federal courts sitting in New Jersey in connection with any dispute arising out of or relating to this Note and hereby waive, to the maximum extent permitted by law, any objection, including any objection based on FORUM NON COVENIENS, to the bringing of any such proceeding in such jurisdictions. Maker and Holders agree that service of process by certified mail to its address shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding. (c) WAIVER OF JURY TRIAL. To the fullest extent permitted by applicable law, Maker and the Holders hereby irrevocably and expressly waive all right to a trial by jury in any action, proceeding, counterclaim (whether based upon contract, tort or otherwise) arising out of or relating to this Note, or other documents entered in connection herewith or the transactions contemplated hereby. (d) SECTION HEADINGS. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Note. (e) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The representations, warranties and agreements contained herein shall survive the delivery of this Note. -3- (f) SEVERABILITY. In case any one or more of the provisions contained in this Note shall be deemed invalid, illegal, or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. (g) ENTIRE AGREEMENT. This Note, the other documents entered in connection herewith, and the transactions contemplated hereby constitute the entire understanding between the parties with respect to the subject matter hereof, superseding all prior negotiations, discussions and agreements. IN WITNESS WHEREOF, this Note has been executed and delivered on the date specified above by the duly authorized representative of the Maker. THINKPATH INC. By: _____________________________________ Name: Declan French Title: Chief Executive Officer -4- EX-4.4 4 exh4-4.txt SECURITY AGREEMENT This SECURITY AGREEMENT is by and between John Kennedy and Cecelia Kennedy (collectively the "Secured Party") and THINKPATH INC., an Ohio corporation ("TP - Ohio"), and THINKPATH INC., an Ontario corporation ("TP - Ontario") (each a "Debtor"), under the following circumstances: A. TP - Ohio is a wholly-owned subsidiary of TP - Ontario. TP - Ohio issued a promissory note (the "Note") to Secured Party dated April 19, 2007, in the principal amount of $800,000. B. As an inducement for Secured Party to accept the Note, TP - Ontario has executed a guaranty dated of even date herewith (the "Guaranty") under which TP - Ontario shall irrevocably and unconditionally guarantee the due and punctual payment and performance of TP - Ohio's obligations under the Note. C. In order to secure the payment and performance of Debtor's obligations under the Note and Guaranty, respectively, each Debtor desires to grant a security interest in the Collateral (as hereinafter defined), under the terms and conditions contained herein. NOW, THEREFORE, in consideration of the above premises and the mutual covenants and conditions hereinafter set forth, the parties hereto hereby agree as follows: 1. SECURITY INTEREST. Debtor hereby assigns, pledges and transfers to Secured Party and grants Secured Party a continuing security interest in all of the properties, assets and rights of each Debtor, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof, including the properties described in this Section 1, all of which properties, assets, and rights are hereafter called "Collateral." 1.1 All of Debtor's accounts, chattel paper, accounts receivable, contract rights, documents and instruments; all other obligations or indebtedness owed to Debtor from whatever source arising; all guarantees of any of the foregoing and all security therefor; all of the right, title and interest of Debtor in and with respect to the goods, services or other property which gave rise to or which secure any of the foregoing and all insurance policies and proceeds relating thereto; all of the foregoing whether now owned by Debtor or hereafter acquired or in existence. 1.2 All of Debtor's inventory, including, without limitation, all goods, merchandise and other personal property which are held for sale or lease, or are furnished or to be furnished under any contract of service by Debtor, and all raw materials, work-in-progress, supplies or materials used or consumed in Debtor's business, and all products thereof, and all substitutions, replacements, additions and accessories thereto, all whether now owned or hereafter acquired by Debtor; and all of Debtor's right, title and interest in and to any leases or rental agreements for such inventory. -1- 1.3 All of Debtor's equipment, including, without limitation, all furniture, fixtures, machinery and other equipment of any kind and all substitutions and replacements thereof and accessories and parts therefor, all whether now owned or hereafter acquired by Debtor. 1.4 All of Debtor's general intangibles, including, without limitation, all payment intangibles, software, goodwill, patents, formulas, blueprints, proprietary manufacturing processes, trademarks, licenses, franchises, beneficial interests in trusts, joint venture interests, partnership interests, rights to tax refunds, pension plan overfundings, literary rights and other contractual rights of Debtor, all whether now owned or hereafter acquired by Debtor. 1.5 All of Debtor's investment property, including, without limitation, all securities, whether certificated or uncertificated, all security entitlements, all securities accounts, all commodity contracts and all commodity accounts owned by Debtor or in which Debtor has an interest, all whether now owned or hereafter acquired by Debtor. 1.6 All of Debtor's deposit accounts and letter-of-credit rights. 1.7 All supporting obligations, ledger sheets, files, records, documents, blueprints, drawings and instruments (including without limitation, computer programs, tapes and related electronic data processing software) evidencing an interest in or relating to the Collateral described in this Section 1. 1.8 All proceeds and products of the Collateral described above in this Section 1, including, without limitation, all claims against third parties for damage to or loss or destruction of any of the foregoing, including insurance proceeds, and accounts, contract rights, chattel paper and general intangibles arising out of any sale, lease or other disposition of any of the foregoing. 2. OBLIGATIONS SECURED. The security interests granted hereby are granted to secure (i) the payment and performance of the obligations of each Debtor to Secured Party pursuant to the Note and Guaranty, respectively (the "Obligations") and (ii) the payment by each Debtor of all costs incurred by Secured Party to obtain, preserve, and/or enforce the security interests granted by this Agreement; to collect the Obligations secured hereby; and to maintain and preserve the Collateral, with such costs including, but not limited to, expenditures made by Secured Party for taxes, assessments, insurance premiums, repairs, reasonable attorneys' fees and other legal expenses, storage costs, rents, and expenses of sale, together with interest on the above amounts at the highest rate being paid by Debtor on any of its obligations to Secured Party, all of which each Debtor agrees to pay to Secured Party. -2- 3. DEBTOR'S WARRANTIES. 3.1 Except for the security interests granted herein and any security interests granted by Debtor which are of record as of the date hereof, Debtor represents and warrants that it is, and as to the Collateral to be acquired after the date hereof, shall be, the owner of the Collateral free from any lien, security interest or encumbrance, and Debtor shall defend the Collateral and its proceeds and products against all claims and demands of all persons at any time claiming the same or any interest therein adverse to Secured Party, and shall preserve the Collateral free from any subsequent liens, encumbrances or security interests. 3.2 Debtor represents and warrants that at the time any account becomes subject to a security interest in favor of Secured Party, said account shall be a good and valid account representing a bona fide outright sale of goods by Debtor or services performed by Debtor and such goods shall have been shipped to the respective account debtors or the services have been performed for the respective account debtors. Each account shall not be subject to any claim for credit, allowance or adjustment by account debtor or any setoff, defense or counterclaim. Debtor shall immediately notify Secured Party in the event of the refusal of any goods which are the subject of any such account, and of the bankruptcy, insolvency or financial embarrassment of any account debtor and of any claim asserted for credit, allowance, adjustment, setoff or counterclaim. 3.3 Debtor represents and warrants that: (a) its exact legal name is that indicated on the first page hereof; (b) it is an organization of the type and is organized in the jurisdiction set forth on the first page hereof; (c) the organizational identification number, or statement that Debtor has none, set forth on the last page hereof is accurate; and (d) Debtor's federal tax identification number is as follows: 31-1323702. 4. DEBTOR'S OBLIGATIONS. 4.1 Debtor shall keep accurate and complete records and accounts in accordance with sound accounting practices of all of its Collateral, and shall at all reasonable times allow Secured Party to inspect the Collateral, to examine, audit or make extracts from Debtor's books and records, and to arrange for verification of the Collateral under reasonable procedures directly with account debtors and other persons or by other procedures. Debtor will furnish to Secured Party on request additional statements of any account together with all notes or other documents and information relating thereto. 4.2 Debtor shall keep the Collateral insured against such casualties, and in such amounts and on such terms as Secured Party shall require and the policies shall provide for at least 30 days written notice of cancellation to Secured Party. Debtor shall furnish Secured Party with satisfactory evidence of such insurance and Secured Party shall be added to any such insurance as loss payee. Debtor shall promptly pay when due all taxes and assessments imposed on, or with respect to the Collateral, and shall maintain the Collateral in good condition and repair. If Debtor fails to pay the premiums on any such insurance or such taxes when due, or to maintain the Collateral in good condition and repair, Secured Party may do so (but shall be under no obligation to do so) for Debtor's account and add the amount of its expenditures with respect thereto to Debtor's outstanding obligations, which amount shall be payable on demand with interest at the highest rate being paid by Debtor on any of its obligations to Secured Party. Secured Party shall have the right to settle and compromise any and all claims under any of the insurance policies required to be maintained by Debtor hereunder and Debtor hereby irrevocably appoints Secured Party as its attorney-in-fact, with power to demand, receive -3- and receipt for all monies payable thereunder, to execute in the name of Debtor any proof of loss, notice, draft, and other instruments in connection with such policies or loss thereunder and generally to do and perform any and all acts as Debtor could perform in connection with such policies. 4.3 Debtor shall execute such financing statements and other documentation and shall take any other actions (at Debtor's own expense) as shall reasonably be requested by Secured Party in order to insure the attachment, perfection, and first priority of, and the ability of Secured Party to enforce, the security interests granted Secured Party hereunder and to carry out the terms of this Agreement, including, but not limited to: (a) endorsing, assigning and delivering promissory notes and tangible chattel paper to Secured Party; (b) taking all steps necessary to perfect Secured Party's security interest in letter of credit rights, deposit accounts, securities accounts, commodity accounts and other investment property; (c) promptly notifying Secured Party in the event any of the Collateral is in the possession of a bailee and promptly obtaining an acknowledgement from the bailee that the bailee holds such Collateral for the benefit of Secured Party and shall act upon the instructions of Secured Party, without further consent of Debtor; and (d) taking all steps necessary to vest in Secured Party control of electronic chattel paper. A photocopy of this Security Agreement shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof. Debtor hereby irrevocably authorizes Secured Party, at any time and from time to time, to file any initial financing statements and amendments thereto to the extent permitted by, and in accordance with, the provisions of the Uniform Commercial Code. 4.4 If Debtor shall at any time hold or acquire a claim arising in tort (and, if Debtor is an individual, such claim arose in the course of Debtor's business or profession, and does not include claims for personal injury or death), Debtor shall immediately notify Secured Party in a writing signed by Debtor of the brief details thereof and grant to Secured Party in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Secured Party. 4.5 Upon request of Secured Party, Debtor shall furnish Secured Party: (a) Within 90 days after the end of Debtor's fiscal year, a financial statement, including a balance sheet, and statements of income, retained earnings and changes in financial position, each prepared in accordance with generally accepted accounting principles consistently applied, certified by Debtor's chief financial officer or certified public accountant; (b) Within 45 days after the close of each quarter, financial statements similar to those in (a) above and certified by Debtor's chief financial officer; and (c) Promptly, such other information as Secured Party may reasonably request from time to time, including, without limitation, at the end of each month, financial statements similar to those in (a) above. 4.6 As long as the Guaranty is in effect, Debtor agrees that it will: -4- (a) preserve its company existence and not, in one transaction or a series of related transactions, merge into or consolidate with any other entity, or sell all or substantially all of its assets; (b) not change the state of its formation or organization; (c) not change its company name without providing Secured Party with 30 days' prior written notice; and (d) if Debtor does not have an organizational identification number (as issued by the jurisdiction in which it is organized) and later obtains one, promptly notify Secured Party of such organizational identification number. 5. DEBTOR'S RIGHTS WITH RESPECT TO COLLATERAL. 5.1 With respect to the Collateral specified in Section 1.1, Debtor is authorized to collect the proceeds of such Collateral and utilize them in the ordinary course of business, provided that Secured Party shall have the right at any time, before or after default, to notify account debtors on any and all of Debtor's accounts of the security interest of Secured Party in such accounts, to send requests for verification to the account debtors, and to notify such account debtors to make payments of such accounts directly to Secured Party. At the request of Secured Party, Debtor shall so notify such account debtors and indicate on all billings that the accounts are payable directly to Secured Party. In addition, Debtor shall, at the request of Secured Party, hold all proceeds from collection of accounts in trust for Secured Party without commingling the same with other funds, and shall promptly turn over the same to Secured Party in the identical form received, endorsed by Debtor to Secured Party. 5.2 Debtor shall also have the right to utilize the Collateral as specified in Section 1.2 in the ordinary course of business, and to sell such Collateral in the ordinary course of business, provided that such Collateral is replaced with Collateral of like kind and quality, with a fair market value equal to or in excess of that sold, provided, however, that Secured Party may, by notice to Debtor, require that no such sales be made without the prior written approval of Secured Party. 5.3 Until default, Debtor shall have the right to use, consume, or sell any items of the Collateral described in Section 1.3 in the regular course of business, but not to otherwise dispose of such Collateral. 6. DEFAULT. Upon the happening of any one or more of the following events or conditions, Secured Party may, at its option, declare the Obligations of Debtor under the Guaranty to be immediately due and payable without notice to Debtor, and Secured Party may proceed to enforce payment of the same, and to exercise all of the rights and remedies of a secured party under the Uniform Commercial Code, in addition to the rights and remedies provided herein. The events of default hereunder are as follows: -5- 6.1 The occurrence of any "Event of Default" under the Note. 6.2 The failure of Debtor to observe or perform any of the provisions of this Agreement or any other agreement between Debtor and Secured Party. 6.3 If any warranty, representation, certificate, schedule, financial statement or other information given to Secured Party hereunder shall prove to be untrue or materially misleading. 6.4 If any proceedings are instituted by or against Debtor under any insolvency laws, or if Debtor shall become insolvent or otherwise suffer such changes in its condition or affairs as in the sole discretion of Secured Party impairs Secured Party's security interests hereunder, or increases its risk as to repayment of the Obligations, or if Secured Party shall otherwise deem itself insecure with respect to the Obligations. Secured Party's remedies include, but are not limited to, the right to take possession of the Collateral or any part thereof, and Debtor hereby grants Secured Party authority to enter upon any premises on which the Collateral or any part thereof may be situated, and remove the Collateral from such premises or use such premises, together with the materials, supplies, books and records of Debtor, to maintain possession and/or the condition of the Collateral and to prepare the Collateral for sale. Debtor shall, upon demand by Secured Party, assemble the Collateral specified in Section 1 hereof, and make it available at a place designated by Secured Party and convenient to both parties. All rights and remedies of Secured Party hereunder shall be cumulative, not exclusive, and shall be enforceable alternatively, successively or concurrently with any other remedy available hereunder or otherwise available at law or in equity. Debtor hereby authorizes Secured Party to specifically disclaim any warranties of title, possession, quiet enjoyment and the like in connection with any sale of the Collateral. 7. POWER OF ATTORNEY. Debtor hereby irrevocably appoints Secured Party as Debtor's true and lawful attorney-in-fact, with full power of substitution, for Debtor, and in Debtor's name, place and stead, upon the occurrence of any event of default in as defined in Section 6 above, and in the event that Secured Party elects to exercise any rights granted to it hereunder. As attorney-in-fact, Secured Party may act for Debtor with respect to the Collateral as if Secured Party were the owner thereof, and may endorse and cash promissory notes, checks and other instruments, institute legal proceedings, make, adjust, and settle claims, and do all other acts necessary and incidental to the exercise of its rights provided hereunder, or otherwise available to it in the event of default. Neither Secured Party nor its agents shall be liable for any acts or omissions or for any error of judgment or mistake of fact or law in its capacity as such attorney-in-fact. 8. MISCELLANEOUS. Any required notices to Debtor, including notice of the sale of any of the Collateral, shall be deemed to be reasonable if mailed to Debtor at the address shown below, or such other address furnished Secured Party in writing, at least five (5) business days prior to the action which is the subject of the notice. The term "Debtor" as used herein shall include the singular as well as the plural, and other words in the singular shall include the plural and words -6- of one gender shall include the other gender when the sense requires. Except as used in item (ii) of the following sentence, the term "Uniform Commercial Code" as used herein shall mean the Uniform Commercial Code as adopted by the State of New Jersey, as said Uniform Commercial Code may be amended from time to time. Debtor acknowledges and agrees that, with respect to any term used herein that is defined in either (i) the Uniform Commercial Code at the time that this Agreement was signed, or (ii) the Uniform Commercial Code as in force at any relevant time in the jurisdiction in which any financing statement is filed, the meaning to be ascribed thereto shall be that under the more encompassing of the two definitions. No waivers by Secured Party of any default shall be effective unless given in writing, and shall not operate as a waiver of any other default. The rights of Secured Party shall inure to the benefit of its successors and assigns, and the obligations of Debtor shall bind Debtor's heirs, executors, administrators, successors and assigns. If there is more than one Debtor, their obligations hereunder shall be joint and several. This Agreement contains the entire understanding between the parties hereto with respect to the transactions contemplated herein and such understanding shall not be modified except in a writing signed by or on behalf of the parties hereto. This Agreement shall be deemed to be a contract entered into and made pursuant to the laws of the State of New Jersey and shall in all respects be governed, construed, applied and enforced in accordance with the laws of said state, except to the extent the Uniform Commercial Code provides for the application of the laws of another state. As a specifically bargained inducement for Secured Party to extend credit to each Debtor: (i) DEBTOR HEREBY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS SECURITY AGREEMENT OR ARISING IN ANY WAY FROM THE OBLIGATIONS OR TRANSACTIONS INVOLVING SECURED PARTY AND DEBTOR AND (ii) DEBTOR HEREBY DESIGNATES ALL COURTS OF RECORD IN THE STATE OF NEW JERSEY AND HAVING JURISDICTION OVER THE SUBJECT MATTER, STATE AND FEDERAL, AS FORUMS WHERE ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF THIS SECURITY AGREEMENT, ITS MAKING, VALIDITY OR PERFORMANCE, MAY BE PROSECUTED AS TO ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND BY THE FOREGOING DESIGNATION DEBTOR CONSENTS TO THE JURISDICTION AND VENUE OF SUCH COURTS. EXECUTED AT ___________________ ON THE _____ DAY OF ______________, 2007. SECURED PARTY: DEBTORS: THINKPATH INC., an Ohio corporation By: - -------------------------------- ------------------------------------ John Kennedy Title: --------------------------------- Organizational Number:_________________ ________________________________ THINKPATH INC., an Ontario corporation Cecelia Kennedy By:____________________________________ Title:_________________________________ Organizational Number:_________________ -7- -----END PRIVACY-ENHANCED MESSAGE-----