U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Date of Report
(Date of earliest event
March 30, 2000
ENTERPRISES SOLUTIONS, INC.
(Exact name of registrant as specified in its Charter)
Nevada 000-28195 88-0232148
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
15 Raven Road, Canton, Massachusetts 02021
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-510-3898
ENTERPRISES SOLUTIONS, INC.
ITEM 5. OTHER EVENTS
(a) Actions by Securities and Exchange Commission
Suspension in Trading of Common Stock. On March 30, 2000, the
Securities and Exchange Commission ("Commission") announced the temporary
suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934
(the "Exchange Act"), of trading of the Common Stock of the Company at 9:30 a.m.
on March 30, 2000 and terminating at 11:59 p.m. on April 12, 2000. The
Commission announced that it temporarily suspended trading in the securities of
the Company because of questions concerning the accuracy and completeness of
assertions made by the Company in its filings with the Commission, in its recent
press releases, and on its Internet website, including questions about the
identity of persons in control of the operations and management of the Company.
The Commission cautioned broker-dealers, shareholders, and prospective
purchasers that they should carefully consider the foregoing information along
with all other currently available information and any information subsequently
issued by the Company. Further, the Commisssion advised that brokers and dealers
should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange
Act, at the termination of the trading suspension, no quotation may be entered
unless and until they have strictly complied with all of the provisions of the
rule. If any broker or dealer has any questions as to whether or not he has
complied with the rule, he should not enter any quotation but immediately
contact the staff of the Commission in Washington, D.C. If any broker or dealer
is uncertain as to what is required by Rule 15c2-11, he should refrain from
entering quotations relating to Enterprises Solutions, Inc. securities until
such time as he has familiarized himself with the rule and is certain that all
of its provisions have been met. If any broker or dealer enters any quotation
that is in violation of the rule, the Commission stated that it would consider
the need for prompt enforcement action.
Court Filing for Temporary Restraining Order and Other Relief. On April
6, 2000, the Commission filed in the U.S. District Court for the Southern
District of New York (1) a motion for Temporary Restraining Order, Order to Show
Cause and Orders Granting Other Relief against the Company and Herbert S.
Cannon, Defendants; (2) a Verified Complaint against the Company, Herbert S.
Cannon and Dr. John A. Solomon, Defendants, and Rowen House Ltd. and Montville
Ltd., Relief Defendants; and (3) and an Ex Parte Application For Order Freezing
Assets, Order To Show Cause Re Preliminary Injunction and Other Relief against
the Company, Herbert S. Cannon, Rowen House, Ltd. and Montville, Ltd.
The Commission's application for Temporary Restraining Order requests a
Court order (i) freezing certain assets of relief defendants, Rowen House, Ltd
and Montville, Ltd., (ii) requiring these relief defendants to show cause why
preliminary injunctive relief should not be entered, and (iii) enjoining all
defendants and relief defendants from destroying evidence. As to the
Commission's application to freeze assets of the relief defendants, it requested
an immediate freeze, with specified provisos, on (i) all monies held in any
account name maintained at the brokerage firm of Wall Street Equities, in the
name of, for the benefit of, or over which account authority is held by relief
defendants Rowen House, Ltd. and Montville, Ltd., to the extent such funds
represent the proceeds from the sale of shares of stock of the Company, and (ii)
any shares of the Company's Stock contained in such account. The Commission also
applied for expedited discovery for an order that all defendants and relief
defendants, and specified persons associated with them, be restrained and
enjoined from destroying, mutilating, concealing, altering, or disposing of, in
any manner, an document (as defined in the Commission's application). The Court
granted the Commission's application for the above Temporary Restraining Order
on April 6, 2000.
The Commission's Verified Complaint alleged securities fraud in
violation of the Exchange Act Section 10(b) and Rule 10b-5 promulgated
thereunder and requested relief enjoining the Company, Herbert S. Cannon and Dr.
John A. Solomon from violating the Exchange Act, the aforementioned Section
10(b) and Rule 10b-5; ordering Herbert S. Cannon to account for and disgorge,
with interest, all profits he has realized from any sales of the Company's
Common Stock, including sales through brokerage firms over which he had any
direct or indirect control, including those of relief defendants, Rowen House,
Ltd. and Montville, Ltd.; imposing a constructive trust upon any and all
proceeds from the Company's Common Stock sales being held in the brokerage
accounts of relief defendants Rowen House, Ltd. and Montville, Ltd.; and
ordering Herbert S. Cannon and Dr. John A. Solomon to pay appropriate civil
The Commission's Ex Parte Aplication for Order Freezing Assets, Order
To Show Cause Re Preliminary Injunction and Other Relief supports its
application for an ex parte order (i) freezing certain assets of the relief
defendants Rowen House, Ltd. and Montville, Ltd., (ii) requiring these relief
defendants to show cause why preliminary injunctive relief should not be
entered, (iii) requiring these relief defendants to each provide certain asset
identifying information, and (iv) enjoining all defendants and relief defendants
from destroying evidence.
The Company is working actively to attempt to settle the above
proceedings with the Commission.
On April 2, 2000, the Company executed a Deed Poll under the laws of
Switzerland in favor of the holders of notes issued pursuant thereto (the "Deed
Poll"). Upon application of Waltrag A.G., in exchange for a purchase price of
$5,000,000, the Company issued to Waltrag A.G., the initial holder, $5,000,000
principal amount of its Convertible Notes pursuant to the Deed Poll (the
"Notes", such term to include the additional note issued as described below). As
set forth in the Deed Poll, each Note is in registered form and in the minimum
denomination of $250,000 each, bearing a coupon interest rate of 10% nominal
interest per annum, payable monthly in arrears, and maturing April 2, 2001. The
Notes are convertible at the option of the holder into Common Stock of the
Company, on or before April 2, 2001, at a conversion price of 90% of the 22 day
moving average price of the Company's Common Stock, backdated from the time of
the conversion request. The Company received payment of the $5,000,000 purchase
price for the above Notes on April 4, 2000.
In connection with the issuance of the Notes, as a commission without
payment of additional consideration, Waltrag A.G. was also issued an additional
Note in the principal amount of $250,000, the terms of which Note are the same
as those of the $5,000,000 principal amount of Notes referred to above, and
warrants to purchase 50,000 shares of Common Stock of the Company on or before
April 2, 2003, exercisable at a price equal to 120% of the conversion price of
the Notes calculated as of April 2, 2000.
Under the Deed Poll, the holder(s) of the Notes and Warrants have
piggyback registration rights for the underlying shares of Common Stock with
respect to any registration statement under the Securities Act of 1933 filed by
the Company at any time. The Company has no right to redeem any of the Notes
prior to their maturity date of April 2, 2001. The holder of Notes may, within
28 days of first becoming entitled to voting shares of the Company such that any
further aquisition of voting shares by the holder, require the Company within a
21 day period to redeem the outstanding Notes. The holder of the Notes has the
express right to demand the redemption of its Notes.
The Company is not restricted in future financings by the provisions of
the Deed Poll.
The Deed Poll provides for a minimum subscription price by an applicant
of $100,000. Each holder of notes issued pursuant to the Deed Poll has the
benefit of, and is entitled to enforce the Deed Poll, whether or not such holder
is or is not a party to the Deed Poll. The Company agreed to establish and
maintain in New York, N.Y., a Register of the holders of notes issued pursuant
to the Deed Poll, and to determine amounts, if any, of withholding tax
applicable to any payment in respect to a note.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
4.1 Deed Poll dated April 2, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf the
undersigned thereunto duly authorized.
Dated: April 7, 2000
Enterprises Solutions, Inc.
By: /s/ Dr. John A. Solomon
Dr. John A. Solomon,
President and Chief Executive Officer
Exhibit No. Description
- ----------- -----------
4.1 Deed Poll dated April 2, 2000
ENTERPRISES SOLUTIONS INC.
Date: Second of April 2000
Parties: ENTERPRISES SOLUTIONS INCORPORATED
15 RAVEN ROAD, CANTON, M.A. 02021
In favour of: THE NOTEHOLDERS (as defined in clause 1.1).
A. The Issuer proposes to issue the Notes pursuant to the terms of this Deed
B. The Notes will be issued in registered form by inscription in the Register.
The following words have these meanings in this Deed Poll unless the contrary
American Dollars, US$, dollars and $ means the lawful currency of the United
States of America.
Business Day means a day (not being a Saturday or Sunday) on which banks are
open for general banking business in Melbourne.
Conditions means the terms and conditions of the Notes set out in Annexure 1.
(a) the Notes; and
(b) this Deed Poll.
Event of Default has the meaning given to it in Condition 11.1.
Insolvency Event means, with respect to any person, the happening of any of
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(a) an application is made to a court (which is not dismissed within 14 days of
it being made) for an order or an order is made that a body corporate be wound
(b) an application is made to the court (which is not dismissed within 14 days
of it being made) for an order appointing a liquidator or provisional liquidator
in respect of the body corporate, or one of them is appointed, whether or not
under an order; or
(c) except to reconstruct or amalgamate while solvent, a body corporate enters
into or resolves to enter into a scheme or arrangement, deed of company
arrangement or composition with or assignment for the benefit of, or any class
of, its creditors, or it proposes a re-organisation, moratorium or other
administration involving any of them; or
(d) a body corporate resolves to wind itself up, or otherwise dissolve itself,
or gives notice of intention to do so, except to reconstruct or amalgamate while
solvent, or is otherwise wound up or dissolved; or
(e) a body corporate is or states that it is insolvent; or
(f) a body corporate is taken to have failed to comply with the statutory
(g) a body corporate is to makes a statement from which it may be reasonably
deduced that the body corporate is the subject of an event which is unlawful.
(h) a body corporate takes any step to obtain protection, or is granted
protection, from its creditors under any applicable legislation or an
administrator is appointed to a body corporate; or
(i) a person becomes an insolvent under administration or action is taken which
could result in that event.
Interest Amount means the amount of interest determined in accordance with
Conditions to be payable in respect of each Note.
Interest Payment Date means the date or dates specified in (or to be specified
in) the Register as a date on which a payment of interest on the Notes is due.
Interest Rate means the nominal rate of interest (expressed in per cent per
annum) recorded in (or to be recorded in) the Registrar as the nominal interest
rate payable on the Notes.
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Issue Date means the date recorded in (or to be recorded in) the Register as the
date on which the Notes are issued.
Maturity Date means the date recorded in (or to be recorded in) the Register as
the date for redemption of the Notes.
Note means the rights and entitlements of an investor under this Deed Poll,
title to which is recorded in and evidenced by an inscription in the Register
and Notes means the aggregate of all such rights which comprise the Issuer's
Noteholder means the person whose name is inscribed in the Register from time to
time as the owner of a Note, or where the Note is owned jointly by more than one
person, the persons whose names appear in the Register as the joint owners of
Prescribed Rate means the aggregate of 10% per annum.
Principal Amount means the face value of Notes held by the Noteholder and
recorded in (or to be recorded in) the Register.
Redemption Amount means the Principal Amount of a Note.
Redemption Datein relation to any Note, means:
(a) the Maturity Date; or
(b) the date (if any) on which the Issuer is obliged to repay the Redemption
Amount under Condition 6.2, 6.3 or Condition 8,
whichever first occurs.
Register means a register of Noteholders maintained by the Issuer pursuant to
Securities includes shares, debentures, debenture stock, notes and any option or
right to subscribe for the same.
Security Interest means any bill of sale (as defined in any statute), mortgage,
charge, lien, pledge, hypothecation, title retention arrangement, trust or
power, as or in effect as security for the payment of a monetary obligation or
the observance of any other obligation.
TaxAct means the Income Tax Assessment Act1936(Cth).
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In this Deed Poll unless the contrary intention appears:
(a) a reference to this Deed Poll or another document includes any variation or
replacement of them;
(b) a reference to this Deed Poll includes a reference to its Annexures;
(c) a reference to a statute, ordinance, code or other law includes regulations
and other instruments under it and consolidations, amendments,
re-enactments or replacements of any of them;
(d) the singular includes the plural and vice versa;
(e) the word person includes a firm, body corporate, an unincorporated
association or an authority;
(f) a reference to a person includes a reference to the person's executors,
administrators, successors, substitutes (including, without limitation,
persons taking by novation) and assigns;
(g) a reference to any thing (including, without limitation, any amount) is a
reference to the whole or any part of it and a reference to a group of
persons is a reference to all of them collectively, to any two or more of
them collectively and to each of them individually;
(h) a reference to registration or recording includes inscription and register
and record have a corresponding meaning;
(i) a reference to a month means a calendar month;
(j) a reference to transfer includes transmission; and
(k) where the day on or by which any matter or thing is to be done is not a
Business Day, that matter or thing must be done on or by the preceding
Headings are inserted for convenience and do not affect the interpretation of
this Deed Poll.
1.4 Time of the essence
Time is of the essence of this Deed Poll in respect to a payment obligation.
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2. THE NOTES
2.1 Obligations and entitlement
The obligations of the Issuer under the Notes are constituted by, and specified
in, this Deed Poll. Entitlement to a Note is determined by inscription in the
2.2 Minimum subscription price
The aggregate subscription price paid by an applicant in respect of Notes
subscribed by it must be a minimum of $100,000.
2.3 Register conclusive of ownership
The person whose name appears in the Register will be treated by the Issuer as
the absolute owner of the relevant Note.
3. CREATION OF NOTES
3.1 Issue of Notes
The Issuer may at any time create its Notes upon the terms and conditions of
this Deed Poll.
3.2 Rights of Noteholders
(a) The Issuer will create the Notes on the Issue Date by inscribing the
details of those Notes in the Register.
(b) A Noteholder is entitled, in respect of each Note for which that person's
name is inscribed in the Register, to the benefits given to Noteholders
under this Deed Poll.
Enterprises Solutions Incorporated 6
4. RIGHTS AND OBLIGATIONS OF NOTEHOLDERS
4.1 Noteholders bound
Each Noteholder and any person claiming under each Noteholder is bound by this
4.2 Deed poll
This Deed Poll is a deed poll. Accordingly, each Noteholder has the benefit of,
and is entitled to enforce, this Deed Poll even though it is not a party to it,
or is not in existence at the time of execution and delivery of this Deed Poll.
Each Noteholder may enforce its rights under this Deed Poll independently from
the Issuer and each other Noteholder.
4.4 Incorporation of Annexures
The Notes are issued upon and subject to:
(a) the Conditions; and
(b) the terms relating to the Notes set out in the Register,
each of which is incorporated in this Deed Poll as if it were set out in this
Deed Poll, and are binding on the Issuer and the Noteholders and all persons
claiming through or under them respectively.
4.5 Provision of documents to Noteholders
Within five Business Days of receipt by the Issuer of a request from a
Noteholder to do so, the Issuer must
(a) provide to that Noteholder a certified copy of this Deed Poll if required
in connection with any legal proceeding, claim or action brought by that
Noteholder in relation to its rights under a Note (Relevant Proceeding); or
(b) produce the original of this Deed Poll to a court if the Issuer is
(1) such document is required in connection with any legal proceeding in
connection with or relating to the Notes;
(2) the relevant Noteholder has taken reasonable steps to ensure that such
document will not be lost, damaged or destroyed; and
Enterprises Solutions Incorporated 7
(3) such document will be returned to the Issuer on request and is capable of
being made available in respect of any other legal proceeding, claim or action
brought by another Noteholder in relation to that other Noteholder's rights
under any Note.
The Issuer agrees to do the following things:
(a) establish and maintain the Register in New York;
(b) enter or cause to be entered in the Register:
(1) the name and last modified address of each Noteholder;
(2) the payment instruction last notified by each Noteholder;
(3) the date on which a person becomes a Noteholder;
(4) the date on which a person ceased to be a Noteholder;
(5) the date on which each Note is redeemed and cancelled;
(6) such other information as is required by any applicable law; and
(c) comply with the obligations expressed in this Deed Poll to be performed by
5.2 Multiple Noteholders
If more than four persons are the holders of a Note, the names of only four such
persons will be entered in the Register.
5.3 Address of Noteholders
If more than one person is the holder of a Note, the address of only one of them
will be entered on the Register. If more than one address is notified to the
Issuer, the address recorded in the Register will be the address of the
Enterprises Solutions Incorporated 8
Noteholder whose name appears first in the Register as one of the holders of the
5.4 Certified extracts from Register available
The Issuer agrees, on request by a Noteholder, to provide to that Noteholder, at
that Noteholder's expense, a certified extract of the particulars entered in the
Register in relation to that Noteholder and the Notes held by it.
Except as provided by statute or as required by order of a court of competent
jurisdiction, no notice of any trust (whether express, implied or constructive)
may be entered in the Register in respect of a Note.
5.6 Computer Register
The Register may be maintained on computer, provided that it is capable of being
promptly reproduced in written form.
5.7 Audit of records
The records maintained by the Issuer in connection with the Notes and this Deed
Poll may be audited by the person (if any) who audits the Register.
Notes are transferable and are renounceable by the Noteholder.
7. THE ISSUER
The Issuer may employ (as an agent or otherwise) such persons (if any) as may be
necessary for it to carry out its obligations under this Deed Poll.
7.2 Specific responsibilities
In addition to its other obligations, the Issuer agrees to:-
(a) Immediately issue the Noteholder 450,000 warrants convertible at the 30 day
moving average stock price of the issuer taken prior to the execution date
of this deed. Registration rights are piggy backed on any registration by
Enterprises Solutions Incorporated 9
(b) establish and maintain the Register referred to in clause 5;
(c) determine the amount of withholding tax (including without limitation, tax
file number withholding tax), if any, deductible from any payment in
respect of a Note;
(d) Use its best endeavors to have its common stock resume trading on the
NASDAQ bulletin board and to comply with the SEC to that end.
8.1 All notices, requests, demands, consents, approvals, agreements or other
communications to the Issuer under this Deed Poll and the Notes:
(a) must be in writing addressed to the Issuer at:
Attn: Otto Walker.
Fax: + (41) 61 8113933
or such other address as the Issuer may notify to the Noteholders from time to
(b) will be taken to be made when delivered to such address.
If payment of any amount due to a Noteholder is made in accordance with the
Conditions, that payment is a good discharge to the Issuer despite any notice
the Issuer may have (whether express or otherwise) of the right, title, interest
and claim of any other person to or in that money or the Note under which the
payment is made.
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10. SECURITY INTERESTS AND ASSIGNMENT
The Issuer may not create or allow to exist a Security Interest in respect of
its right under this Deed Poll or otherwise dispose of or deal with its rights
under this Deed Poll.
11. GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS
11.1 Governing law
This Deed Poll is governed by the law in force in Switzerland.
Enterprises Solutions Incorporated 11
Each party irrevocably and unconditionally submits to the non-exclusive
jurisdiction of the courts of Switzerland and courts of appeal from them. Each
party waives any right it has to object to an action being brought in those
courts, to claim that the action has been brought in an inconvenient forum, or
to claim those courts do not have jurisdiction.
11.3 Service of process
Without preventing any other mode of service, any document in an action
(including, without limitation, any writ of summons or other originating process
or any third or other party notice) may be served on any party by being
delivered to or left for that party at its address for service of notices under
EXECUTED as a Deed Poll in Switzerland.
Dated this second day of April 2000
SIGNED for and on behalf of )
ENTERPRISES SOLUTIONS INC. ) /s/ Dr. John A. Solomon
by its duly authorised officer ) -------------------------
in the presence of: )
s/s Gary S. Baker Dr. John A. Solomon
- ------------------------- -------------------------
Witness Print Name
Gary S. Baker
Enterprises Solutions Incorporated 12
Conditions of the Notes
The Notes are constituted by a deed poll ("Deed Poll") executed by Enterprises
Solutions Incorporated ("Issuer"). Statements in these terms and conditions
("Conditions") are subject to the detailed provisions of the Deed Poll, a copy
of which is available for inspection at the offices of the Issuer.
The registered owners of the Notes ("Noteholders") are entitled to the benefit
of, are bound by and are deemed to have notice of, all the provision contained
in the Deed Poll.
(a) Unless otherwise defined in these Conditions, terms defined in the Deed
Poll have the same meaning when used in these Conditions.
(b) In these Conditions:
Commission means a commission of $250,000 10% convertible note on the same
terms as those described in this deed and 50,000 detachable warrants are
exercisable at a price equivalent to the conversion price of the notes
described in this deed this price determination shall be 120% of the above
when struck and shall remain said price for the life of the warrants being
3 years from the date of this deed. Registration rights on the underlying
common stock are to be piggy backed onto any registration statement,
provided the warrants are exercised prior to a registration statement filed
by the company at any time.
Control of a person, includes the possession directly or indirectly of the
power, whether or not having statutory, legal or equitable force, and whether or
not based on statutory, legal or equitable rights, directly or indirectly:
(i) to control more than 50% of the total votes which might be cast at a
general meeting of the person;
(ii) to control the membership of the board of directors or other governing
body of the person; or
(iii) to direct or cause the direction of the management and policies of that
person whether by means of trust, agreements, arrangements,
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understandings, the ownership of any interest in shares or stock of that
person or otherwise.
Conversion Date means the date a Note is converted into Ordinary Shares
under Condition 7.
Conversion Formula means the following formula: Each note will be
converted, at the sole discretion of the holder, into common stock at a
value of 90% of the 22 day moving average, backdated from the time of the
conversion request, of the stock price at the time of conversion.
Registration rights piggy back on any registration statement of the
Conversion Notice is defined in Condition 7(b).
"Conversion Period" means the period commencing on the date of execution
of this deed and expiring on the date which occurs 12 months from the
Ordinary Share means one fully paid ordinary share in the capital of the
Outstanding Notes on any day, means any Note which has not been converted
into Ordinary Shares under Condition 7 as at that day.
Securities includes shares, debentures, stock, notes and any option or
right to subscribe for the same.
Clauses 1.2(a), 1.2(c) to (k) inclusive, 1.4 and 1.5 of the Deed Poll
apply to these Conditions provided that each reference in them to "this
Deed Poll" is to be read as if it were a reference to "these Conditions".
2. APPLICATION, ISSUE TERMS AND USE OF PROCEEDS
The Issuer agrees with the Noteholder that upon receipt of an application
(in the form annexed) duly signed by the Noteholder, the Issuer will issue
to the Noteholder the number of Notes described in that application on the
terms of that application.
2.2 Issue Terms
(a) The Notes must be paid for in full on application.
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(b) The Notes are convertible solely at the option of the Noteholder to
Ordinary Shares in the manner described in Condition 7.
3. FORM, DENOMINATION AND TITLE
3.1 Form and denomination
Each Note is issued in registered form and in a minimum denomination of
$250,000 with increments of $1,000 thereafter. The holders of the Notes
are recorded in the Register. Each Note is a separate debt of the Issuer
and may be transferred separately from any other Note.
3.2 Registered owners
The person whose name is inscribed in the Register as the registered owner
of any Note from time to time will be treated by the Issuer as the
absolute owner of such Note for all purposes, whether or not any payment
in relation to such Note is overdue and regardless of any notice of
ownership, trust or any other interest inscribed in the Register. Two or
more persons registered as Noteholders are taken to be joint holders with
right of survivorship between them.
3.3 Inscription conclusive
Each inscription in the Register in respect of a Note constitutes:
(a) sufficient and conclusive evidence to all persons and for all purposes
that the person whose name is so inscribed, is the registered owner of the
Note to which the inscription relates;
(b) for the benefit of the person whose name is so inscribed, a separate and
individual acknowledgment by the Issuer of its indebtedness to that person
and of the vesting in such person of all rights vested in a Noteholder by
the Deed Poll; and
(c) an unconditional and irrevocable undertaking and promise by the Issuer to
the person whose name is so inscribed that, for value received, the Issuer
will make all payments of principal and (if applicable) interest in
respect of the Note in accordance with these Conditions.
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3.4 Manifest errors
The making of, or the giving effect to of, a manifest error in an
inscription into the Register will not avoid the constitution, issue or
transfer of a Note. The Issuer must correct any manifest error of which it
3.5 Issue of certificate
Within 3 Business Days from the Issue Date, the Issuer shall cause a
certificate in respect of the Notes held by each Noteholder to be issued
to the Noteholder in the form of the certificate set out in Annexure 3.
4. STATUS OF NOTES
The Notes are direct, unconditional and rank without preference or
priority among themselves.
5.1 Period of accrual of interest
(a) Subject to Conditions 5.1 (b) and 5.1(c), interest accrues on each Note
from (and including) the Issue Date up to (but excluding) the Redemption
(b) Any overdue principal of a Note continues to bear interest at the
Prescribed Rate, both before and after judgment, until such Redemption
Amount is paid in full to the Noteholder;
(c) Any overdue interest on a Note itself bears interest at the Prescribed
Rate, calculated on the date the interest falls due for payment and then
Enterprises Solutions Incorporated 16
at successive intervals of 3 months, both before and after any judgment,
until such overdue interest is paid in full to the Noteholder.
5.2 Interest Payment Dates
Interest is payable monthly in arrears on each Interest Payment Date,
(a) the first payment of interest will be in respect of the period from the
Issue Date up to and including:
(i) the date which occurs six months from the Issue Date; or
(ii) the Conversion Date of all the Notes held by the Noteholder, whichever
first occurs; and
(b) the last payment of interest will be made on the Redemption Date or
Conversion Date (which relates to all Notes then held by the Noteholder).
Interest is calculated on the basis of a year of 365 days and the actual
number of days elapsed.
5.3 Interest Rate and determination of Interest Rate
Interest accrues on the Principal Amount of each Note at the Interest
6. REDEMPTION AND PURCHASE
(a) Each Outstanding Note of a Noteholder must be redeemed by the Issuer on
the Redemption Date.
(b) On the Redemption Date, the Issuer must pay to the Noteholder the
Redemption Amount together with all interest (if any accrued and unpaid
6.2 Demand following non-satisfaction of Event of Default
The Noteholder may, following the occurrence of an Event of Default,
declare by notice in writing to the Issuer the Redemption Amount to be due
and payable and for that purpose require the redemption of all that
Noteholder's Outstanding Notes, and otherwise in accordance with Condition
6.1(b). If redemption is required then the Issuer must repay all moneys
due to the Noteholder within 14 days (or such other period as the Issuer
and the Noteholder may otherwise agree).
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6.3 The Noteholder may, within twenty eight (28) days of first becoming
entitled to voting shares of the Issuer such that any further acquisition
of voting shares by the Noteholder, require the Issuer (within 21 days of
receipt of a notice from the Noteholder requesting redemption for the
reason described in this Condition) to redeem the Outstanding Notes in
accordance with this Condition 6.
6.4 Right to demand redemption
The Noteholder has the express right to demand the redemption of its
6.5 No right to redeem
The Issuer has no right to redeem any Note pr: -)r to the Redemption Date.
All Notes redeemed by the Issuer, or which are repurchased by the Issuer
and which the Issuer elects to cancel, must be cancelled promptly after
being repurchased and may not be reissued or resold and:
(a) the total Principal Amount of Notes evidenced by inscription on the
Register immediately on such redemption or cancellation (as the case may
be) is reduced by an amount equal to the aggregate Principal Amount of all
Notes so redeemed or cancelled except in respect of an obligation or
liability which arises on or before the Redemption Date; and
(b) all liabilities and obligations of the Issuer in connection with those
Notes so redeemed or cancelled are discharged.
(a) A Noteholder may exercise its right to convert any or all of its Notes
into Ordinary Shares under this Condition 7.
(b) The option to convert may only be exercised by the Noteholder giving
written notice to the Issuer (Conversion Notice) at any time and from time
to time during the Conversion Period. The notice must be duly completed
and be substantially in the form of Annexure 2.
(c) Within 7 days from receipt of the Conversion Notice the Issuer must:
(i) issue to the Noteholder Ordinary Shares, as per the conversion formula,
for each Note so converted; and
Enterprises Solutions Incorporated 18
(ii) not later than 10 Business Days after the Conversion Date forward free of
charge to the Noteholder a share certificate for the Ordinary Shares
issued on conversion of the Notes described in a Conversion Notice given
under Condition 7(b).
(d) The issue of Ordinary Shares consequent upon conversion of Notes is
treated for all purposes as the full repayment of the Redemption Amount
payable with respect to such Notes and the obligations of the Issuer in
relation thereto cease except in respect to an obligation or liability
which arises on or before the Conversion Date.
(e) The Issuer must pay to the Noteholder all interest accrued and unpaid on
the Note up to (but excluding) the Conversion Date.
(f) Once issued, a Conversion Notice is not irrevocable.
(g) The Issuer must cause all Ordinary Shares issued to the Noteholder
consequent upon conversion of Notes under this Condition 7 to be listed
for trading on the NASDAQ as soon as possible after the Conversion Date.
(h) The Ordinary Shares allotted under this Condition 7 shall rank pari passu
and form one class with the other Ordinary Shares then on issue.
8. CHANGE IN CONTROL
(a) If a change in Control of the Issuer occurs prior to the Redemption Date,
the Issuer shall promptly give notice to the Noteholders of the occurrence
of that event.
(b) The Noteholder may within 21 days from the date of receipt of a notice
under Condition 8(a), require the Issuer:
(i) to convert his Outstanding Notes to Ordinary Shares pursuant to Condition
(ii) to redeem the Outstanding Notes in accordance with Condition 6 and any
Conversion Notice received by the Issuer on or after the date of that
notice is of no force or effect.
Enterprises Solutions Incorporated 19
9.1 Payments to Noteholders
All payments under a Note must be made by the Issuer:
(a) in US Dollars;
(b) to an account or an address in Switzerland or to another jurisdiction
approved by the Issuer (it being acknowledged by the Issuer that it
approves Switzerland for this purpose) designated by the Noteholder to the
Issuer not later than the close of business on the eighth day immediately
preceding the relevant Interest Payment Date or Maturity Date; or
(c) by cheque drawn on a bank in America or, at the option of the Noteholder,
by electronic transfer to an account situated in America or another
jurisdiction approved by the Issuer under Condition 9.1(b) and designated
by the Noteholder to the Issuer not later than the close of business on
the eighth day immediately preceding the relevant Interest Payment Date or
Maturity Date, by the Issuer giving irrevocable instructions to effect a
transfer of the relevant funds to such account; and
(d) without set-off or counterclaim or any other deduction.
9.2 Business Days
If a payment is due under a Note on a day which is not a Business Day or
if payment is to be made to an account on a day on which banks are not
open for general banking business in the city in which the account is
located, the Noteholder is not entitled to payment of such amount until
the next Business Day or a day on which banks in such city are open for
general banking business (as the case may be) and is entitled to interest
in respect of any such delay.
9.3 Payments subject to fiscal laws
All payments are subject to Condition 10 and to any applicable fiscal or
other laws and regulations.
10.1 Payments made free and clear
All payments under the Notes must be made free and clear of, and without
deduction for, or by reference to, any present or future taxes.
Enterprises Solutions Incorporated 20
11. EVENTS OF DEFAULT
11.1 An Event to Default occurs in relation to the Notes if:
(a) (failure to pay): there is default for more than 30 Days in the payment of
principal in respect of the Notes or if there is default for more than 30
Days in the payment of interest in respect of the Notes;
(b) (cross default): any Borrowed Moneys Indebtedness (as defined in Condition
11.2) in an aggregate amount of not less than $10,000 of the Issuer or a
(i) is not paid when due or within any originally applicable grace period;
(ii) is declared to be payable prior to its specified maturity (including any
originally applicable grace period) following the occurrence of a default
or any event or circumstance which constitutes an event of default
(however described); or
(iii) in the case of any guarantee, indemnity or other commitment entered into
by the Issuer in respect of indebtedness of any other person) is not paid
or satisfied on demand being made or within any originally applicable
grace period unless refusal to make such payment is allowed under any
(c) (cease business): the Issuer or any Principal Subsidiary stops payment of
its debts generally or ceases to carry on the whole or a substantial part
of its business;
Enterprises Solutions Incorporated 21
(d) (insolvency): a petition in bankruptcy, reorganisation, compulsory
composition, winding up or liquidation proceeding, or any other proceeding
analogous in its purposes or effect is filed against the Issuer or any
Principal Subsidiary (as defined in Condition 11.2(b)) and such proceeding
is not discharged or stayed within a period of 60 days or the Issuer or
any Principal Subsidiary initiates or consents to proceedings relating to
itself under any applicable bankruptcy, reorganisation or insolvency laws
or makes an assignment for the benefit of, or enters into any composition
with, it creditors;
(e) (receiver): a receiver, receiver and manager, administrator or similar
official is appointed over any of the assets or undertaking of the Issuer
or a Principal Subsidiary or any step it taken in connection with such an
(f) (execution): an order of attachment or execution is issued against all or
a substantial part of the property of the Issuer or a Principal Subsidiary
and is not removed or discharged within a period of 7 days; or
(g) (winding up): an effective resolution is passed for the winding up of the
Issuer or a Principal Subsidiary or a meeting is convened for the purpose
of considering such a resolution;
(h) (vitiation): this Deed Poll or any of the Notes is or becomes wholly or
party void, voidable or unenforceable;
(i) (unable to pay debt): if the Issuer or a Principal Subsidiary becomes
insolvent or unable to pay its debts or would be deemed to be unable to
pay its debts; or
(j) (compromise): if a compromise or arrangement is proposed with, or becomes
effective in relation to the creditors or any class of the creditors of
the Issuer or a Principal Subsidiary.
11.2 For the purposes of Condition 11.1:
(a) Borrowed Moneys Indebtedness means with respect to any person, all
obligations created, incurred or assumed by such person for the payment or
repayment of moneys relating to or in connection with:
(i) any indebtedness of such person in respect of moneys borrowed by it;
(ii) any indebtedness of such person under acceptance or documentary credit
Enterprises Solutions Incorporated 22
(iii) any indebtedness of such person under bills, bonds, debentures, notes or
similar instruments on which such person is liable;
(iv) any actual or contingent indebtedness of such person for moneys owing
under any instrument entered into by such person primarily as a method of
raising finance and not referred to elsewhere in this definition; and
(v) actual or contingent indebtedness of such person under guarantees,
security, indemnities or other commitments designed to assure any creditor
against financial loss in respect of indebtedness of any other person;
(b) Principal Subsidiary means any Subsidiary (as defined in Condition
11.2(c)) from time to time the total assets of which constitute 15% or
more in value of the aggregate total assets of the Issuer on a
consolidated basis calculated by reference to the respective latest
audited accounts of the Issuer and the Subsidiary in question; and
(c) Subsidiary means any entity:
(i) of which the Issuer owns or controls (either directly or through another
or other Subsidiaries) 50% or more of the issued share capital; or
(ii) in which the Issuer has any ownership interest having ordinary voting
power to elect 50% or more of the directors, managers or trustees of such
11.3 If an Event of Default occurs:
(a) a Noteholder may by written notice to the Issuer (Early Redemption Notice)
(such notice being effective upon receipt by the Issuer), with a copy to
the other parties to this deed, declare the Principal Amount of the Notes
held by that holder together with accrued interest to the Early Redemption
Date (Early Redemption Amount) to be due and payable on the date that such
written notice is received by the Issuer (Early Redemption Date).
11.4 The rights of a Noteholder in respect of any amount declared due and
payable under Condition 11.3(a) are subject to Conditions 4.2 and 4.4.
Enterprises Solutions Incorporated 23
12. FURTHER ISSUES
The Issuer may from time to time and without the consent of the
Noteholders create and issue debt instruments and raise funds and other
financial accommodation as it sees fit.
Enterprises Solutions Incorporated 24
13.1 All notices with respect to the Notes are valid if despatched by prepaid
ordinary post to the Noteholders at their registered addresses (or, in the
case of joint holders, to the address recorded in the Register). Such
notice is taken to be received on the seventh day after posting.
13.2 Change of Address
A Noteholder must promptly notify any change of address to the Issuer.
13.3 Notices to Issuer
All notices to the Issuer are valid if sent to the address stipulated in
or notified in accordance with clause 9.1 of the Deed Poll.
14. STAMP DUTY
The Issuer must pay all stamp duty payable in respect of the Notes.
15. GOVERNING LAW, JURISDICTION AND SERVICES OF PROCESS
15.1 Governing law
The Notes are governed by the laws in force in Switzerland.
The Issuer irrevocably and unconditionally submits to the non-exclusive
jurisdiction of the courts of Switzerland and courts of appeal from them.
The Issuer waives any right it has to object to an action being brought in
those courts, to claim that the action has been brought in an inconvenient
forum, or to claim those courts do not have jurisdiction.
15.3 Service of process
Without preventing any other mode of service, any document in an action
(including, without limitation, any writ of summons or other originating
process or any third or other party notice) may be served on the Issuer by
being delivered to or left for the Issuer at its address for service of
notices under clause 9.1 of the Deed Poll.
Enterprises Solutions Incorporated 25
Any documents or information of any kind which relates directly or
indirectly to the business being conducted by Enterprises Solutions
Incorporated or its subsidiaries will be held commercial in confidence by
Enterprises Solutions Incorporated 26
Form of Conversion Notice
NOTICE OF EXERCISE OF RIGHT TO CONVERT
We refer to the Deed Poll dated [ ] April 2000 given by Enterprises Solutions
Incorporated in favour of the Noteholders.
Expressions used in this notice which are defined in the Deed Poll bear the
I/We the holder(s) of [ ] Notes hereby give notice of the right to convert [ ]
Notes into Ordinary Shares in accordance with the Conditions.
If this Notice is signed by an attorney, the attorney hereby declares that
he/she has no notice of revocation of the power of attorney under the authority
of which this Notice is signed.
_________If you wish to convert only part of your entitlement, insert the
appropriate number. If this space is left blank the Notice is deemed to relate
to the whole of your holding of Notes.
This Notice must be signed by the Noteholder(s) personally or by a duly
appointed attorney. If signed by an attorney, the relevant power of attorney
must be submitted with the Notice unless already noted by the Issuer. If there
are joint holders, each must sign. In the case of a corporation, the document
must be executed in accordance with appropriate law of its jurisdiction and its
company constitution as to execution of documents by a corporation or by a duly
appointed attorney according to law.
Enterprises Solutions Incorporated 27
2000 NOTES CONVERTIBLE NOTE CERTIFICATE 2000 NOTES
ENTERPRISES SOLUTIONS INCORPORATED
REGISTERED OFFICE: DATE
This is to certify that the abovenamed is the registered holder of the number of
2000 Notes of ENTERPRISES SOLUTIONS INCORPORATED as shown below, subject to the
terms and conditions of the Issue and the provisions of which are contained in
the Deed Poll dated [ ] April 2000, under which the 2000 Notes are issued.
REFERENCE CERTIFICATE NO NO OF UNITS
NO OF UNITS
Signed for and on behalf of )
ENTERPRISES SOLUTIONS INCORPORATED )
by its )
duly authorised officer in the presence of: )
/s/ Gary S. Baker /s/ Dr. John A. Solomon
- ----------------------------------- -----------------------------
Gary S. Baker Dr. John A. Solomon
- ----------------------------------- ------------------------------
Print Name Print Name
CDR USN (Ret)
Enterprises Solutions Incorporated 28
To: The Directors
Enterprises Solutions Incorporated
P.O. Box 352
Boston MA 02137
Reference is made to the deed poll dated 2nd April 2000 ("Deed Poll") made by
Enterprises Solutions Incorporated ("Issuer") in favour of the Noteholders (as
defined in the Deed Poll).
Expressions used in this application which are defined in the Deed Poll bear the
WALTRAG AG. hereby applies for the issue to it of 5,000,000 non-transferrable
Notes of $1 each with a coupon rate of 10% nominal interest per annum (payable
monthly in arrears) and maturing 2nd April 2001.
The Notes may be converted at the option of Waltrag A.G. into Ordinary Shares of
the Issuer in accordance with the Conversion Formula.
The Issuer will immediately pay Waltrag A.G. the Commission.
Waltrag A.G. agrees to pay the issue price of the Notes being $5,000,000 to a
bank account nominated by the Issuer within 4 working days of the date of this
By making this application, Waltrag A.G. acknowledges to and agrees with the
Issuer that Waltrag A.G. is bound by the terms of the Deed Poll. Further Waltrag
A.G. acknowledges it is aware of a halt in trading of the common stock of The
Issuer and has read the SEC press release and after investigating all matters
asserted by the SEC and enters this agreement having conducted due diligence
concerning such matters.
Enterprises Solutions Incorporated 29
Dated: April 1999
Signed for and on behalf of WALTRAG A.G.
by its duly authorised officer in the
/s/ Jrion Nadine
- ----------------------------------- /s/ Walker Otto
Witness Director Secretary
Jrion Nadine Walker Otto
- ----------------------------------- ------------------------
Print Name Print Name