WO2001009786A1

WO2001009786A1 - The share bond

Info

Publication number: WO2001009786A1
Application number: PCT/US1999/017242
Authority: WO
Inventors: Durham Russell Maples
Original assignee: Maples, Rebecca, Anderson; Anderson, Catherine, Franke
Priority date: 1999-07-29
Filing date: 1999-07-29
Publication date: 2001-02-08

Abstract

The instant invention is a method and instrument for enhancing the stock of a business entity by joining the shares of stock (12) to a debt instrument (10) at no cost, no loss financially to any current and/or future shareowner whereby any principal or issue price is zero, unpaid or paid by any means other than any current and/or future shareowner paying any money or property for the bond. The enhancement that is derived from this joining is called a Share Bond which has increased investment security and guaranteed monetary benefits for the shareowner.

Description

TITLE OF INVENTION THE SHARE BOND

U S Tax Code

Stapled Entities - Title 26, Subtitle A, Chapter 1, Subchapter B, Part II, Section 269b ,

Determination of amount of oπgmal issue discount - Title 26, Subtitle A, Chapter 1, Subchapter P ,

Part V, Subpart A, Section 1273, (c) (2), (b) (5),

Other definitions and special rules - Title 26, Subtitle A, Chapter 1, Subchapter P, Part V, Subpart

A, Section 1275, (a) (4),

Book entπes permitted - Title 26, Subtitle A, Chapter 1, Subchapter B, Part IV, Subpart B,

Section 149 (a) (3)

Other Publications

Bruck, Connie, "The Predators' Ball", A Penguin Book, 1988, p 37-38

Teweles, Richard and Bradley, Edward, "The Stock Market", John Wiley & Sons, Inc , 1987, p 12-36, ,p 445-449

Train, John, "The Midas Touch", Harper & Row, 1987, p 75-78

Woelfel, Charles, "The Dictionary of Banking",

Probus Publishing Co , 1994, p 6, 10, 96, 137, 154, 229

Munn, Glenn Gaywaine / Garcia, Ferdinand Lawrence, "Encyclopedia of Banking and Finance", Bankers Publishing Company, 1973, p 498 Technical Field

This invention relates to the field of Financial Secuπties for enhancing the stock of a business entity by joining a debt instrument to shares of that stock

Background Art

A business entity or company faces daily challenges m their efforts to make their shares of stock increasingly more valuable These companies have compelling reasons for wanting to enhance their stock's value The first is that the company can issue more shares for sale to raise money for company operations and not go into debt to do so The second reason is the company can reward the shareowners who profit when the shares mcrease in pπce Pleasing the shareowners is important since they are the voters who decide who directs and runs the company Keepmg shareowners happy and stock pπces high are invaluable m helping to prevent a proxy fight or hostile takeover This helps the CEO and executives maintain their jobs smce takeovers often lead to the removal of the executives Enhancing the stock does not always mean the stock pnce will mcrease because other factors are always at work where stock pπces are involved Still enhancing the stock could help keep the pnce stable and avoid a stock pnce plunge m financially hard times, thereby preventing the picture-perfect climate for a hostile corporate takeover Stock enhancement provides benefits for the CEO, executives and shareowners The most direct way of enhancing stock is to pay dividends to the shareowners The problem with dividends is that they are included in the corporate revenue when paid, therefore are taxed at the corporate level and again by the individual income tax This double taxation on the same money reduces the money the shareowners receive Current corporate tax rates are from fifteen to thirty-five percent with companies paying thirty-five percent on any profit over $10,000,000 In spite of this large tax burden, many companies will still pay dividends out of the profits Other companies will invest in company operations, buy other companies, pay executives large amounts of money, pay for expensive luxuπes or use a combination of the four to avoid making a profit They will then pay dividends by either borrowing money or pay the dividends from company savings This practice becomes a temporary fix since savings not replenished with taxable profits will eventually be exhausted Contmumg to borrow, if not supported by mcreased revenues, the corporation will soon apse under the debt burden Still this often happens because the tax burden is so great, and yet the rewarding of shareowners to enhance the stock is considered necessary The present system and methods are burdened with inefficiencies The cuπent environment causes many companies to abandon stock enhancement These companies focus on using profits to reward top executives and expand the company Instead of paying out money to the IRS and to shareowners, they often make poor acquisitions and CEO's live like kmgs If the company begins to suffer financially, they lay-off employees to mcrease profits and repeat the process In the meantime the shareowners receive little or no dividends since dividends are not guaranteed The stock pnce drops or becomes stagnant

There have been some attempts to reward shareowners by usmg the debt-fa vonng provision of the US Tax Laws mterest on bonds is deductible but dividends on stock are not The financial bonds would be issued directly to the shareowner assuming approximately a thirty-five percent corporate- income-tax rate A company that can pay shareowners a rate of nine percent on dividends can just as easily pay twelve percent mterest on debt because it can deduct the mterest The shareowners have to pay additional money for the bonds and the solution is effective only m the short term A big problem anses immediately after the shareowners sell the stock but retain the bonds The new shareowners will not receive the bond mterest, so they will find dividends sparse and soon falling stock pπces This situation will cause many corporate management problems smce to contmue to sell new bonds to all the new shareowners could send the company mto bankruptcy Even though the company receives money from the bond sales, the debt could collapse the company Still the deductible mterest on bonds is a beneficial component of any stock enhancement method or instrument

There are a vaπety of financial bonds and their sole purpose is to raise money for the institution that sells or issues the bonds Bonds are generally defined to be investment secunties that differ from stock m that bonds usually have guaranteed payment which is paid before dividends on stock The guaranteed payment that exists with most bonds is the written unconditional promise to pay the principal amount This guarantee is a beneficial component of any stock enhancement method or instrument Bonds are more secure than stock because failure to pay the principal amount on the bonds could legally force the company mto bankruptcy Stocks are more speculative In the case of a corporate liquidation, the bondowners are m lme to be paid before the stockowners The corporate assets are usually distnbuted among those owed wages, holdmg loans, holdmg bonds and the end-of- the-line stockowner could receive nothing The mcreased investment secuπty of a bond is a beneficial component of any stock enhancement method or instrument Convertible bonds are presently the closest form available by which most of the afore-mentioned enhancement elements of a bond are m some way tied to stock A convertible secuπty is one that permits the holder, at his or her option and under certain conditions, to exchange an issue for another secuπty Usually a convertible bond may be exchanged for common stock m the same company, but there are some exceptions m which the holder may receive prefeπed stock and others m which the secuπty received is an issue of another company Holders of a convertible secuπty may exercise this option of exchange for a profit, mcrease yield, avoid a call, or for any other reason they believe valid The problem with a convertible bond is that it is an erther-or proposition The combmed benefits are not exercised or capable of bemg utilized simultaneously Once the bond converts to stock, the benefits associated with the bond disappear When the bond portion of the secuπty is m effect, the benefits that are usually associated with stock such as votmg nghts, possible stock mcreases, possible stock splits and possible dividends are not available pπor to conversion

The best stock enhancement should retain the best elements of stock while addmg other benefits An example of an attempt to do this can be found m a corporate structure called pair-shared REIT'S (Real Estate Investment Trusts) or stapled entities This structure lmks a share in a real estate investment trust, which is exempt from taxes at the corporate level, with a share m an operatmg company that can generate mcome other than rents and mortgages The shares are paired to trade together as one unit The problem with this structure is that it is confined to real estate mvestment trusts and Congress prohibited the structure from tax-exemption status in 1983 In the Tax Code Title 26, Subtitle A, Chapter 1, Subchapter B, Part II, Section 269b, it is stated that stapled entities shall be treated as one entity with entity bemg defined as any corporation, partnership, trust, association, estate or other form of carrying on a busmess activity Several of these pair-shared REIT'S were grandfathered m and today their stock value is greatly mcreased So much so, that one of the existing pair-shared REIT'S bought a major corporation (ITT) for billions m stock and cash while generatmg less than a half billion dollars m revenue This demonstrates the potential power of true stock enhancement, particularly, when you consider that the pair-shared REIT'S pay out most of all profits to the shareowners m dividends which are not double taxed

A slightly different corporate structure is generally refeπed to m the tax code m two other sections In Title 26, Subtitle A, Chapter 1, Subchapter P, Part V, Subpart A, Section 1273, it is stated in (c)(2) Treatment of Investments - "In the case of any debt instrument and an option, secunty, or other property issued together as an mvestment unit " This shows a bond and a stock can be jomed In the same section (b)(5), Property is defined to mclude services and the πght to use property, but such term does not mclude money which is relevant when coupled with Title 26, Subtitle A, Chapter 1, Subchapter P, Part V, Subpart A, Section 1275, (a)(5) which states - "any debt obligation of a

100 corporation distnbuted by such coφoration with respect to its stock shall be treated as if it had been issued for property " The two statements together refer to a bond (debt obligation) distnbuted with respect to its stock (jomed to stock) will be treated for tax p poses as if it had been issued for property This does not mclude money There is no reference to any bond bemg issued with respect to the coφoration's stock that has been issued for property or money, only that for tax puφoses will

105 be treated as if it had been issued for property In fact all references to a bond m the tax code are made to the effect that the bond must be issued for something m terms of money or property The reason is that all bonds have previously only been defined and used as mvestment secunties

Investment secunties m the financial reference literature are defined as generally, all classes of bonds and stocks, regardless of quality Therefore, any bond issued in an mvestment unit would be

110 considered an mvestment secunty smce all classes of bonds are mvestment secunties To have a bond m such a unit be considered a non-investment secunty would require a specific stated principal or issue pnce of zero for that bond Without that specific statement any reasonable mind must conclude that some money or property was given, by the stockowner, as an issue pnce or principal for that bond To have had one pnce for the entire unit does not automatically lead to the conclusion that the

115 bond issue pnce is zero and the payment is allocated entirely to the stock Both are defined as mvestment secunties which by definition requires an mvestment of money, or property, from the individual or entity that will receive benefits from the bond There have been no references made to a bond bemg issued and jomed to stock already outstanding No reference has been made to such bonds bemg issued and jomed to stock for no money or no property, thereby costing the owners of the stock

120 nothing

The concept of joining non-investment bonds to stock is a new and important aspect of any stock enhancement method or instrument The stock enhancement is much more effective if the shareowners pay nothing for the bonds Any stock enhancement should have the best elements of both stocks and bonds To add the best elements of bonds to the best elements of stocks, and at

125 no cost to the shareowner, will create a great demand for the stock The pnce of the stock will mcrease which will make both the shareowners and coφorate management happy Shareowners make more money from their stock investments Coφorations can sell or trade stock and get more money or assets for the same shares This will decrease the chances of coφorate takeovers m that the company 130 is too big or it's stock too expensive Therefore, a means is needed to provide a combmation of all these elements that can be exercised simultaneously with any busmess operation under the cuπent tax law

Disclosure of Invention

135 Accordmgly several objects and advantages of my mvention are to provide stock enhancement of a busmess entity under cuπent tax law To jom a bond, or debt instrument, to stock would add mvestment secuπty and provide coφorate tax deductible payments The potential pnce growth of the stock, possible splits of the stock, possible dividends, or any votmg nghts of the stock would be retained by the shareowners The cost to the shareowners would be only the pnce of the stock and

140 nothing for the bond

The mvention is a method and instrument for enhancing the shares of stock of a busmess entity Hence the title of the mvention is a SHARE BOND which can enhance all types of stock from all types of busmess operations

Share Bonds are issued to shares of stock when the coφoration gives a wntten unconditional

145 promise to pay a sum certam m money on a specified date and to pay a fixed rate of mterest to the shareholder of record The sum certam m money is refeπed to as the principal, issue pnce or face value amount The Share Bond is issued to the stock not to the stockholder The stockholder's evidence to the πght of the mterest and the nght of the face value amount is the stock certificate or stock ownership If the stockholder relinquishes ownership of the stock, the right to the mterest and

150 the πght to the face value amount travel with the stock certificate - not the former stockholder

The stockowner, shareowner, or stockholder does not pay any money or property for the bond The coφoration or company receives m return for adequate consideration in money's worth the stock or equity enhancement for the face value amount of the bond The face value amount multiplied by the number of shares is placed on the credit side of the balance sheet as equity enhancement An equal

155 amount is placed on the debit side of the balance sheet as debt This debt is owed to the equity/stockholders but the stockholder does not own the Share Bond The stockholder cannot separate the πght to the principal and the πght to the mterest from the stock to be sold separately The Share Bond is a book entry bond and is descπbed m Section 149 (f)(3) of the US Tax Code Section 149 (f)(3) states the πght to the principal and the πght to the mterest of a bond is transferable The transfer of ownership of the bond or debt is blatantly omitted m this section In fact, nowhere m the US Tax Code does it state that a bond or debt must be owned to have the mterest deductible The concept of non-ownership is important with regards to the US Tax Code so that the Share Bond cannot be classified as a dividend at issuance The shareholder receives no property or

165 money at the time of issuance, therefore, the Share Bond cannot be taxed as a dividend to the shareholder The shareholder can only be taxed once on the mterest and principal when they are paid

The Share Bond is not exchanged for the outstanding shares of a coφoration 's stock, but is the addition of nghts to the coφoration's stock There is no conversion to stock for the Share Bond, the Share Bond is debt from issuance to matunty

170 The non-investment aspect allows the Share Bond to be issued and jomed to currently outstanding, or previously issued, shares of stock This is crucial for a large coφoration that has a large number of shares and shareholders To collect even one penny as principal, or as the issue pnce, for each bond on each share of stock would be impossible Stock shares are bemg traded everyday when the stock market is open, and to track down each share m this incredible ownership fluctuation would be

175 impossible A large coφoration cannot utilize the Share Bond without the principal bemg zero, unpaid or paid by any means other than any cuπent and/or future shareowner paying any money or property for the bond The Share Bond's capability to be issued to cuπently outstanding or previously owned issued stock is a step beyond the instrument descπbed m Section 1273 (c)(2) of the US Tax Code which specifically states "issued together" All other bonds are generally classified m financial

180 encyclopedias and dictionaπes as an mvestment secuπty and requires an mvestment The Share Bond operates best without any mvestment from the shareowners

Share Bonds provide the greatest mvestment secuπty when jomed to shares of common stock smce common stockowners are the last to receive money m a coφorate liquidation With Share Bonds these shareowners could be classified as senior debt, but subordinated debt still pays them before any

185 ordmary shareowner gets anythmg Guaranteed payment adds to this greater mvestment secuπty

The face value amount of the Share Bond is lower than ordmary bonds and can be as small as one cent The mterest rate the Share Bond pays is much higher than a traditional bond and can be 100% of the face value amount The US Tax Code permits this m Section 163 (I) (1) as long as the bond matunty date is 5 years or less from issuance date The mterest paid to the shareowner is deductible to

190 the coφoration under Section 163, General Rule of the US Tax Code

Other countries will not have the same tax code as the US, but there is a double taxation that presently exists with coφorate dividends m many countπes Still it is important to mention a possible secondary non-enhancement aspect of a Share Bond If the accrual method of accounting is used, a

195 busmess entity will be able to amortize the cumulative face value of all the Share Bonds over the matunty term of the bonds If the Share Bonds have a cumulative face value often million dollars and a five year matunty, the busmess entity deducts two million dollars a year for five years from their coφorate taxes This money could be placed mto savings , and later used to pay off the Share Bonds when they mature The shareowners receive more money without giving up the stock

200 The Share Bond is defined as any debt mstrument jomed , by any means, to a share of stock or any division of ownership or equity of a busmess entity The Share bond is defined as any debt mstrument jomed, by any means, to an outstandmg or previously issued share of stock or any division of ownership or equity of a busmess entity The Share Bond is defined as any debt mstrument jomed, by any means, to a share of stock or any division of ownership or equity of a busmess entity whereby any

205 principal or issue pnce is zero, unpaid or paid by any means other than any current and/or future shareowner paying any money or property for the debt mstrument The Share Bond is defined as any debt mstrument jomed, by any means, to any outstandmg or previously issued share of stock or any division of ownership or equity of a busmess entity whereby any principal or issue pnce is zero, unpaid or paid, by any means other than any current and/or future shareowner paying any money or

210 property for the debt mstrument The Share Bond is defined as a method of enhancmg the stock, or any division of ownership or equity of a busmess entity, compπsmg jommg, by any means, the share of stock or any division of ownership or equity to any debt mstrument whereby any principal or issue pnce is zero, unpaid or paid by any means other than any cuπent and/or future shareowner paying any money or property for the debt mstrument The Share Bond is defined as a method of enhancmg the

215 stock, or any division of ownership or equity of a busmess entity, compnsmg jommg, by any means, any outstandmg or previously issued share of stock or any division of ownership or equity to any debt mstrument whereby any principal or issue pnce is zero, unpaid or paid by any means other than any cuπent and/or future shareowner paying any money or property for the debt mstrument The Share Bond is defined as a method or any debt mstrument that transfers the πght of the principal and the

220 πght to the mterest from said debt mstrument to the owner of record of an outstandmg or previously issued equity of a busmess entity The Share Bond is defined as a method or process for enhancmg the equity of a busmess entity, compπsmg said busmess entity giving a wntten unconditional promise to pay a sum certam m money and to pay a fixed rate of mterest thereby forming a debt mstrument, the 225 πght to said sum certam m money and the πght to said fixed rate of mterest on said debt mstrument is issued or delivered to a share or shares of equity of said busmess entity at no cost, no loss financially to any cuπent or future shareowners of said share or shares of equity of said busmess entity, whereby any stated principal, sale pnce or issue pnce is zero, unpaid or paid by any means other than said cuπent or future shareowners of said share or shares of equity of said busmess entity exchanging any

230 money or property for said debt mstrument

The Share Bond is unique m that it provides (1) the capability for shareowners to simultaneously receive the benefits of both a bond and a stock, while purchasmg only the stock, (2) the capability for the shareowner of record to receive the benefits of the Share Bond for the pnce of zero, (3) no taxable dividend liability smce the Share Bond has only very restncted ownership that is more accurately

235 stated as the shareowner bemg the receiver of benefits, (4) stock enhancement that no other bond can provide smce all other bonds are mvestment secunties for raismg money, (5) a primary puφose of enhancmg stock and must be jomed to divisions of equity to function , (6) the only economically feasible means that a stockowner of outstandmg or previously issued stock can receive a guaranteed payment and payments that are not subject to double taxation

240 Further objects and advantages of the mvention will become apparent from a consideration of the drawings and ensumg descπptions

Bnef Descnption Of The Drawing

Figure 1 is a flow diagram of a debt mstrument jomed to a share of stock by transferring the nght to 245 the principal and the nght to the mterest to the share of stock

List Of Reference Numerals 10 Any debt mstrument 12 Share of stock 250 14 Right of principal 16 Right of mterest

Best Mode For Carrying Out The Invention

The best mode for carrying out the Share Bond is to issue and jom the bond to the stock at no cost to the shareholder The wntten unconditional promise to pay the face value amount must give the shareowner legal recourse to bankrupt the coφoration on default of this payment The bond maturity date should be five years or less The shareowner must own stock to have the πght to the face value amount and the πght to the mterest from the bond These nghts cannot be separated from the stock to 260 be sold separately The Share Bond operates as a book entry bond and best as debt subordmate to all other debt of the coφoration The face value amount cannot be decreased on substitution with another Share Bond unless the shareowner receives money equal to the decrease A fixed rate of mterest can be 100%

265 Industnal Applicability

The Share Bond will give coφorations the ability to enhance their stock by rewardmg the stockowners directly with more money than is possible with just dividends The mterest paid to the shareowner will be deducted from the coφorate revenue before the coφorate mcome tax is calculated A busmess entity named X Coφoration issues one Share Bond to each one hundred million shares

270 of common stock X Coφoration is cuπently paymg a one-dollar dividend to each share of common stock outstandmg To pay this dividend, X Coφoration must earn one dollar and 52 5 cents per share to pay the coφorate mcome taxes without boπowmg money One dollar goes to the shareowner and 52 5 cents is paid to the Federal Government None of this money is retained by X Coφoration, all is paid out Contrast this with a Share Bond that has a face value amount of one dollar and forty cents

275 paymg 100% mterest X Coφoration now pays one dollar and forty cents to each outstandmg share of common stock This amounts to a forty cents mcrease per share over what is capable with a dividend The 12 5 cents per share that is classified as profit is taxed at 35% The Federal Government gets 4 4 Cents, and X Coφoration is left with 8 1 cents instead of zero as with the dividend

The extra 40 cents per share that is paid to shareowners will cause the stock price to nse There are

280 several ways the coφoration can use this enhanced stock One is to sell more shares and receive more money per share m return Another is to exchange these shares for the shares of another coφoration, thereby, acquiring that coφoration with stock cuπency The higher stock value allows the coφoration to make the acquisition and issue fewer shares to do so This means less dilution for existing shareholders of the surviving company and more overall value to the shares

285 The Share Bond delivers stock enhancement by allowing the coφoration to pay more per share than is possible with dividends When more money is paid per share, there is more demand for the shares and the price of the stock increases. The face value amount is guaranteed to be paid, but dividends are never guaranteed. This fact makes the Share Bond more attractive to shareowners. 290 Shareowner demand causes the stock value to rise benefiting the shareowner and the coφoration.

295

300

305

310

315

Claims

What is claimed

1 Any debt mstrument jomed, by any means, to a share of stock or any division of ownership or equity of a busmess entity

2 Any debt mstrument jomed, by any means, to any outstandmg or previously issued share of stock or any division of ownership or equity of a busmess entity

3 Any debt mstrument jomed, by any means, to any share of stock or any division of ownership or equity of a busmess entity whereby any principal or issue pnce is zero, unpaid or paid by any means other than any current and/or future shareowner paymg any money or property for the debt mstrument

4 Any debt mstrument jomed, by any means, to any outstandmg or previously issued share of stock or any division of ownership or equity of a busmess entity whereby any principal or issue pnce is zero, unpaid or paid by any means other than any cuπent and/or future shareowner paymg any money or property for the debt mstrument

5 A method of enhancmg the stock, or any division of ownership or equity of a busmess entity, compnsmg jommg, by any means, the share of stock or any division of ownership or equity to any debt mstrument whereby any principal or issue pnce is zero, unpaid or paid by any means other than any cuπent and/or future shareowner paymg any money or property for the debt mstrument

6 A method of enhancmg the stock, or any division of ownership or equity of a busmess entity, compπsmg jommg, by any means, any outstandmg or previously issued share of stock or any division of ownership or equity to any debt mstrument whereby any principal or issue pnce is zero, unpaid or paid by any means other than any current and/or future shareowner paymg any money or property for the debt mstrument

7 A method or a debt mstrument that transfers the nght of the principal and the πght to the mterest from said debt mstrument to the owner of record of an outstandmg or previously issued share of equity of a busmess entity A method or process for enhancing the equity of a business entity, comprising said business entity giving a written unconditional promise to pay on a specified date a sum certain in money and to pay a fixed rate of interest thereby forming a debt instrument, the right to said sum certain in money and the right to said fixed rate of interest on said debt instrument is issued or delivered to share or shares of equity of said business entity at no cost, no loss financially to any cuπent or future shareowners of said share or shares of equity of said business entity, whereby any stated principal, sale price or issue price is zero, unpaid or paid by any means other than said cuπent or future shareowners of said share or shares of equity of said business entity exchanging any money or property for said debt instrument.

AMENDED CLAIMS

[received by the International Bureau on 23 December 2000 (23 12 00), original claims 1 , 4 and 8 amended, new claim 9 and 10 added, remaining claims unchanged (2 pages)]

What is claimed

1 A method or process for enhancmg the equity of a busmess entity, compπsmg said busmess entity giving a written unconditional promise to pay on demand or on a specified date a sum certam in money and to pay a fixed rate of mterest thereby formmg a debt mstrument, the πght to said sum certam m money and the πght to said fixed rate of mterest on said debt mstrument is issued or delivered to a share or shares of equity of said busmess entity, whereby said debt mstrument cannot be owned by the shareowner of said share or shares of equity of said busmess entity

3 Any debt mstrument jomed, by any means, to any share of stock or any division of ownership or equity of a busmess entity whereby any principal or issue pnce is zero, unpaid or paid by any means other than any cuπent and/or future shareowner paymg any money or property for the debt mstrument

4 Any debt mstrument and a share or shares of equity of a busmess entity issued together m an mvestment unit, whereby said debt mstrument cannot be owned bv the shareowner of said share or shares of equity of said busmess entity

5 A method of enhancmg the stock, or any division of ownership or equity of a busmess entity, compπsmg jommg, by any means, the share of stock or any division of ownership or equity to any debt mstrument whereby any principal or issue pnce is zero, unpaid or paid by any means other than any current and/or future shareowner paymg any money or property for the debt mstrument

6 A method of enhancmg the stock, or any division of ownership or equity of a busmess entity, compπsmg jommg, by any means, any outstandmg or previously issued share of stock or any division of ownership or equity to any debt mstrument whereby any principal or issue pnce is zero, unpaid or paid by any means other than any cuπent and/or future shareowner paymg any money or property for the debt mstrument

7. A method or a debt instrument that transfers the πght of the principal and the nght to the interest from said debt instrument to the owner of record of an outstanding or previously issued share of equity of a business entity.

8. A method or process for enhancing the equity of a busmess entity, compπsing said busmess entity giving a written unconditional promise to pay on demand or on a specified date a sum certam in money and to pay a fixed rate of mterest thereby formmg a debt mstrument, the right to said sum certam m money and the πght to said fixed rate of mterest on said debt mstrument is issued or delivered to a share or shares of equity of said busmess entity at no cost, no loss financially to any current or future shareowners of said share or shares of equity of said busmess entity, whereby any stated principal, sale pnce or issue pnce is zero, unpaid or paid by any means other than said current or future shareowners of said share or shares of equity of said busmess entity exchanging any money or property for said debt mstrument.

9. A method or process for enhancing the equity of a busmess entity, compπsmg said busmess entity givmg a written unconditional promise to pay on demand or on a specified date a sum certain m money and to pay a fixed rate of interest thereby formmg a debt mstrument, the right to said sum certam m money and the πght to said fixed rate of mterest on said debt mstrument is issued or delivered to a share or shares of equity of said busmess entity, whereby said debt mstrument cannot be separated from said share or shares of equity of said busmess entity to be sold or traded separate from said share or shares of said equity of said busmess entity.

10. Any debt instrument and a share or shares of equity of a busmess entity issued together in an mvestment unit, whereby said debt mstrument cannot be separated from said share or shares of equity of said business entity to be sold or traded separate from said share or shares of equity of said business entity. Statement under Article 19(1)

1 The amendments have no material impact on the drawing filed in the original application.

2. The amendments have a material impact on the stated definition of the Share Bond (page 8 and 9 of original application) The stated definition should be correctly altered to state that any debt instrument joined to a share or shares of equity of a business entity that cannot be separated from the shares or shares of equity to be sold separate from the share or shares of equity of the business entity is a Share Bond

3 The amendments have a material impact on the stated definition of the Share Bond (page 8 and 9 of original application) The stated definition should be correctly altered to state that any debt instrument joined to a share or shares of equity of a business entity that cannot be owned by the shareowner or shareowners of the share or shares of equity of the business entity is a Share Bond.